Food service giant Compass Group issues more than £680m of sustainable bonds

Image: Compass

Compass Group announced earlier this week that it had raised proceeds of £250m and €500m respectively from the two bond packages. Both were listed on the London Stock Exchange Main Market, appearing in a sub-category called the Sustainable Bond Market. The bonds will replace an existing Eurobond from Compass Group that will reach maturity in January 2023.

Proceeds from the bonds will be used to support work that helps Compass Group progress on its goals relating to climate, waste, social sustainability, supplier engagement and healthy eating.

On climate, Compass Group has set a global commitment to a net-zero business and value chain by 2050. It has had its 2030 target for reducing operational emissions verified by the Science-Based Targets Initiative (SBTi) in line with 1.5C, and its 2030 target for reducing indirect emissions verified in line with 2C.

Proceeds from the bonds may be used to finance energy efficiency, renewable energy procurement, regenerative agriculture and the procurement of plant-based and seasonal, local products – all activities which will reduce emissions.

Bond proceeds may also go towards efforts to reduce food waste and to reduce plastic packaging.

Also eligible for support from the bonds are Compass Group’s efforts to promote healthy eating and to support more sustainable suppliers. These include suppliers producing certified goods, local suppliers, and suppliers from marginalised groups. Compass Group UK & Ireland is notably ending the use of air freight for fresh fruit and vegetables this year.

Bond allocations will be guided by the firm’s Sustainable Financing Framework, a 22-page framework which was launched in July in preparation for this week’s bond issuances.  As most firms’ frameworks state, Compass Group’s framework requires it to report annually on how the proceeds have been allocated until they are fully allocated. The reports must also note the social and environmental benefits of the supported projects.

Compass Group’s chief financial officer Palmer Brown said the framework and bonds “reflect the company’s objective to be a socially and environmentally responsible organisation for clients, employees, suppliers and wider society” and its prioritisation of the net-zero transition.

Brown added: “Furthermore, by providing a sustainability reporting framework for our colleagues to adhere to, we expect to see additional operational benefits across the Group’s businesses, reinforcing more sustainable practices and behaviours, while accelerating existing projects that underpin our growth and drive efficiencies.”

The name’s bond. Sustainability-linked bond.

According to Linklaters, the amount of sustainability-linked bonds issued globally in 2021 was ten times higher than in 2020, with a total of $110bn raised. 2022, it is predicting, will be even stronger. $26bn was raised globally in the first quarter and a further $27bn in the second quarter. Linklaters has recorded that companies in Europe are the leading issuers of sustainability-linked bonds.

In recent weeks, edie has covered Alphabet Inc’s confirmation that all proceeds from its flagship $5.75bn sustainable bond have been allocated; news of PepsiCo’s second green bond package being issued at $1.25bn and Anglian Water’s use of bonds to raise funding from the Canadian market for drought resilience projects in the UK.