The Body Shop owner raises $1bn for first sustainability bond
Natura & Co, the parent company of the Body Shop and Avon, has issued what it claims is Latin America's largest sustainability bond to date, priced at $1bn.
The firm’s headquarters in Brazil’s Sao Paolo announced this week that the international funding process had been completed. With a seven-year term, the notes for the bond will mature on 3 May 2028.
Funds raised through the bonds will be used to refinance existing debt and the package’s interest coupons will be paid every six months. The sustainability link is that the bond will commits Natura & Co to delivering against its headline goals on climate action and sustainable packaging.
On the former, the company has pledged to reach net-zero by 2030 and set an interim emission to reduce emissions intensity by 13% by 2026, against a 2019 baseline.
On the latter, Natura’s overarching ‘Commitment to Life, Sustainability Vision 2030’ targets full packaging circularity. Targets are in place to reduce packaging weight by one-fifth; ensure that 50% of all plastic used is recycled and to transition to 100% reusable, recyclable or compostable formats.
Environmental performance indicators will be assessed by the end of 2026 and, if progress is insufficient, Natura & Co will need to pay higher fees on the bond. A 65% increase is the potential penalty.
“The strong demand for the securities is a recognition by the market of the Group's solid capacity to deliver social, environmental and financial results,” Natura’s executive chairman and chief executive Roberto Marques said. “Natura already has a long and consistent history of commitment to sustainability and is now taking a step further connecting and aligning financial and environmental targets.”
The name’s Bond. Sustainable Bond.
Following the issuance of $378bn of bonds branded as “green” or “sustainable” in the first quarter of 2021, Nordic bank SEB believes that issuance is likely to exceed $1trn by the end of the year.
$378bn is equivalent to around half of all issuances made between January and March.
In late 2020, SEB’s predictions for issuance in 2021 stood at $750bn.
SEB said in a statement that the low-carbon transition is “gaining pace faster than anyone had anticipated”. While policy, science and public opinion had been changing pre-pandemic, the events of 2020 affected supply and demand in the fossil fuel production and transport sectors. At the same time, the pandemic resulted in a stronger investor and corporate focus on social issues like public health.