Applying financial expertise to environmental issues: Deutsche Bank assists Unilever in pioneering green bond
The bond helps fund renewable energy, energy efficiency and water efficiency projects located at five Unilever product factories.
Consumer goods company Unilever has issued a 4 year, £250 million 2% fixed rate bond that is the first green bond to be linked to a company’s internal energy efficiency investments. Deutsche Bank was Joint Lead Manager on the deal and our Global Transaction Banking division provided Principal Paying Agent services.
Jamie Stuart, Head of UK Debt Origination said “Growing numbers of investors and corporate clients are seeing Green Bonds as an important badge of honor that signals how they are assisting to improve environmental sustainability. Applying our financial expertise to environmental issues is an important focus for Deutsche Bank.”
The Green Bond Principles
Deutsche Bank and 12 other financial institutions published a set of Green Bond Principles to ensure integrity in how capital raised from a Green Bond will be used. In accordance with these Principles, Unilever published information on their website on how the capital would be used and a set of minimum environmental criteria. The company will annually report on whether projects funded through the green bond proceeds reduce CO2 emissions or water use by 50% if it is a new project or 30% if the project involved retrofit (using a 2008 company baseline). Unilever also published an opinion from the environmental consultant DNV GL on whether the bond has met these criteria.
The proceeds of the bond will fund projects located at a laundry liquid detergent factory in Johannesburg, South Africa; a laundry powder facility in Sichuan, China; a Home and Personal Care factory in Selcuklu-Konya, Turkey; an ice cream factory in Johannesburg, South Africa; the expansion of a spreads factory in Kansas, US; and the ‘Lean & Green Freezer’ cabinets project in Turkey, Russia and the US.
The bond was more than 3 times oversubscribed within 3 hours. Over 100 investors purchased the bond, including several first-time buyers of Unilever bonds. Other banks involved in the deal included Banco Santander, Citigroup and Morgan Stanley.
Green bonds - a growing market
Green bonds are a rapidly growing market. This is one of a growing number of green bonds that Deutsche Bank has been involved in:
- one of five lead managers for the European Investment Bank’s first ‘climate awareness bond’ to be priced in Sterling with a £500 million, 6 year bond
- sole structuring agent and sole book runner on the first-ever securitization of loans for residential energy efficiency with a $104 million PACE bond in California
- one of three lead manager on the European Investment Bank’s first ‘climate awareness bond’ to be priced in Swiss Francs with a CHF 350 million bond
- one of nine book runners on Unibail-Rodamco’s €750 million, 10 year, A+ rated green property bond
“Growing numbers of investors and corporate clients are seeing Green Bonds as an important badge of honor that signals how they are assisting to improve environmental sustainability.”
A set of minimum environmental criteria
Up to 50%
reduction of CO2 emissions or water use are expected for projects funded through the green bond