Deutsche Bank, Olam International close ESG-linked FX

This enables Olam to lock-in discounts when it meets pre-defined ESG targets.

Deutsche Bank and Olam International have successfully executed Asia’s first foreign exchange (FX) derivative linked to environmental, social and governance (ESG) key performance indicators (KPIs), according to an announcement

The ESG-linked FX of Thai Baht and US dollar forward enables Olam to lock-in a discount when it meets pre-defined ESG targets that support the United Nations Sustainable Development Goals (UN SDGs).

The FX risk solution is said to marry the requirement to hedge the FX risk arising from growing a crop in one country and selling it to another country, and supports Olam’s programme to strengthen supply chain sustainability.

The sustainability-linked derivative follows the concepts enshrined in the Loan Market Association Sustainability-linked Loan Principles (LMA SLLP), and follows the EU Sustainable Finance taxonomy.