One of the world’s largest producers of building materials and solutions, Heidelberg Materials (formerly known as HeidelbergCement), has successfully placed its first €750 million sustainability-linked bond (SLB).
The nine-year SLB has a coupon rate linked to the achievement of two key performance indicators (KPIs), namely to reduce specific net CO2 emissions to 500 kg CO2 per tonne of cementitious material by 2026, and to 400 kg CO2 per tonne of cementitious material by 2030. At Group level, Heidelberg Materials, which is headquartered in Germany, aims to reach net zero carbon emissions by 2050 at the latest.
The CO2 reduction target for 2026 is also recognised in the new Commercial Paper Programme that was launched by Heidelberg Materials in the beginning of the year. If the company does not succeed in reducing CO₂ emissions within the specified period and in the specified amount, a donation must be made to the non-profit organisation BirdLife Europe to promote biodiversity.
The order book for Heidelberg Materials’ SLB was four times oversubscribed, underlining strong investor demand for the transaction. The SLB, for which BNP Paribas acted as joint bookrunner, was launched under the company’s Sustainability-Linked Financing Framework, which is aligned with the five core components of the Sustainability-Linked Bond Principles published by the International Capital Markets Association (ICMA).
Transitioning cement is critical to climate mitigation
The cement industry contributes to around 7% of global industrial carbon emissions. Emissions from cement production are among the hardest to abate, due to process emissions that result from chemical reactions and the need for high temperatures.
With few economically viable alternatives currently available, reaching net zero in cement manufacturing will require innovative solutions to prevent CO₂ from reaching the atmosphere on a large scale. This includes an important role for Carbon Capture, Utilisation, and Storage (CCUS). Heidelberg Materials plans to reduce CO2 emissions by 10 million tonnes cumulatively through its already started large-scale CCUS projects globally by 2030.
Finance is also key. According to research from the University of Cambridge which was supported by BNP Paribas, 67% of cement companies surveyed say that they would require medium or high-level support from external financial sources to reach net zero.
This inaugural sustainability-linked bond from Heidelberg Materials demonstrates the value that capital markets can have in scaling up transition solutions and supporting decarbonisation in the industry.Hugo Stinnes, Co-Head Corporate Debt Capital Markets DACH, BNP Paribas
According to Hugo Stinnes, Co-Head Corporate Debt Capital Markets DACH at BNP Paribas, this mobilising of finance towards the low-carbon transition is vital: “This inaugural sustainability-linked bond from Heidelberg Materials demonstrates the value that capital markets can have in scaling up transition solutions and supporting decarbonisation in the industry.“
BNP Paribas Germany plays an active role in supporting the transition to a low carbon economy, and is scaling up finance solutions to support clients across the industry.