The Co-op Group has raised a £300m sustainable bond to support the Fairtrade movement.
The sterling bond is designed to meet the UN’s Sustainable Development Goals, and will help fund the shipping of Fairtrade products, produce new ones, and fund marketing.
The Group says the move underlines its “unique focus on a better way of doing business which delivers real benefits for members, communities and investors”.
The announcement follows chief executive Steve Murrells’ speech to the Group’s AGM on 18 May, where he renewed the society’s commitment to Fairtrade at a time when other major retailers are scaling back their investment.
“We remain committed while other retailers continue to pull back or develop alternatives,” he told delegates in Manchester. “We know that Fairtrade is the gold standard and other alternatives are just confusing customers.”
The Group intends to allocate the net proceeds of the sustainability bond issuance to the costs of bringing Fairtrade products to customers, marketing and promoting Fairtrade products and wider Fairtrade movement.
The five -year bond pays investors an annual interest of 5.125%, and allows the Group to access long-term funding at an attractive rate. It enables global investors to increase their focus on investments that meet the UN’s Sustainable Development Goals and key environmental and sustainability targets.
Under its Sustainability Bond Framework, set up last year, the Group can use bond issuances to allocate funds to its spend on:
- education, via its Academies Trust;
- alleviating water poverty;
- providing access to responsibly sourced products; and
- delivering energy-efficient technology to lower emissions.
The framework has been reviewed by ethical rating agency Vigeo Eiris who have issued a Second Party Opinion (SPO) and have expressed “reasonable assurance” (their highest level of assurance) on the 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 Group raise funds to fuel its growth plans, within its debt ceiling of £0.9bn.
Mr Murrells said: “The popularity of this bond demonstrates confidence in our 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.”