BLUE FINANCE

“Thai Union has placed sustainability at the heart of our business and, with our global sustainability strategy, SeaChange® since 2016 and now entering its next phase with the goal to support the target on “Healthy Living, Healthy Oceans”.

In 2021, we were very pleased to launch these sustainability-linked financings, including the firstever sustainability-linked bond in Thailand and our inaugural sustainability-linked loans in Thailand and in Japan, which very warmly welcomed by the markets. Together, they reaffirm our commitment to driving meaningful change, not only in our own operations,but in the industry as a whole. The recognition from financial institutions of Thai Union’s sustainability initiatives is a testament to the hard work and success we have seen since the launch of SeaChange®, and demonstrates the growing, global focus on ethicalbusiness and investors’ desire to support companies that are truly seeking to make a difference.

In 2023, Thai Union will announce a major update to SeaChange® with new goals and new commitments through to 2030. This will include actions across a wide range of topics to address such as the decline in biodiversity, tackling climate change, ensuring endangered species are protected, important ecosystems are restored and that natural resources are managed sustainably.

(covering sustainable finances issued in 2020-2022 with a target of increasing sustainable finances 50% of TU’s long-term financing by 2022)

Launching a series of sustainability-linked financings was a major step Thai Union implemented in 2021 to move from traditional financing toward Blue Finance — financing for projects that benefit the oceans, and the seafood industry as a whole.

Sustainability-Linked Financings are a type of financing instrument for which the financial and/or structural characteristics can vary depending on whether the issuer achieves predefined sustainability/ESG objectives. This type of Blue Financing represents another way we can work with our partners in the financial community on products that help ensure we continue to preserve the oceans that are vital not only to our business, but also the planet, while providing healthy and nutritious products that health-conscious consumers globally are demanding.

Interest rates for Sustainability-Linked Loans (SLLs)/Sustainability-Linked Bonds (SLBs) are linked to Key Performance Indicators (KPIs) and Sustainability Performance Targets (SPTs) around sustainability, with achievements leading to the borrower being rewarded with a reduction in interest rates. For Thai Union, these KPIs include maintaining the Company’s consistently high rankings in the S&P Global Dow Jones Sustainability Indices (DJSI); achieving the Company’s Greenhouse Gas (GHG) reduction targets; and increasing oversight in Thai Union’s international supply chains through an increase in the use of electronic monitoring (EM) and/or human observers onboard tuna vessels1 .

1 Electronic monitoring (EM) systems aim to address fishing industry issues such as improving working conditions on vessels and combating Illegal, Unreported and Unregulated (IUU) fishing—a major threat to the sustainable use of marine resources, the diversity of marine ecosystems, and the protection of labor rights. Addressing IUU fishing is part of UN Sustainable Development Goal (SDG) 14, Life Below Water.
Thai Union launched a series of Sustainability-Linked Loans/Bonds equivalent to USD$800 million in 2021, with the details shown below.
Our Blue Finance Portfolio Details
Sustainability-Linked Loan # 1/2021
  • 5 yrs unsubordinated unsecured THB and USD Sustainability-Linked Loan issued in Thailand, dated 21 Jan. 2021, THB 4,550 mil. and USD 65 mil.
  • 5 yrs unsubordinated unsecured USD and JPY Sustainability-Linked Loan issued in Japan, dated 4 Feb. 2021, USD 150 mil. and JPY 3,400 mil.
Sustainability-Linked Bond #1/2021
  • 7 yrs unsubordinated unsecured THB Sustainability-Linked Bond issued in Thailand, dated 20 Jul. 2021, THB 5,000 mil.
Sustainability-Linked Bond #2/2021
  • 5 yrs unsubordinated unsecured THB Sustainability-Linked Bond issued in Thailand, dated 10 Nov. 2021, THB 4,500 mil.
  • 10 yrs unsubordinated unsecured THB Sustainability-Linked Bond issued in Thailand, dated 10 Nov. 2021, THB 1,500 mil.
Sustainability-Linked Loan # 2/2021
  • 5 yrs unsubordinated unsecured JPY Sustainability-Linked Loan issued in Japan, dated 9 Dec. 2021, JPY 14,000 mil.

With a strong commitment to environmental, social, and governance practices through our SeaChange® program, Thai Union’s Sustainability-Linked Financing Framework describes the alignment of the Company’s business and sustainability objectives and strategies to support its commitment to “Healthy Living, Healthy Oceans”. It also demonstrates how the Sustainability- Linked Bonds/Loans are set to follow the principles announced by the International Capital Market Association (ICMA) or Loan Management Association (LMA).

