The supermarket giant Woolworths has become the latest company to tie its financing costs to its sustainability goals, issuing €550 million in sustainability-linked bonds on Friday.
The bonds will primarily be sold to institutional investors in Europe. Reflecting the group’s commitment to reducing carbon emissions a penalty will be imposed if Woolworths fails to meet its scope 1 and 2 emissions targets by the end of 2026.
The group’s F26 emissions will be assessed against its progress towards achieving the group’s 2030 emissions reduction target, aligned with a Paris Agreement scenario of limiting global warming to 1.5 degrees and verified by the Science Based Target initiative.
The notes were priced at a margin of 0.60% over the Euro base rate, and settlement is expected to occur on 16 September 2021. Woolworths will use the proceeds from the notes for general corporate purposes, including establishing long term funding of the group’s recent investments in Quantium and PFD Food Services.
The transaction forms part of the total funding of approximately $1.5 billion that the group is seeking to raise. The company continues to maintain solid investment-grade credit ratings on a stable outlook with both Moody’s (Baa2) and S&P (BBB).
Woolworths Group Chief Financial Officer, Stephen Harrison said: “We’re working hard to materially reduce our carbon emissions by 2030, in line with our contribution to the goal of limiting climate change to 1.5 degrees set by the Paris Agreement. It’s an important part of our broader sustainability strategy and ambition towards creating a better tomorrow. The bond is directly linked to our emissions reduction performance and embeds financial incentives to drive meaningful change, in addition to the clear incentives to do so for the environment and our customers.”