Project detail - Volcafe Limited

Volcafe Limited

Status: Investment in contracting phase
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Disclaimer

The information as disclosed is indicative and provided on an "as-is/as available" basis for general informational purposes only and should not be construed as financial, legal or investment advice, nor as a commitment or an offer to arrange or provide any financing. The final decision to provide financing is subject to the terms and conditions of FMO in its sole and absolute discretion. When providing links to other sites, FMO bears no responsibility for the accuracy, legality or content of the external site or for that of subsequent links. The information on proposed investment for high-risk investments is made available in the language relevant to the country or region where the bulk of operations take place. Translations of any information into languages other than English are intended as a convenience for local stakeholders. In case of any discrepancy, the information provided in English will prevail.

Who is our prospective customer?

Founded in 1851, Volcafe Coffee Group has over 170 years of history. It is one of the largest global coffee traders in the world with subsidiaries in all main coffee origin countries in the world. Volcafe Coffee Group forms part of the larger trading group ED&F Man Commodities.

What is our funding objective?

The funding objective of this transaction is to support Volcafe's coffee procurement in Costa Rica. Volcafe Costa Rica is a leading exporter of high quality and sustainable coffee and has established itself as a trustworthy coffee partner for farmers and suppliers. In Costa Rica, Volcafe sources mostly from smallholder farmers (over 85% of the farmers are smallholder farmers) and more than 70% of the coffee procured is certified by Rainforest Alliance.

Why do we want to fund this investment?

This project aligns well with FMO's ambitions to: i) support leading coffee traders to build sustainable and inclusive value chains, through access to financing for origination but also further up the chain with smallholder farmer financing; ii) contribute to the viability of the coffee sector in countries like Costa Rica, which have seen urbanization and development encroach upon coffee-growing regions, while having the potential to increase production of high-quality coffee.

What is the Environmental and Social categorization rationale?

This is a Category B+ project according to IFC’s Policy on E&S Sustainability because it may cause significant adverse E&S risks and impacts that may be diverse, but which can be mitigated with adequate management plans. The main risks associated with this project are (i) wastewater discharge pollution; (ii) occupational health and safety risks; (iii) poor work conditions among coffee harvesters and child labour along the supply chain; (iv) potential impacts on natural habitat and biodiversity along the supply chain (including deforestation and pollution used by excessive use of agrochemicals). While all Performance Standards are applicable to this investment, IFC’s environmental and social due diligence indicates that the investment will have impacts which must be managed in a manner consistent with the following Performance Standards: PS 1 - Assessment and Management of Environmental and Social Risks and Impacts PS 2 - Labor and Working Conditions PS 3 - Resource Efficiency and Pollution Prevention PS 4 - Community Health, Safety and Security PS 6 - Biodiversity Conservation and Sustainable Management of Living Natural Resources PS 5, 7 and 8 are not triggered since i. there is no land acquisition or economic displacement as a result of this transaction; ii. it is not expected any negative impact on indigenous people's land and the areas where the coffee is sourced are not close to indigenous territories; and iii. it is not expected to affect material or immaterial cultural values.

Website customer/investment
https://www.volcafe.com/
Country
Global
Sector
Agribusiness, Food & Water
Publication date
5/2/2024
Deadline for feedback
7/1/2024
Total FMO financing
USD 23.00 MLN
Funding
FMO NV
Risk categorization on environmental and social impacts, A = high risk, B+ = medium high risk, B = medium risk, C = low risk Environmental & Social Category
(A, B+, B or C)
B+