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Suzano considering green-linked bank debt

NEW YORK (From news reports) - Brazilian pulp and paper exporter Suzano Papel e Celulose SA has started discussions with its relationship banks over potential green or sustainability-linked loans, a move that comes as the company looks to reduce its carbon footprint and drive the development of new products from renewable sources.

Suzano, which has already issued green bonds in the capital markets, is one of Latin America's largest producers of printing and packaging paper, and the company is under pressure from stakeholders and lenders to introduce more sustainable measures in an industry not typically known for environmentally friendly business practices.

"We have several relationship banks that are worried about sustainability in our portfolio," Marcelo Bacci, Suzano's chief financial officer, said in an interview on Wednesday. "We want to turn (sustainability) into a point of differentiation for us. This can be in the way of using a structure similar for a green bond into a green loan. This is under discussion and may be used in the future."

Suzano has prioritized the research and development of renewable-based products that could replace fossil-based materials in sectors the company is active in, such as textiles, construction and fuels. Green or environmental, social and governance (ESG) financing instruments, which must align with sustainability-linked loan or green bond principles, is one way the company can fund these investments, according to Bacci.

"We may come up with loans linked to sustainability in some way. The more the bar is raised (by lending banks asking Suzano for more sustainable practices) this is better for us because we have conditions to do more than what they request," Bacci said in the interview held on the sidelines of Suzano's investor day at the New York Stock Exchange.

Interest in green loans has gathered pace among corporate borrowers looking to not only diversify their lender base, but also enhance their reputation with investors and consumers that place a higher priority on sustainability. But unlike Europe, where ESG financing has a longer track record, green loans has been slow to take off in the Americas as companies are yet to gain a deeper understanding of the debt instruments.

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