Biesterfeld ties its ABCP program to sustainability criteria
The Hamburg-based chemical distributor Biesterfeld is tying its ABCP program to ESG criteria. Since summer 2022, the family-owned company has been refinancing its trade receivables via what is probably Germany’s first sustainably oriented ABCP program. The new financing offer, which is based on Biesterfeld AG’s ESG rating, was developed together with Landesbank Baden-Württemberg (LBBW) as the financial partner.
Formed in 1906, Biesterfeld AG is one of the world’s leading distributors of plastics, rubber and specialty chemicals. A rating from Ecovadis provides transparency with regard to the chemical distributor’s sustainability activities. The ESG rating agency conducts an annual analysis of how responsibly Biesterfeld AG acts with regard to the criteria of E for environment, S for social, and G for governance.
For a Schuldschein transaction in 2021, Biesterfeld and LBBW agreed that the margin will be raised if the company’s ESG rating falls by five points. Conversely, a five-point increase in Biesterfeld’s rating will be rewarded with a lower margin. These thresholds will be increased over time. The same logic is now being applied to the ABCP program.
LBBW intends to offer the new option – sustainably structured ABCP programs – to other clients. “If the company already has an ESG rating, this is a simple matter,” says Steffen Bahnmüller, ABCP expert at LBBW. “If not, we will work with them to find a suitable structure.”
Kai Froböse, CFO of the Biesterfeld Group: “We have been growing dynamically for many years along with our suppliers. At the same time, Biesterfeld is wholly family-owned with an extremely solid position and a highly stable financing structure. We have already tied our financing to our sustainability activities with the ESG Schuldschein, and we are now systematically pressing ahead with this approach with the ABCP program.”
Thomas Rogall, Director of Finance and Accounting at Biesterfeld: “Refinancing via ABCP has been a fixed element of our financing strategy for many years. That strategy is quite literally sustainable in the sense that it is structured for long-term solidity. The ABCP transaction using the ‘Weinberg’ platform sponsored by LBBW has been running successfully for some years. As a family-owned company, we think in terms of generations and place great value on combining our economic objectives with ecological and social aspects. That is why we were open to the suggestion of following up the ESG-linked Schuldschein by tying the ABCP program to sustainability criteria.”
Sascha Chevalier, Head of Origination Securitization Trade Receivables at LBBW: “Securitizing receivables via the ‘Weinberg’ ABCP platform is a perfect addition to the financing mix. This is especially true in turbulent times, because it grows dynamically with the receivables and revenue volume and also protects the credit line as an off-balance-sheet instrument. Together with Biesterfeld AG, we are demonstrating how ABCP programs can also be geared toward sustainability criteria. We are confident that many of our other clients will be similarly enthusiastic about this offer.”
ABCP stands for asset-backed commercial papers, i.e. commercial papers that are backed by substantial assets. Specifically, LBBW bundles companies’ outstanding trade receivables in short-term securities known as ABCP via the ‘Weinberg’ multi-seller conduit and places them on the capital market. This gives companies quicker access to their money. The sale of their receivables provides them with liquidity and greater scope for action. As an off-balance-sheet instrument, an ABCP transaction also has a positive impact on individual balance sheet ratios.
ESG stands for environmental, social and governance. Companies are evaluated on ESG criteria, which encompass environmental and social aspects as well as responsible corporate governance. Verifiable key figures are defined in order to make sustainability measurable. This task is increasingly performed by specialist rating agencies that analyze companies annually with regard to a wide range of ESG criteria and their development.