First Corporate Sustainability Bonds Issued in the United States

In May 2016, Starbucks, the Seattle-based coffee chain, announced that it had closed an offer of $500 million in bonds to fund sustainability projects. The move was made to “fund programs that ensure coffee is grown and distributed in a way that can be maintained over the long run.”

Key Details

  • Starbucks has issued the first corporate sustainability bonds in the United States
  • The company offered $500 million in senior unsecured notes at the rate of 2.45% per year with a June 15, 2026 maturity date; the bond was “significantly oversubscribed”
  • This bond issue comprises almost 11% of the world’s $4.6 billion in bonds geared toward social projects, with most of these bonds issued by development banks and financial services firms, rather than retail corporations
  • The Seattle-based coffee chain plans to use the proceeds to fund projects that support a sustainable supply chain:
    • Maintaining crop stability and sustainable farming practices
    • Developing and sustaining farmer support centers in regions where coffee is grown
    • Financing farmers via loans through the Starbucks Global Farmer Fund, including a program that helps farmers rotate their crops
  • Starbucks will issue an annual publication detailing how funds were allocated to eligible projects

Implications

Companies such as Starbucks are realizing that building out a sustainable supply chain is critical to achieving meaningful impact on their goals. The use of these bonds brings needed capital to help suppliers implement practices now that will have a long-range return for Starbucks. Sustainability bonds allow investors to directly support a sustainability agenda, and based on the popularity of this first issuance, there may be more to come.

More Information

Starbucks: Starbucks Issues the First U.S. Corporate Sustainability Bond

Bloomberg: Starbucks Raises $500 Million with Its First Sustainability Bond

This report is part of the Clean Tech & Sustainability Minute series. To view all featured Minutes, please click here.

Additional Contributing Author: Freedom David

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