Jewelry designer and retailer Pandora announced the launch of a new program for issuances of senior unsecured notes, with terms on the new debt tied to the company’s climate and circular materials goals. The company said that it plans to use the program to secure €500 million in funding.
The announcement follows the release by Pandora of its updated Sustainability-Linked Finance Framework, outlining the Key Performance Indicators (KPIs) and Sustainability Performance Targets (SPTs) to be used in sustainability-linked issuances, as well as the process for selecting the targets, trigger events that cause a step-up in debt cost, and reporting and external verification requirements.
The KPIs selected for the framework include reductions in Pandora’s emissions across the value chain, and use of recycled materials. Specifically, the framework specifies that the debt cost trigger would occur if the company does not meet goals to reduce Scope 1 and 2 emissions by 90% by the end of 2025, on a 2019 basis, and Scope 3 emissions by 14% by the end of 2027, 23% by the end of 2028, 31% by the end of 2029, and 42% by the end of 2030, as well as its goal to purchase 100% recycled silver and gold for its jewelry by 2025.
Pandora received a Second Party Opinion from Moody’s Investor Service assessing the framework with a “Very good” Sustainability quality score.
Anders Boyer, CFO of Pandora, said:
“The new financing programme will allow us to further diversify our funding structure while at the same time linking it directly to our sustainability commitment.”
Sustainability-linked debt has been one of the fastest growing areas of sustainable finance, with attributes including interest payments tied to an issuer’s achievement of specific sustainability targets. Corporate interest in sustainability-linked loans has grown rapidly, as the financing provides flexibility to use proceeds for general corporate purposes, while with instruments such as green bonds, raised funds can only be allocated to specific categories of green projects.
Following an extended period of rapid growth, however, SLB issuance slowed sharply in late 2022, with Moody’s Investors Service citing factors such as growing market scrutiny on the credibility and robustness of issuers’ SLB targets, and the sector’s exposure to high-yield issuance.