Sustainability bonds in fashion
Luxury brand Burberry Group showcases its sustainability credentials with its first green bond
£300m
raised by Burberry’s first sustainability bond
"We are delighted that our inaugural Sustainability Bond has been listed on London Stock Exchange’s Sustainable Bond Market"
Burberry may be renowned for its check prints and trench coats, but the luxury brand also has an impressive suite of sustainability targets covering its products, emissions, energy use, avoidance of waste and community support.
As the company’s responsibility strategy states, the company’s “commitment to sustainability is long-standing, grounded in the belief that for our future growth, we need to actively address the challenges facing our industry and the world in which we live. We are dedicated to reducing our environmental footprint and enabling social progress.”
That commitment is now extended to the Burberry’s funding, with the listing of its first sustainability bond. The £300 million, five-year note was issued in September 2020 and listed on London Stock Exchange’s Sustainable Bond Market. With the bond being 7.9 times oversubscribed, the company was able to achieve what it describes as “tight pricing”, with the paper paying a coupon of 1.125%.
Projects on the runway
“We are delighted that our inaugural sustainability bond has been listed on London Stock Exchange’s Sustainable Bond Market,” said Julie Brown, Chief Operating and Chief Financial Officer. “The addition of this financing will support our liquidity and allow us to secure proceeds for investment in our sustainability agenda over the life of the bond.”
The proceeds from the bond will be used to finance and/or refinance three types of project, as set out in the company’s Sustainability Bond Framework. These are: investments in energy efficient buildings, or in energy efficiency improvements; procurement of sustainably produced cotton; and sourcing of sustainable packaging and labelling materials.
Ambitious goals
The company has not yet revealed any plans for subsequent sustainability bonds, but it certainly has ambitious sustainability goals to finance. Among other targets, it has committed to reduce its direct greenhouse gas emissions, and those associated with the energy it buys, to 95% below 2016 levels by 2022. It also plans to reduce its Scope 3 emissions – those from its supply chain – by 30% by 2030. To do this, it is engaging with its supply chain partners to encourage them to adopt renewable energy.
It is also committed to sourcing all of its cotton from sources that are more sustainable than the market average by 2022, and all of its leather from tanneries that have social, environmental and traceability certifications in place by the same date.
The company is clear-eyed about the importance of its environmental and social commitments: “The success of our business over the long term,” it says, “depends on the environmental sustainability of our operations, the resilience of our supply chain and our ability to manage climate change impacts.” Its first sustainability bond will help the company deliver on those commitments.
