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 .

Thai Union launched a series of Sustainability-Linked Loans/Bonds equivalent to USD$800 million in 2021, with the details shown below.

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).

Sustainalytics was appointed as an independent party to provide a second-party opinion on the KPIs and alignment to the Sustainability-Linked Loan Principles. Each KPI will be verified by external organizations to ensure a fair and independent evaluation.

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.