Commodity trading company Trafigura has closed its first sustainability-linked loan structure worth over $5 billion.
The loan structure is comprised of a new 365-day European multi-currency syndicated revolving credit facility totaling $ 1.85 billion, as well as the extension and increase of its $3.65 billion 3-year facility.
The 365-day ERCF will be used to refinance the maturing $1.9 billion 365-day facility dated March 2020, as well as for general corporate purposes.
The company said that its progress in sustainability and responsible business practices have enabled it to structure its 365-day ERCF and 3-year ERCF, as sustainability-linked loans.
The loan structure includes three KPIs to be tested annually and verified by a third party expert, relating to cutting operational greenhouse gas emissions (Scope 1 & 2), responsible sourcing of metals (in line with ISO 20400:2017) and growing Trafigura’s renewable power portfolio.
The facility agent will apply a penalty or discount on the margin, depending on the number of KPIs met each year.
“We have successfully refinanced Trafigura’s one-year flagship credit facility despite high volatility and economic uncertainty throughout the syndication period,” Christophe Salmon , Group Chief Financial Officer for Trafigura, said.
“We continue to be pioneers within our industry by closing the first sustainability-linked syndicated bank facility at a corporate level. It demonstrates our focus on ESG and commitment to continue our strong progress in improving ESG performance across our global business.”
The commodity trader has been very active on the decarbonization front, especially in the maritime industry.
The most recent projects have seen Trafigura invest up to €30 million into Belgium’s largest Battery Energy Storage Systems (BESS) at Nyrstar’s zinc smelting facility in Balen.
Furthermore, the company has been a strong supporter of the introduction of a carbon levy in the shipping industry to help boost competitiveness and uptake of alternative fuels.
The company is proposing a levy between $250 and $300 per metric tonne of CO2 equivalent on shipping fuels. The system would be overseen by the IMO, and it would be adjusted as the competitiveness gap narrows.