“The sort of bond creates a transparent and clear dedication and incentive for the corporate,” mentioned CFO Adam Karlsson
Attire large H&M Group has issued a EUR500m (US$607m) sustainability-linked bond that’s aligned to targets akin to growing the share of recycled supplies used to 30% by 2025.
Sustainability-linked bonds are new within the bond market. In distinction to inexperienced bonds, the place the funds are linked to particular tasks, sustainability-linked bonds are coupled to the corporate assembly numerous outlined sustainability targets. If these targets are usually not met, bondholders accrue further funds.
In a press release yesterday (18 February), the Swedish attire retailer mentioned the bond has a maturity of eight and a half years, whereas the annual coupon charge is 0.25%.
It added that resulting from a surge in curiosity, the bond was 7.6 occasions oversubscribed.
“For H&M Group, sustainability is an integral a part of our operations. The sort of bond creates a transparent and clear dedication and incentive for the corporate. It is a vital step in our continued work to optimise the corporate’s capital construction, whereas on the similar time offering traders with a possibility to contribute to optimistic transformation of the style trade,” mentioned Adam Karlsson, CFO.
The targets that H&M Group has dedicated to attaining by 2025 are:
- Improve the share of recycled supplies used to 30%.
- Scale back emissions from the group’s personal operations by 20%.
- Scale back absolute Scope 3 emissions from material manufacturing, garment manufacturing, uncooked supplies, and upstream transport by 10%.
“Sustainalytics is of the opinion that the H&M Group Sustainability-Linked Bond KPIs are related and materials to the issuer and that the SPTs are formidable and impactful. The purpose to achieve 30% recycled supplies as inputs is a extremely formidable SPT (Sustainability Efficiency Goal) and represents management within the clothes trade,” mentioned Evan Bruner, venture supervisor, Sustainalytics.
Helena Helmersson, CEO of H&M Group, added: “Our prospects are displaying each day that they recognize H&M Group’s providing with the perfect mixture of style, high quality, value and sustainability.”
She famous the profitable bond challenge is proof that the monetary market additionally values the group’s formidable sustainability work.
The bond shall be listed on the regulated market Euronext Dublin and has been positioned with the help of BNP Paribas, Commerzbank, Danske Financial institution, SEB and Customary Chartered. SEB additionally acted as advisor for the Sustainability-Linked Bond Framework.
A variety of corporations within the attire trade have not too long ago 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 scale back greenhouse gasoline emissions final month.
Whereas VF Cop mentioned yesterday (18 February) it has totally allotted the online proceeds from its inaugural inexperienced bond issued final 12 months, which totalled about EUR493m (US$594.8m), to 13 of the group’s eligible sustainability tasks worldwide.