Chanel pioneers ¬sustainability-linked bonds for combating climate changes

By Nikita Chaurasia  | Date: 2022-10-05

Chanel pioneers ¬sustainability-linked bonds for combating climate changes

French luxury fashion house well-recognized for its perfumes and tweed suits, Chanel, has reportedly unveiled ­sustainability-linked bonds, or SLBs, to combat climate change two years ago when the firm was in need to borrow money.

The investors who bought Chanel’s $589 million (€600 million) of bonds are also assured that if the firm cannot meet certain climate goals, it will pay them millions of euros back. To put it the other way, they would be liable to pay the penalty for not meeting the set goals.

According to Philippe Blondiaux, the chief financial officer of Chanel, the deal was a great way to align the financial strategy with that of the company as per the firm’s sustainability targets.

However, Chanel and other companies selling such bonds are not risking much as they will set their own goals and create an obvious incentive for making them easy to achieve.

Despite insisting the firm on setting more challenging goals, the investors look satisfied as long as what they are building gets labelled green.

Apparently, the demand for the bonds is two, three, or even five times greater than the amount offered.

According to sources, the deal shows that the firm had already fulfilled the key objective before selling the bonds to investors.

Under this bond, Chanel was required to lessen its indirect or Scope 3 emissions, around 10% of the emissions produced by its customers and suppliers, by 2030.

However, the firm’s disclosures show that those emissions had fallen 21% below the baseline set in the bond contract by the time the bond was issued.

Subsequently, Chanel was paying its lenders a lower rate for meeting a goal that had already been met.

 

Source credit - https://www.bnnbloomberg.ca/greenwashing-enters-a-22-trillion-debt-market-derailing-climate-goals-1.1827662

About Author

Nikita Chaurasia     aeresearch.net

Nikita Chaurasia

An accomplished professional in the field of content development, playing with words comes naturally to Nikita Chaurasia. After completing her post-graduate MBA degree in Advertising and PR, Nikita worked across numerous content-driven verticals, undertaking diverse r...

Read More >>

More News By Nikita Chaurasia

Pacific Island pushes Japan to delay wastewater release from Fukushima

Pacific Island pushes Japan to delay wastewater release from Fukushima

By Nikita Chaurasia

Pacific Island nations have reportedly pushed Japan to postpone the release of Fukushima nuclear power plant wastewater due to concerns that it may pollute fishing grounds. An appeal was made on Wednesday when Japan announced that treated sewage f...

Activist groups take Danone to court over excessive use of plastics

Activist groups take Danone to court over excessive use of plastics

By Nikita Chaurasia

Danone, the French bottled water and yogurt firm, is reportedly being sued in court by three environmental activists’ groups for failing to cut its plastic footprint significantly. According to the groups, the maker of Evian and Volvic miner...

Bosch expands security with dashcams designed for rideshare drivers

Bosch expands security with dashcams designed for rideshare drivers

By Nikita Chaurasia

Bosch, the German technology company, has reportedly expanded its security footprint in the ridesharing market with the launch of its latest security dashcams. At CES 2023, Las Vegas, the German tech firm unveiled a new integrated smart camera on ...

Australia: PM Albanese denies potential $450M payout to Rio Tinto

Australia: PM Albanese denies potential $450M payout to Rio Tinto

By Nikita Chaurasia

Australia's Prime Minister Anthony Albanese has reportedly denied rumors that Rio Tinto and its partners could receive a $450 million settlement for the Gladstone power station, which would bring the total compensation for the coal price limit to...

UK: Firms still struggle with post-Brexit trading and red tape

UK: Firms still struggle with post-Brexit trading and red tape

By Nikita Chaurasia

Businesses in the UK are still reportedly grappling after two years following the beginning of post-Brexit trading, as suggested by a new report. According to the British Chambers of Commerce (BCC), firms are still battling increased red tape and ...