First corporate sustainability bond in Asia will protect fragile forests

A new $95 million sustainability bond has been announced to help finance a natural rubber plantation in Indonesia.

The transaction is the first such bond to be launched in Asia; it was issued by the Tropical Landscapes Finance Facility (TLFF), and arranged by BNP Paribas.

The new transaction will be used to support a joint venture, the Royal Lestari Utama (RLU), to produce “climate smart, wildlife friendly, socially inclusive” natural rubber in the Jambi, Sumatra and East Kalimantan provinces, according to a statement from the fund.

The project will help preserve 45,000 hectares of forest and create an estimated 16,000 jobs for local communities in the provinces. One of areas now protected by the project sits next to a national park where elephants, tigers and orangutans still coexist in the country, one of the last such places in Indonesia. 

The TLFF is a government-supported initiative, created in 2016 and counting UN Environment as a founding partner.

Indonesia’s Minister of Environment and Forestry, Siti Nurbaya Bakar, welcomed the news: "We highly support this positive drive from the private sector using an investment structure like the TLFF, which not only boosts economic development, but also improves much needed skills in the longer term".

David Sulaiman, President Director of RLU, said: “We are honoured to take this important step alongside TLFF towards establishing an impactful partnership for the development of a more sustainable rubber industry”

“This demonstrates our commitment to a thriving, sustainable rubber market for the country and our unwavering support for local communities”, he added.

BNP Paribas, another founding partner of the fund highlighted the vital role that banks play in enabling “sustainable and impactful projects everywhere”.

“This transaction is proof that financial institutions can generate socially beneficial outcomes when we really work hard”, said Eric Raynaud, the bank’s CEO in Asia Pacific.

 

Photo: Dawn Armfield