Deutsche Bank Executes Asia’s First FX Forward Using ESG KPIs

The German lender partnered with Olam International to close the FX forward.

Deutsche Bank announced this week that, alongside Olam International, it has executed the first foreign exchange (forex) derivative linked to environmental, social, and governance (ESG) key performance indicators in Asia.

In particular, the ESG-linked FX forward, which is the Thai Baht/US dollar currency pair, executed on Thursday by the German lender allows Olam to lock-in a discount when it meets pre-defined ESG targets which supports the United Nations Sustainable Development Goals (SDGs).

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Commenting on the product, Deutsche Bank Head of Fixed Income and Currencies and Corporate Bank APAC and Chief Country Officer Singapore, David Lynne, said in the statement: “Supporting our clients’ transformation towards sustainability is a key plank in Deutsche Bank’s strategy. Deutsche Bank aims to lead the industry by creating innovative ESG financial solutions to accelerate the adoption of sustainable practices by our clients across the world.

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Deutsche Bank aims to lead in sustainability 

Olam is a major food and agri-business company, headquartered in Singapore. The announcement this week comes as part of Deutsche Bank’s continued commitment to sustainability, the German lender said on Thursday.

The new FX risk solution combines the requirement to hedge the forex risk that comes from growing crop in one country and then selling it to another country, as well as supporting Olam’s program to strengthen supply chain sustainability.

“Olam is delighted to partner with Deutsche Bank to implement Asia’s first ESG FX solution,” added Olam’s Managing Director and Group CFO, N Muthukumar in the statement.

“This innovative facility provides us with a hedge on our currency risk exposure and enables Olam to lock-in a discount when we meet pre-set ESG targets that are aligned with our sustainability strategy and the United Nations Sustainable Development Goals. This is yet another way we are living our Purpose of reimagining global agriculture and food systems.”

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