Pan-Asian, agri-food company, Japfa Ltd, has closed on a US$150 million Sustainability-Linked Loan (SLL), with DBS Bank and Rabobank as joint sustainable loan facilitators.
“This SLL marks another pivotal step in Japfa’s journey to align business growth with our ambitious ESG [environmental, social, governance] goals,” said Tan Yong Nang, CEO, Japfa. “At Japfa, we believe that sustainable practices are not just integral to our business, but essential to shaping a future where growth and responsibility go hand in hand.”
What is a Sustainability-Linked Loan?
SLLs are loans that tie the financial outcome to the borrower’s progress on sustainability or its key performance indicators (KPI). This could mean that progress is rewarded with a lower interest rate, or the interest rate could even go up if the borrower backslides. The result of the loan varies on how the lender and borrower decide to structure it.
Despite the loan being linked to sustainability, the borrower is not required to use the loan for a sustainability project. It is meant to be another option for companies that are working toward being more sustainable.
Japfa’s key performance indicators
Japfa’s SLL is specifically tied to progress made on its KPIs:
- Recycling water to reduce waste and the use of freshwater,
- Phasing out coal and switching to cleaner energy, and
- Combatting malnutrition in children with its “Japfa For Kids” program.
“The KPIs tied to this loan reaffirm our determination to address some of the most pressing global challenges, from enhancing resource efficiency to improving nutrition and transitioning to cleaner energy sources,” said Tan.
“Rabobank is proud to jointly facilitate this SLL for Japfa, one of our longstanding clients, and we are honoured to further supporting Japfa in achieving their sustainability ambitions,” said Gregory Vandeler, general manager Southeast Asia, Rabobank. “Japfa’s commitment to food security and sustainability across the agri-food value chain aligns with our mission of growing a better world together.”
