Environmental Finance's Sustainable Debt Awards 2024

Sustainability-linked bond of the year - corporate: DHL Group - Deutsche Post

On June 2023, Deutsche Post, the parent company of logistics firm DHL Group, issued its inaugural sustainability-linked bond (SLB) worth €500 million ($544 million).

The interest rate of the ten-year bond is tied to the company's performance against key performance indicators (KPIs) set in the group's Sustainability-Linked Finance Framework, published in November 2022.

The proceeds will primarily be used for general corporate purposes, including refinancing of existing financial liabilities. The bond has a fixed coupon of 3.375% per annum. In case the company fails to achieve one or both sustainability performance targets (SPTs), the interest rate will increase by 0.25 percentage points per annum from 2031 until maturity.

The DHL Group's SLB includes two KPIs that are both aligned with the company's Science Based Targets initiative (SBTi) approved targets and linked to Scope 1, 2 and 3 emissions.

Firstly, DHL Group commits to reduce absolute Scope 1 and 2 emissions by 42%. The company says it plans to achieve this reduction by increasing the share of sustainable fuels to over 30% by 2030 and electrifying the pickup vehicles fleet to over 60%.

The second target relates to a reduction of absolute Scope 3 emissions from fuel- and energy-related activities, upstream transportation and distribution and business travel 25% by 2030, from a 2021 base year.

Fredrik von PlatenAs a global logistics company, the vast majority of DHL Group's global greenhouse gas emissions arises from aircraft, vehicles, and logistics sites which are operated globally. Therefore, the majority of its emissions are both hard to abate, and from outside its operations.

Fredrik von Platen, sustainable finance, debt capital markets, SEB, commented: "We recognise that sustainability is not a goal, but a journey that requires continuous innovation and dedication. This award is a recognition that reflects all the hard work and dedication of every member of the team who worked on this transaction, as well as the trust and support from investors. I am a strong believer of the importance of integrating sustainability targets into financing strategies to accelerate the green transformation in our society."

SEB acted as an advisor for the Sustainability-Linked Finance Framework, as well as a structurer for the SLB issuance.

Deal highlights

Issuer: Deutsche Post AG
Size: €500 million ($544 million).
Maturity: 3 July 2033
Coupon: 3.375%. Coupon step-up: Up 25bps if either of the SPTs is not met.
KPIs: KPI1: reduce absolute Scopes 1 and 2 emissions by 42% by 2030. KPI 2: Reduce Scope 3 emissions from fuel- and energy-related activities, upstream transportation and distribution and business travel 25% by 2030
External reviewer: Sustainalytics
Lead managers: Commerzbank, HSBC, ING, SEB
Credit rating: BBB+ (Fitch); A2 (Moody's)