July 31, 2019
Marfrig deepens commitment to sustainable beef sourcing
Marfrig Global Foods SA is tapping the market for bonds aimed to protect the environment as meat companies face growing criticism for contributing to climate change, Bloomberg reported.
The company, with operations spanning South America and the United States, is selling as much as US$500 million in transition bonds, an instrument that could help 'less-than-green' firms including oil companies, coal miners and agribusinesses. Bookrunners include BNP Paribas SA, ING Groep NV and Banco Santander SA.
Marfrig is committing to using proceeds to only buy cattle from ranchers in the Amazon region who comply with non-deforestation and other sustainable criteria such as animal welfare and fair-labour practices.
According to Marfrig CFO Marco Antonio Spada, investors have been increasingly concerned about sustainability, and the company wants to show "a little of what what (they) are doing."
Marfrig has complied for seven straight years with a 2009 agreement not to buy cattle from newly deforested areas in the Amazon region, the company said in June. Purchasing will be made stricter under the bond rules, with monitoring also covering indirect suppliers.
Transition bonds will help reduce entry barriers in sustainable financing for sectors including agriculture and facilitate open dialogue between companies and investors aligned with environment, social and governance criteria, according to Daniel Shurey, head of green finance at BloombergNEF.
"The agriculture sector has really struggled with conventional green bonds," Shurey said. "Transition finance and behaviour-based sustainable finance is far more suitable for it."
"(A)s these companies continue on the transition path, they will need to do more to prove that they are going beyond business-as-usual decarbonisation," he added.