11 August 2020
A sustainability-linked trade facility to fund a unique VIVE end to end sugar supply chain
This week marks a key milestone in VIVE’s progress as we have completed the world’s first fully sustainable sugar supply chain, from producer to end user. The trade moved 50,000 metric tonnes of sustainably sourced sugar, valued at almost USD$16 million, in a cross-sector collaboration providing hope for a more sustainable future.
When The VIVE Programme was first created in 2015 as part of Czarnikow’s initiative to incorporate sustainability into supply chains and become industry leaders in creating a more sustainable future, it was designed to be able to deliver exactly this. We identified a need to go further than a simple focus on sustainable sourcing at the agricultural level: we felt a responsibility to encompass the entire supply chain and design-in traceability.
This trade has been made possible by the collaborative effort of VIVE Programme participants, who through their involvement in the programme have demonstrated a commitment to sustainability and have passed third party verification.
The sugar was sourced from Santa Terezinha mill in Brazil, who since joining the programme have embraced VIVE’s emphasis on continual improvement and have improved their farm and facility scores year on year. Exporting 100% of their production, Santa Terezinha have firmly established themselves as a leading supplier of raw sugar to the world’s standalone refineries.
The sugar was shipped from Brazil to Malaysia by The China Navigation Company Pte Ltd, who have recently become the first shipping company to enrol in VIVE. In the face of current challenges within the shipping and logistics space brought about by Covid-19, CNCo has committed to making shipping sustainable. They are founder members of the Sustainable Shipping Initiative and the Ship Recycling Transparency Initiative and have a dedicated sustainable development team.
OCBC Bank, is the second largest financial services group in Southeast Asia with more than 500 branches in 19 countries and regions, financed the trade with a sustainability-linked trade facility which made it viable and attractive for all partners to be able to participate. This creates a ‘pull through’ effect and allows players at all stages of the supply chain to be granted commercial advantage. This is essential in any large collaboration and will in turn create greater demand for sustainable sugar in the future, driving continuous improvement and encouraging similar trades to occur in future.
Upon arrival in Malaysia, the sugar is refined by Central Sugars Refinery Sdn Bhd refinery in Malaysia who have been longstanding participants in the VIVE Programme and have achieved the VIVE excellence level. The VIVE Programme and Central Sugars Refinery Malaysia have entered into a VIVE 25 Impact Agreement. VIVE 25 is an inclusive initiative launched by the VIVE Programme that seeks to foster relationships and benefit supply chain participants both upstream and downstream. Central Sugars Refinery Malaysia will commit to sourcing at least 50% of their annual raw sugar requirements for their two refineries from VIVE claim level producers by 2025. By participating in this trade they will go some way to meeting this target, which Czarnikow is proud to support.
The sugar was purchased by a Fraser & Neave for conversion into end products across Asia. Fraser & Neave are a major manufacturer of soft drinks in the Asian market and are a member of the Buyers Supporting VIVE Programme, which enables large multinationals to encourage sustainable practice.
In some sectors, products which are marked sustainable have seen a 150% increase in sales in recent years. Smaller players are encouraged by large MNCs, who are also part of the VIVE network, in a ‘pull through’ effect that opens market opportunities to those for whom sustainability is a new priority. The VIVE Programme is set to be the industry model on what happens when all partners work together to commit to fully to sustainable trade.
It can be seen then that this trade has demonstrated the ability of VIVE to engage participants at all stages of a supply chain, and to facilitate global trade that meets sustainable requirements, encourages continual improvement and brings financial incentive to sustainable development. This is the first of what we hope will be many similar trades in future.
Increased consumer demand for sustainable product is driving producers to create it, leading to an environmental, social and commercial advantage in the commodities sector. Ben French, Senior Trader at Czarnikow responsible for the expansion of The VIVE Programme in Asia says; “The ongoing COVID-19 pandemic has reinforced our principle that sustainable production and supply chains are critical for food security, business resilience, transparency and social and environmental responsibility. It is therefore imperative that sustainable development is built into the foundations of businesses as we gradually emerge from the pandemic.”
To find out more about how the programme can support your business, get in touch today.