Rabobank Offers Metal Customers Sustainability Performance Incentives
Rabobank offers customers of metal companies with incentives such as lower interest rates if they meet sustainability goals – and pilot penalties for late arrivals, an executive at the Dutch lender said on Tuesday.
Metals producers, especially those that manufacture energy-intensive aluminum, face increasing demands from governments and customers to reduce emissions and source responsibly as the world shifts to a low carbon economy.
“We want to finance clients who invest in … sustainable initiatives and for these investments we look if we can support them with incentives”, said Richard Piechocki, head of sustainable trade and commodity finance at Rabobank, based in Utrecht, about the LME Seminar on metals in Asia.
Rabobank and another European lender funded a customer’s purchases of low-carbon aluminum based on a set of sustainable KPIs with incentives, Piechocki said at a panel discussion.
In addition, a Chinese metallurgical company client of targets set by Rabobank to reduce CO2 emissions, dust generated during production and emissions of nitrous oxide and sulfur dioxide, he added.
“If the client achieves the goals, we are prepared to give an incentive in the form of a reduction in the interest rate” on a loan, Piechocki said.
Rabobank also operates programs that provide incentives and penalties based on carbon intensity or emissions produced per unit of energy consumed.
“What we want is to finance those trade flows which can prove that they are the best performers in reducing carbon intensity,” Piechocki said.
Rabobank is prepared to give those in the top 10% a cut on interest rates, but will take a premium if trade flows are in the worst 10%, he added.
Our Standards: The Thomson Reuters Trust Principles.