SC prices its first ESG-linked derivative

Standard Chartered has announced that it has priced its first commodity hedge linked to ESG benchmarks with Trafigura.

The bank says the transaction involves combining conventional derivatives risk management with sustainability-linked key performance indicators that are linked to reducing greenhouse emissions and to sustainable sourcing in the base metals business. It 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.

Sharad Desai, Global Head of Financial Markets Sales at Standard Chartered, said: “We are committed to getting capital to where it is needed to help our clients achieve their sustainability goals, and ESG-linked derivatives are among a number of solutions that we offer them. We’re proud to structure this first ESG-linked derivative transaction for Trafigura to help them execute both on risk management and su