Responsible Business

Finance

Although financial markets were temporarily disrupted due to the Covid-19 pandemic, 2020 saw significant increases in commitments by financial investors and the banking community on environmental, social and corporate governance (ESG) related issues.  

For example, total assets under management signed onto the United Nations’ Principles for Responsible Investment (PRI) increased by US$17 trillion (or 20%) to over US$103 trillion in total, which is the largest annual increase since the PRI’s inception in 2006.   

Starting in 2019, LDC began to incorporate sustainability targets into its committed financing facilities.  As the investment community continues to align incentives for environmental integrity and accountability, LDC is committed to adopting new targets and sustainability-linked principles in its funding strategy. 

Pursuing our journey to further connect our environmental performance with how we finance our company, early in 2020 we introduced a major new initiative. 

In January, LDC signed a new US$100 million facility with the European Bank for Reconstruction and Development to support the sustainable expansion of operations in Bulgaria, Egypt, Kazakhstan, Poland, Romania, Tajikistan, Turkey and Ukraine, while reinforcing corporate governance to address climate change risks.  

As a result, many small and medium-sized farmers across these eight countries have increased access to markets and knowledge-sharing programs - including on management of risks arising from climate change - and are receiving training on modern agronomic practices to improve the quality of their produce sustainably. 

The agreement also provides for LDC’s adoption of an enhanced climate corporate governance approach in line with the guidelines of the Financial Stability Board’s Task Force on Climate-related Financial Disclosures, which support voluntary disclosure of climate-related financial risk.   

This includes the development of new tools for climate-related risk management, and climate scenario stress-testing of grain harvests in Ukraine and cotton harvests in Turkey. These tests will generate experience and data that reinforces our understanding of climate change impacts on various supply chains, and therefore our ability to support farmers and suppliers in mitigating these.  

As we move forward in 2021, LDC will seek to embed more sustainability-linked financing initiatives within a new ESG framework, which we are developing to drive positive change in relation to a wide range of global environmental, social and corporate governance issues.  

Targets

Include sustainability-linked interest-rate mechanism in a second RCF through North America hub (postponed to 2021)

Completion: 2020

Status: Postponed

Include sustainability-linked interest-rate mechanism in a second RCF through Asia hub

Completion: 2020

Status: Complete