Chew's Agriculture signs $27m sustainability-linked loan with DBS

Chew's Agriculture will enjoy lower interest rates if it meets Humane Farm Animal Care standards. This means providing wholesome and nutritious feed to its livestock, having the appropriate environmental design, as well as caring and responsible plan
Chew's Agriculture will enjoy lower interest rates if it meets Humane Farm Animal Care standards. This means providing wholesome and nutritious feed to its livestock, having the appropriate environmental design, as well as caring and responsible planning and management of livestock.ST FILE PHOTO

Egg producer Chew's Agriculture has signed a 10-year, $27 million sustainability-linked loan with DBS Bank, to construct a new farm with larger cage-free facilities.

According to DBS, this is the first sustainability-linked loan for a small and medium-sized enterprise (SME) in Singapore.

The loan will ensure that hens laying eggs on the farm will continue to be housed in optimal conditions - which include larger litter areas and elevated perches, the lender said yesterday.

The egg producer will also enjoy lower interest rates if it meets Humane Farm Animal Care (HFAC) standards. This means providing wholesome and nutritious feed to its livestock, having the appropriate environmental design, as well as caring and responsible planning and management of livestock. It will also need to have "skilled, knowledgeable, conscientious animal care, factors which contribute to more nutritious eggs".

Chew's Agriculture supplies 500,000 eggs a day, 95 per cent of which are distributed in Singapore.

Its loan with DBS was evaluated based on a series of environmental, social and governance (ESG) performance metrics, DBS said.

Said Chew's Agriculture director Edvin Lim: "Through incorporating HFAC standards, we are not only ensuring the well-being of our layer hens, but also improving the quality of the eggs that they produce. It is a win-win solution that definitely sets a new benchmark for how we run our business."

He added that demand for nutritious eggs produced in the right environment has become more important as consumers become more health-and eco-conscious.

For its sustainability-linked loans, DBS said corporates are evaluated based on an annual sustainability review report typically assessed by an external independent party, tracking the performance in terms of ESG criteria.

When borrowers meet or exceed predetermined ESG targets, their interest rates are reduced.

DBS head of SME banking Joyce Tee said the bank expects sustainability-linked financing to increase in the SME sector, especially since these financing options incentivise and reward companies to advance their sustainability agenda.

A version of this article appeared in the print edition of The Straits Times on May 30, 2019, with the headline 'Chew's Agriculture signs $27m sustainability-linked loan with DBS'. Print Edition | Subscribe