Heidelberg Materials Issues First Sustainability-Linked Bond, with Interest Rates Tied to Industry's Most Ambitious Climate Commitments
As part of the €10 billion EMTN programme, Heidelberg Materials successfully placed its first sustainability-linked bond with an issue amount of €750 million and a term until 2032 through HeidelbergCement AG. At its Capital Markets Day 2022, the company had already announced the issuance of a bond connected to sustainability criteria.
Interest on the bond is linked to the development of specific CO2 emissions per tonne of cementitious material up to 2026 as well as 2030, which are defined as key performance indicators (KPIs) in the Sustainability-Linked Financing Framework. Compared with the base year 2021, Heidelberg Materials aims to reduce specific CO2 emissions by around 30% to 400 kg per tonne of cementitious material by 2030.
"The placement strengthens our goal to reach the most ambitious climate goals in our industry and to increase the share of sustainable financial instruments to over 70% by 2025," said CFO René Aldach. “With the denomination of €1,000, we are the only company on the capital market to date to also offer retail investors the opportunity to invest in sustainability-linked bonds."
The bond's 4.6 times oversubscription indicates the financial market's belief in the Group's sustainability approach. The fixed interest rate on the 10-year Eurobond is 3.75% each year. BNP Paribas, Citigroup, Commerzbank, ING, SEB, and Standard Chartered Bank are the issue's joint bookrunners.
Heidelberg Materials has also been a pioneer in the field of commercial paper since the beginning of this year (CP). The CP programme is also linked to the reduction of specific CO2 emissions per tonne of cementitious material under the Sustainability-Linked Financing Framework's 2026 target.
If the company is unable to cut CO2 emissions within the set time frame and quantity, a donation to the non-profit organisation BirdLife Europe, in addition to an additional annual interest payment, must be provided to support biodiversity.
For more sustainable finance news
Source: Heidelberg Materials