Deutsche Post DHL Adopts Sustainability-Linked Finance
Deutsche Post AG
Early on, Deutsche Post DHL Group built sustainability goals into its business strategy. Now, it is tying those goals to its future long-term financial instruments, which shows that it is even more committed to sustainability. The company has established a framework for future sustainability-linked bonds.
Deutsche Post DHL Group established a direct link between its sustainability policy and its financing strategy with its "Sustainability-Linked Finance Framework." The framework allows for the issue of debt instruments (such as bonds), the coupons of which are linked to the Group's aspirational CO2 emissions reduction objective. The interest rates on the sustainability-linked debt instruments may change depending on the Group's progress toward net-zero emissions logistics.
Chief Financial Officer Melanie Kreis said:
"I am very happy about today's announcement, as I truly believe that integrating our sustainability targets into our financing strategy accelerates the green transformation of Deutsche Post DHL Group.
"The Sustainability-Linked Finance Framework is a big step that shows how much we want to reduce our company's carbon footprint for good. Furthermore, our framework is designed to serve as a financial incentive to deliver on our environmental ambitions. This creates trust and transparency for our customers and investors."
Deutsche Post DHL Group will use its absolute annual CO2 emissions as a key performance indicator to figure out how much interest it has to pay on sustainability-linked debt instruments.
In doing so, the Group emphasises the significance of decarbonising the entire logistics sector as well as its commitment to reducing greenhouse gas emissions to less than 29 million tCO2 by 2030.
This emissions target is aligned with the Paris Agreement and was validated and certified through the Science-Based Targets initiative (SBTi) in October 2022. In 2017, the company said its goal was to have net zero emissions from logistics by 2050. As a result, Deutsche Post DHL Group contributes to the Paris climate agreement's aim of reducing global warming to 1.5 degrees Celsius as well as the United Nations' Agenda 2030.
Going forward, the framework can be used for long-term debt issuances. If it doesn't meet its ambitious interim environmental goal by 2030, it will have to pay higher interest rates to investors in its debt. The concrete terms and conditions will depend on individual debt issuances. SEB (Skandinaviska Enskilda Banken AB (publ)) was a consultant during the framework's creation.