COFCO and OCBC partner on first financing linked to SBTi FLAG emission reduction targets
SINGAPORE - COFCO International and Singapore-headquartered OCBC, Southeast Asia’s second largest financial services group by assets, have launched the first financing facility with interest rate incentives tied to Science Based Targets initiative (SBTi)-validated FLAG targets for 1.5°C climate alignment.
The USD 600 million OCBC 1.5°C loan is a sustainability-linked revolving credit facility (RCF) incorporating two performance targets aligned with COFCO International’s SBTi-validated Forest, Land, and Agriculture (FLAG) soy and corn emissions reduction targets.
According to SBTI, FLAG is the world’s first framework for companies in land-intensive sectors, including agriculture, to set science-based targets that include land-based emissions reductions and removals.
COFCO International will qualify for interest discounts by achieving externally verified annual emissions reductions for purchased soy and corn, which will primarily come from the company’s efforts to eliminate deforestation and conversion from its soy and corn supply chains.
This loan follows the Sustainability Linked Loan Principles guidelines.
“Reducing emissions across our supply chains and operations is at the heart of our efforts to protect cultivation of the crops we source, reduce risk and ensure access to food,” says Helen Song, CFO of COFCO International. “This loan facility reflects broader trends across the industry, with sustainable financing increasingly linked to emissions reduction targets, and agriculture businesses increasingly setting verified targets, taking actions to meet them, and reporting transparently to be held accountable.”
Elaine Lam, Head of Global Corporate Banking, OCBC, said: “Being the first financing facility aligned with SBTi-validated FLAG targets, this transaction demonstrates COFCO’s commitment to achieving its decarbonisation ambitions. We are pleased to support COFCO International with our OCBC 1.5°C loan, the first non-Singapore company to take up this solution which we launched last year to incentivise corporates to set and work towards clear carbon emissions reduction targets aligned with science-based Net Zero decarbonisation pathways for their sectors. We are committed to supporting our customers around the world to transition to a low-carbon future.”
In June 2024, SBTi approved COFCO International’s emissions reduction targets. This validation confirms that the company’s near-term targets are in line with global efforts to limit warming to 1.5°C and reflect best practices under the FLAG sector guidance.
This agreement builds on COFCO International’s track record with sustainability-linked financing, where key performance indicators (KPIs) have focused on soy traceability, environmental and social screening of farmers, and environmental, social and governance (ESG) risk management.
OCBC participated as Senior Mandated Lead Arranger in COFCO International’s USD 2.3 Billion sustainability-linked loan announced in 2019 and as Bookrunning Mandated Lead Arranger for the USD 1.6 Billion sustainability-linked loan announced in 2022.
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