MERCON

About MERCON

Mercon Coffee Group is a vertically integrated, global coffee supplier committed to delivering high-quality coffee while promoting sustainable livelihoods in coffee-growing communities.

&Green supports Mercon Coffee Group with an 8-year, USD 20 Million credit facility to promote forest protection in sustainable coffee supply chains. This initiative aims to enhance livelihood opportunities for smallholder farmers and improve farm management practice.

Transaction Summary

NAME

Mercon

Jurisdiction

Vietnam

Sector

Coffee

&Green Investment

USD 20 Million

Investment Term

8 years

Financial Structure

&Green provided an 8-year senior unsecured loan

Impact Targets

Approximately 63,000 hectares of forest in the supply chain landscapes

Over 15,000 coffee suppliers engaged in Landscapes

Climate resilient agriculture, knowledge sharing with other farmers, community engagement

INVESTMENT RATIONALE

Mercon is using the loan from &Green to create a blueprint of a climate-resilient and deforestation-free coffee production in Vietnam: improved livelihood opportunities for smallholders and enhanced farm management efficiency.

Mercon is piloting two models: an NDPE approach which aims to mitigate deforestation risks in exports; and LIFT to enhance climate resilience and livelihood impacts in sourcing operations. The NDPE ensures no coffee is sourced from deforestation regions, protecting around 63,000 hectares. LIFT focuses on commercially viable sourcing regions for the company.

The &Green Facility is enabling Mercon to shift from a fragmented system of farm-level capacity building and compliance management to a comprehensive approach. This approach prioritizes climate resilience and forest conservation and may include reforestation activities.

MERCON’s Landscape Protection Plan targets, developed with &Green:

Forest Protection in Vietnam: Mercon aims to source deforestation-free coffee by 2027. To achieve this, they will implement a traceability system, engage stakeholders, and establish MRV mechanisms expecting to conserve approximately 63,000 hectares of forests.

Climate Resilient Agriculture: In LIFT geographies, model farms owned by influential local farmers will showcase climate-smart and deforestation-free agriculture, raising awareness and demonstrating practical benefits. These farms will also monitor climate resilience.

A YEAR IN REVIEW

HIGHLIGHTS IN 2023

Human Rights and Labour Risks

Mercon has created a tool to evaluate the risks associated with engaging in or endorsing unlawful/unethical practices within agricultural value chains. This evaluation focuses on three crucial areas: labour, human rights, and environment. The assessment outcome is a relative rating of risk exposure in these domains at a local (micro) level. This rating is based on data collected from visits to a randomized selection of farms and interviews with various stakeholders including farmers, workers, company personnel, civil society representatives, and other local key informants.

Physical Climate Risk Assessment in Vietnam

A specialized consultancy is conducting a study on physical climate risk assessment and improving the climate resilience of coffee production supply chains in the Central Highlands of Vietnam, in Mercon landscapes. The assessment will cover the climate adaptation scenarios for agricultural practices and trends in natural systems, including description and mapping of key landscape elements affecting coffee production.