Trafigura has stopped tying pricing to sustainability targets on its flagship European, Asian and Japanese credit facilities, ending a practice that had set it apart from most of its large energy trading rivals.
The Singapore-based commodity trader previously structured all its main revolving credit facilities (RCFs) as sustainability-linked loans, but ended the practice this year, according to recent deal announcements and a person familiar with the matter.
A US$5.8bn European RCF and a facility arranged in the Japanese market, both announced in March, were the first to drop sustainability-linked pricing. Altogether, the three RCFs account for just over US$9.8bn of Trafigura’s available credit from its lenders.
Sustainability-linked loans provide borrowers with margin discounts if they meet agreed key performance indicators, such as reducing emissions or adopting labour safeguards.
The structures – underpinned by principles from the Loan Market Association – mushroomed across trade and commodity finance in the late 2010s and early this decade, but have become more complicated as lenders push borrowers towards bolder targets and regulators scrutinise deals for potential greenwashing.
Trafigura began making its RCFs sustainability-linked in 2021, with targets focused on reducing Scope 1 and 2 emissions, growing its renewable power portfolio and implementing a set of voluntary principles on security and human rights.
A person familiar with Trafigura’s strategy said the trader had moved away from the model partly due to its complexity and because banks held different views on what constituted “ambitious” targets. Trafigura declined to comment.
Of its main energy trading rivals, only Gunvor continues to publicly disclose the use of SLL structures for its borrowing facilities, GTR analysis found. A spokesperson for the trader said: “Gunvor’s main unsecured facilities are still sustainability-linked but they are annually reviewed.”
Glencore, Mercuria and Vitol have never disclosed any borrowing tied to sustainability metrics.
The picture is also mixed across other major commodity finance borrowers.
In soft commodities, Louis Dreyfus Company uses sustainability-linked pricing for all its committed RCFs, which totalled US$4.6bn at the end of 2025.
China’s Cofco also uses SLL structures for some of its credit lines, including a social-focused US$435mn Standard Chartered deal announced last month.
Bunge made one of its RCFs sustainability-linked in 2019. Deal documentation filed with a US regulator last year showed the US$3.5bn facility contained a sustainability option but that the targets had not yet been agreed with lenders. Bunge did not respond to questions about the facility.
Singapore-headquartered Wilmar has used sustainability-linked structures in loans with Standard Chartered and Bank of East Asia, as recently as 2024, but it is unclear if they have been renewed. A spokesperson declined to comment.
Agri-commodities rival Olam signed a sustainability-linked loan for its food ingredients subsidiary in 2023. Nut a spokesperson said the structure wasn’t continued when the facility was renewed, although added that “sustainability‑linked facilities are part of our overall debt mix”.
A ‘matured’ market
Overall, the frenzy of SLL arrangements that took place several years ago has since cooled as the market has matured and regulatory scrutiny has increased.
“There definitely is a bit of a retrenchment taking place where these things are being used more rarely and more selectively,” said A&O Shearman partner Greg Brown.
The size and liquidity needs of large traders mean credit lines are usually provided by a large syndication pool. Participating lenders sometimes disagree on how ambitious the sustainability targets should be, Brown said.
Sustainability linkage has become less popular in Europe, as it “has got more costly and complex to administer”, the London-based lawyer added – partly because banks “have a real fear of greenwashing” and outside scrutiny of the deals. However, interest in green and transition loans has grown, Brown noted.
At the same time, some borrowers have held back from publicising the sustainable structures of some deals because of anxiety over greenwashing, said Catherine Lang-Anderson, an A&O Shearman partner.
In 2023, the UK’s Financial Conduct Authority said it had “market integrity” concerns that lenders were not insisting on ambitious targets or meaningful penalties for missed KPIs. But last year, the regulator confirmed it was seeing “better practice and more robust product structures”.
The market for sustainable loans experienced a “turning point” in 2023, according to HFW partner Jason Marett, who has advised participants in commodity finance SLLs.
“Since then, we’ve moved into a more mature phase of the market where documentation is more robust and SLLs are more credible as a result, but that comes with a greater focus on KPI calibration, verification and overall discipline in how these facilities are put together,” the Geneva-based lawyer said.
“We’re still seeing SLLs in the market. We’re seeing them carefully structured, with targets carefully set, and with a stronger focus on third party verification”.
Last year, the International Chamber of Commerce released sustainable trade finance principles designed to help lenders in the absence of internationally agreed rules or standards.
Marett said that guidance may be filtering down to banks and affecting how they adapt SLL mechanisms to commodity lending.
