Italian multinational tyre manufacturer Pirelli benefitted from an exceptional market reception for its inaugural €600 million Sustainability-Linked Bond (SLB) issue; a first in the industry with an orderbook almost six times oversubscribed.
The SLB, priced on 11 January, is also Pirelli’s inaugural rated bond, assigned with investment grade ratings by S&P Global Ratings and Fitch Ratings. The transaction targets emissions reduction goals validated by the Science Based Targets Initiative (SBTi) and is aligned with a 1.5-degree scenario. These include:
- KPI 1: Absolute Scope 1 and 2 GHG emissions reduction by 42% by 2025 (against 2015 levels)
- KPI 2: Reduction of absolute scope 3 emissions from purchased raw materials by 9% (versus a 2018 baseline)
An ‘off the road’ sustainable financing strategy
Pirelli’s decision to launch the transaction underlines the company’s strength of ambition in sustainability, as outlined in its Sustainability Strategy. Pirelli is committed to the net zero transition, with an aim to achieve carbon neutrality by 2030, and to make a tangible contribution to global efforts to achieve the 2030 Sustainable Development Goals.
Since 2020, the company has harnessed sustainable finance mechanisms in the form of sustainability-linked loans (SLL), and in May 2022 established an inaugural Sustainability-Linked Financing Framework. The framework extends its approach to a wider range of financing instruments, such as sustainability-linked bonds, rates derivatives, guarantees and insurance policies. The framework has been established in accordance with the ICMA (International Capital Market Association) Sustainability-Linked Bond Principles 2020 and the LMA (Loan Market Association) Sustainability-Linked Loan Principles 2022.
BNP Paribas acted as joint ESG Structuring Advisor on the framework and joint Global Coordinator on Pirelli’s inaugural SLB.
Capital markets can support carbon intensive sectors to align financing strategies with environmental KPIs across all emissions scopes. With this inaugural SLB, Pirelli demonstrates that innovation in sustainable finance can drive material decarbonisation across the whole value chain.Giulio Baratta, Head of IG Finance DCM EMEA, BNP Paribas