Best Sustainable Treasury Solution Winner: Denso International India Pvt Ltd

Published: Jan 2024
Photo of Monica Wu, Citi.

Photo of Monica Wu, Citi.

Kengo Torii

Senior General Manager
Denso International India Pvt Ltd

Denso International India Private Limited was founded in 1999 as the regional headquarters for Denso in India. The company’s business includes sale of automotive components manufactured by companies in India, and is also the technical R&D centre for engineering design and performance evaluation of non-thermal products.

in partnership with

Citi logo

Denso deploys sustainability linked loan in accordance with LMA principles

The challenge

Denso’s entire business is based on the Denso philosophy, and it guides all aspects of all corporate actions. The Denso philosophy aims to ensure it will continue to be a corporation that is trusted by people around the world, by defining its mission, management principles and individual spirit of Denso and establishing “Valuing nature and living harmoniously with society” as one of its management policies. Implementing the Denso philosophy to promote the sustainable development of society is what sustainability means to Denso and it was important to recognise such principles when the company needed to raise finance.

The solution

Three manufacturing subsidiaries of Denso Corporation in India agreed to raise funds through a sustainability linked loan (SLL) for any projects with a positive environmental impact with the goal of promoting its sustainability management and in line with the core elements of Denso. These three companies planned to raise funds in accordance with this framework, which has been verified by Sustainalytics, an independent external consultant.

This framework has been established in accordance with the Sustainability-Linked Loan Principles (SLLP) 2021 as administered by the Loan Market Association (LMA).

The following five components form the basis of this framework:

  1. Selection of key performance indicators (KPIs).

  2. Calibration of sustainability performance targets (SPTs).

  3. Loan characteristics.

  4. Reporting.

  5. Verification.

Since DENSO’s founding, we have had sustainability in mind as reflected in DENSO Creed, as well as DENSO’s basic management philosophies and long-term policies. Under Denso’s Revolution Plan “Reborn21” which is based on the DENSO Group Long-term Policy 2030, we have declared that we would contribute to a sustainable society by providing new value in the fields of environmental protection. We are highly honoured to receive the Best Sustainability Treasury Solution award from Treasury Today Group. This prestigious award substantiates our commitment and strategy towards sustainability. Through this award, we look forward to inspiring automobile and other industries to grow their sustainability agenda globally.

Kengo Torii, Senior General Manager

Best practice and innovation

Denso collaborated with Citi and together they examined multiple flows and finally selected the INR Import Loan and Sales Invoice Discounting as the structure to support Denso’s KPI-linked framework. Both the teams performed detailed due diligence to ensure the entire flow and transaction contributes to sustainable development goals (13 – Climate Action).

Given the larger impact and the complexity of the project, it was important to create a simple and streamlined process with a swift implementation which kept sustainability at its core. Denso and Citi were able to quickly turn around the documentation, process finalisation, product implementation and ESG classification with minimal steps. Denso, in collaboration with Citi, are using an end-to-end digital loan disbursement process to support Denso to drawdown the loan within the same day of request.

Key benefits

  • Contribution to achieve Denso Group’s goal of carbon neutrality (net zero CO2 emissions) by 2035.

  • Process efficiencies and enhanced automation.

  • Future-proof solution.

  • Cost savings.

“We understand the need for ESG in today’s world and to support this cause, we continue to reinforce the mechanisms, processes and structures that embed sustainability and accountability in our business activities.

This solution directly promotes Denso’s comprehensive sustainability targets. It is critical that we develop a resilient corporate structure, which will allow us to respond to changes in the external environment in any age and provide new value.

Denso Group has launched this initiative to achieve carbon neutrality (zero CO2 emissions) by 2035 to achieve our environmental goal of ‘Carbon Neutral Manufacturing’. We have set KPIs for environmental issues, including climate change, as one of the ‘materiality’ issues on our sustainability management, and are consistently working to achieve these goals through our business activities,” says Kengo Torii, Senior General Manager.

Ashish Pandey

Solution Sales, Treasury and Trade Solutions, Citi India

Denso’s objective was to develop a sustainability-linked loan framework that focuses on the reduction of absolute scope 1 and 2 CO2 emissions, including their own emissions and the purchase of renewable energy and energy efficiency. Citi and Denso partnered to develop a framework for KPI Linked Trade Financing, helping Denso to take a big step towards achieving their sustainability goals. Citi also developed an end-to-end digital trade financing solution, which directly contributes to Denso’s Sustainability Framework. Congratulations to the team on this well-earned recognition!

in partnership with

Citi logo

The Adam Smith Awards Asia is the industry benchmark for best practice and innovation in corporate treasury. The 2023 awards attracted 450 nominations. To find out more please visit treasurytoday.com/adam-smith-awards-asia

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