Wilmar forges another collaboration through sustainability-linked loan
DBS and Wilmar International ink new sustainability-linked loan
Asia’s leading agribusiness group Wilmar International further demonstrates its commitment to responsible business as it joined hands with Singapore lender DBS to promote corporate responsibility through a sustainability-linked loan.
The collaboration, announced on August 10, will peg the interest rate of Wilmar’s existing two-year US$100 million revolving credit facility to a series of environmental, social and governance (ESG) performance metrics as its links its sustainability improvements with its corporate financing activities. The interest rate for this loan is based, in part, on the ESG rating of the company by Sustainalytics, a global provider of ESG research and ratings, and will be reduced on a tiered basis if pre-determined targets are achieved.
Based on the annual ESG ratings report developed by Sustainalytics, performance indicators covering issues ranging from biodiversity, greenhouse gas reduction, renewable energy to ESG governance are used in the evaluation.
“Responsible financing is part of Wilmar’s holistic approach towards building a sustainable business,” says Wilmar CFO Ho Kiam Kong. “We are continuously seeking ways to improve our sustainability performance and we believe that forming partnerships with the like-minded will make a larger impact.”
Adds Yulanda Chung, head of sustainability, institutional banking group at DBS: “We see a growing market of sustainability-linked loans, which enable lenders to incentivize and reward corporations to advance their sustainability agenda.”
The collaboration with DBS demonstrates Wilmar’s commitment to responsible business. The company has earlier forged similar arrangements with two other banks, incorporating sustainability metrics into aspect of its business.
In the first of its kind in the palm oil industry, Wilmar partnered with ING in November 2017 to convert part of its existing bilateral committed revolving credit facility of US$150 million with the bank into sustainability performance-linked loan. It is the first company in Asia to work together with ING to link its sustainability performance to a loan.
In June this year, Wilmar partnered with OCBC Bank to tie-up the interest rates of its existing US$200 million revolving credit facility to sustainability KPIs.
Listed on the Singapore Exchange, Wilmar’s business activities include palm oil cultivation, oilseed crushing, edible oils refining, sugar milling and refining, manufacturing of consumer products, specialty fats, oleochemicals, biodiesel and fertilizers, as well as flour and rice milling.