GWFP Mercon 2021 (IFC-45105)

Regions
  • Latin America and Caribbean
Geographic location where the impacts of the investment may be experienced.
Countries
  • Brazil
  • Guatemala
  • Honduras
  • Nicaragua
  • Vietnam
Geographic location where the impacts of the investment may be experienced.
Financial Institutions
  • International Finance Corporation (IFC)
International, regional and national development finance institutions. Many of these banks have a public interest mission, such as poverty reduction.
Project Status
Proposed
Stage of the project cycle. Stages vary by development bank and can include: pending, approval, implementation, and closed or completed.
Bank Risk Rating
B
Environmental and social categorization assessed by the development bank as a measure of the planned project’s environmental and social impacts. A higher risk rating may require more due diligence to limit or avoid harm to people and the environment. For example, "A" or "B" are risk categories where "A" represents the highest amount of risk. Results will include projects that specifically recorded a rating, all other projects are marked ‘U’ for "Undisclosed."
Voting Date
Apr 25, 2021
Date when project documentation and funding is reviewed by the Board for consideration and approval. Some development banks will state a "board date" or "decision date." When funding approval is obtained, the legal documents are accepted and signed, the implementation phase begins.
Borrower
MERCON B.V.
A public entity (government or state-owned) provided with funds or financial support to manage and/or implement a project.
Sectors
  • Agriculture and Forestry
  • Industry and Trade
The service or industry focus of the investment. A project can have several sectors.
Investment Type(s)
Loan
The categories of the bank investment: loan, grant, guarantee, technical assistance, advisory services, equity and fund.
Investment Amount (USD)
$ 60.00 million
Value listed on project documents at time of disclosure. If necessary, this amount is converted to USD ($) on the date of disclosure. Please review updated project documents for more information.
Primary Source

Original disclosure @ IFC website

Updated in EWS Apr 26, 2021

Disclosed by Bank Mar 25, 2021


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Project Description
If provided by the financial institution, the Early Warning System Team writes a short summary describing the purported development objective of the project and project components. Review the complete project documentation for a detailed description.
Project Description

 The proposed investment consists of a participation of US$60 million by IFC in a two-year revolving credit facility (the “Facility”) in favor of Mercon Coffee Group (“Mercon”), with an option for an additional year. The facility aims at supporting Mercon’s activities across the coffee sector value chain from production and storage in IDA countries of origin in Central America (Nicaragua, Honduras) and other producing countries (Brazil, Guatemala, Vietnam) to transportation and commercialization in multiple destinations. This project prioritizes improving farmers’ access to markets and finance, provision of technical expertise, and climate-smart considerations.

Mercon is a vertically integrated coffee company. Its footprint encompasses all segments of coffee value chains, from (i) upstream Robusta production on four farms of a total of 1,644 hectares (ha), including 600 ha of forest conservation area in the Atlantic region of Nicaragua;  (ii) midstream operations, including 22 wet and dry mills of which six are under Mercon’s own management, plus warehousing, in countries of origin; (iii) downstream coffee sourcing and trading operations in ten countries through which Mercon sources raw green coffee beans from more than 9,000 third-party suppliers and distributes coffee to consumers in 40 countries.

                                                  

Overview of IFC's Scope of Review

IFC’s environmental and social (E&S) review of the proposed investment included a virtual meeting in March 2021 with Mercon’s Director for Latin America Operations, Sustainable Production Manager, Strategic Planning and Sustainability Manager, Environment, Occupational Health and Safety (EHS) Manager, Sustainability analyst, Human Resources (HR) Director, and the Chief of Security and was supported by a review of Environment, OHS, Stakeholder Engagement Policies, Farm and Supplier Codes, draft EHS Standard Operating Procedures (SOPs), environmental permits and licenses, and preliminary result of EHS and supply chain risk assessment. IFC previously supported Mercon’s and in this context IFC’s review also drew on monthly meetings held with Mercon since July 2020 to monitor the development of the company’s sustainability framework; Site Supervision Visits (SSVs) of Mercon feed mills in Nicaragua (El Carmen), Honduras (CIGRAH) and Vietnam (Mercafe mills) undertaken in January / February 2020, and an earlier visit to San Carlos mill (Nicaragua).

IFC’s appraisal also used the Global Map for risk assessment and management of Agro-Commodities Production (GMAP) for high-level E&S risk screening associated with coffee production in all countries of origin, the Integrated Biodiversity Assessment Tool (IBAT) to screen for negative impacts on critical habitats from current farming production and sourcing operations (using GPS coordinates of farms or coffee post-harvest centers and a 50 km radius around the coffee mills, representing the coffee beans’ catchment areas (especially in Nicaragua and Brazil as pre-financed sourcing), the Global Forest Change (University of Maryland, Department of Geographical Sciences) - https://earthenginepartners.appspot.com/science-2013-global-forest) to assess habitat conversion adjacent to areas of coffee sourcing in all countries of origin. This biodiversity review confirmed that coffee production and sourcing in all origins are in consolidated agricultural lands and/or not located in recently deforested areas, although Guatemala, Honduras and Vietnam are considered “high-risk” for future deforestation. IFC’s Gender-Based Violence (GBV) risk screening tool was also used to screen for GBV risk in Nicaragua. The U.S. Department of Labor ILAB Sweat and Toil app was used to screen for exploitative labor practices in countries of origin.

Due to limitations arising from the COVID-19 emergency, IFC has been unable to visit any of Mercon’s operations since February 2020.  Once travel restrictions are lifted, IFC will conduct a field visit, and as needed, update this ESRS and the E&S Action Plan (ESAP) accordingly.

IFC previously supported Mercon in 2019. The ESRS prepared in advance of that investment may be reviewed at:  https://disclosures.ifc.org/project-detail/ESRS/42454/gwfp-mercon-2019.

Investment Description
Here you can find a list of individual development financial institutions that finance the project.
Private Actor 1 Private Actor 1 Role Private Actor 1 Sector Relation Private Actor 2 Private Actor 2 Role Private Actor 2 Sector
- - - - Mercon Coffee Corporation Client Industry and Trade

Contact Information
This section aims to support the local communities and local CSO to get to know which stakeholders are involved in a project with their roles and responsibilities. If available, there may be a complaint office for the respective bank which operates independently to receive and determine violations in policy and practice. Independent Accountability Mechanisms receive and respond to complaints. Most Independent Accountability Mechanisms offer two functions for addressing complaints: dispute resolution and compliance review.

ACCESS TO INFORMATION

You can submit a request for information disclosure at: https://disclosures.ifc.org/#/inquiries

If you believe that your request for information from IFC has been unreasonably denied, or that this Policy has been interpreted incorrectly, you can submit a complaint at the link above to IFC's Access to Information Policy Advisor, who reports directly to IFC's Executive Vice President.

ACCOUNTABILITY MECHANISM OF IFC/MIGA

The Compliance Advisor Ombudsman (CAO) is the independent complaint mechanism and fact-finding body for people who believe they are likely to be, or have been, adversely affected by an IFC or MIGA- financed project. If you submit a complaint to the CAO, they may assist you in resolving a dispute with the company and/or investigate to assess whether the IFC is following its own policies and procedures for preventing harm to people or the environment. If you want to submit a complaint electronically, you can email the CAO at CAO@worldbankgroup.org You can learn more about the CAO and how to file a complaint at http://www.cao-ombudsman.org

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