200.0 million (USD)

Product Line	IFC Investment (million USD)
Risk Management
Guarantee	50.0
Loan	150.0
Equity

* These investment figures are indicative

The Project is expected to: (i) increase the supply of wheat to African millers in the destination countries to produce wheat products; (ii) increase the supply of animal feed (soya bean, corn) to destination countries; (iii) increase technical support from the Group to millers to improve food safety and quality; and (iv) increase (in-kind) financing to millers to ensure continuity in commodity trading. To measure progress against this outcome, IFC will track the: (i) volume of products supplied to customers; and (ii) number of customers reached. The Project is expected to have catalytic effect of stimulating industry-wide best practices in grain trade financing, grain sourcing and processing, and facilitating food quality and safety improvements, moving the sector toward greater competitiveness from domination by large players to more participation by mid-sized players. To measure progress against this outcome, IFC will track the number of private sector banks providing support to the Company (which should increase or at least remain stable).

IFC’s proposed investment consists of a $20 million risk sharing facility with BIC-BRED to increase their available credit facility to $60m for AGRO COMPANIES to finance more trade flows. BIC-BRED had limits on facility size that prevented the Bank from financing large cargoes of wheat and feed at the current (high) price. With IFC, larger financing will be possible. Besides, the company had lost $125m of credit lines in 2019/20 that jeopardized their development. They had to replace this amount with existing and new lenders (including IFC). In addition, IFC’s involvement is expected to contribute to the reinforcement of the Group’s environmental and social practices, in line with IFC’s Performance Standards and industry best practices.

This project has been categorized as an FI-2 in accordance with IFC's Environmental and Social Review Procedure (ESRP). The proposed investment is an unfunded Risk Sharing Facility ('RSF') for BIC-BRED Bank ('BIC-BRED'), a 100% owned subsidiary of BRED Banque Populaire ('BPCE'). The RSF is an uncommitted secured short term trade finance facility to Agro Companies (primarily engaged in commodities trading including wheat, corn, soybean meal (SBM) and Durum and shipping to flour mills in Africa) to finance its working capital needs. The environmental and social risks and impacts associated with the majority of Agro Companies' grain sourcing activities are considered limited (as grain sourcing mostly takes place in Canada, France, Russia, and within consolidated agricultural areas) and the overall project risk is thus considered medium. The identified applicable requirements for this project are IFC Performance Standards (especially PS2/PS6 supply chain requirements), applicable E&S laws in the countries of import and export and the IFC Exclusion List. Based on the use of proceeds for the commodity trade finance, and in compliance with the investment agreement regarding avoidance of sourcing soy from origins and/or regions of production subject to significant conversion of natural habitats leading to biodiversity loss, the project is designed to avoid such E&S risks associated with the soy value chain.

The main E&S risks and impacts derive from the management capacity of the obligor (Agro Company) and of BIC BRED to identify and manage the supply chain risks associated with its sourcing of grains and trade finance respectively. Most of the commodities sourced by the obligor have low to medium level environmental and social risks; for its wheat sourcing (approximately 90% of the commodities sourced), these risks are generally absent. Sourcing soy (which can vary year-by-year depending on customer demand with up to 5% of all commodities sourced in a typical year) from some origins (e.g., Argentina) is associated with higher PS supply chain risks, especially from a PS6 standpoint (as soy production in Argentina is typically from large professional farms which are mechanized, PS2 risk profile of these third-party suppliers is low for child / forced labor and significant OHS risks); GMAP flags soy from Argentina as possibly being associated with high PS6 risks, notably if soy is being sourced from the Gran Chaco Biome, located in northeastern Argentina (https://www.nature.org/en-us/about-us/where-we-work/latin-america/argentina/gran-chaco/ ). To avoid such PS6 risk, Agro Companies only sources soy from recognized soy traders who have publicly committed to a Sustainable Soy Sourcing Policy, comply with national laws, regulations and have put in place their own corporate requirements on no-deforestation or conversion of natural habitats, and publicly disclose their traceability and no-deforestation progress (e.g. https://www.cargill.com/doc/1432192055486/soy-progress-mid-year-report-2021-en.pdf). To ensure avoidance of sourcing in the Gran Chaco Biome, IFC conducted detailed due diligence with regards to the origin of soy purchased by Agro Companies. This additional due diligence confirms that Agro Companies' soy sourcing in Argentina is sourced from consolidated agricultural areas as the only port used to export the soy is located in San Lorenzo. From a logistical standpoint, this location eliminated the economic feasibility of sourcing from the Gran Chaco Biome. In addition, the main soy suppliers to Agro Companies attested that the soy purchased does not originate in those areas subject to deforestation or habitat conversion risk, based on compliance with their respective Sustainability Soy Policy and independently verified through the release of a bi-annual public report. BIC-BRED has an established E&S policy and procedures, including a risk matrix for screening its agro-commodity trade finance, which are well resourced, to avoid and mitigate E&S risks in its investments. Agro Companies has a Health Safety Security and Environment (HSSE) policy and procedures, responsibilities, and tools for undertaking E&S reviews associated with its grain trading activities. As part of its supply chain risk management, risk screening is in place to identify child labor and forced labor from its supply chain. With regard to Agro Companies in general and more specifically the trade flows financed under the facility made available to Agro Companies, BIC-BRED Bank will complement its BRED Group E&S risk review system to deepen the analysis of supply chain risks (such as those associated with PS2 and PS 6) and also enhance its obligor due diligence, monitoring and reporting, especially for high-risk combination (country/commodity combination, such as Argentina/soy). In doing so, BIC-BRED and by default its obligor (Agro Companies) will better align their ESMS in relation to this investment with IFC's PS1 requirements. This is addressed in the ESAP.

Task Title & Description	Anticipated Completion Date
In the frame of the transactions financed under the investment, BIC-BRED Bank will complement its existing E&S Risk Screening System based on IFC’s Performance Standards requirements and technical guidance	09/30/2022