Mastercard issues $600m sustainability bond to help finance net-zero transition

The new initiative builds on the company’s efforts to get its customers to switch to cards made from recycled, biodegradable and ocean plastics

The business said in a statement that the Sustainability Financing Framework that will be used to allocate bond proceeds has been verified externally by Sustainalytics, in line with the Green Bond Principles, Social Bond Principles, Sustainability Bond Guidelines and Green Loan Principles – all frameworks designed to unify best-practice in this space.

The Framework is designed to advance investment in eleven areas, each relating to one or more of the SDGs. The areas are green buildings; energy efficiency; renewable energy; efficient and circular products, production technologies and processes; pollution prevention and control; sustainable resource and land management; climate change adaptation; the Mastercard Impact Fund; the Covid-19 response; advancing inclusion and equality and commercially sustainable impact. This last area relates to skills, education and support for staff, customers and communities.

Mastercard’s overarching sustainability targets include pledges to bring one billion individuals and 50 million small businesses into the digital economy by 2025 and to reach net-zero emissions across all scopes by 2050. On this latter pledge, the firm has developed Science-Based Targets for 2025, aligned with 1.5C. It has already switched to 100% renewable electricity globally, meaning that major remaining emissions sources include heating, cooling and the supply chain.

Mastercard’s chief executive officer Michael Mielbach said the targets, and the bond designed to support their delivery, were created in recognition of the fact that the business “cannot succeed in a failing world”.

“No matter where you work or live, we are all in the sustainability business; the future of people, our planet and the economy are inextricably linked,” he said.

“To deliver positive social and environmental impact at scale companies need to invest in the technology, insights, and partnerships to make programs commercially sustainable for the long term. Our Sustainability Bond will support both social and green initiatives to drive inclusive and sustainable growth for our company and the communities we serve around the world.”

The new bond has a ten-year period and a fixed rate of 1.9%. It was issued at the same time as a  separate, non-sustainability-related $700m bond, which has a 30-year period.

Last year, edie spoke to Mastercard’s chief sustainability officer Kristina Kloberdanz as part of our ongoing #SustyTalk series of video interviews. You can watch that interview, in which she discusses the need for partnership and collaboration for the SDGs, here.

Green corporate finance

Mastercard 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 its Republic Plaza commercial property and future low-carbon projects.

Then, in February, 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.

Similarly, Premier Inn owner Whitbread priced two major green bonds at £300m and £250m respectively, and  EN+ Group’s Metals business 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.

Fashion giant H&M Group additionally issued a €500m sustainability bond in February and will use proceeds to increase recycled material sourcing and reduce emissions across the business.

There has also been movement in the sovereign green bond space. After successful issuance from nations including Germany and Sweden last year, UK Chancellor Rishi Sunak used this week’s Budget speech to confirm that the UK will issue at least £15bn of green gilts this financial year. Also this week, Italy has issued the largest sovereign green bond to date, priced at €8.5bn.

Sarah George