Leading building materials company LafargeHolcim announced today the launch of an €850 million sustainability-linked bond (SLB) offering, pricing the 2031 maturing bonds with a coupon of 0.5%. According to the company, the issuance marks the first bond of its kind in the building materials industry. LafargeHolcim reported strong demand for the bond, with the issue more 3x oversubscribed.
Géraldine Picaud, LafargeHolcim Chief Financial Officer said:
“We are proud to be the first in our industry to launch a sustainability-linked bond. The order book of EUR 2.6 billion demonstrates the confidence of investors in the company’s financial strength, strategy and ability to deliver on its sustainability targets.”
Securities issued under sustainability-linked frameworks have attributes including coupon payments tied to an issuer’s achievement of specific Sustainability Performance Targets (SPTs), based on selected Key Performance Indicators (KPIs). According to LafargeHolcim’s Sustainability-Linked Financing Framework, the SLB is tied to the company’s target to reach 475 kg net CO2 per ton of cementitious material by 2030, representing a reduction of 17.5% from a 2018 baseline. ESG consultancy ISS ESG has provided a second-party opinion validating the robustness and relevance of the company’s CO2 reduction target in the context of the SLB.
Building materials companies are coming increasingly in focus in the fight against climate change, due to the carbon-intensity of their primary products. According to the International Energy Agency (IEA), the cement sector is the third-largest industrial energy consumer in the world, responsible for 7% of industrial energy use, and the second industrial emitter of carbon dioxide, responsible for 7% of global emissions.
LafargeHolcim has been active in initiatives aiming to improve the environmental profile of its products. In July, the company announced the global rollout of its ECOPact line of low carbon concrete, and in September, the company announced a partnership with the Science-Based Targets initiative (SBTi) to develop a roadmap for aligning climate targets to a 1.5°C future in the cement sector.
Magali Anderson, LafargeHolcim’s Chief Sustainability Officer said:
“This announcement demonstrates the company’s commitment to reach the most ambitious CO2 reduction target of the industry for 2030. Today’s bond issuance brings our ESG related funding agreements to CHF 6 billion.”