Henkel issues 1st bond related to plastic waste reduction
Henkel AG & Co. KGaA, the German company that makes Loctite adhesive and Persil laundry detergent, said on July 3 that it completed the issuance of what it described as the first-ever obligation related to reducing emissions. plastic waste.
The five-year, $ 70 million bond was issued through a private placement with Japanese insurance companies Dai-ichi Life Holdings Inc. and Dai-ichi Frontier Life Insurance Co. Ltd. Henkel said the proceeds from the bond would support projects to reduce plastic waste in its operations. HSBC acted as green structuring advisor and lead of the transaction.
Henkel is often cited as one of the most progressive companies in the fight against environmental and social issues. In 2018, it was the first company in Germany to enter into a syndicated “sustainability loan”. a credit facility linked to its performance in three independent sustainability ratings.
“Sustainability is not only firmly anchored in our strategic framework for the future, but also increasingly relevant to investors and financial markets,” CFO Marco Swoboda said in a July 3 statement describing the link between plastic waste.
Kenjiro Okazaki, Managing Director of Dai-ichi Life, one of the largest private life insurance companies in Japan, said: “As the bond is issued by a manufacturer, the impact goes directly into the supply chain where Henkel develops more sustainable packaging solutions, for example by increasing the amount of recycled plastic. “
Plastics make up 12% of the world’s solid waste, mostly the result of excessive packaging and low levels of recycling, according to a February report released by UBS. Plastic production increased from 15 million metric tonnes in 1964 to 311 million metric tonnes in 2014, with volumes set to double further over the next two decades. The report says that without change, plastics in the sea could trump fish by 2050.
“Today, 95% of the value of plastic packaging materials, or $ 80 billion to $ 120 billion a year, is lost after a single use,” UBS said. “Only 14% of plastic packaging is collected for recycling. And when the additional loss of value during sorting and reprocessing is taken into account, only 5% of the material value is kept for later use.
In another report released in March, UBS noted that the fight against wAte only accounts for 4% of the reported use of proceeds in the $ 700 billion green bond market, which is geared more towards energy efficiency and green buildings. The bank described a “new concept” whereby companies could fight waste by raising funds dedicated to waste reduction, as Henkel has done. “Like green bonds, these would be standard bonds that would appeal to both traditional traditional investors and the growing cohort of sustainable investors,” UBS said.
Portuguese packaging company Logoplaste Consultores Técnicos SA made waves in June when it changed the pricing structure of one of its leveraged loans to link interest payments to ESG measures, creating the first institutional term loan of this type. “As a debt investor, it’s always scary to agree to something that no one has done before with no history of how it will turn out,” a senior lender involved told LCD News, an offer from S&P Global Market Intelligence. “It’s a situation where finance and sustainability are intrinsically linked, and it’s a win-win for everyone. “
Henkel said the proceeds of its bond will help fund activities to meet the company’s more ambitious 2025 packaging goals that it announced on March 20. Over the next five years, the company plans to make all of its packaging recyclable or reusable and to reduce by 50% the amount of virgin plastic of fossil origin in its beauty care, laundry and home maintenance activities.
The company strives to achieve this goal. In a conference call with shareholders on June 17, CEO Carsten Knobel said that Henkel had acquired a stake in Truman’s, a U.S. cleaning products startup that only uses refillable bottles and refill cartridges containing a concentrated detergent. Henkel’s industrial activity had also invested in a recycling start-up in Germany called Saperatec.
“Together we are developing recyclable adhesives,” Knobel said. “This will also allow flexible packaging to be recycled, especially in the food industry.