FSC-certified cork improves options for finance

Amorim Florestal (FSC Certificate Holder  and an important forestry business) has partnered with Caixa Geral de Depósitos (CGD, Portugal’s largest bank) to launch the first Environmental, Social and Governance (ESG) operation in the cork sector, reducing the cost of borrowing for sustainable businesses.

ESG measures an organization's sustainability with a set of standards and good practices that define whether a company is socially conscious, sustainable and well managed.

This partnership is aimed at Amorim Florestal's cork suppliers and establishes a line of credit from Caixa Geral de Depósitos that reduces the interest rate that the banks sets when it grants a loan. The reduction is determined by each company’s ESG rating, which includes certification by the Forest Stewardship Council (FSC) as well as the development of ESG and forest management practices.

This is Corticeira Amorim's first supply-chain financing operation, intended to give its suppliers an incentive – lower financial costs -- to adopt good ESG practices.

"In addition to our own operations, we want to create opportunities for suppliers to adopt responsible and sustainable practices. Every year we implement various actions to conserve and expand areas of cork oak forest. These efforts go far beyond the forest areas under our direct management and include forest certification programs, safety at work, technical training, and support for forest owners." says Cristina Rios de Amorim, Director and Chief Financial Officer of Corticeira Amorim.

João Tudela Martins, Director and Chief Risk Officer at CGD adds: "This partnership aims to boost sustainable financing initiatives, providing more favourable conditions for companies that have a good sustainability performance, namely in terms of environmental, social and governance criteria. Caixa is proud to have made this agreement with a major player in the forestry sector in Portugal, promoting sustainable forest management, which is fundamental to mitigating the impact of climate change as an important carbon sink."

By making favourable financing conditions available to companies, this new partnership- encourages them to invest in ESG, with benefits for the environment. Corticeira Amorim understands the importance of its suppliers, and by offering financial benefits can improve sustainability as well as its entire relationship ecosystem. The partnership is a concrete step to preserve forests, particularly cork oak forests, that highlights responsible forest management.

The partnership between Amorim Florestal and Caixa Geral de Depósitos also addresses the commitments of the United Nations Framework Convention on Climate Change (UNFCCC) to promote carbon neutrality and suggestions from the Global Landscapes Forum and the EU Taxonomy to make investment decisions that consider environmental, social and governance factors in addition to financial returns.

Sustainable finance of this kind offers one way to arouse the interest of companies in a green transition. It will encourage management strategies that can further FSC's mission to protect forests around the world.