30.0 million (USD)

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	30.0
Equity

* These investment figures are indicative

By sustaining LAAD's operations, the project supports agribusiness companies in the face of increased financing needs and operational disruptions. By limiting supply disruptions, the project promotes resilience in the export-oriented agribusiness sector more broadly

IFC's additionality is driven largely by our countercyclical role during crises. The IFC's Real Sector COVID-19 Facility component contributes successful experience with rapid crisis response efforts, its set of programs aimed at investing both large scale and transactional liquidity and capital for trade finance and working capital in emerging markets, its ability to support real sector clients to address liquidity constraints in response to COVID-19 and to provide critical goods, equipment and supplies, its ability to help clients re-direct supply chains and its support to continued employment in countries of operation.

Indicator	Metrics	Comments	Calendar Year 2022	Calendar Year 2023	Calendar Year 2024
CORE - E and S Management Systems (Y/N)	Compliance/Enhancement		Not Available	Not Available	Not Available

The proposed investment will support LAAD portfolio under the RSE Covid-19 Emergency Response envelope. LAAD is an existing client with satisfactory E&S performance. E&S risks associated with the supported portfolio are of a moderate nature; therefore, the investment has been categorized as FI-2 in accordance with the Sustainability Framework. LAAD’s portfolio involves medium to long-term transactions (3-7 years) of 700.000 USD on average, to agricultural SME’s that carry potential environmental and social (E&S) risks, such as impacts on biodiversity, resource management, child and forced labor associated with commodity supply chains. As of 2019, LAAD’s largest exposure was to Brazil (15%), followed by Nicaragua and Ecuador (12% each) and Guatemala (9%). Its largest sector exposure is to perennial crops (62%) followed by non-perennial crops (24%) and animal production (9%). For this project, LAAD will need to ensure that all sub-loans are assessed against: (i) the IFC Exclusion List; (ii) the E&S laws and regulations of the countries where it operates; and (iii) the IFC Performance Standards.

The key E&S risks of this project are associated with the capacity of LAAD to implement an Environmental and Social Management System (ESMS) to effectively manage the E&S risks in its portfolio. LAAD finances and develops private agribusiness projects in Latin America and the Caribbean involving all phases of production, processing, storage, services, technology and marketing in the fields of agriculture, horticulture, animal husbandry and forestry. Risks may include child and forced labor, occupational, health and safety risks to workers through agricultural practices, exposures to chemicals without adequate protective equipment, land conversion and habitat fragmentation. The production of soybeans in the Cerrado region and cattle farming in the Chaco region (Paraguay) may have specific E&S impacts including biodiversity, labor and land conflicts. For this investment, higher risk companies will not be eligible, such as those categorized as high-risk (category A), or those involved in: a) involuntary resettlement, b) risk of adverse impacts on Indigenous Peoples, c) significant risks to or impacts on the environment, community health and safety, biodiversity, cultural heritage, or d) significant occupational health and safety risks. LAAD has a board approved ESMS, policies and procedures are adequate to manage potential environmental and social risks. To assess potential deforestation risks, LAAD uses geographic information systems (GIS) software as part of sub-loan appraisal and periodic supervision. The scope of LAAD’s policy includes the IFC Exclusion List, host country laws and the Performance Standards. Further, LAAD has recently adopted a policy that applies to palm oil producers, producers with more than 500 hectares must be certified or have to commit to start the certification process for Roundtable on Sustainable Palm Oil (RSPO), Rain Forest Alliance, Sedex Member Ethical Trade Audit (SMETA 4 Pillars), Global GAP Risk Assessment on Social Practice (GRASP) or other international certification previously agreed with LAAD. Guatemalan palm producers with production areas between 100 and 500 hectares must obtain at least one international social certification, such as SMETA 2 Pillar, Ethical Trading Initiative or other social international certification previously agreed with LAAD. LAAD will not finance projects that involve conversion or degradation of Natural Habitats in accordance with IFC Performance Standard 6 for any of its perennial or annual crops and livestock clients. This FI has a dedicated team of environmental specialists with capacity to assess potential environmental and social risks. As part of its risk management procedures, LAAD implemented an External Communication Mechanism (ECM) for receiving and addressing E&S concerns raised about projects financed by the FI. For this project, LAAD will be required to: (i) enhance ESMS screening tools to assess supply chain and animal welfare risks; (ii) enhance the way occupational, health and safety aspects are documented in appraisal evaluations; (iii) participate in occupational, health and safety training specific to review common occupational, health and safety risks in agribusiness; (iv) remain committed to applying the labor standards established by the IFC Performance Standard 2, Labor and Working Conditions; and (v) submit an annual report to the IFC.

S.no	Title	Anticipated Completion Date	Status
1	Staff Training	03/31/2021	Completed
4	Other1 - Enhance ESMS	03/31/2021	Completed