Natura raises R$1.3bn in green bonds

Under the sustainability-linked bonds (SLB) format, the funding included a R$300 million allocation by the International Finance Corporation (IFC) as an anchor investor and another R$200 million by IDB Invest as an impact investor.

The two institutions are the private sector arms of the World Bank and the Inter-American Development Bank, respectively.

The issuance of bonds linked to sustainability goals is expected to bring financial institutions closer to the Amazon population and foster credit granting in the region, according to Silvia Vilas Boas, vice-president of finance and strategy at Natura &Co América Latina. The executive highlighted the partnership with two of the largest multilateral banks in the world.

Natura points out that by bringing banks closer to Amazon producers, goals assessment and monitoring will help institutions improve risk management.

Demand for the debentures, according to Ms. Vilas Boas, was “very high.” She expects the partnership with the two institutions, responsible for 40% of issuance, to improve credit granting in the Amazon region in the medium term. That should come with the increased volume of information to base risk management by financial institutions. The executive points out that the auditing and due diligence process carried out by the IFC and the IDB for granting this type of credit is “very thorough.”

“We have the challenge of ensuring that the funds will reach the end [of the supply chain]. Who can afford a double-digit interest rate? How can a large financial institution grant credit to those with no salary check and no history with the financial market like a company like Natura?” the executive pointed out.

Ms. Vilas Boas also said this is the first Brazilian debenture linked to Amazon bio-actives. The deal was structured in two stages. The company, which has 44 Amazonian bio-inputs in its catalog, must reach 47 ingredients by 2025. By 2027, the goal is to achieve 49 ingredients.

If the company fails to achieve the targets, it should pay a premium to investors, of 0.15 percentage points at the end of the first verification and 0.3 points at the end of the second verification. The interest rate involved in the deal is equivalent to the CDI (the interbank deposit rate, used as an investment benchmark in Brazil) plus 1.2%.

“This is how our business model is designed, which allows us to have sufficient and auditable information to link the indicator to this financial instrument,” Ms. Vilas Boas emphasized.

The targets were announced by Natura in September 2023 as part of the “Visão 2030” program, launched in 2020. Last year, the program was reviewed and expanded after meeting part of the targets. Four years ago, the goal was to work with 34 Amazon communities in the company’s supply chain. The company exceeded that target. It currently works with 41 partner communities. By 2030, the goal is to increase the purchase of Amazon inputs by four.