IDB Invest, Cia Empaques Announce First Sustainability-Linked Bond in Colombia
• Issued by Compañía de Empaques, this is the first bond linked to sustainability in Colombia, structured and subscribed by IDB Invest.
IDB Invest and Compañía de Empaques SA, part of the Excala group, announced the first sustainability-linked bond (SLB) issued in Colombia. The bond, structured and underwritten by IDB Invest, will raise up to COP50 billion over a 5-year term and will include a sustainability goal to be met in 2024.
Compañía de Empaques will allocate the resources to make necessary investments to increase its installed capacity, as well as adopting new technologies to optimize the use of raw materials and energy consumption index, such as efficient energy consumption equipment, growth of portfolio of renewable products, greater consumption of photovoltaic energy, operational technical improvements in the consumption of compressed air as well as promoting a culture of adequate management of energy resources.
Projected business growth contemplates an inclusive supply model and favors local suppliers, with special emphasis on agricultural producers, since 80% of fique fiber purchases are directly from producers or cooperatives, eliminating intermediaries in the supply chain. The company plans to double its purchases in the next 5 years, benefiting part of the 22,000 existing fique producers in Colombia, affected by small-scale production, poverty and exclusion.
In addition, the company is working to foster innovation in products normally considered generic to add value through quality improvements and co-design with its customers of custom-made products, offering real-time inventory identification and traceability solutions. With this transaction, Compañía de Empaques plans to increase exports, currently to 14 countries.
Additionally, the company hopes to develop new technologies to improve productivity in fique processing, as well as develop new products based on fique-derived biomaterials and based on circular economy initiatives.
Sustainability-linked bonds, or SLBs, are innovative financial instruments that seek to develop the financing market for companies committed to sustainability. Unlike other thematic bonds that focus on the use of funds, through these bonds the issuer commits to implement a long-term sustainability strategy, assuming the commitment to achieve ambitious and material goals that show improvements in its sustainability performance. Goals are periodically measured using performance metrics (KPIs) and their achievement has an impact on the bond's interest rate (premium or penalty).
IDB Invest, through its advisory services, supported Compañía de Empaques in the identification of KPIs, as well as ambitious goals comparable with international peers and standards, which served as input for the development of the bond issuance framework. The framework has a second-party opinion from VE, part of Moody's ESG Solutions, certifying its alignment with international standards for thematic bonds, established in the Principles set by the International Capital Markets Association (ICMA).
Through this issue, and in line with its Sustainability Strategy, Compañía de Empaques undertakes to reduce its energy consumption rate on raw material incorporated into processes (KWh / Kg) by 8.3% by 2024, which represents an annual average of 1.66% of its energy intensity, well above Colombia's Energy Efficiency Roadmap. This is a relevant indicator given the high energy consumption of the plastic industry in Colombia (equivalent to 9% of industrial energy consumption, the second highest after the metallurgical industry), as well as an ambitious goal with respect to the historical trajectory of the company, the peers of the sector, and international standards. Failure to meet the goal will represent an increase of 20 bps over the applicable interest rate in 2025 until the bond's maturity. KPI and goals monitoring will be annual and certified by an external auditor.
This transaction reaffirms IDB Invest's commitment to the development of the capital market in the region, incorporating a new issuer and helping to create a new asset class in Colombia.
This funding is expected to contribute to five of the Sustainable Development Goals (SDGs): End Poverty (SDG 1), Decent Work and Economic Growth (SDG 8), Industry, Innovation and Infrastructure (SDG 9), Reduction of Inequalities (SDG 10) and Alliance to achieve the goals (SDG 17).
About IDB Invest
IDB Invest, a member of the IDB Group, is a multilateral development bank committed to promoting the economic development of its member countries in Latin America and the Caribbean through the private sector. IDB Invest finances sustainable companies and projects to achieve financial results and maximize economic, social, and environmental development in the region. With a portfolio of $13.1 billion in asset management and 385 clients in 25 countries, IDB Invest provides innovative financial solutions and advisory services that meet the needs of its clients in a variety of industries.
About Compañía de Empaques
Compañía de Empaques is a Colombian company, listed on the public securities market, which began operations in 1938. It’s focused to the transformation of natural fibers and plastic resins into practical solutions with high quality standards in its four business units: Packaging (Logistics Solutions), Agro, Bio-applications and Construction and Infrastructure. At the end of 2019, the products of its synthetic fiber and natural fiber portfolios represented 76% and 24% of sales, respectively. The company has a team of more than 1,900 collaborators, who make possible the development of its business and its consolidation as a benchmark in the processing of both types of fibers. In 2018, Compañía de Empaques redefined its corporate strategy, declaring as a strategic course 2025, to be a multi-business Corporation, with multi-country operations and to have consolidated sales of $ 850 billion pesos ($236 millions), becoming leaders and benchmarks on sustainability issues in your industry.