Project detail - ETC Group

Who is our prospective customer?

ETG is a diversified agricultural conglomerate that has a diverse portfolio of expertise across various industries, encompassing agricultural inputs, chemicals, logistics, processing, food and food ingredients, energy, metals, technology and supply chain optimization. ETG has built its business by linking small-holder African farmers to a diverse pool of global buyers and efficiently managing this value chain. It started operations in 1967 in Kenya by distributing and marketing products manufactured by multinational companies in the country to East Africa and has since diversified operations globally (45 countries spanning 6 continents) with most operations still centered around Africa.

What is our funding objective?

The Sustainability Linked Loan (the “SLL”) which FMO will arrange for ETG will be used to fund the Group’s permanent working capital requirements predominantly in Africa, where ETG recorded the majority of its revenues.

Why do we want to fund this investment?

ETG has gradually built an ambitious sustainability agenda. This transaction represents an landmark and innovative opportunity for both ETG and FMO to demonstrate the importance of high sustainability standards, as the company will define ambitious KPI on the reduction of Greenhouse Gas emissions, deforestation and reforestation, as well as extension services to supply chain farmers (including women). This transaction is expected to be labeled Reduction of Inequalities (RI – SDG13) as ETG sources a significant portion of its commodities from smallholders, partly in Least Developing Countries. Additionally, the SLL will be a landmark transaction for ETG as it aims at presenting this financing as an anchor facility going forward allowing us to support the company in a syndication process to other development finance institutions willing to support ETG’s strategy.

What is the Environmental and Social categorization rationale?

Based on Environmental and Social (E&S) risks and impacts and the countries and regional contexts, the E&S risk category is B+. The main risks are in the supply chain and are related to the inherent sector and country Human Rights risks as child and forced labour risks and general labour risks, transport and machinery operating risks. Environmental and de-forestation risks are less prominent. Supply chain risks are addressed by specific tools, monitoring and root cause addressing mitigation programs. With these measures ETG is taking important next steps towards strengthening the E&S risk management and leverage in its supply chains now progressing from the highest risk commodities towards their other commodities. FMO has been working with ETG on E&S improvements from 2019 and since then, the company has grown its E&S organization along with E&S capacity, knowledge, and awareness. ETG is committed to international practices and standards. This is reflected in the group integrated management system, including feedback loops to further improve and address risks at group, country and plant levels. The relevant IFC Performance Standards for this financing are PS1 to PS4 (Management, Labour, Resource Efficiency and Community). For Resettlement (PS5), Biodiversity (PS6), Indigenous People (PS7), and Cultural Heritage (PS8) policies are in place in case these are triggered by new activities or expansions. E&S risks will be monitored and mitigated by the implementation of a corporate Environmental and Social Action Plan.

More investments

Date	Total FMO financing
7/18/2019	USD 25.50 MLN