29 November 2022, London, UK
Concord Resources Limited (Concord) has signed a pioneering agreement with trade finance provider, Societe Generale, to pilot access to sustainability-linked loans tied to climate-related KPIs. This is part of Concord’s wider commitment to addressing greenhouse gas (GHG) emissions in its metals and minerals trade portfolio.
The pilot agreement was facilitated and enabled by CarbonChain, the carbon accounting software provider for the commodities sector. Both Concord and Societe Generale have access to Concord’s GHG emissions reports and progress-tracking dashboard on CarbonChain’s platform, covering all financed trades.
If implemented, a sustainability-linked loan will offer Concord special trade finance terms, contingent on meeting agreed, ambitious emissions-reduction targets over a 12-month period against a 2021 baseline.
The pilot KPIs include improvements in third-party sustainability assessments, as well as KPIs based on traffic light ratings (green, amber, red) from CarbonChain, which are assigned to each trade according to its performance against industry benchmarks for the relevant commodity. For example, a copper trade whose carbon intensity is 20% better (lower) than the industry benchmark is assigned a Green Trade Rating. All production emissions are counted, from mine to finished product. This ensures the KPIs cover the biggest and most relevant sources of emissions and climate risks in an end-to-end trade supply chain.
To achieve success on two of the critical KPIs, Concord must increase the proportion of Green-assigned trades and decrease the proportion of Red- and Amber- assigned trades in its entire trade portfolio — not just the trades financed by Societe Generale.
Andreas Schmitz, Concord’s COO and Global Head Corporate Finance, said:
“Agreeing this pilot with one of our key trade finance providers is a major milestone in our climate journey. It provides a vital incentive to meet our sustainability objectives.
Banks increasingly want transparency and action in their carbon-intensive portfolios. We know they want to reward low-carbon trades and products but they generally lack the carbon data to do so. We have been comprehensively tracking and reporting our end-to-end trade supply chain emissions via CarbonChain’s platform for nearly two years. This transparency has allowed us to develop climate KPIs with Societe Generale, informed by robust data-led insights.”
The agreement has a specific requirement for aluminum emissions, with a dedicated KPI for reducing the average carbon intensity of aluminum production in Concord’s trades. Aluminum is the most carbon-intense base metal at the global level, and decarbonizing its production is critical, especially due to its important role in producing lighter and electrified transport for the clean energy transition. Methods to reduce its carbon intensity include switching production power sources to renewable electricity, and changing how anodes are used.
Accurate carbon accounting is the bedrock of climate action. CarbonChain carries out the calculations and ratings, using source-level data and its third-party verified and validated methodology aligned with the GHG Protocol. All GHG emissions are covered, calculated as carbon dioxide equivalent (CO2e).
Adam Hearne, CEO & Co-Founder, CarbonChain, said:
“We’re delighted to have facilitated a pioneering agreement for the commodity trade finance sector. It’s an example of the power of transparency and data to unlock the financial incentives necessary for decarbonizing the economy.
The commodities sector faces major disruption in the climate emergency. Collaboration between traders, banks, suppliers and producers is key to tackling carbon risk and getting ahead of regulation. We expect to see more and more commodities traders and financial institutions following suit, and accelerating emissions reductions across the commodities sector towards net zero.”
Deia Markova, Head of Trade Commodity Finance, Societe Generale in Switzerland, said:
“Societe Generale has placed sustainable development – and the energy transition in particular – at the heart of its strategy. This new agreement, setting quantified KPIs and targets as a first step towards a sustainability-linked financing, set together with Concord Resources and CarbonChain, is a key milestone for us and the industry. Together, we have built over the past year the tangible benchmarks against which we aim to measure progress and will now work to define the reward system which seems fair but ambitious. A great co-construction achievement built through the collective intelligence from each stakeholder.”
Notes to editors
Founded in 2015 Concord is a global resources merchant focused on the supply chain, financing and risk management of non-ferrous metals and related raw materials, led by an experienced and entrepreneurial management team. Its team works with resource producers and consumers on spot transactions out to multi-year, structured agreements. Concord’s capabilities include global sourcing, marketing and management of all the required logistics and finance to optimise its clients’ supply chains from long-term partnership marketing arrangements to single container deliveries. Concord brings substantial cross-commodity, structuring and asset optimisation experience of its founding team to work for the benefit of its customers and partners. For more information, please visit www.concordltd.com.
About Societe Generale
Societe Generale is one of the leading European financial services groups. Based on a diversified and integrated banking model, the Group combines financial strength and proven expertise in innovation with a strategy of sustainable growth. Committed to the positive transformations of the world’s societies and economies, Societe Generale and its teams seek to build, day after day, together with its clients, a better and sustainable future through responsible and innovative financial solutions.
Active in the real economy for over 150 years, with a solid position in Europe and connected to the rest of the world, Societe Generale has over 117,000 members of staff in 66 countries and supports on a daily basis 25 million individual clients, businesses and institutional investors around the world by offering a wide range of advisory services and tailored financial solutions. The Group is built on three complementary core businesses:
- French Retail Banking which encompasses the Societe Generale, Credit du Nord and Boursorama brands. Each offers a full range of financial services with omnichannel products at the cutting edge of digital innovation.
- International Retail Banking, Insurance and Financial Services, with networks in Africa, Central and Eastern Europe and specialised businesses that are leaders in their markets;
- Global Banking and Investor Solutions, which offers recognised expertise, key international locations and integrated solutions.
Societe Generale is included in the principal socially responsible investment indices: DJSI (Europe), FTSE4Good (Global and Europe), Bloomberg Gender-Equality Index, Refinitiv Diversity and Inclusion Index, Euronext Vigeo (Europe and Eurozone), STOXX Global ESG Leaders indexes, and the MSCI Low Carbon Leaders Index (World and Europe). For more information, you can follow us on Twitter @societegenerale or visit our website www.societegenerale.com.
CarbonChain builds technology that puts carbon data at the heart of climate action in the world’s most polluting industries. Its AI-powered carbon accounting platform automates the tracking of supply chain greenhouse gas (GHG) emissions for companies, traders, and financiers in the highest-emitting sectors (metals and mining, oil and gas, and agriculture). With accurate, granular, asset-level data covering the end-to-end supply chain, CarbonChain’s software unlocks unrivalled insight into carbon-related risks and opportunities in near real-time. This enables the most climate-critical sectors, and those who finance them, to tackle risks, manage emissions, and build resilience as they accelerate the transition to a net-zero economy. CarbonChain is a CDP accredited solutions provider, a TCFD supporter, and a proud member of ResponsibleSteel. CarbonChain was part of the Y Combinator Summer 2020 cohort and is supported by the UK government’s innovation arm (InnovateUK), the NatWest accelerator, and the London Business School Incubator. Visit www.carbonchain.com to learn more.