Commercial, Demand Management, Energy Efficiency  -  May 28, 2019

Starbucks issues $1 billion Sustainability Bond

Starbucks has issued a $1 billion, 30-year Sustainability Bond that will fund its ethical coffee sourcing and Greener Retail Initiative, the company announced May 13.

The sustainability bond is the largest of its kind that the coffee giant has issued to date. 

The company announced its Greener Stories initiative in September, with the intention to design, build and operate 10,000 Greener Stores globally by 2025. The framework for the Greener Store initiative was developed in partnership with World Wildlife Fund and SCS Global Services and focuses on commitments to energy efficiency, renewable energy, water stewardship, waste reduction and more.

These green initiatives will also include investment in greener coffee cups and packaging as Starbucks works to reduce its environmental footprint with such projects as the global rollout of straw-less lids and identifying the next generation of recyclable and compostable cups

A second major reason behind the bond is to support coffee farmers who use sustainable practices in their production.

The bond includes the distribution of new and refinanced loans to coffee farmers through Starbucks' $50 million Global Farmer Fund.

Using the bond, Starbucks will purchase coffee that is verified by Coffee and Farmer Equity Practices. The initiative also includes the continued development and operation of Farmer Support Centers and agronomy research and development centers in coffee-growing regions around the world.

"The bond demonstrates Starbucks commitment to meaningful, continual progress toward our aspiration of sustainable coffee, served sustainably," CFO Patrick Grismer said in a statement. "It also illustrates a trend toward heavier interest from investors in our socially and environmentally focused projects – in this case supporting coffee farmers and leading in green retail."

Per the guidelines outlined in the Green Bond Principles, Starbucks will publish annual updates of the allocation of the proceeds through the term of the sustainability bond until all proceeds have been fully allocated to projects meeting the eligibility criteria.

 SED's View: This is more evidence of the integration between finance and sustainability by leading industry players. With the demand for green bonds far exceeding the supply, we see the pace of these deals accelerating.

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