“This kind of bond creates a transparent and clear dedication and incentive for the corporate,” mentioned CFO Adam Karlsson
Attire big H&M Group has issued a EUR500m (US$607m) sustainability-linked bond that’s aligned to targets comparable 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 initiatives, sustainability-linked bonds are coupled to the corporate assembly plenty of outlined sustainability targets. If these targets aren’t met, bondholders accrue further funds.
In an announcement 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 on account of a surge in curiosity, the bond was 7.6 instances oversubscribed.
“For H&M Group, sustainability is an integral a part of our operations. This kind 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 chance to contribute to optimistic transformation of the style trade,” mentioned Adam Karlsson, CFO.
The targets that H&M Group has dedicated to reaching by 2025 are:
- Enhance the share 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, 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, challenge supervisor, Sustainalytics.
Helena Helmersson, CEO of H&M Group, added: “Our prospects are exhibiting each day that they admire H&M Group’s providing with the very best mixture of trend, 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 might be listed on the regulated market Euronext Dublin and has been positioned with the help of BNP Paribas, Commerzbank, Danske Financial institution, SEB and Normal Chartered. SEB additionally acted as advisor for the Sustainability-Linked Bond Framework.
A variety of firms within the attire trade have just lately issued inexperienced or sustainability-linked bonds.
UK grocery store retailer Tesco launched a bond that, for the primary time, is linked to the company’s commitment to reduce greenhouse gas emissions final month.
Whereas VF Cop mentioned yesterday (18 February) it has fully allocated the net proceeds from its inaugural green bond issued final 12 months, which totalled about EUR493m (US$594.8m), to 13 of the group’s eligible sustainability initiatives worldwide.