HP Inc., one of the world’s leading printing, 3D printing and personal systems technology companies, has embedded its climate actions into its financing through a $5 billion, five-year revolving credit facility structured as the company’s inaugural sustainability-linked loan (SLL), as well as a $1 billion, 10-year sustainability notes offering.
HP’s first sustainable financings of any kind align with the company’s Sustainable Impact strategy and its goals of achieving net zero greenhouse gas (GHG) emissions across the HP value chain by 2040. The SLL also features a social target of doubling the number of the company’s Black and African American US executives by 2025. BNP Paribas served as Sole Sustainability Coordinator, Joint Lead Arranger and Joint Bookrunner on HP’s SLL, and Joint Bookrunner on its subsequent sustainability bond.
Steps to a net zero future
HP reinforced its commitment to positive impact by announcing ambitious goals for climate action and diversity, inclusion and equity in April and May 2021, respectively. The company’s long-term ambition is to transform its business toward a more circular and low carbon economy. The targets of the company’s inaugural SLL are aligned with these goals, which are some of the most comprehensive in the technology industry:
- Reduce absolute Scope 1 and 2 GHG emissions
- Double the number of Black and African Americans among US-based executives by 2025 (measured from 2019 baseline)
The pricing of the SLL will increase or decrease based on whether HP reaches those targets, providing a financial incentive for the company to meet these goals. The Scope 1 and 2 GHG emissions reduction goal is consistent with the Science Based Target Initiative’s sector guidance for reductions required to limit global warming to 1.5°Celsius. HP will report its progress against the targets in the company’s annual Sustainable Impact report, and will obtain third-party verification on its GHG emissions progress.
HP’s 2030 vision is to be the world’s most sustainable and just technology company. The target to double the number of Black and African American executives by 2025 is part of HP’s comprehensive strategy to advance racial equality and social justice. The company views diversity of experiences and backgrounds as fuel for innovation, and earlier this year HP launched a Racial Equality and Social Justice Task Force to accelerate the pipeline, retention and promotion for Black and African American talent; advocate for Black and African Americans through public policy, civic action and clear corporate positions on local and national issues; and leverage its industry spending power to influence its ecosystem, including partners, suppliers and vendors. In addition, among HP’s goals announced last month was a commitment to achieve gender equality in leadership by 2030, making it the first Fortune 100 technology company to make such a commitment.
“HP’s aspiration is to be the world’s most just and sustainable technology company. We plan to make significant investments to offer leadership in this space,” said Zac Nesper, Treasurer at HP Inc. “We believe financial accountability is important as we demonstrate our commitment and drive change.”
The growth of ESG transactions and strong appetite from investors has given rise to a wave of multifaceted transactions, notably in the technology sector. For example, in January Latin America e-commerce and payments leader Mercado Libre included a sustainability tranche in its inaugural $1.1 billion debt offering to fund clean transportation and land conservation programmes as well as social initiatives such as support for microfinance.
Corporates in the technology sector are discovering that sustainability-linked financing provides the opportunity to highlight their firm-wide commitment to environmental and social initiativesBarbara Nash, Head of Technology, Media and Telecommunications Coverage at BNP Paribas CIB Americas
“Corporates in the technology sector are discovering that sustainability-linked financing provides the opportunity to highlight their firm-wide commitment to environmental and social initiatives,” said Barbara Nash, Head of Technology, Media and Telecommunications Coverage at BNP Paribas CIB Americas. “Through this facility, HP has embedded ambitious climate goals into its financing while also providing a lever to promote greater inclusion in the firm and the overall technology industry.”
Framework for the future
In June, HP followed its SLL by announcing its Sustainable Bond Framework, which the company will use to issue green, social or sustainability bonds to help finance projects that contribute to a more sustainable and just future. The company also launched its inaugural 10-year Sustainability Bond, totaling $1 billion, as part of a $2 billion overall debt offering. The Sustainability Bond’s proceeds are expected to be used to finance or refinance eligible green and social project categories, including eco-efficient products, renewable energy, energy efficiency, as well as socio-economic advancement and empowerment. The sustainable bond framework from HP is accompanied by a second party opinion from Sustainalytics.
Through its first-ever sustainable financing and new Sustainable Bond Framework, HP continues its journey and mission toward becoming the world’s most sustainable and just technology company.