Rabobank is offering metal company clients incentives such as lower interest rates if they meet sustainability targets – and piloting penalties for the laggards, an executive from the Dutch lender said on Tuesday.
Metal producers, particularly those who make energy-intensive aluminium, are facing growing demands from governments and clients to reduce emissions and source materials responsibly as the world transitions to a low-carbon economy.
“We want to finance clients who invest in … sustainable initiatives and for these investments we are looking if we can support them with incentives,” Richard Piechocki, head of sustainable trade and commodity finance at Utrecht-based Rabobank, said on the LME Asia Metals Seminar.
Rabobank and another European lender financed a client’s purchases of low-carbon aluminium based on a set of sustainable key performance indicators with incentives, Piechocki said during a panel discussion.
Separately, a Chinese metal company client of Rabobank’s set targets to reduce C02 emissions, the dust generated during production and nitrous oxide and sulphur dioxide emissions, he added.
“If the client achieves the targets we are willing to give an incentive in the form of a reduction on the interest rate” on a loan, Piechocki said.
Rabobank is also piloting schemes that provide incentives and penalties based on carbon intensity, or the emissions produced per unit of energy consumed.
“What we want is to finance those trade flows that can prove that they are best performing on carbon intensity reduction,” Piechocki said.
Rabobank is willing to give those ranking in the top 10% a discount on interest rates but will levy a premium if the trade flows are in the worst 10%, he added.
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