Gold mining giant Newmont Corporation announced today the launch of the mining industry’s first sustainability-linked bond offering, with the cost of debt tied to the company’s climate and diversity goals.
Sustainability-linked securities are an increasingly popular form of sustainable finance instruments, with attributes including interest payments tied to an issuer’s achievement of specific sustainability targets. According to a recent report from Moody’s ESGEnvironmental, social, and governance (ESG) criteria are a set of standards for a company’s operations that socially conscious investors use to screen potential investments. Solutions, the sustainability-linked bond market is the fastest growing sector of the rapidly expanding sustainable finance market, with global issuance year-to-date of $62 billion as of the end of Q3 2021, eclipsing the $9 billion issued in all of 2020.
Under Newmont’s new offering, the coupon on the bonds will be tied to the company’s 2030 targets for emissions reduction and the representation of women in senior leadership roles target, with interest rates increasing if the targets are not met. Newmont has committed to achieve 32% reductions in Scope 1 and 2 emissions and a 30% reduction in Scope 3 emissions by 2030, and the company has pledged to achieve a 50% representation of women in senior leadership positions by 2030 as well.
Joint bookrunners on the offering include BMO Capital Markets, Credit Suisse, Goldman Sachs and J.P. Morgan, with Credit Suisse also acting as sustainability-linked bond structuring advisor.
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