Sustainability-linked Financing Framework

Year 2022
File size 519 KB
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Sustainability-linked Financing Framework

Year 2021
File size 418 KB
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Sustainalytics was appointed as an independent party to provide a second-party opinion on the KPIs and alignment to the Sustainability-Linked Loan Principles (SLLP), Sustainability-Linked Bond Principles (SLBP) and other Principles & Standards. Each KPI will be verified by external organizations to ensure a fair and independent evaluation.

SPO on TU Sustainability-Linked Loan (SLL#1)

Year 2022
File size 506 KB
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SPO on TU Sustainability-Linked Loan (SLL#2)

Year 2022
File size 507 KB
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SPO on TU Sustainability-Linked Loan (SLL#2)

Year 2021
File size 2.32 MB
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SPO on TU Sustainability-Linked Bond (SLB#1 and SLB#2)

Year 2021
File size 549 KB
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SPO on TU Sustainability-Linked Loan (SLL#1)

Year 2021
File size 271 KB
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To show our strong commitment to improving the Company’s Environmental, Safety, and Governance (ESG), Thai Union selects to be included in the Dow Jones Sustainability Index (DJSI) Emerging Markets and ranking in the top 10 companies for the DJSI Food Products Industry Index as the Key Performance Index (KPI)/Sustainability Performance Target (SPT) # 1.

KPI/SPT # 2 is to reduce Thai Union’s Scope 1 and Scope 2 carbon emissions from manufacturing operations by 4 percent annually (carbon intensity) from a 2019 baseline. This is to reflect our strong focus on Climate Change.

For KPI/SPT#3, Thai Union has also set a target to increase the percentage of tuna purchased from vessels equipped with electronic monitoring and/or human observers from a 71 percent baseline in 2021 to 100 percent in 2025. This will help improve the monitoring and surveillance of Thai Union’s wild-caught tuna supply chains, whether electronically and/or through the use of human observers at sea.

Commitment and Actual Delivery
Sustainablilty targets linked to our Blue Finance portfolio

3 Sustainability KPIs/Targets to be TESTED over the lift of financing tenors

KPI1: DJSI Emerging Markets and DJSI Food Products Industry Index Family
Improvement KPIs Actual
As of 2020
Under SeaChange® commitment, TU has been included in DJSI for 7 consecutive years, and ranked no. 1 or no. 2 during such period. TU targeted to be included in DJSI and ranked top 10 in DJSI Food Industry.
As of May 2023
Under SeaChange® commitment, TU has been ranked number one in the world in the food industry on the Dow Jones Sustainability Indices (DJSI) 2022. The company has now been listed for 9 consecutive years on the DJSI.
KPI2: Carbon Intensity of Finished Goods
Note: Thailand Greenhouse Gas Management Organization (TGO) emissions factor Change in Mar. 2021 leading an average of 5% higher GHG emission
Improvement KPIs Actual
We had already achieved 28% reduction from 2016 to 2020 to reduce by 4% annually on scope 1 & 2 carbon intensity As of May 2023
We have already achieved and got 0.61 t CO2 eq/ t FG
KPI3: Percentage of tuna vessels outfitted with an electronic monitoring (EM) and/or human observers on board
Improvement KPIs Actual
To increase the percentage on tuna vessels with Electronic Monitoring and/or human observers. The SPTs had been revised for SLL#1 (onshore) and SLL#2 in 2023. To better reflect revised baseline estimation from actual audited number and year-round auditing. This is clearly new initiative to improve tuna sourcing sustainability and traceability. The 2021 audited number is 71% and we can improve to 79% in 2022 audited number.

Thai Union has set a target to convert from traditional financing to Blue Finance for 50 percent of its long-term financing portfolio by 2022. The Company aims to increase to this to 75 percent by 2025.

Sustainable Finance Target

on Long-term Financing (USD 1.4bn or THB 45bn)

To achieve such an ambitious target, Thai Union launched a series of Sustainability-Linked Loans/Bonds equivalent to USD$800 million in 2021, with the details of the testing period as shown below.

For any securities issued under the Framework, after completion of the testing period, the adjustment of the step-up and/or step-down coupon will be made in the next coupon payment until the next testing period and coupon adjustment cycle.

