The Co-op has become the first UK retailer to issue a sterling denominated sustainability bond.
In a move that has raised £300m, the retailer has moved to allocate the proceeds to exclusively support its work to promote Fairtrade. The support will extend to Fairtrade producers and their communities.
Co-op, which has outlets across East Devon, including a large supermarket in Lace Walk, Honiton, says the initiative underlines its unique focus on finding better way of doing business.
It says, Fairtrade delivers real benefits for members, communities and investors.
Steve Murrells, CEO of the Co-op, said: “The popularity of this bond demonstrates confidence in the Co-op’s growth strategy and in particular how we’ve placed sustainability at the heart of our future plans.
“Co-op was an early pioneer of Fairtrade and now with the support of like-minded investors we can grow it further, opening up new opportunities and creating value for our members as well as producers and communities in developing countries.”
The Sustainability Bond has been issued at a time when some other major retailers are scaling back their investment in Fairtrade – a key source of support for communities around the developing world.
A five-year bond, it will pay investors an annual interest of 5.125%.
Co-op believes access to long-term funding will enable global investors to increase their focus on investments that meet the United Nation’s sustainable development goals.
The group has developed a Sustainability Bond Framework under which any subsequent bond issuance will allow the Co-op to allocate funds to its spend on education, via its Academies Trust. The trust work to alleviate water poverty, providing access to responsibly sourced products and delivering energy efficient technology to lower emissions.
The Co-op’s Sustainability Bond Framework has been reviewed by Vigeo Eiris, who have issued a Second Party Opinion (SPO) and have expressed “reasonable assurance” (their highest level of assurance) on our commitments and the bond’s overall contribution to sustainability.
This issuance is the first in a series of planned re-financing that will see the Co-op raise funds to fuel its growth plans, within its debt ceiling of £0.9bn.
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