Viterra, with support from Commonwealth Bank, has refinanced and expanded its industry-leading inventory financing, designed to encourage sustainable farming practices both in Australia and abroad.
Viterra purchases agricultural commodities such as barley, wheat, canola and cotton from Australian growers and through its extensive regional network supplies to both domestic and international customers across a range of industries.
CBA supported Viterra to refinance its $800 million syndicated Sustainability-Linked Borrowing Base Facility (SL-BBF) and introduce a new sustainability target focused on promoting grower engagement with the Better Cotton Initiative (BCI) and purchasing BCI-certified cotton. Convened by the World Wide Fund for Nature (WWF), the Better Cotton Initiative is a non-profit, multi-stakeholder governance group that promotes better standards in cotton farming and practices across 21 countries.
The new target is in addition to Viterra's original targets, which focus on:
- Grower engagement with International Sustainability and Carbon Certification (ISCC)
- Purchasing ISCC-certified Australian-grown grain
- Securing protein meals for import into Australia and other jurisdictions that are sourced from overseas farms that follow sustainable agricultural practices, including non-deforestation.
Due to the positive progress made through its initiatives to date, Viterra has committed to increase its original targets further, to ensure they maintain ambitious, impactful goals. This includes revising higher the annual trajectories of targets 1 and 2, and broadening the scope of target 3.
Commonwealth Bank worked with Viterra to structure the market-leading SL-BBF, which ties Viterra's cost of inventory finance to its achievement of the above sustainability targets. Like a traditional trade finance facility, the inventory financing allows Viterra to use the Australian-grown grain and cotton it holds on hand as collateral to unlock capital the company can use to further support its activities.
"Viterra continues to break new ground and lead the market with its commitment to promoting sustainable agriculture in its supply chain, and we are proud to support Viterra in this important work that propels Australia's transition to a sustainable economy," said Alex Toone, Executive General Manager, Commodities, Trade and Carbon, at Commonwealth Bank.
Viterra is focused on the promotion of sustainable cotton, which will become even more vital on the back of expected growth in cotton production after three years of historically wet conditions, said Ian Ritter, Viterra CFO, Trading, Australia and New Zealand.
"We're very pleased to have achieved our targets last year and we'd like to thank growers for their participation in the ISCC which allows us to access key markets and provides sustainability confidence to our customers. This year we have set our ambitions higher and expanded our targets to include sustainable cotton. It is a timely opportunity to engage with our valued suppliers on sustainable cotton practices and leverage what we have achieved with the ISCC program to help cotton growers to unlock the opportunities for sustainably-produced ingredients and fibres.
"Our sustainable financing is one aspect of our broader sustainability focus across the global Viterra business. Across our network we want to drive and support the industry to meet the demand of consumers while preserving the same opportunities for future generations," said Mr Ritter.
Viterra's vantage point as a key intermediary between global makers of consumer goods and Australian agri-businesses gives it critical insights into shifting consumer expectations, said Commonwealth Bank's Charles Davis.
"Viterra's industry-leading commitment to sustainability extends to ensuring the sustainability of Australia's agricultural industry, and promoting certification that can help growers gain recognition for the investment they've made in the natural capital of their land," Mr Davis said.
CBA acted as Sole Sustainability Coordinator on the second year of Viterra Australia's SL-BBF. CBA was also appointed as Mandated Lead Arranger and Bookrunner, Agent and Security Trustee.
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