July 2, 2020

Deutsche Bank and Halcyon Agri Corporation partner on sustainability through innovative new loan

Deutsche Bank’s Corporate Bank today announced that it has provided a USD 25 million sustainability-linked loan facility with a three-year tenor, and an accordion feature to upsize the facility to USD 75 million, to Corrie MacColl, a subsidiary of Halcyon Agri Corporation (“Halcyon”), to finance the company’s capex investments for its rubber plantations in Cameroon and Malaysia.

The proceeds of the loan will be used for the maintenance of Halcyon’s rubber plantations while promoting its Cameroon Outgrower Programme, which aims to provide additional food security and boost the income of 13,000 local smallholder farmers. The Borrower group will be required to comply with the mutually agreed sustainability framework (“the Framework”) developed by Environmental Resources Management (Singapore) Pte Ltd (“ERM”), throughout the life of the loan. Compliance will be assessed and/or verified by ERM appointed by Deutsche Bank AG, Singapore Branch as consultant on the Framework.

ERM will be responsible for reviewing the key performance indicators of the loan, which will complement and enhance the borrowers’ existing sustainability strategy and objectives, and is another step for Halcyon to drive ESG standards as the market leader in sustainability. ERM has also set the sustainability performance targets embedded in the Framework of the financing facility. While ESG conditions attached to loan rates are not unusual in corporate lending facilities, it is the comprehensive nature of the KPIs that will set a new standard for the rubber industry, making this commercial loan unique.

Halcyon is one of the world's leading rubber franchises with an integrated global network spanning plantations, processing, and distribution of quality rubber. Being at the forefront of sustainability, Halcyon developed its HEVEAPRO rubber processing standards in 2014 and released their Sustainable Natural Rubber Supply Chain Policy in 2018, which includes a No Deforestation commitment – a first for the industry. In 2019, the Group became a signatory of the United Nations Global Compact and was awarded the second most transparent rubber company by the Zoological Society of London’s SPOTT analysis. In the same year, Halcyon launched BOUNCE, the world’s first rubber sustainability movement anchored by the United Nations Sustainable Development Goals. Halcyon is a founding member of the Global Platform for Sustainable Natural Rubber.

David Lynne, APAC Head of Corporate Bank at Deutsche Bank, said: “We are committed to driving positive change through our efforts in sustainable finance, and are proud to pioneer sustainability-linked loans such as these in the market. The finance industry can play a critical role in helping companies reach their sustainability objectives, by helping align incentives to ensure that more sustainable business practices also make good financial sense. It is gratifying to work with partners like Halcyon on this type of project, which evaluates a broader set of more environmentally conscious metrics in defining successful business.”

Jeremy Loh, Chief Financial Officer of Halcyon Agri Corporation, said: “We are delighted to have chosen Deutsche Bank for this one-of-a-kind loan structure. It was important to us to ensure that we continue to support our clients in a sustainable way, supporting our overall corporate social responsibility strategy and in accordance with developing standards for sustainable financing in the rubber industry.”

Deutsche Bank has had a longstanding commitment to sustainability. The bank has been a member of the UN Environment Programme Finance Initiative and signatory of its Declaration of Sustainable Development since 1992, and has achieved climate neutrality in operations since 2012. Deutsche Bank also formally supports the targets set by the Paris Climate Agreement in 2015. In 2019, the bank was a founding signatory of the UN Principles for Responsible Banking. The bank has also committed that by 2025 its total volume of sustainable financing and investments will be at least EUR 200bn, and that its operations will be powered entirely by renewable energy sources. In 2020, the bank announced the appointment of Kamran Khan to the newly created role of Head of ESG for Asia Pacific to drive the regional business strategy around ESG across all of the bank’s business divisions in the region.