Project Details
Project
ARAUCO Sustainable Financing Framework Second-Party Opinion (2024) (English)
Client
Celulosa Arauco y Constitución S.A.
Project Type
Sustainability Bond/Loan
Industry Group
Paper & Forestry
Use of Proceeds
Natural resources/land use management; Conservation; Energy efficiency; Water/waste water management; Pollution prevention and control; Renewable energy; Clean transport; Eco-efficient products; Climate change adaptation; Affordable housing; Access to essential services; Socio-economic advancement;
Location
Chile
Evaluation Date
Nov 2024
Evaluation Summary
Sustainalytics is of the opinion that the ARAUCO Sustainable Financing Framework is credible, impactful and aligned with the Sustainability Bond Guidelines 2021, Green Bond Principles 2021, Social Bond Principles 2023, Green Loan Principles 2023 and Social Loan Principles 2023. This assessment is based on the following:
USE OF PROCEEDS
The eligible categories1 for the use of proceeds include nine green and three social categories that are aligned with those recognized by the Green Bond Principles, Social Bond Principles, Green Loan Principles and Social Loan Principles. Sustainalytics considers that investments in the eligible categories will lead to positive environmental or social impacts and advance the UN Sustainable Development Goals, specifically SDGs 3, 4, 6, 7, 8, 9, 11, 12, 14 and 15.
PROJECT EVALUATION AND SELECTION
ARAUCO has established a Sustainable Finance Coordination Group that will review and select the projects in line with the Framework’s eligibility and exclusionary criteria. ARAUCO’s CFO is the chair of the group, which also comprises members from the Company’s Finance, Sustainability, Environment and Legal departments. ARACUO’s Finance Department will ultimately approve the final allocation of all proceeds. The Company’s internal policies and due diligence processes will be used to evaluate and address environmental and social risks commonly associated with the financed projects. This is in line with market practice.
MANAGEMENT OF PROCEEDS
ARAUCO’s Finance Department will oversee the management of proceeds, and an equal amount to the net proceeds will be tracked using internal systems, which will contain a database of relevant project information. ARAUCO commits to complete allocation within 60 months of issuance. Pending allocation, proceeds will be temporarily invested in cash, cash equivalents or other capital management activities in accordance with ARAUCO’s investment policies or used to repay a portion of outstanding debt. Sustainalytics considers this to be in line with market practice.
REPORTING
ARAUCO commits to report annually on the allocation of the net proceeds of all issuances, as well as the corresponding impact of the financed projects, in a Sustainable Instrument Financing Report on ARAUCO’s website. This is in line with market practice.