Henkel, which owns Persil and numerous other brands, has defined a framework within which sustainable bonds can be placed in the future.
This includes two possible forms of financing – the issuance of sustainability-linked bonds as well as green bonds.
Sustainable Finance Framework
With the 'Sustainable Finance Framework', Henkel aims to create a direct link between its sustainability strategy and funding strategy.
For sustainability-linked bonds, financing costs are linked to the achievement of sustainability targets, while the proceeds from the issuance of green bonds will go into sustainable investments.
The framework was reviewed by the independent ESG rating agency ISS ESG, which confirmed the environmental added value and the compliance of the framework with the Green Bond and Sustainability-Linked Bond Principles of the International Capital Market Association (ICMA).
Henkel CFO Marco Swoboda stated, "Sustainability is an essential part of our strategic agenda for purposeful growth. In addition, the topic is also becoming increasingly important for investors and the global financial markets, and in this respect is becoming a critical success factor for competitiveness as an issuer.
"With the integrated framework for the issuance of sustainable bonds that has now been established, we are consistently expanding our commitment to sustainable finance and once again position Henkel as a pioneer in this field. The framework allows us to access sustainable financing quickly and flexibly and opens up a broader investor target group. At the same time, it underscores our commitment to achieving our sustainability targets and the ongoing commitment of the Henkel Finance team to actively support our sustainability agenda.“
For the issuance of sustainability-linked bonds, Henkel has defined three different KPIs and specific targets relating to the two focal areas of energy/climate and materials/waste.
The selected KPIs are core to Henkel’s business and reflect progress against the company’s sustainability targets.
Depending on the achievement of the targets, the interest terms of the bonds change.
The proceeds from the issuance of a green bond will be used to finance sustainable projects.
Projects eligible for financing include, for example, the areas of circular economy, clean transportation, sustainable water and wastewater management, or renewable energies.
Henkel implemented innovative solutions in the area of Sustainable Finance at an early stage.
In 2018, Henkel concluded a syndicated ‘sustainability-linked loan’ – a credit facility linked to Henkel’s performance in three independent sustainability ratings – which it said was a first in Germany and the world in its sector.
In July 2020, Henkel became the first company worldwide to issue a plastic waste reduction bond, the proceeds of which are specifically allocated to projects and expenditures to reduce plastic waste.
© 2021 European Supermarket Magazine. Article by Conor Farrelly. For more Retail news, click here. Click subscribe to sign up to ESM: European Supermarket Magazine.