Deutsche Bank and Olam International announced the execution of Asia’s first FX derivative linked to environmental, social and governance (ESG) key performance indicators (KPIs).
The ESG-linked foreign exchange (Thai Baht/US dollar) forward allows Olam to insert a discount when it meets pre-defined ESG targets which supports the United Nations (UN) Sustainable Development Goals (SDGs).
Deutsche Bank Head of Fixed Income and Currencies and Corporate Bank APAC and Chief Country Officer Singapore, David Lynne, said:
Supporting our clients’ transformation towards sustainability is a key plank in Deutsche Bank’s strategy. Deutsche Bank aims to lead the industry by creating innovative ESG financial solutions to accelerate the adoption of sustainable practices by our clients across the world.
The FX risk solutions helps reduce the FX risk associated with having products from one country and selling them to another while supporting Olam’s program to strengthen supply chain sustainability.
Olam’s Managing Director and Group CFO, N. Muthukumar said:
Olam is delighted to partner with Deutsche Bank to implement Asia’s first ESG FX solution. This innovative facility provides us with a hedge on our currency risk exposure and enables Olam to lock-in a discount when we meet pre-set ESG targets that are aligned with our sustainability strategy and the United Nations Sustainable Development Goals. This is yet another way we are living our Purpose of reimagining global agriculture and food systems.
The sustainability-linked derivative follows the concepts set by the Loan Market Association (LMA) Sustainability-linked Loan Principles (SLLP) and follows the EU Sustainable Finance taxonomy
Deutsche Bank Head of ESG APAC Kamran Khan commented:
Green Finance has to date largely involved sustainability-linked loans, bonds and equities, where market standards are becoming standardized. This sustainability-linked derivative transaction leverages Deutsche Bank’s world-class execution expertise and commitment to ESG to open an important new path for the global Sustainable Finance market.
Deutsche Bank has been a member of the UN Environment Programme Finance Initiative as part of it’s commitment to sustainability. Since 2012, the bank has achieved climate neutrality in operations and since 2016 it has been a supporter of the Paris Climate Agreement.
In 2019 Deutsche Bank became a founding signatory of the UN Principles for Responsible Banking. The bank promised that by 2025 its total volume of sustainable financing and investments will reach at least EUR 200 billion and that its operations will be powered entirely by renewable energy sources. In Asia Pacific region, the bank recently appointed a dedicated Head of ESG.
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