Smurfit Kappa to launch debut €1bn green bond

Fundraising latest move by packaging group that has capitalised on sustainability

A forklift collects recycled cardboard from a delivery truck at a UK paper mill, operated by Smurfit Kappa, which has announced plans to raise €1 billion in green finance. Photograph: Luke MacGregor/Bloomberg

A forklift collects recycled cardboard from a delivery truck at a UK paper mill, operated by Smurfit Kappa, which has announced plans to raise €1 billion in green finance. Photograph: Luke MacGregor/Bloomberg

 

Smurfit Kappa, the cardboard box-maker riding the wave of sustainable packaging, is venturing into the area of green funding with plans to raise €1 billion.

The Dublin-based multinational said on Monday that its planned debt offering is under its new green finance framework, where money raised will be targeted at products using certified sustainable raw materials and production methods, as well as environmentally sustainable management of natural resources and land.

The framework is aligned with the International Capital Market Association Green Bond Principles 2021 and Loan Market Association Green Loan Principles 2021, Smurfit Kappa said.

“Setting up this framework and issuing green finance instruments is a further significant step in our sustainability strategy, embedding sustainability into our capital structure alongside our sustainability-linked revolving credit facility, and complementing the dedication of everyone in Smurfit Kappa, where we make a sustainable product in an increasingly sustainable way,” said Garrett Quinn, chief sustainability officer at Smurfit Kappa.

The group has hired ING, Rabobank, BNP Paribas and Citigroup to hold virtual investor meetings, starting on Monday, to market its debut green bonds, which will mature between eight and 12 years from now.

Smurfit Kappa also plans to use its expected improved cash position to redeem bonds that would ordinarily mature in 2024, should the green finance deal complete.

The FTSE 100 company, which employs 46,000 people across 23 countries in Europe and the Americas, reported in late July that its revenues rose by 11 per cent to €4.7 billion in the first half of the year, while pre-tax profit jumped 8 per cent to €413 million, amid soaring demand for cardboard boxes.

The group also raised €660 million in a share sale last November to give it more firepower for investment to take advantage of a surge in ecommerce and a shift across the consumer goods industry towards sustainable packaging.

Having cut its own CO2 emissions by a third between 2005 and 2019, the company announced late last year it plans to reach net zero emissions by 2050, in line with a growing number of the world’s largest corporates and targets set by the EU.

Global issuance of sustainable debt is on track to surpass $1 trillion (€850 billion) this year, up 30 per cent on 2020, with green bonds dominating, according to the Institute of International Finance.