Dutch agricultural giant's revolving credit facility will see interest on its loan repayments determined in part by its performance against green goals
Agricultural commodities giant Louis Dreyfus Company has become the latest firm to agree a multi-million dollar loan deal with an interest rate linked to company performance against green goals such as CO2 reduction, power consumption, water usage, and landfill waste.
The $750m revolving credit facility (RCF) announced by the firm yesterday marks the first time it has included a sustainability-linked pricing mechanism in its loan repayments, and in time the company intends to implement similar green targets for two more of its RCFs when they come up for renewal.
Yesterday's RCF provides for a cut in interest rate each year the firm improves its performance against green metrics, with performance assessed by an independent auditor.
The renewed RCF replaces Louis Dreyfus Company's previous three-year $750m facility with the group, explained Federico Cerisoli, LDC's group chief financial officer.
"Our position in the food value chain puts us at the heart of some of the world's most pressing challenges, such as the need to feed a growing world population sustainably," he said. "As a company, we are committed to fair and sustainable value creation, and with this first sustainability-linked RCF, today we are linking that commitment to our financing. It is also positive that the banking community is increasingly rising to the challenge, through novel financing options."
The transaction was led by BNP Paribas, Bank of America, ICBC, ING, MUFG, Société Générale and SunTrust as joint lead arrangers and bookrunners, with ING acting as sustainability structuring agent and BNP Paribas as sustainability coordinator, according to the firm.
Louis Dreyfus Company is not the first company to pioneer pollution linked interest rates for its loans, with Dutch science giant DSM having last year launched a €1bn RCF in 2018, and Thames Water having also separately agreed a £1.4bn facility with interest rates linked to a set of environmental metrics. Earlier this month coffee chain Starbucks also launched an "oversubscribed" $1bn sustainability bond.