A Brazilian cosmetics company has raised R$1.3 billion ($245 million) with a ‘first-of-its-kind’ sustainability-linked bond (SLB) tied to targets on biodiversity conservation and sustainable sourcing in the Amazon region.
Natura Cosmeticos secured investment in the bond from the International Finance Corporation (IFC) and IDB Invest, the private sector arms of the World Bank and the Inter-American Development Bank Group, respectively.
Anchor investor IFC allocated R$300 mln and helped the company mobilise additional funds, while IDB Invest ringfenced R$200 mln, according to separate statements.
“This is an important path to reconcile the protection of the Amazon with economic development,” said Manuel Reyes-Retana, IFC regional director for Latin America.
“This issuance shows the potential of sustainability-linked bonds to remodel all of the sustainable debt markets industry and generate bigger impact,” added Guillermo Foscarini, managing director of the corporate division of IDB Invest.
Under the deal, Natura committed to enhancing sustainable sourcing practices in the Brazilian Amazon, while contributing to biodiversity conservation and restoration across the region, and increasing the number of Amazon ingredients to 49 by 2027, up from a baseline of 44 at the moment, according to IDB.
IDB said the initiative also intends to support agroforestry uptake, in line with Brazil’s emphasis on promoting a bioeconomy both at national and global levels.
Last year, IDB partnered with Banco do Brasil to launch a $250-mln programme for financing bioeconomy in the Amazon.
“A POWERFUL TOOL”
“Brazil has an immense potential to globally lead this business model that harmonises income generation with environmental conservation,” said Silvia Vilas Boas, Natura’s finance and strategy executive.
“Widening the economy is crucial, and for that, we need to strengthen all of its encompassing ecosystems. The issuing is a powerful tool to help us reach this goal.”
In recent months, biodiversity has been increasingly included as a key performance indicator in SLBs, with the market set to further accelerate compared to last year.
Bonds incorporating biodiversity loss prevention and nature conservation account for almost a third of total ESG labelled debt issued so far this year, up from approximately 3% in 2015, according to the UN Development Programme.
SLBs are performance-based instruments that require issuers to meet predefined ESG targets, giving issuing entities more discretion over spending proceeds than other sustainable finance instruments like green bonds.
Last year, an analysis published by rating agency Sustainable Fitch said nature is poised to become increasingly mainstream within ESG, with steady growth in the issuance of SLBs featuring biodiversity.
By Sergio Colombo – sergio@carbon-pulse.com
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