Global leader in sustainable food retail, Ahold Delhaize, already has a well-integrated Sustainable Finance strategy with both a sustainability bond and sustainability-linked RCF. Now, with its first ever sustainability-linked bond (SLB), Ahold Delhaize is accelerating its sustainability strategy to reduce its carbon footprints and food waste, ultimately enabling the transition to a low carbon economy.
What is a sustainability-linked bond?
Sustainability-linked bonds embed an environmental, social and governance (ESG)-related key performance indicator (KPI) that issuers commit to achieve, accruing additional payments to bondholders should they fall short. Unlike green or sustainable bonds, the funds raised with this instrument are not tagged to a specific use of proceeds but for general corporate purposes. This type of bond aims to further underpin the key role that debt markets can play in funding and inspiring companies that contribute to sustainability from an ESG perspective.
This is also the first ever SLB from a food retailer to embed food waste targets into the structure, bringing a tangible and visible KPI to their investors. BNP Paribas was joint bookrunner on the €600 million transaction.
The United Nations estimates that globally food waste is responsible for 8-10% of global greenhouse gas emissions, and addressing food waste through sustainable finance innovations is an important aspect of the Ahold Delhaize SLB.
Around the world, Ahold Delhaize’s grocery retail brands serve over 54 million shoppers each week in the United States, Europe and Indonesia. This includes Stop & Shop, FreshDirect, GIANT, and Food Lion in the US, Albert Heijn, bol.com and Delhaize in Europe, and Super Indo in Indonesia, amongst others.
The SLB followsa robust framework that embeds two progressive Sustainability Performance Targets (SPT):
- SPT / KPI 1: Reduction of Scope 1 and 2 CO2 emissions by 29% in 2025 from a 2018 baseline
- SPT / KPI 2: Reduction of food waste by 32% in 2025 from a 2016 baseline
The Ahold Delhaize SLB centres on an ambitious climate strategy, whereby SPT1 aligns with Ahold Delhaize 2030 SBTI validated Goal to reduce absolute scope 1 and 2 GHG emissions and KPI 2 is measured according to the Food Loss and Waste Protocol.
Addressing food waste through sustainable finance innovations is an important aspect of the Ahold Delhaize SLB
The SLB, which has a 9-year maturity, is also in accordance with Ahold Delhaize’s recently published Sustainability-Linked Bond Framework, which follows the Sustainability-Linked Bond principles, as administered by ICMA.
In reference to the environmental importance of the SLB, Frans Muller, Chief Executive Officer of Ahold Delhaize, said, “It helps us accelerate the achievement of the ESG targets we set in our Healthy and Sustainable roadmap and is another important step for our organization to contribute to the 1.5-degree Paris agreement.”
The company has developed a progressive environmental strategy, focussing on creating a healthy, low-carbon food system that secures sustainable diets for future generations.
The SLB attracted strong investor interest and Natalie Knight, Chief Financial Officer of Ahold Delhaize emphasised, “Sustainability-Linked Bonds represent the next phase of our ESG financing, where we bring our long-term commitments to tackle our carbon footprint and food waste directly to our investors. I am grateful for the trust our investors place in us.”
Ahold Delhaize’s approach also harnesses circular economy and waste prevention, and the company is a founding member of the World Resources Institute’s ’10x20x30 Food Loss and Waste Initiative’ which engages the world’s largest food retailers’ supply chains in the fight against food loss and waste.
Delphine Queniart, Global Head of Sustainable Finance & Solutions at BNP Paribas Global Markets, highlighted the innovation within the structure, “Ahold Delhaize demonstrates a truly holistic approach to their Sustainability-Linked Bond structure because they have offered investors scientific, transparent targets to tackle decarbonisation and reduce food waste, a core material part of their business.”
Ahold Delhaize is headquartered in the Netherlands, and Geert Lippens, CEO & Country Head for BNP Paribas Netherlands noted, “This is a good example of our Dutch strategy where we make our worldwide expertise in sustainable finance available to our local clients. We are pleased we could contribute to Ahold Delhaize’s objectives to reduce carbon footprint and food waste across all their local markets. It will allow them to be front-runners in the decarbonisation of food retail sector. On top, the deal demonstrates our commitment to support clients in the Netherlands.”