Fund for sustainable rubber production

The Tropical Landscapes Finance Facility (TLFF) announced its inaugural transaction, a landmark US$ 95 million Sustainability Bond to help finance a sustainable natural rubber plantation on heavily degraded land in two provinces in Indonesia. The project incorporates extensive social and environmental objectives and safeguards. The planted areas will serve as a buffer zone to protect a threatened national park from encroachment. 

 

The multi-tranche Sustainability Bond, arranged by BNP Paribas (BNPP) and issued by TLFF I Pte Ltd, will fund PT Royal Lestari Utama (RLU), an Indonesian joint venture between France's Michelin and Indonesia's Barito Pacific Group for climate smart, wildlife friendly, socially inclusive production of natural rubber in Jambi, Sumatra and East Kalimantan provinces. This is the first corporate sustainability bond in Asia and the first sustainability bond in ASEAN.

 

The project involves collaboration with WWF, which has worked with Michelin and RLU to set aside remaining High Carbon Stock (HCS) and High Carbon Value (HCV) forests in the RLU concessions, as well as critical wildlife conservation and riparian areas. Out of a concession area of 88,000 hectares, roughly 45,000 hectares will be set aside for community livelihoods and conservation. 

 

In Jambi Province, the two concession areas held by RLU and two WWF concessions form a contiguous buffer zone protecting the Bukit Tigapuluh National Park, which is one of the last places in Indonesia where elephants, tigers and orangutans co-exist. At maturity, the natural rubber plantation is expected to provide approximately 16,000 fair-wage jobs, providing a critical source of employment for local communities.

 

This transaction marks the first corporate sustainability bond in Asia and the first sustainability bond in ASEAN.