Calendar year Issued Maturity 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031
Sustainability
Linked Loan # 1
Jan
2021
Jan
2025
Testing
period
Testing
period
Testing
period
Testing
period
Testing
period
- - - - - - -
Sustainability
Linked Bond # 1
Jul
2021
Jul
2028
- No
testing
No
testing
Testing
period**
No
testing
No
testing
Testing
period
No
testing
No
testing
- - -
Sustainability
Linked Bond # 2
(5-Year tranche)
Nov
2021
Nov
2026
- No
testing
No
testing
Testing
period**
No
testing
No
testing
No
testing
- - - - -
Sustainability
Linked Bond # 2
(10-Year tranche)
Nov
2021
Nov
2031
- No
testing
No
testing
Testing
period**
No
testing
No
testing
Testing
period
No
testing
No
testing
No
testing
No
testing
No
testing
Sustainability
Linked Loan # 2
Dec
2021
Dec
2026
- Testing
period
Testing
period
Testing
period
Testing
period
Testing
period
- - - - - -
Announcement of testing results May
2021
May
2022
May
2023
May
2024
May
2025
May
2026
May
2027
May
2028
May
2029
May
2030
May
2031
May
2032
Remark:**SPTs will be tested for such testing year and will have impact to the coupons of the bonds untill next testing period

SUSTAINABILITY COMPLIANCE CERTIFICATE (SLB#1_2564_TU287A)

Assessment Year : 2023

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SUSTAINABILITY COMPLIANCE CERTIFICATE (SLB#2_2564 Series 1_TU26NB)

Assessment Year : 2023

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SUSTAINABILITY COMPLIANCE CERTIFICATE (SLB#2_2564 Series 2_TU31NA)

Assessment Year : 2023

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(covering sustainable finances issued in 2023-2025 with a target of increasing sustainable finances 75% of TU’s long-term financing by 2025)

Nov 2023 - Thai Union secures THB11.5 billion Sustainability-Linked Loan to underpin phase two of their Blue Finance program

Our Blue Finance Portfolio Details
Sustainability-Linked Loan # 1/2023
  • 3 yrs unsubordinated unsecured THB and USD Sustainability-Linked Loan issued in Thailand, dated 28 Nov 2023, THB 4,220 mil. and USD 43 mil.
  • 5 yrs unsubordinated unsecured THB and USD Sustainability-Linked Loan issued in Thailand, dated 28 Nov 2023, THB 4,070 mil. and USD 47 mil.

Sustainability-linked Financing Framework

Year 2023
File size 1010 KB
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DNV was appointed as an independent party to provide a second-party opinion on the KPIs/SPTs and alignment to the Sustainability-Linked Loan Principles (SLLP), Sustainability-Linked Bond Principles (SLBP) and other Principles & Standards. Each KPI/SPT will be verified by external organizations to ensure a fair and independent evaluation.

SPO on TU Blue Finance #2

Year 2023
File size 675 KB
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KPI SPT
KPI 1
Dow Jones Sustainability Index (DJSI): Food Products Industry Index Family
To be ranked in the top 5% companies for the DJSI Food Products Industry Index as per S&P Yearbook.
KPI 2
Absolute Scope 1 and Scope 2 GHG emissions

Reduction of 42% by 2030 from 2021 baseline

2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
Base 4.0% 8.0% 12.0% 17.0% 22.0% 27.0% 32.0% 37.0% 42.0%
KPI 3
Absolute Scope 3 GHG emissions

Reduction of 42% by 2030 from 2021 baseline

2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
Base 0.0% 0.0% 0.0% 0.0% 2.5% 7.5% 15.0% 27.0% 42.0%
KPI 4
% of Shrimp volume purchased (kg) under GSSI Recognized Certifications or AIP

% shrimp purchasing volume responsibly sourced through a credible AIP or a certification to increase to 100% by 2030

2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
Base 49% 57% 66% 75% 83% 89% 100%

AIP: Aquaculture Improvement Project, GSSI: Global Sustainable Seafood Initiative

Commitment and Actual Delivery
Sustainablilty targets linked to our BLUE Finance #2 Portfolios

4 Sustainability KPIs/SPTs to be TESTED over the lift of financing tenors

SPT 1: To be ranked in the top 5% companies for the DJSI Food Products Industry Index as per S&P Yearbook.
SPT 2: Reduction of absolute GHG Emission under Scope 1 and 2 by 42% by 2030 from 2021 Baseline.
SPT 3: Reduction of absolute GHG Emission under Scope 3 by 42% by 2030 from 2021 Baseline
SPT 4: 100% of shrimp purchasing volume (kg) is responsibly sourced through a certification that has been benchmarked by GSSI and is stated as GSSI Recognized or a credible AIP by 2030