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    Swedish Investors Support Clean Aluminium

    Stockholm (NordSIP) – As the world races to meet the climate goals of the 2015 Paris Agreement, efforts are underway to reduce the carbon footprint of all industries. One prominent polluter, the metal industry, is at pains to find solutions to its emissions problems.

    To address this challenge, Swedish aluminium company Gränges issued a five-year SEK600 million sustainability-linked bond. Gränges is an aluminium company offering lighter, smarter, and more sustainable aluminium products and solutions with a total annual production capacity amounts to 560 ktonnes. The company employs 2,600 workers across global production facilities and is listed on Nasdaq Stockholm.

    The new bond pays a coupon of 3 months Stibor + 1.20%, 5 basis points (bps) below and SEK100 million above guidance thanks to stronger than expected interest, which saw an order books growing to above SEK1 billion. Demand originated overwhelmingly from Sweden, with Finnish and Norwegian investors contributing a mere 5% and 3% of the demand. Sectorally, asset and fund managers represented 75% of the demand, followed by pension funds and insurance companies’ 22% and leaving 3% to other miscellaneous investors.

    “Gränges has a strong commitment to sustainability and it’s encouraging to see the high interest among investors in supporting our sustainability strategy and targets. The engagement confirms that our sustainability and climate strategy is relevant, ambitious, and credible”, says Sofia Hedevåg, SVP Sustainability at Gränges.

    The sustainability-linked bond is tied to the achievement of three sustainability performance targets (SPTs), which if they are not met will trigger a step-up of 40bps (per SPT) on redemption price. The first SPT is the achievement of a 25% (Scope 1+2)carbon emissions intensity reduction from Gränges operations and purchased energy  by by 2025 compared to 2017. The second SPT foresees a 30% carbon emissions intensity reduction from sourced metal inputs (scope 3) by 2025 compared to 2017. The third SPT aims for an 30% increase in the share of recycled aluminium as a share of total sourced metal inputs by 2025.

    According to Sustainalytics’ Second Party Opinion of Gränges’ 2021 Green and Sustainability-Linked Finance Framework, the bond program “is credible and impactful and aligns with the four core components of the Green Bond Principles 2021 and Green Loan Principles 2021”.

    Danske Bank and Nordea acted as joint sustainability structuring advisors and Joint Lead Managers for the issuance. So far this year, approximately €704 billion worth of Green, Social Sustainability and Sustainability-linked bonds have been issued globally.

     

    Image courtesy of Gränges
    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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