Edition 6, April 2022
Constance Chalchat
Sustainable Development Catalyst, Board Member, PADI divemaster, author & lucky mother ??
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As the world again faces unchartered crises, we focus this edition on the importance of resilience and autonomy for energy, food security and sustainable and resilient supply chains.
?With the geopolitical outlook continuing to remain uncertain, inflationary pressures are impacting companies in many ways, not least of which is cost of production. Circular economy and energy efficiency will absolutely be key levers that must be activated to avoid overspending and operate in a world with limited resources.?
Chile also reminds us that the sustainable development agenda is all the more important and illustrates this with a first in innovative sustainable financing; while?L'Oréal's €3 billion bond with an inaugural sustainability-linked tranche includes a target on circularity as well as emissions reductions.
Inflation - back to the 1970s?
As rising inflation puts the world’s growth outlook at risk, our Markets 360 experts argue that the risks of stagflation have increased. Inflation is surging across developed markets, with the US inflation rate at its highest level in more than three decades.
?Inflation was already running well above target across developed economies at the start of this year. Commodity prices were soaring and the easing of Covid-19 restrictions caused supply bottlenecks, as demand recovered at different speeds across sectors.
?Different countries will be affected to different degrees. The impact of the Russia-Ukraine crisis on any particular economy will probably depend on its proximity to Russia and risk factors, such as its dependency on Russian imports. Of the major economies, the eurozone is by far the most exposed, Markets 360’s experts estimate.?
What does this mean for companies seeking to secure energy efficiency, food security and sustainable supply chains? And as countries and corporates ramp up commitments to decarbonisation, how is the transition to a lower-carbon economy both driving and impacted by inflationary pressures? Click below to find out more.
Chile sets a trend with the first sovereign sustainability-linked bond
Chile has become the world’s first country to use sovereign debt to fund its long-term climate initiatives and accelerate its energy transition. For years, Chile has moved swiftly to take on the daunting challenge of addressing climate change.
In early March, the country announced its newest initiative: a first-of-its-kind, US$2 billion sustainability-linked bond offering (SLB) with two KPIs geared toward reducing emissions and increasing Chile’s use of renewable energy. BNP Paribas served as Joint Structuring Agent and Joint Bookrunner on the deal, which is the latest in a series of trailblazing sustainable finance transactions supported by the Bank in Latin America and globally.
In the process, Chile becomes the first government to link its official Nationally Determined Contribution (NDC) commitment on climate change to a bond issuance, and one of only 11 countries to make unconditional commitments to the United Nations to reduce emissions over the next decade and beyond.
Sustainable beauty: L’Oréal successfully launches inaugural €3 billion bond with sustainability-linked tranche
Global French beauty leader L’Oréal benefitted from an exceptional market reception for its €3 billion inaugural public bond offering, which is composed of three tranches, one of which is sustainability-linked.
The issue saw strong investor demand with an oversubscription of over 3.5 times?the full offering. The sustainability-linked tranche is in the form of a €1,250 million 4.25-year sustainability-linked bond (SLB) to target notably emissions reductions and more sustainable packaging.
?L’Oréal’s decision to issue its inaugural bond with a sustainability-linked tranche underlines the Group’s global leadership on sustainability. It also demonstrates how circular economy KPIs are becoming increasingly embedded into capital markets products to tackle emissions across the whole supply chain and drive innovation in materials use.?
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We hope you have found our sixth edition inspiring and insightful covering both the opportunities and challenges on the pathways to net zero. Until the next issue, may your transition to net zero accelerate smoothly!