SK hynix Announces Industry’s Inaugural Sustainability-Linked Bond

SK hynix Inc. announced the successful issuance of a USD 1 billion Sustainability-Linked Bond (SLB).

“The company is highly encouraged by the large-scale investment even during the downturn in the semiconductor industry,” SK hynix said. “We see this as a result of global investors’ trust in the company’s commitment to climate action, along with the prospects of a turnaround in the semiconductor industry later this year.”

Orders from more than 304 institutions worldwide were more than the company had expected, so the total amount of the issuance was raised from USD 500 million to USD 1 billion.

The interest rate on an SLB might fluctuate based on whether the issuer meets predetermined environmental, social, and governance (ESG) management objectives. By 2026, SK hynix intends to cut Scope 1 and 2 greenhouse gas (GHG) emissions intensity by 57% relative to the company's 2020 baseline.

SK Hynix became the first global semiconductor memory manufacturer to issue such a bond after SLB was recently thrust into the spotlight as one of the corporate sustainability management strategies.

Every year, the company intends to transparently disclose its progress toward GHG emission reduction targets in its Sustainability Reporting System (SRS).

After 2026, the company will also keep track of how close it is to reaching the final goal during the first half of the next year and change the interest rates based on that.

Before the issuance, SK hynix received second-party opinions on its predefined ESG objectives from global verification organisations. Moody's and DNV concluded that the company's sustainability performance goal is "ambitious" and that, once reached, it will make a "substantial contribution" to the management of corporate sustainability.

Woo-hyun Kim, Head of Finance at SK hynix, said, “The successful issuance of SLB is seen as a result of global investors’ recognition of the company’s commitment to climate action,” adding the company “will continue to lead ESG management and contribute to increasing both economic value (EV) and social value (SV).”

In the meantime, SK hynix issued a green bond for USD 750 million with SLB. Green bonds are a specific sort of bond that can only be used to finance environmentally friendly projects. With the proceeds from the green bonds, the company intends to invest in eco-friendly projects such as water quality management, energy efficiency enhancement, pollution prevention, and ecological restoration.

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Source: SK hynix