As companies step up their focus on the social and environmental impact of their value chain, the range of sustainable financing tools must also expand.
In 2021, 516.9 million PCs were shipped globally, and with more than 272 million new laptops manufactured every year, the computer sector’s contribution to global greenhouse gas (GHG) emissions is often compared to the entire airline industry’s at an estimated 2%. It is therefore no small feat when the global technology powerhouse and world’s leading PC manufacturer, Hong Kong-listed Lenovo which has a dominant 24.6% market share, shows its commitment to reducing its carbon footprint through an inaugural green bond.
Lenovo successfully issued a US$625 million 10-year green bond in July 2022 as part of a US$1.25 billion dual tranche notes offering that reopened Asia’s international corporate bond market amid a challenging market environment. The bond was rated Baa2 (Moody’s Investors Service), BBB- (Standard & Poor’s) and BBB (Fitch). It was the largest debut technology sector ESG bond globally so far in 2022. BNP Paribas acted as Joint Global Coordinator for this green bond offering, and was the Sole Green Structuring Advisor supporting the establishment of the company’s Green Finance Framework.
Lenovo’s debut green bond was the first under its Green Finance Framework (GFF) which was published in July 2022. Independently verified by Sustainalytics, the Framework reflects the company’s commitment to align its financing activities with its comprehensive sustainability strategy.
Lenovo has been publishing its environmental impact for 16 years. After meeting and exceeding its first generation of emissions reduction targets in 2020, the company set new targets for 2030. Lenovo’s 2030 targets have been set in alignment to the methodology of the Science-Based Targets initiative (SBTi), an independent non-governmental organisation. SBTi has validated Lenovo’s 2030 emissions reduction goals, and is currently evaluating long-term goals to reach net-zero by 2050, in alignment with SBTi’s Net-Zero Standard.
In 2021, Lenovo was one of 80 companies selected to test a new Net-Zero Standard with the SBTi, the first ever science-based net-zero targets standardisation. In the 2021-22 financial year, Lenovo reported a 15% reduction in scope 1 and 2 emissions and the company is increasing its focus on collaborating with suppliers to reduce scope 3 emissions intensity across the value chain.
In its Annual ESG Report released on 30 August 2022, Lenovo highlighted its progress in the circular economy, integrating new recycled materials such as magnesium, aluminium, and ocean-bound plastic into products, as well as increasing its use of closed-loop recycled plastic.
Lenovo’s environmental, social and governance (ESG) leadership extends beyond decarbonisation: the company set a new record for its charitable giving, and was recognised for its programmes that promote inclusion for women, LGBTQ+, and people with disabilities in the workplace.
“At Lenovo, we believe business success and building a sustainable future must go hand in hand,” said Wong Wai Ming, Chief Financial Officer at Lenovo. “The establishment of our Green Finance Framework is an important milestone, reflects our broader commitment to sustainability as we embrace green financing, and further demonstrates our unwavering commitment to making a positive environmental and social impact.”
As the Sole Green Structuring Advisor, BNP Paribas helped Lenovo design the Framework and ensure its alignment with the Green Bond Principles set out by the International Capital Market Association.
We started working with Lenovo on creating their new Green Finance Framework late last year. It sets out in detail which aspects of the company’s holistic ESG strategy will be funded by the proceeds of green financing activities to contribute to positive environmental impacts.Stanley Chan, Co-head of Large Corporates, Hong Kong, BNP Paribas
“We started working with Lenovo on creating their new Green Finance Framework late last year,” explained Stanley Chan, Co-head of Large Corporates, Hong Kong at BNP Paribas. “It sets out in detail which aspects of the company’s holistic ESG strategy will be funded by the proceeds of green financing activities to contribute to positive environmental impacts.”
Investor confidence in Lenovo’s ESG strategy
Proceeds from the green bond will finance eligible projects as outlined in the GFF across five green categories, including: energy efficiency, renewable energy, green buildings, circular economy adapted products, production and processes, and clean transportation.
The dual-tranche bond offering received strong investor interest despite the volatile backdrop into which the issue was launched, with high inflation and hawkish signals from the U.S. Federal Reserve. The strong response underlined investors’ confidence in Lenovo’s dominant position in the market and the credibility of its ESG efforts and credentials.
Together with a robust green finance framework, Lenovo’s credible sustainability strategy and track record is the key ingredient to gain investor’s support in their debut green bond offering.Chaoni Huang, Head of Sustainable Capital Markets, Global Markets APAC, BNP Paribas
“Together with a robust green finance framework, Lenovo’s credible sustainability strategy and track record is the key ingredient to gain investor’s support in their debut green bond offering,” said Chaoni Huang, Head of Sustainable Capital Markets, Global Markets APAC, at BNP Paribas.
A long-term partnership
The deal continues a long partnership between Lenovo and BNP Paribas, which has been a close advisor to the company since 1995. The relationship now includes treasury and import-export financing, as well as capital markets: BNP Paribas has worked on eight bond issues for the company, as well as equity raisings.
Lenovo’s strong banking relationships were evident in the selection of eight joint global coordinators for the July bond issue. Among those, BNP Paribas was the sole green structuring advisor.
“This transaction exemplifies BNP Paribas’ strength in debt capital markets and capabilities in driving successful landmark transactions in these turbulent times. We aim to continue our work in offering financing for our clients and investors, and further contributing towards a net zero economy,” Barry Fung, Managing Director, Co-head of Debt Capital Markets Origination, Capital Markets Group APAC, BNP Paribas.