Co-op issues £300m bond supporting Fairtrade movement

The issuance is the first in a series of planned green re-financing initiatives for Co-op Group

The five-year bond will be used to finance initiatives aimed at reducing water poverty and delivering low-carbon technologies across developing nations. It will also pay for farmers and their families in these regions to receive an education.

Co-op, meanwhile, will use the net proceeds of the bond to expand and promote the selection of responsibly sourced, Fairtrade-certified products it sells across its UK and US stores.

The bond will mature in May 2024, with a predicted annual interest rate of 5.125%. Proceeds will be issued in sterling.

The Co-op Group’s chief executive Steve Murrells claims that the company’s green bond framework has been designed in line with the UN’s Sustainable Development Goals (SDGs) and said that the new bond underlines its “unique focus on a better way of doing business which delivers real benefits for members, communities and investors”.

“The popularity of this bond demonstrates confidence in our growth strategy and in particular how we’ve placed sustainability at the heart of our future plans,” he said.

“We remain committed [to Fairtrade] while other retailers continue to pull back or develop alternatives. We know that Fairtrade is the gold standard and other alternatives are just confusing customers.”

In 2017, the Co-op became the first UK retailer to sell and use only Fairtrade cocoa in own-brand products. The Co-op has partnered with the Fairtrade Foundation to create a new sourcing model, which has seen more than 200 Co-op products switch to 100% Fairtrade cocoa, and also sells Fairtrade tea, coffee and bananas, among other lines. 

The name’s Bond. Green Bond.

Amid growing concerns that the next financial crash is likely to be climate-related, the global market for green bonds is growing exponentially. It grew by a staggering 78% between 2016 and 2017, with national and institutional investors funnelling more than $150bn into low-carbon projects.

This boon has been widely attributed to the corporate issuance of bonds, with the likes of Verizon, Apple and Unilever having all issued multi-million pound green bonds in recent times. A further key driver has been the rise of specialist funding, such as the European Investment Bank’s (EIB) Sustainability Awareness Bond, which is designed to boost capital market and private sector transparency for climate-related risks and opportunities, and various blue bonds for ocean conservation.

Nonetheless, green bonds still account for just 2% of the global bond market, according to HSBC. Moreover, financial experts at Nordic bank SEB, have predicted that global green bond issuance could “plateau” at 2017 levels next year.

Sarah George