Tesco launches sustainability-linked bond of £400m

Tesco has today launched its second sustainability-linked bond 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 a second sustainability-linked bond further demonstrates the strength of our commitment to reduce our impact on the environment by reaching our target of reducing GHG emissions by 60% by 2025 (against a 2015/16 baseline).

The sterling bond has a coupon of 1.875% and a 7-year maturity. This follows the issuance of Tesco’s first sustainability-linked bond in January 2021 and the establishment of a £2.5bn revolving credit facility in October 2020, 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%[1] reduction in Group GHG emissions against a 2015 baseline, as well as sourcing 100%¹ of electricity from renewable sources. In July 2021, we launched a new windfarm in partnership with ScottishPower Renewables to provide clean energy to power the equivalent of 20,000 homes and representing a major step towards powering Tesco stores directly from renewable sources.

The bond will be aligned to Tesco’s 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.

Imran Nawaz, CFO, Tesco said: “I am delighted that we have issued our second sustainability-linked bond, further demonstrating our commitment to achieving our climate change targets, especially in the run up to the COP26 climate conference next week. We are proud to be making good progress on our journey to be net zero in our operations by 2035 and by linking our financial strategy to this target, this further cements our ambition”.

Ends

 Enquiries:

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 to refinance the upcoming maturity in February 2022 (£417m).

This bond received very strong support, with investor demand in excess of £1.2bn, highlighting the depth of support for Tesco and its sustainability strategy.

Tesco was advised by Citi, HSBC, Lloyds & NatWest Markets (B&D), Freshfields Bruckhaus Deringer LLP and Allen & Overy LLP.

 Sustainability-Bond Framework

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. 

Climate Change

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 2035. To reach these targets, Tesco is prioritising its own operations emissions hotspots, including refrigeration, heating and transport with prog

[1] On a continuing operations basis