Wilmar pegs interest rate for ING credit facility to sustainability performance

WILMAR International is pegging the interest rate of an existing credit facility to its sustainability performance - making it the first in the palm oil industry to do so as the sector strives to improve its sustainability credentials.

The firm said on Monday evening that it has partnered Dutch bank ING to convert a portion of its existing bilateral, committed US$150 million revolving credit facility into a loan linked to sustainability performance.

If certain performance milestones involving environmental, social and governance (ESG) indicators are met, the interest rate for part of the loan will be reduced for the following year. Wilmar's progress will be tracked by Sustainalytics, an ESG data firm.

Some of these indicators include programmes for biodiversity and to reduce greenhouse gas emissions. They also include standards on the scope and quality of social supplier standards, said a Wilmar spokeswoman.

ING has since March this year worked with eight clients in Europe - including a chocolate and cocoa producer and a health technology company - on similar sustainability improvement loans. Wilmar is the first company in Asia to work with the bank on such a loan.

Wilmar's chief financial officer Ho Kiam Kong said that the collaboration with ING dovetails with the firm's commitment to be a responsible business.

"We believe that incorporating sustainability metrics into every aspect of our business, from daily operations to corporate financing, is key to creating value for our stakeholders," he said in a statement.

ING Wholesale Banking Asia chief executive Gerrit Stoelinga said that the bank appreciates Wilmar's commitment and market leadership to get on board with the concept. "We have a strong pipeline of sustainability deals and will continue to find innovative ways to empower and support our clients in their sustainability journey," he added.