H&M Group issues €500m sustainability bond

The bond has an 8.5-year maturity

The firm, which owns brands including Cos and Monki as well as its namesake H&M, issued the bond late last week and confirmed that it was more than seven times oversubscribed.

The bond has an 8.5-year maturity and H&M Group used BNP Paribas, Commerzbank, Danske Bank, SEB and Standard Chartered as book-runners on the deal. SEB acted as advisor and Sustainalytics provided third-party assessments of the bond’s KPIs.

H&M Group said in a statement that the bond’s proceeds will be used to finance initiatives that deliver progress against key materials and emissions targets. On the former, the firm is striving to increase the share of recycled materials across its whole product portfolio to 30% by 2025. On the latter, H&M group is aiming to reduce operational emissions by one-fifth and Scope 3 (indirect) emissions from raw materials, fabric production, garment manufacturing and upstream transport by one-tenths. These targets also have 2025 deadlines.

The firm’s chief executive officer Helena Helmersson said the bond issue’s success is “proof that the financial market values [its] ambitious sustainability work”.

H&M Group’s longer-term sustainability visions include becoming a “fully circular” business and reaching net-zero emissions. The business has often faced the argument that, if it wishes to meet the former of these commitments, it should transition away from the fast-fashion model that is linked to overconsumption and waste. While a slower approach is visible through brands like Cos and Arket, the focus for H&M itself has been on recycled content and textile recycling.

On emissions, the firm is part of the UN Fashion Charter, along with the likes of Primark, Levi Strauss and Inditex – the owner of Zara. The Charter implores members to chart a path to net-zero across all scopes by 2050 at the latest.

A flurry of sustainable finance announcements

H&M Group is one of several big-name businesses to have issued new financial offerings with sustainability links since the new year.

January saw Asian real estate giant City Developments Limited (CDL) confirming a new green revolving credit facility totalling $470m that will be used to refinance it’s the Republic Plaza commercial property and future low-carbon projects.

Then, last week, Anheuser-Busch InBev (AB InBev) announced what it claims is the world’s largest corporate sustainability-linked loan to date, priced at $10.1bn, while Thai Union announced a new $400m loan package with interest payments linked to climate, sustainability and due diligence targets.

The working week was rounded off by an announcement from EN+ Group’s Metals business, which confirmed that it has raised $200m under a new sustainability-linked pre-export finance facility. The facility’s interest rate is subject to a discount if the business meets its decarbonisation goals; it is notably striving for net-zero by 2050, with an interim target to reduce absolute emissions by 35% by 2030.

For the new facility, Crédit Agricole Corporate & Investment Bank and Natixis acted as Mandated Lead Arrangers. Societe Generale and Natixis also acted as Sustainability Coordinators and Crédit Agricole Corporate & Investment Bank as Sustainability Arranger.

“We are very pleased to sign this new sustainability-linked financing, which again demonstrates the support from the financial community to the Group’s ESG strategy and is part of the continuing momentum we have achieved in our drive to deliver the most sustainable, low carbon aluminium on the market,” EN+ and RUSAL’s deputy chief executive Oleg Mukhamedshin said.

“As demand amongst customers grows for more sustainable and environmentally friendly aluminium, the Group is committed to driving down the carbon footprint of its products and this facility will enable us to further strengthen our ESG credentials.”

Sarah George

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