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Seafood giant issues world-first sustainability bond

Thiraphong Chansiri:
Thiraphong Chansiri: "Sustainability is central to our operations and business philosophy." Photo: Thai Union.

Seafood giant Thai Union has put its money where its mouth is by issuing a bond which will cost it more in interest payments if it fails to meet promised sustainability targets.

The THB 5 billion (£111 million) seven-year senior, unsecured Sustainability-Linked Bond (SLB) for institutional investors carries an interest rate of 2.47 % and was issued on Tuesday.

The SLB is not only the first in Thailand but also the first globally to introduce step-up and/or step-down facilities related to the achievement of Sustainability Performance Targets (SPTs).

Carbon reduction

These targets include remaining in the Dow Jones Sustainability Index (DJSI) Emerging Markets and ranking in the top 10 companies for the DJSI Food Products Industry Index; reducing Thai Union’s Scope 1 and Scope 2 carbon emissions from manufacturing operations by 4% annually (carbon intensity); and increasing the monitoring and surveillance of Thai Union’s wild-caught tuna supply chains, whether electronically and/or through the use of human observers at sea.

Investors in the bond will be entitled to a lower or higher coupon should the company achieve or fail to achieve these SPTs in 2023 and 2026. The company’s sustainability-linked financing framework is externally verified by Sustainalytics to ensure alignment with international best practices and standards.

We are grateful for the unprecedented interest shown by institutional investors including government related funds, life insurance companies, asset management companies, and banks.

Thai Union chief executive Thiraphong Chansiri

“Sustainability is central to our operations and business philosophy and we have committed to a policy of Healthy Living, Healthy Oceans,” said Thai Union president and chief executive Thiraphong Chansiri.

“This type of Blue Financing represents another way we can now work with our partners in the financial community on products that help ensure we continue to preserve the oceans that are vital not only to our business, but also the planet while providing healthy and nutritious products that health-conscious consumers globally are demanding.

“We are extremely proud to have launched Thailand’s first Sustainability-Linked Bond and are grateful for the nod of approval to this offering through the unprecedented interest shown by institutional investors including government related funds, life insurance companies, asset management companies, and banks.”

Green salmon finance

Sustainability-linked finance has also become an option for salmon farmers. Chilean salmon farmers Blumar and Ventisqueros have received so-called “green credits”, which come with a series of environmental and social sustainability commitments made by the companies to their creditors.

And in Norway, companies such as Mowi, Grieg Seafood and SalMar have issued green bonds to raise capital. Green bonds enable capital-raising and investment for new and existing projects with environmental benefits. Companies are expected to comply with the voluntary Green Bond Principles published in June 2018 by the International Capital Market Association (ICMA).