Meanwhile scope two emissions are associated with the electricity Trafigura purchases for driving its activities. Scope one emissions are direct emissions from its own operations, such as combustion in boilers, furnaces, vehicles or vessels. The KPI for reducing greenhouse gas emissions in Trafigura’s RCF will measure the firm’s performance in reducing scope one and two emissions, and reaching the 30% target set out in its responsibility report.
Yet, for the meantime, he says that sustainability-linked loans are yet to become a “new normal” in the industry. Speaking about the reasons for this, Olivier Bazin, partner at law firm HFW, notes that there is now a consensus among global banks and international trading houses that sustainable finance “not only brings cheaper funding it is the right thing to do”.īazin tells GTR that lenders and corporates alike have come under increasing pressure from regulators, shareholders and civil society to stop financing carbon-heavy industries, namely coal, and shift towards sustainable business practices. There is a growing trend towards sustainability-linked loans in the energy commodities space, following the first such deal struck by Gunvor in late 2018 – which also saw the trader gain a discounted rate for meeting certain requirements on areas including CO2 emissions, as well as waste and water management. And based on our performance, we will either benefit from some reduction in margin, or we have to pay a penalty to the banks,” he explains. That will be delivered to the ERCF facility agent. “Each year there will be a backward-looking assessment, where we will provide a KPI report as well as a compliance certificate. A third-party firm – ERM CVS – will be tasked with assessing whether the trader is hitting its goals. Trafigura will either gain discounted rates if it meets its KPIs, or face penalties if it fails to keep pace.
VOSTOK OIL TRAFIGURA ISO
He explains that the RCF isn’t asset-based but is linked to three overarching key performance indicators (KPIs) of its operations, which include cutting greenhouse gas emissions, growing its renewable energy portfolio, and bringing its sourcing of metals in line with those outlined by ISO 20400 – an international standard for sustainable procurement.
The deal will refinance an existing one-year European multi-currency RCF and extend a three-year RCF, and is expected to have a total value of US$5.5bn.Ĭhristophe declined to name the banks that are taking part, but says the RCF will include 50 banks that are broadly similar to those involved in previous years. In an interview with GTR, Trafigura’s Laurent Christophe, group treasurer at the Swiss-based trader, says the company will ink a new sustainability-linked multi-currency RCF in late March with two separate tranches. Having published its first ever emissions reduction target in a responsibility report last month – which will see the commodity trader work to cut its own direct and indirect emissions by 30% in the next three years – Trafigura is preparing to sign a sustainability-linked RCF in March. Global commodity trader Trafigura is set to secure a new sustainability-linked revolving credit facility (RCF) as it works to cut its carbon footprint and boost renewables, though the firm says it has no plans to shift away from oil in the coming years.
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