Deutsche Post DHL Group has linked its sustainability targets to its future long-term financial instruments to expand its commitment to sustainability. To this end, the company has introduced a framework that allows it to issue sustainability-linked bonds in the future.
With its Sustainability-Linked Finance Framework, Deutsche Post DHL Group has created a direct relationship between its sustainability strategy and its financing strategy. The framework enables the issuance of debt instruments such as bonds, the coupons of which are linked to the achievement of the group’s aspirational CO2 emissions-reduction target. Depending on the group’s performance toward net zero emissions logistics, the interest rates of the sustainability-linked debt instruments can change.
For the issuance of sustainability-linked debt instruments, Deutsche Post DHL Group will use its absolute annual CO2 emissions as a key performance indicator to determine interest payments. Going forward, the framework can be used for long-term debt issuances. Missing the group’s interim environmental target by 2030 will result in higher interest rates to be paid to debt investors. The concrete terms and conditions will depend on individual debt issuances. Financial services company Skandinaviska Enskilda Banken (SEB) acted as an advisor for the development of the framework.
By using its absolute annual CO2 emissions as a key performance indicator, the group intends to stress the urgent need to decarbonize the entire logistics sector and underscore its commitment to reducing its greenhouse gas emissions to below 29 million tons of CO2e by 2030. This emissions target is in line with the Paris Agreement and was validated and approved through the Science-Based Targets initiative (SBTi) in October 2022.
Melanie Kreis, chief financial officer of DHL, said, “I am very happy about today’s announcement, as I truly believe that integrating our sustainability targets into our financing strategy accelerates the green transformation of Deutsche Post DHL Group. The Sustainability-Linked Finance Framework is an important milestone that shows our commitment to permanently reducing our company’s carbon footprint. Furthermore, our framework is designed to serve as a financial incentive to deliver on our environmental ambitions. This creates trust and transparency for our customers and investors.”