Link maker

Finance chiefs urge more companies to link debt to sustainability goals

A group of CFOs from major international companies are urging their peers to better link their companies’ financing to corporate sustainability goals.

CFOs of 60 companies, including brewer Anheuser-Busch InBev HER,

energy company Enel SpA and telecommunications company Verizon Communications Inc.

this week pledged to tie around half of their corporate funding, including corporate bond issuance, to environmental, social or governance objectives by 2025. That figure was 27% end of 2020, according to the group.

CFOs are members of a task force formed in 2019 to support the United Nations Sustainable Development Goals, which include tackling climate change and ending poverty. The announcement came during the United Nations General Assembly this week in New York.

Members of the task force also pledged to invest $500 billion in projects that advance the UN’s Sustainable Development Goals by 2025. The group expects this amount to increase as he is trying to recruit new members for the group.

“The idea is to broaden the group to ensure that it is as representative as possible of a wider set of companies, sectors and countries,” said Fernando Tennenbaum, chief financial officer of AB InBev. .

Several members of the task force, including Enel, UK grocery chain Tesco PLC and Swedish fashion retailer H&M Hennes & Mauritz AB, have recently issued sustainability bonds. Unlike green bonds, which must be used for designated environmental projects, sustainability bonds can be used for general purposes. Bond interest rates adjust based on whether or not a company meets a set of predetermined sustainability goals.

The sustainability bond market has grown over the past year, alongside a broader rise in ESG debt issuance. Companies have raised $49.7 billion in sustainability bond proceeds so far this year, up from $3.6 billion in the same period a year earlier, according to Refinitiv, a provider of sustainability bonds. data.

AB InBev plans to add sustainability objectives to its next corporate bond issue, Tennenbaum said. He declined to provide details on when the beverage company might raise funds. AB InBev took out a $10.1 billion sustainability loan earlier this year. The five-year revolving credit facility includes pricing that adjusts based on the achievement of targets related to improving water efficiency and increasing the use of renewable energy.

“Given what we’ve learned for our sustainability-linked loan and the expertise we’ve gained, it makes perfect sense to do the same with our bonds,” Tennenbaum said.

The CFO Working Group works with its members on defining its own sustainability goals as well as developing case studies of how companies are integrating ESG goals into their operations and capital markets activities , the members said.

Scott Mather, chief investment officer for U.S. core and sustainable investments at financial firm Pacific Investment Management Co., said the task force is actively recruiting more chief financial officers for the group. With more members, the group will be able to make bigger commitments, he said.

“If we succeed in developing the network, we hope to be able to launch even more activities,” Mr. Mather said.

Write to Kristin Broughton at [email protected]

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Appeared in the September 27, 2021 print edition as “CFOs aim to link debt, sustainability”.