Unlocking the potential of sustainability-linked loans in agrifood
Despite a broader slowdown in sustainability-linked loan (SLLs) volumes, the agrifood sector remains a notable exception. For agrifood companies, SLLs offer a relevant way to finance transition where it matters most: across operations, supply chains and day-to-day practices. By linking financing conditions to measurable performance across complex value chains, they provide a flexible tool to support a sector whose transformation depends less on large-scale green investments than on changes in practices, sourcing and operations.
Insights by Vincent Nobilet, Managing Director Agribusiness, Trade & Sustainable Commodity Finance at Societe Generale.
Agrifood systems play a critical role in the global economy, representing approximately 12.8% of global GDP while accounting for more than 30% of total human-induced greenhouse gas emissions(1).
Beyond significant physical impacts of climate change on the sector, agrifood players face increasing pressure on multiple fronts: deforestation, biodiversity loss, supply chain transparency, and social challenges such as labor conditions and farmers’ income levels. These issues are now central to corporates’ strategies and financing needs.
At the same time, agrifood stands out in the sustainable finance landscape. Between 2017 and 2023, it accounted for around 5% of global SLL issuance, compared with only 3% of conventional lending, highlighting its relative attractiveness for sustainability-linked structures(1).
Why SLLs fit agrifood: from Capex to Opex transformation
One of the defining characteristics of agrifood is the limited role of large, identifiable green Capex projects. Assets are highly granular and investments often fragmented, making traditional green loans less suitable.
Instead, the transition largely relies on changes in operating practices: improving agricultural techniques, reducing waste, enhancing traceability, or strengthening sustainable sourcing policies. A significant portion of these transformations is embedded in operating expenditures (Opex), rather than discrete investments.
In this context, SLLs provide a particularly relevant framework. By linking financial terms to sustainability performance rather than to the use of proceeds, they enable companies to embed sustainability targets across their entire operations and supply chains.
They also allow for tailored KPIs that reflect the diversity of agrifood systems, from greenhouse gas emissions and water use to deforestation-free sourcing or human rights across value chains.
Limitations and growing scrutiny
Despite their alignment with the best practices of the sustainability-linked loan market, SLLs face increasing scrutiny.
The first challenge relates to KPI credibility. Market participants are placing greater emphasis on ensuring that sustainability targets are material, ambitious, and properly verified, in order to mitigate greenwashing risks.
Second, access to SLLs remains concentrated among large corporates. The need for robust data systems and established sustainability frameworks can exclude smaller agrifood companies, despite their potential for impact.
An evolving SLL structure
Two recent transactions illustrate this evolution.
Societe Generale co-arranged a USD 1.2 billion borrowing base facility for ED&F Man Commodities, in which we acted as Global Sustainability Coordinator, Active Bookrunner and Mandated Lead Arranger. The transaction was recently converted into an SLL, by incorporating sustainability performance indicators aligned with the company’s commitments on decarbonization, deforestation-free sourcing in coffee and sugar supply chains, women empowerment in local farming communities, and biodiversity restoration.
Societe Generale also co-arranged a EUR 2 billion borrowing base facility for Barry Callebaut, backed by cocoa inventories and indexed to market conditions. Designed to adapt to cocoa price volatility and support liquidity needs, the facility also incorporates sustainability performance indicators aligned with Barry Callebaut’s commitments on decarbonization, deforestation-free cocoa and human rights in its direct supply chain.
By combining commodity financing with sustainability-linked features, these inaugural SLLs illustrate the positive momentum of those instruments in the agrifood space and how financial innovation can support sector transition.
Unlocking the full potential of SLLs in agrifood
SLLs are therefore not just a financing product, but a potential bridge between sustainable finance and tangible on-the-ground transformation. Their full potential in agrifood will depend on making them more accessible beyond large corporates, supported by credible KPIs, proportionate verification and practical assistance for borrowers still building their sustainability capabilities.
While greenhouse gas emissions, water use, impacts on nature, and waste reduction remain central, agrifood value chains also raise material social and governance issues, from farmer livelihoods and labour conditions to traceability and responsible sourcing. Integrating these dimensions, where relevant and measurable, would make SLLs more closely aligned with the systemic nature of agrifood transformation.
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