USAID-Supported Advisory Informs Natural Rubber Sustainability Strategy
FEBRUARY 2, 2023 (BANGKOK) – After partnering with the United States Agency for International Development (USAID) Green Invest Asia project to conduct its first full scope greenhouse gas emission inventory of its supply chain operations across Southeast Asia, Halcyon Agri Corporation (SGX:5VJ), a leading rubber processor and merchant, is upgrading its responsible sourcing policies and practices.
“Beyond meeting climate reporting requirements, our project with USAID lays the foundation for Halcyon’s climate ambitions,” said Li Xuetao, CEO of Halcyon Agri. “Through this partnership, we have tapped on data-driven decisions and further strengthened our internal capabilities. These covered key areas such as prioritizing mitigation efforts, partnering with suppliers on supply chain emissions, and strengthening our value proposition in supporting our customers’ net-zero commitments.”
The rubber market is growing steadily; it is expected to reach a global market size of $50 billion by 2027, driven partly by the persistent demand for automobiles. Tire companies purchase 70 percent of natural rubber produced globally. Halcyon Agri Corporation is a global leader in the integrated natural rubber supply chain, with headquarters in Singapore and most of its production capacity in Southeast Asia, including sourcing and processing operations in Indonesia, Malaysia, and Thailand.
The USAID-supported carbon emission study, conducted by South Pole in 2022, assessed key emissions sources from across Halcyon’s operations and supply chains, identified potential deforestation risks in its major Southeast Asian sourcing areas, and proposed interventions for more efficient, lower-emission supply chains and improved land use. Halcyon continued the study beyond the region to account for its global operations spanning plantations and distribution. The completed global emissions study will be a key step towards its commitment to setting climate mitigation targets under the globally recognized Science Based Target Initiative (SBTi).
Most major international buyers of natural rubber – including Michelin and Nike – have sustainable procurement policies, but complex supply chains remain a challenge for traceability, according to the Global Platform for Sustainable Natural Rubber, a trade group advocating for ways to lower environmental risks linked to natural rubber production.
“Transformation of global rubber supply chains by companies like Halcyon is what’s needed to achieve low-carbon production, boost community livelihoods, and improve supply chain transparency,” said Aaron Brownell, USAID Regional Development Mission for Asia’s Environment Office Director. “Advancing decarbonization through key global supply chains will lay the foundation for future economies and social systems that are less extractive and emission-dependent, and more climate resilient. USAID is committed to working with progressive companies to improve the lives of producers, ensure transparency, and limit temperature increases to 1.5C.”
As part of a syndicated Sustainability Linked Loan of up to $300 million, led by UOB and secured by Halcyon Agri Corporation in June 2022, Halcyon is required to report on its traceable sourcing, along with other indicators. Halcyon’s Sustainable Natural Rubber Supply Chain Policy outlines the importance of tracing the source provenance of raw materials in connection with the trader’s no-deforestation commitment. The loan’s traceability indicator drives Halcyon to better manage deforestation risk and develop long-term targeted interventions..
USAID recently announced programs and targets to increase private investment in climate solutions, including a new Sustainable Banking Alliance to increase the capacity of banks to increase their climate investments, and launch of a Climate Finance Investor Network to facilitate faster engagement with the private sector.
