Railway company Norfolk Southern announced that it has closed a $500 million green bond offering, with proceeds aimed at projects to reduce emissions from operations, and from customer supply chains.

James A. Squires, Norfolk Southern Chairman, President and CEO, said:

“Green bonds will enable us to deliver for our customers and the environment. In recent years our customers have avoided 15 million metric tons of carbon emissions annually by shipping their goods and materials with Norfolk Southern. Now we are committing to do even more to help customers reduce their carbon footprint, promote cleaner air, and drive long-term value for shareholders.”

The new issue comes as companies globally are increasingly turning to sustainable finance tools to fund ESG-related projects. A recent report from Moody’s indicated that green bond issuance in the first quarter of 2021 soared to a record $99 billion, and estimated that sustainable bond issuance for the year will exceed $650 billion, substantially greater than last year’s record $491 billion.

Norfolk Southern’s green bond issue was conducted under the company’s recently released Green Financing Framework, which outlines eligible use of proceeds, project evaluation and selection criteria, management of proceeds and reporting requirements. According to the framework, proceeds may fund projects under the categories of Clean Transportation, such as fuel efficient locomotives, railway modernization and energy management technology; Renewable Energy, such as wind and solar power purchase agreements; Energy Efficiency, such as LED lighting and HVAC equipment upgrades; Green Buildings; Pollution Prevention and Control, including investments to eliminate waste to landfill, and; Environmentally Sustainable Management of Natural Resources and Land Use, including reforestation projects.

The company will report annually on the disbursement of the funds until fully allocated, and, where feasible, on key performance indicators such as estimated emissions reductions and renewable energy sourced, to demonstrate the environmental impact of the funded projects.

Josh Raglin, Norfolk Southern Chief Sustainability Officer, said:

“Green bonds challenge us to reduce our environmental impacts and evaluate not only where we have been, but where we want to go. Through innovation and collaboration with our many partners, we aim to be the transportation industry leader delivering the low-carbon economy.”