Can Barry Callebaut Attract Sustainable Investment with its 'Forever Chocolate' Strategy?
| Case Code: FINC135 Case Length: 22 Pages Period: 2016-2018 Pub Date: 2018 Teaching Note: Available |
Price: Rs.500 Organization: Barry Callebaut Industry: Chocolate Countries: Global Themes: International Marketing, International Marketing Mix, Sustainable Finance |
Abstract Case Intro 1 Case Intro 2 Excerpts
Introduction
In June 2017, ING Group (ING) issued a syndicated loan facility to Barry Callebaut (Callebaut) with the interest rate of the facility coupled to its sustainability performance and rating. The move was in line with Callebaut's sustainability strategy 'Forever Chocolate', targeting 100% sustainable chocolate by 2025. Forever Chocolate aimed to address the four biggest sustainability challenges in the chocolate supply chain – child labor, farmer poverty, its carbon and forest footprint, and sustainable sourcing. In its future chocolate plan, the company strove to scale up its own, besides promoting industry efforts to raise industry standards. By committing itself to sustainability ambitions, the company not only ensured availability of financial resources, but successfully linked the tenure of the credit facility and interest rate to its sustainability performance. The company was confident that it could reach its sustainability goals and make sustainable chocolate the norm by 2025. However, the company’s unsteady financial performance for years presented a dismal picture. Industry observers raised questions on whether Callebaut could go along with its sustainability commitments and continue attracting funds to achieve its Forever Chocolate objectives in the long run. Since the tenure of the credit facility and interest rate is linked to its sustainability performance, if the requirements are not met would Callebaut be forced to put less emphasis on social and environmental sustainability in the future?
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