S&P Global Launches $1.25 Billion Bond With Interest Tied to Scope 3 Emissions & Supply Chain Diversity Goals
Leading credit ratings, benchmarks and analytics provider S&P Global announced the launch of its inaugural sustainability-linked bond (SLB) issuance, with the offering of $1.25 billion of 2029 sustainability-linked senior notes, with debt costs tied to sustainability goals including emissions reductions and supplier diversity. The sustainability targets chosen for the bond include value chain aspects including the climate impact of business travel, and the company’s indirect spend through its suppliers.
The issuance forms part of a $5.5 billion senior notes offering by S&P Global, and follows the completion last week of the company’s $140 billion merger with market data services company IHS Markit.
Sustainability-linked securities, which are designed to incentivize issuers to deliver on sustainability goals with terms tied to the performance towards the targets, are the fastest growing segment of the sustainable finance market. According to a recent report by Moody’s ESG Solutions, the sustainability-linked bond market surged 10x in 2021 to $90 billion of issuance, with 2022 volumes anticipated to more than double to $200 billion.
The new SLB offering follows the recent publication of S&P Global’s Sustainability-Linked Bond Framework, which outlines the Key Performance Indicators (KPIs) being tracked to measure the company’s performance towards its defined Sustainability Performance Targets (SPTs). According to the framework, the KPIs tracked include S&P Global’s reduction of scope 3 business travel emissions, and its percent of procurement spend with US minority and diverse organizations. The SPTs include achieving at least a 25% reduction emissions from business travel by 2025, on a 2019 base, and reaching at least 10% Tier 1 (direct vendors and suppliers) and Tier 2 (indirect spend, performed by S&P’s vendors and suppliers) spend with US minority and diverse organizations in 2025.
The SLBs bear interest at a 2.7% rate. If S&P Global does not hit its sustainability targets, the bonds will be subject to a 25 basis point rate increase beginning in 2026.