CFOs urge more companies to link debt to sustainability goals

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A group of CFOs from large international companies are urging their peers to link the financing of their companies more to corporate sustainability goals.

CFOs of 60 companies, including beer maker Anheuser-Busch InBev HER,

the energy company Enel SpA and the telecommunications company Verizon Communications Inc.

this week, they pledged to tie about half of their corporate finance, including corporate bond issues, to environmental, social or governance goals by 2025. That figure stood at 27% at the 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 eradicating poverty. The announcement took place at this week’s United Nations General Assembly 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 sum to increase as ‘he strives to recruit new members for the group.

“The idea is to expand the group to ensure that it is as representative as possible of a wider set of companies, sectors and countries,” said Fernando Tennenbaum, CFO 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, recently issued sustainability bonds. Unlike green bonds, which are to be used for designated environmental projects, sustainability bonds can be used for general purposes. Interest rates on bonds adjust depending 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 larger increase in ESG debt issuance. The companies have raised $ 49.7 billion in sustainability bond products 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 targets to its upcoming 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 goals related to improving water efficiency and increasing the use of renewable energy.

“Given what we’ve learned for our sustainability loan and the expertise we’ve gained, it makes a lot of 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 on how companies integrate ESG goals into their operations and activities in the equity markets. capital, members said.

Scott Mather, investment director for core and sustainable investments in the United States at financial firm Pacific Investment Management Co., said the task force is actively recruiting more CFOs for the group. With more members, the group will be able to make bigger commitments, he said.

“If we manage to grow the network, we hope to be able to launch even more activities,” said Mather.

Write to Kristin Broughton at [email protected]

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