Tesco launches first sustainability-linked bond of €750m
20 January 2021
Tesco has launched a bond that, for the first time, is linked to the Company’s commitment to reduce greenhouse gas emissions.
Tesco was the first business globally to set a zero-carbon goal in 2009 and later the first FTSE 100 Company to set science-based carbon reduction targets on a 1.5-degree trajectory. The launch of our first sustainability-linked bond further demonstrates the strength of our commitment to reduce our impact on the environment and become a net zero carbon business in the UK by 2035.
The €750m bond with a 0.375% coupon offers an 8.5-year maturity and is the first bond of its kind to be issued by a retailer. It is an important step in setting tangible incentives for our environmental and social performance and follows the announcement in October 2020, that Tesco established a £2.5bn revolving credit facility, with interest linked to the achievement of three ambitious environmental targets.
The bond is aligned to an agreed Sustainability Performance Target (SPT) of reducing Scope 1 and 2 Group Greenhouse Gas (GHG) Emissions by 60% by 2025 against Tesco’s 2015 Baseline.
As we work towards our targets, we have already achieved a 50% reduction in Group GHG emissions against a 2015 baseline as well as sourcing 97%1 of electricity from renewable sources. In November 2020, we announced a partnership with Low Carbon to create three new solar farms and introduced a new fleet of electric delivery vehicles in London as part of our plan to go fully electric by 2030.
The bond will be aligned to Tesco’s newly introduced Sustainability-Bond Framework, which follows the ICMA Sustainability-Linked Bond principles, and has been independently assessed by Sustainalytics.
Tesco has always taken a transparent approach to reporting progress and targets for environmental and sustainable goals. Our Little Helps Plan captures the approach we take to be a responsible and sustainable business and enables us to demonstrate, monitor and improve our performance, both within our own operations and in the wider supply chain.
Alan Stewart, CFO, Tesco said:
“I’m delighted that we have issued our first sustainability-linked bond. Linking our financial strategy to our long-term commitment to tackle sustainability is an important step in ensuring that this commitment is embedded across all our business operations and ensures we are driving continuous improvement. We are proud to be making good progress on our journey to be a net zero carbon business in the UK by 2035 and for the entire Group by 2050.”
Investor relations Chris Griffith +44 (0) 1707 940 900
Media Shona Buchanan +44 (0) 330 678 0639
Notes to Editors:
Tesco has issued this bond specifically to repurchase existing bonds.
This bond received very strong support, with investor demand in excess of €5bn, highlighting the depth of support for Tesco and its sustainability strategy.
Tesco is a member of the A4S CFO Network and more recently the UN Global Compact Chief Financial Officers Taskforce.
Tesco was advised by BNP Paribas, Citi, MUFG, RBC Capital Markets (B&D), Freshfields Bruckhaus Deringer LLP and Allen & Overy LLP.
The Sustainability-Bond Framework and Sustainalytics Second Party Opinion is available on Tesco PLC here: https://www.tescoplc.com/investors/debt-investors/sustainability-linked-financing/
Little Helps Plan
The Little Helps Plan sets out how Tesco will make a positive difference to its customers, colleagues and communities, suppliers, shareholders and the environment and is the framework through which it shapes its long-term approach to sustainability.
As part of the business’ commitment towards carbon neutrality, it has published clear milestones in carbon emissions reduction in its own operations: -35% by 2020, -60% by 2025, -85% by 2030 and -100% by 2050. To reach these targets, Tesco is prioritising its own operations emissions hotspots, including grid electricity, refrigeration, heating and transport with progress so far ahead of schedule.