Written by William Kellett
European dairy giant Arla Foods has set an ambitious science-based climate target of reducing carbon dioxide equivalent (CO2e) emissions by 30% in 2030, and has an ambition of becoming carbon net zero by 2050.
With a strong focus on sustainability across the entire value chain, Arla is exploring all opportunities to reduce its CO2e footprint and improve its green handprint. Now, investors can support the transition by purchasing green bonds issued by Arla.
The Swedish krona (SEK) 1.5 billion (€148 million) proceeds from Arla’s green bonds will be allocated to green investments within the cooperative.
Chief financial officer at Arla, Torben Dahl Nyholm, said:
“Green bonds support our green thinking and is one more step towards a carbon net zero future.
“As a cooperative we work hard to reduce greenhouse gas emissions across the entire value chain – from farm to fork – and are taking every step possible towards a green future.”
Issue of green bonds
He added that the decision to issue green bonds is an integrated part of Arla’s financing strategy.
Arla Foods has successfully issued a floating rate green bond at the Swedish bond market in SEK on May 7, at a credit margin of 0.68%.
“Sweden has a large corporate bond market which, combined with the fact that Arla is a household name in Sweden, makes it very attractive for Arla to utilize this market,” explained Nyholm.
With asset managers, banks as well as insurance and pension funds in the Nordic countries as primary investors, the bonds were immediately overbooked with banks receiving bids for more than SEK 4 billion (€396 million) before the issuance was closed at the announced SEK 1.5 billion.
The EMTN (Euro Medium Term Note) bond program with a maximum value of €750 million is registered on the Irish Stock Exchange Euronext Dublin where the bonds are also listed.
Nordea has acted as Sole Sustainability Structuring Advisor to Arla, and Nordea and SEB have acted as Joint Lead Managers on the transaction.
The proceeds from the issuance will be used in accordance with Arla’s Sustainable Financing Framework, which is supported by a second party opinion from Sustainalytics.
Examples of how the proceeds are allocated include efficient use of biogas, water treatment and recycling, energy optimisation on Arla’s 60 production sites as well as climate checks on farms.
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