The Co-operative Group has issued a £300m first-of-its-kind “sustainability bond” and will use the proceeds to fund the promotion of Fairtrade products.
At a time when other retailers, notably Sainsbury’s, are scaling back their promotion of Fairtrade, the Co-op said it intends to allocate the net proceeds of the sustainability bond issuance to the costs of bringing Fairtrade products to customers, and to marketing and promoting Fairtrade products and the wider Fairtrade movement.
Priced in sterling, the bond was two times oversubscribed when issued to the market and will pay an annual interest rate of 5.125%.
The Co-op said that raising funds through a sustainability bond would allow it to access long-term funding at an attractive rate and would enable global investors to increase their focus on investments that meet the UN’s sustainable development goals and key environmental and sustainability targets.
The retailer has developed a sustainability bond framework under which any subsequent bond issuance will allow it to allocate funds to 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 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,” said Steve Murrells, CEO of the Co-op.
“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,” Murrells added.