H&M Group has issued a €500 million sustainability-linked bond with a maturity of 8.5 years. The annual coupon rate of this bond is 0.25 per cent. The bond generated great interest and was 7.6 times oversubscribed. In contrast to green bonds, where funds are linked to specific projects, sustainability-linked bonds are coupled to the company meeting a number of defined sustainability targets.
Through this bond, the H&M Group aims to achieve the following targets: increase the share of recycled materials used to 30 percent; reduce emissions from the Group’s own operations by 20 percent; reduce absolute Scope 3 emissions from fabric production, garment manufacturing, raw materials and upstream transport by 10 percent.
“H&M Group Sustainability-Linked Bond KPIs are relevant and material to the issuer and that the SPTs are ambitious and impactful. The goal to reach 30 percent recycled materials as inputs is a highly ambitious SPT (Sustainability Performance Target) and represents leadership in the clothing industry,” says Evan Bruner, Project Manager, Sustainalytics.
“The successful issue of this bond proves that the financial market also values our ambitious sustainability work and we look forward to working together for a sustainable industry,” adds Helena Helmersson, CEO, H&M Group.
The bond will be listed on the regulated market Euronext Dublin and has been placed with the assistance of BNP Paribas, Commerzbank, Danske Bank, SEB and Standard Chartered. SEB also acted as advisor for the Sustainability-Linked Bond Framework.