“This sort of bond creates a transparent and clear dedication and incentive for the corporate,” stated CFO Adam Karlsson.
Garment big H&M Group has issued a € 500 million (US $ 607 million) sustainability-linked bond that’s aligned with objectives akin to growing the proportion of recycled supplies used to 30% by 2025.
Sustainability-linked bonds are new to the bond market. Not like inexperienced bonds, the place funds are tied to particular tasks, sustainability-linked bonds are tied to the corporate assembly a set of outlined sustainability objectives. If these targets aren’t met, the bondholders accumulate further funds.
In an announcement yesterday (February 18), the Swedish clothes retailer stated that the bond has a maturity of eight and a half years, whereas the annual coupon charge is zero.25%.
He added that as a consequence of a rise in curiosity, the bond had an oversubscription of seven.6 occasions.
“For H&M Group, sustainability is an integral a part of our operations. This sort of bond creates a transparent and clear dedication and incentive for the corporate. It is a crucial step in our ongoing work to optimize the corporate’s capital construction, by whereas offering traders with the chance to contribute to the optimistic transformation of the style trade, “stated Adam Karlsson, CFO.
The targets that H&M Group has dedicated to reaching by 2025 are:
- Improve the proportion of recycled supplies used to 30%.
- Scale back emissions from the group’s personal operations by 20%.
- Scale back absolute Scope three emissions from cloth manufacturing, attire manufacturing, uncooked supplies, and upstream transportation by 10%.
“Sustainalytics believes that the H&M Group’s sustainability-linked bond KPIs are related and materials to the issuer and that the SPTs are bold and impactful. The objective of reaching 30% recycled supplies as inputs is an SPT (Sustainability Efficiency Goal ) very bold) and represents management within the attire trade, “stated Evan Bruner, challenge supervisor for Sustainalytics.
Helena Helmersson, CEO of H&M Group, added: “Our clients present every day that they respect the H&M Group providing with one of the best mixture of trend, high quality, worth and sustainability.”
He famous that the profitable bond issuance is proof that the monetary market additionally values the group’s bold sustainability work.
The bond will probably be listed on the regulated Euronext Dublin market and has been positioned with the assistance of BNP Paribas, Commerzbank, Danske Financial institution, SEB and Commonplace Chartered. SEB additionally acted as advisor to the Sustainability Linked Bond Framework.
A number of firms within the garment trade have lately issued inexperienced or sustainability-linked bonds.
UK grocery store retailer Tesco launched a bond that, for the primary time, is linked to the corporate’s dedication to lowering greenhouse gasoline emissions final month.
Whereas VF Cop stated yesterday (February 18) that it absolutely allotted the online proceeds from its inaugural inexperienced bond issued final yr, which totaled round 493 million euros ($ 594.eight million), to 13 of the tasks. Group’s eligible sustainability companions worldwide.