SCB executes its first ESG-linked derivative


Standard Chartered announced today that it has priced its first commodity hedge linked to Environmental, Social and Governance (ESG) benchmarks with Trafigura, a leading commodity trading client.

The transaction involves combining conventional derivatives risk management with sustainabilitylinked key performance indicators (KPIs) that are linked to reducing greenhouse emissions - from owned or controlled sources - and to sustainable sourcing in the base metals business.

This transaction is structured to offer a premium or discount to Trafigura on their hedging rate based on fulfilling the pre-agreed ESG KPIs, which are independently monitored and reported on regular basis by a leading third-party provider, ERM Certification and Verification Services.

Chin Hwee Tan, CEO of Trafigura, Asia-Pacific, said: “We are committed to embed sustainability in our day-to-day operations in a consistent and coherent way. A key pillar of our responsible business practices involves minimising adverse impacts on the natural environment. This sustainability goals-linked derivative transaction with Standard Chartered is an important step forward on our journey.”