Tesco launches first sustainability-linked bond of €750m


Tesco has launched a bond that is linked to the company’s commitment to reduce greenhouse gas emissions.

The €750m bond with a 0.375% coupon offers an 8.5-year maturity and is the first bond of its kind to be issued by a retailer. It is an important step in setting tangible incentives for our environmental and social performance and follows the announcement in October 2020, that Tesco established a £2.5bn revolving credit facility, with interest linked to the achievement of three ambitious environmental targets.

The bond is aligned to an agreed Sustainability Performance Target (SPT) of reducing Scope 1 and 2 Group Greenhouse Gas (GHG) Emissions by 60% by 2025 against Tesco’s 2015 Baseline.

Tesco has so far achieved a 50% reduction in Group GHG emissions against a 2015 baseline as well as sourcing 97% of electricity from renewable sources. In November 2020, it announced a partnership with Low Carbon to create three new solar farms and introduced a new fleet of electric delivery vehicles in London as part of a plan to go fully electric by 2030.

The bond will be aligned to Tesco’s newly introduced Sustainability-Bond Framework, which follows the ICMA Sustainability-Linked Bond principles, and has been independently assessed by Sustainalytics.

Alan Stewart, CFO, Tesco said, “I’m delighted that we have issued our first sustainability-linked bond. Linking our financial strategy to our long-term commitment to tackle sustainability is an important step in ensuring that this commitment is embedded across all our business operations and ensures we are driving continuous improvement. We are proud to be making good progress on our journey to be a net zero carbon business in the UK by 2035 and for the entire Group by 2050.”


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