How Smurfit Kappa allocated proceeds from its first green bond

The green bonds were issued in 2021 with €500m maturing in 2029 and the other €500m maturing in 2033.

Smurfit Kappa has this week launched its second annual report on the allocation of its green bond proceeds and the impact of these projects.

This report confirmed that 96% of the proceeds have been allocated to projects related to resource efficiency, waste management and the circular economy.

The business has now reached 76% recycled fibres in its global production range, which mainly consists of corrugated packaging. All of these fibres have been sourced under one of three key certification schemes – the Forest Stewardship Council’s (FSC), the Programme for the Endorsement of Forest Certification (PEFC) or the Sustainable Forestry Initiative (SFI).

Smurfit Kappa has also invested in projects to deliver a 4% reduction in waste sent to landfill on 2020 levels and an 8% reduction in water intake within the same timeframe.

The remaining 4% of green bond proceeds from the €1bn, dual-tranche package have been allocated to initiatives intended to improve supply chain sustainability, with a specific focus on land use and natural resources.

All of Smurfit Kappa’s forestry assets have now been certified by FSC. The firm has also undertaken research to understand the level of CO2 sequestered in its forestry assets, coming back with an estimate of 9.34 million tonnes.

This is more than the annual emissions footprint of Jamaica or Costa Rica.

Smurfit Kappa’s group treasurer Emer Murnane said the company is committed to integrating its sustainability strategy and corporate structure, with green bonds proving to be a key instrument on that journey.

Murnane said: “Through our green finance instruments, we aim to give debt investors the opportunity to invest in truly sustainable business practices, reporting transparently on our ambitious sustainability targets and the progress we are making towards achieving them.”

Green bond boon

Investors pledged $351bn to green bonds issued in the first six months of 2023 – a record high for the first half of any year.

This was positive news following a dip in green and sustainability-linked bond issuance in 2022 for the first time in a decade.

Businesses to have issued green bond packages this year include energy major E.ON (€1.5bn), Allied Irish Banks (AIB) (€750m) and technology giant Intel ($400m).