Starbucks Brews its Biggest Sustainability Bond Yet

    Stockholm (NordSIP) – Starbucks announced that it had issued a 30-year US$1 billion Sustainability Bond. This was the third and largest Sustainability Bond from the coffee company following the first corporate sustainability bond in 2016 and the first global yen corporate sustainability bond in 2017.

    “We are very pleased to see that our new Sustainability Bond attracted significant investor interest and was oversubscribed,” said Patrick Grismer, CFO of Starbucks. “The bond demonstrates Starbucks commitment to meaningful, continual progress toward our aspiration of sustainable coffee, served sustainably. It also illustrates a trend toward heavier interest from investors in our socially and environmentally focused projects – in this case supporting coffee farmers and leading in green retail,” he explained. “By issuing a Sustainability Bond, we’re providing investors an opportunity to participate in our sustainability efforts, and our hope is that this inspires others to pursue more sustainability-related investing opportunities.”

    According to Sustainalytics’s second opinion, “the Starbucks Sustainability Bond Framework is credible and impactful, and aligns with the SBG [‘Sustainability Bond Guidelines’] 2018 and the four core components of the Green Bond Principles 2018 (“GBP 2018”) and Social Bond Principles 2018 (“SBP 2018”).” Heather Lang, executive director of Sustainalytics’ Sustainable Finance Solutions team applauded “Starbucks efforts to broaden its social and environmental programs and to align its eligible projects with the U.N. Sustainable Development Goals.”

    The proceeds from the bond will be used in four different ways: Greener retail stores, supporting farmers, and supporting sustainable industry practices. Greener retail projects focus on Starbucks’ Greener Stores initiative, announced in September, to design, build and operate 10,000 Greener Stores globally by 2025. US$20 million from this bond will be invested in responsible asset manager responsAbility to provide debt financing to coffee producers in Latin America, Africa and Asia to support the operations of coffee farmers. By purchasing coffee verified by a third-party as complying with Coffee and Farmer Equity (C.A.F.E.) Practices, Starbucks also supports sustainable industry practices.

    The 30-year Sustainability Bond is part of a larger bond offering of US$2 billion, with another US$1 billion bond issued for general corporate purposes including the repurchase of common stock as part of the previously communicated $25 billion shareholder return target. The issuance is in line with Starbucks commitment to a leverage cap of 3x lease-adjusted EBITDAR and a minimum credit rating of BBB+Baa1.

    Photo courtesy of Starbucks

    Filipe Albuquerque
    Filipe Albuquerque
    Filipe is an economist with 8 years of experience in macroeconomic and financial analysis for the Economist Intelligence Unit, the UN World Institute for Development Economic Research, the Stockholm School of Economics and the School of Oriental and African Studies. Filipe holds a MSc in European Political Economy from the LSE and a MSc in Economics from the University of London, where he currently is a PhD candidate.

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