Musim Mas, a leading palm oil producer, has announced its inaugural Sustainability-Linked Revolving Credit Facility (RCF), marking a major stride in its commitment to sustainable business practices. This innovative financing, in partnership with Rabobank as sustainability coordinator and HSBC as a lender, demonstrates Musim Mas’ dedication to integrating environmental and social responsibility into its financial framework.
The Musim Mas Group, through its marketing arm Inter-Continental Oils & Fats Pte. Ltd., and its Spanish and Italian biofuel entities, has converted its EUR 150 million uncommitted RCF into a sustainability-linked loan. This move aligns with the Loan Market Association (LMA) Sustainability-Linked Loan Principles, emphasizing responsible business practices.
The Sustainability-Linked Loan is anchored on three key performance indicators (KPIs):
1.
RSPO certification of independent smallholders:
Promoting sustainable practices among smallholders is crucial to achieving responsible palm oil production. Musim Mas aims to increase the number of independent smallholders who are certified by the Roundtable on Sustainable Palm Oil (RSPO).2.
Training of independent smallholders:
Empowering smallholders with knowledge and skills in sustainable farming practices is a key focus. Musim Mas will invest in comprehensive training programs to improve yield and responsible production techniques.3.
Maintaining a deforestation-free palm oil supply chain:
Musim Mas’ commitment to eliminating deforestation is a core principle. The company will continue to ensure its supply chain remains free from any deforestation activities, contributing to a more sustainable future for palm oil production.The progress made on these KPIs will be externally verified by reputable assessors, ensuring transparency and accountability. The selection of these specific KPIs was driven by their materiality and ambitious targets, reflecting Musim Mas’ commitment to long-term sustainability.
Independent smallholders, who represent approximately 41% of the palm oil production area, play a critical role in the palm oil industry. Musim Mas recognizes the importance of supporting these smallholders, enabling them to adopt sustainable farming methods and improve their livelihoods.
Rabobank, as the sustainability coordinator, played a vital role in integrating sustainability principles into the financing structure. Rabobank and HSBC are the joint lenders for the RCF.
Gregory Vandeler, Head of Trade & Commodity Finance, Rabobank Asia, commented, “Rabobank is honored to have acted as the lead sustainability coordinator for Musim Mas in their inaugural sustainability-linked loan. Partnering with Musim Mas – one of our longstanding clients and a true leader in sustainability in the palm oil industry – in this inaugural deal, reflects the trusted relationship we have with them. Linking sustainability performance to financing is a way to support our clients in their sustainability commitments while simultaneously enhancing productivity, resilience, and farmer livelihoods. There is great potential in making the agri-food sector more sustainable. In our role as a leading food, agriculture and trade commodity bank, we are committed to taking a leading role in working closely with our clients in their sustainable transition journeys.”
Priya Kini, Head of Commercial Banking, HSBC Singapore, said, “We have a longstanding relationship with Musim Mas, and we are glad to be able to further deepen our support with their first sustainability-linked loan. Musim Mas wants to embed ESG principles into their core business operations and financing activities, and we are pleased to help them do so. This collaboration is a clear demonstration of HSBC’s ongoing efforts to support our clients’ transition to a more sustainable future.”
This Sustainability-Linked Loan marks another milestone in Musim Mas’ commitment to incorporating environmental and social considerations into its financial activities. The company’s efforts extend beyond this latest initiative, as evidenced by previous achievements:
* In 2021, Musim Mas secured a Green Trade Financing Facility with a Singapore bank, with RSPO certification as a key performance indicator, aligning with the Monetary Authority of Singapore’s (MAS) Green Finance Industry Taskforce’s Green and Sustainable Trade Finance and Working Capital Framework.
* In 2024, Musim Mas partnered with a leading bank to implement an innovative Sustainable Account with a Liquidity Management Structure. This initiative aimed to optimize the Group’s cash flow and working capital across its entities, while seamlessly integrating environmental, social, and governance (ESG) considerations.
“Contracting a sustainability-linked loan with ambitious, meaningful, and measurable targets is a testament to Musim Mas’ deep-rooted commitment to sustainability and responsible corporate behavior. Musim Mas is reinforcing to our stakeholders—financial banks, customers, and employees—about our dedication to driving positive environmental and social impact while delivering long-term value,” said Mr. Alvin Lim, Chief Financial Officer and Executive Director, Musim Mas.
This commitment to sustainable practices highlights Musim Mas’ dedication to responsible palm oil production, ensuring a positive impact on the environment, communities, and the industry as a whole.
