H&M's sustainability bond oversubscribed 7.6 times

February 22, 2021 - Sweden

The €500 million sustainability-linked bond with a maturity of 8.5 years, issued by the H&M Group, has generated great interest and has been 7.6 times oversubscribed. The bond will be listed on the regulated market Euronext Dublin and has been placed with the assistance of BNP Paribas, Commerzbank, Danske Bank, SEB and Standard Chartered.

SEB also acted as advisor for the Sustainability-Linked Bond Framework. The annual coupon rate for the bond is 0.25 per cent.

Sustainability-linked bonds are something new on the bond market. In contrast to green bonds, where the funds are linked to specific projects, sustainability-linked bonds are coupled to the company meeting a number of defined sustainability targets.

“For H&M Group, sustainability is an integral part of our operations. This type of bond creates a clear and transparent commitment and incentive for the company. It is an important step in our continued work to optimise the company’s capital structure, while at the same time providing investors with an opportunity to contribute to positive transformation of the fashion industry,” said H&M CFO Adam Karlsson in a media statement.

By 2025, H&M Group has committed to increase the share of recycled materials used to 30 per cent, reduce emissions from the Group’s own operations by 20 per cent, and reduce absolute Scope 3 emissions from fabric production, garment manufacturing, raw materials and upstream transport by 10 per cent.

“Sustainalytics is of the opinion that the H&M Group Sustainability-Linked Bond KPIs are relevant and material to the issuer and that the SPTs (Sustainability Performance Targets) are ambitious and impactful. The goal to reach 30 per cent recycled materials as inputs is a highly ambitious SPT and represents leadership in the clothing industry,” said Evan Bruner, project manager, Sustainalytics.

“Our customers are showing on a daily basis that they appreciate H&M Group’s offering with the best combination of fashion, quality, price and sustainability. Today’s (February 18) successful bond issue is proof that the financial market also values our ambitious sustainability work and we look forward to working together for a sustainable industry,” said H&M Group CEO Helena Helmersson.