German Firm Secures Bond Funding from Japanese firms for Plastic Waste Reduction : Henkel Concludes 5-year $70m Plastic Waste Reduction Bond
Düsseldorf based diversified product manufacturer, Henkel, has become “the first company globally” to conclude a plastic waste reduction bond.
The company said that to achieve this it has combined attractive corporate financing instruments with progress in sustainability to conclude the bond, a private placement with Japanese insurance companies Dai-ichi Life and Dai-ichi Frontier Life, which will be specifically allocated to projects and expenditures related to Henkel’s activities to reduce plastic waste. The bond has a total volume of $70 million and a maturity of five years.
The plastic waste reduction bond underlines Henkel’s commitment to foster a circular economy and reduce plastic waste and hence to Sustainable Finance. At the same time, it provides the opportunity for additional learnings from financial products which include sustainability features. In 2018, Henkel was the first company in Germany to conclude a syndicated ‘Sustainability linked Loan’, a credit facility linked to Henkel’s performance in three independent sustainability ratings.
Sustainability targets
“Sustainability is not only firmly embedded in our strategic framework for the future but also increasingly relevant for investors and the financial markets,” said Henkel CFO Marco Swoboda. “We are proud to be the first corporate issuer of a plastic waste reduction bond, once more demonstrating our ability to conclude innovative sustainable investment instruments at attractive terms. By linking financing concepts to our plastic waste reduction initiatives, the Finance team shows its continuous commitment to actively contributing to our sustainability agenda.”
“Plastic waste is one of the biggest environmental challenges globally. We have reaffirmed our clear commitment to accelerate our sustainability actions and are working towards ambitious targets for reducing plastic waste and fostering a circular economy,” added Sylvie Nicol, Member of the Henkel Management Board responsible for Human Resources and Sustainability. “This plastic waste reduction bond is a strong signal of our conviction that especially in times like these, in midst of the current COVID-19 crisis, we need to step up our efforts to promote sustainable solutions and concepts across the whole organization and along the entire value chain.”
“Dai-ichi Life has been promoting ESG investments and actively investing in green and social bonds. This is the first-ever corporate bond to have proceeds exclusively allocated to plastic waste reduction. As the bond is being issued by a manufacturer, the impact goes directly into the supply chain where Henkel is developing more sustainable packaging solutions, for example by increasing the amount of recycled plastic,” commented Kenjiro Okazaki, General Manager, Global Fixed Income Investment Dept. at Dai-ichi Life. “We expect the plastic waste reduction bond to contribute to fostering a sustainable economy and reducing plastic waste.”
Initiatives and partnerships
The bond proceeds will contribute to finance key projects and activities in line with Henkel’s packaging targets for 2025. By then, 100% of the company’s packaging will be recyclable or reusable*, the amount of fossil-based virgin plastics will be reduced by 50% and Henkel wants to help prevent waste from being disposed in the environment.
Next to developing sustainable packaging solutions, Henkel is engaged in several partnerships and cross-industry initiatives that aim to drive innovation in packaging development and the transition towards a circular economy. For example, the company is a founding member of the Alliance to End Plastic Waste (AEPW) and partner of the Plastic Bank.
HSBC acted as Green Structuring Advisor and Lead Manager on this transaction.
No further financial details of the transaction were disclosed.
