Deutsche Post DHL Group, a global leader in logistics and shipping, has introduced a Sustainability-Linked Finance Framework, which will allow the company to issue sustainability-linked bonds. DHL describes this move as establishing "a direct link between its sustainability strategy and its financing strategy."
Sustainability-linked securities, which are meant to motivate issuers to achieve sustainability objectives by tying their terms to achieving such objectives, are the fastest-growing area of the sustainable finance market. According to recent research by Moody, the issuance of sustainability-linked bonds increased tenfold to $90 billion in 2021.
The coupon payments on sustainability-linked bonds issued by DHL under the new framework would be tied to the company's performance against its emissions reduction goals, specifically, its commitments to reduce absolute Scopes 1 and 2 emissions by 42% and absolute Scope 3 emissions from fuel- and energy-related activities, upstream transportation, and distribution by 25% by 2030, with the base year of 2021. DHL will be compelled to pay investors higher interest rates if the targets are not met.
The framework identifies the selected Sustainability Performance Targets (SPTs) as commitments confirmed and certified by the Science-Based Targets program (SBTi).
Melanie Kreis, chief finance officer of DHL, stated that the new framework "is intended to serve as a financial incentive to achieve our environmental goals."
"I'm very happy about today's news, because I'm sure that putting our sustainability goals into our funding strategy will speed up Deutsche Post DHL Group's green transformation. The Sustainability-Linked Finance Framework is an important step that shows our company's commitment to permanently lowering its carbon footprint.
Last year, DHL published its Sustainability Roadmap, which included intentions to invest €7 billion over ten years in efforts to reduce its CO2 emissions, with an emphasis on alternative aviation fuels, the development of its fleet of zero-emission electric vehicles, and climate-neutral buildings.
Sustainalytics' Second Party Opinion on the framework assessed the Scope 1 and 2 SPTs as "Highly Ambitious" and the Scope 3 SPT as "Ambitious."