Project detail - Bacao SAS

Who is our prospective customer?

Andean Cacao GmbH’s vision is to catalyse change to the cacao sector by proving a scalable sustainable production model (productive, profitable, eco-friendly, and inclusive) that can satisfy the growing need for regenerative and carbon-neutral cacao. Bacao SAS, the main Colombian subsidiary, was created in 2016 and owns approximately 5000 hectares. It will develop approximately 3800 hectares of cacao using best-in-class agriculture design and practices, of which approximately 879 hectares already planted. The company is backed by strong complementary shareholders (including a leading chocolate manufacturer) which uniquely positions the company for success through an advantageous long term off-take agreement and the sharing of industry-leading experience, know-how, and innovations in cacao farming, plant science and agronomy.

What is our funding objective?

FMO and IFC will jointly provide USD 50 mln in debt financing to the project. Funds will be used to complete the investments in the approximately 3800 hectares of plantations and related infrastructure and to cover the negative cashflow from operations during the scale up of the project.

Why do we want to fund this investment?

This project aligns with FMO's ambitions to: i) support leading commodity off-takers to further integrate complex value chains like cacao; ii) satisfy the growing need for regenerative and carbon-neutral cacao; iii) support a project intended to demonstrate that cacao can be produced profitably and sustainably, spurring further commercial investment into primary production; and iv) support the wider cacao sector in Colombia by supporting clusters of smallholders with access to market and technical assistance.

What is the Environmental and Social categorization rationale?

This concerns an E&S B+ categorized investment, as the company engages in primary production of cocoa beans (own operations and a supply chain) which comes with potential adverse environmental or social impacts that are beyond the site boundaries and might in part be irreversible, although they can be prevented and addressed through relevant mitigation measures. E&S characteristics of this specific investment include assessment of the land acquisition process, history of the land and no deforestation, production practices and use of agrochemicals, labour and accommodation conditions, organizational Health and Safety, biodiversity, and pollution risk management. ESG performances will be focused on the assessment and management of these risks by incorporating Sustainable Agriculture Practices, Good International Industry Practices, including World Bank Group (WBG) Environmental, Health and Safety (EHS) General Guidelines. This will guide the company’s efforts to design and implement mitigants consistent with the unique characteristics of the country of production, the local population, and existing biodiversity. FMO’s environmental and social due diligence indicates that the investment will have impact which must be managed in a manner consistent with the following IFC Performance Standards in particular: PS 1 – Assessment and Management of Environmental and Social Risks and Impacts, PS 2 – Labor and Working Conditions PS 3 – Resource Efficiency and Pollution Prevention, PS 4 – Community Health, Safety and Security, and PS 6 - Biodiversity Conservation and Sustainable Management of Living Natural Resources. The following Performance Standards - PS 5 Land Acquisition and Involuntary Resettlement, 7 Indigenous Peoples and 8 Cultural Heritage - are not applicable to this project in this period, as the land has been acquired through willing buyer-willing seller transaction, and no impact on Indigenous Peoples, nor cultural heritages has been identified. FMO will periodically review the project’s compliance with the Performance Standards

More investments

Date	Total FMO financing
5/20/2023	USD 15.00 MLN