StanChart executes first ESG-linked derivative

This is the bank’s first commodity-linked derivative to ESG performance of commodity trading client Trafigura.

Standard Chartered has priced its first commodity hedge linked to environmental, social and governance ESG benchmarks with Trafigura.

The transaction involves combining conventional derivatives risk management with sustainability-linked 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.

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

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