First corporate sustainability bond issued in Asia

First corporate sustainability bond issued in Asia

Mar 5, 2018
Rubber tree (Image credit: Pixabay)
Monday, March 5, 2018

Jakarta, Indonesia – A new US$95 million Sustainability Bond has been announced to finance a sustainable natural rubber plantation in Indonesia. It is the first ever corporate sustainability bond issued in Asia.

The multi-tranche Sustainability Bond was arranged by BNP Paribas (BNPP) and issued by the Tropical Landscapes Finance Facility (TLFF). The bond will fund PT Royal Lestari Utama (RLU), an Indonesian joint venture between France’s Michelin and Indonesia’s Barito Pacific Group, for climate smart, wildlife friendly, socially inclusive production of natural rubber in Jambi, Sumatra and East Kalimantan provinces. The project also involves collaboration with WWF.

The project incorporates extensive social and environmental objectives and safeguards. Planted areas will serve as a buffer zone to protect the threatened Bukit Tigapuluh National Park from encroachment. The national park is one of the last places in Indonesia where elephants, tigers and orangutans co-exist.

Out of a concession area of 88,000 hectares, roughly 45,000 hectares will be set aside for community livelihoods and conservation. At maturity, the natural rubber plantation is expected to provide approximately 16,000 fair-wage jobs, providing a critical source of employment for local communities. An initial 18,100 hectares of rubber were planted as of December 2017 and the TLFF bond issue will contribute to financing further development of the plantation.

“It is the role of banks today to make sure we can enable sustainable and impactful projects everywhere. While not without its own challenges, this transaction is proof that financial institutions can generate socially beneficial outcomes when we really work hard,” said Eric Raynaud, CEO, Asia Pacific and Member of Group Executive Committee at BNP Paribas. “This complex structuring arrangement also demonstrates that our institutional investor clients have the appetite to invest in projects and companies that combine commercial and financial performance with clear environmental and social purpose and impact.”

Image credit: Pixabay