Corporate giant Apple has announced it is entering the green bond market with a US$1.5 billion (AU$2.1b) issuance that will be used to finance green buildings, energy efficiency, renewables and green product material innovation.
The move is part of a larger US$12b (AU$16.7b) bond sale, which is reported to be the second-largest bond market deal for 2016 so far.
“This will allow investors to show they will put their money where their hearts and concerns are,” Apple vice president of environment, policy and social initiatives Lisa Jackson told Reuters.
An investor prospectus said Apple would identify eligible projects that fell within three environmental priorities where the company believes it can make the most impact
- Reduce impact on climate change by using renewable energy sources and driving energy efficiency in facilities, products and supply chain
- Pioneer the use of greener materials in products and processes
- Conserve precious resources
Eligible projects are ones that meet the following criteria:
- expenditures related to new and ongoing renewable energy projects, such as solar and wind projects, or associated energy storage solutions
- expenditures related to projects that have received within the last three years, or are expected to receive, certification of LEED Gold or Platinum or BREEAM Very Good, Excellent or Outstanding green building standards
- expenditures related to the implementation of environmental design elements for new or ongoing building developments, such as high performance mechanical systems, natural ventilation, onsite renewable energy, and high performance lighting systems
- expenditures related to energy efficiency projects and technologies at corporate facilities, such as heating, ventilation and airconditioning systems upgrades, lighting retrofits and energy monitors and controls
- expenditures related to water efficiency projects and technologies at corporate facilities, such as upgrades to water efficient fixtures and water efficient irrigation and increased use of recycled water
- expenditures related to projects that enhance recycling, material recovery and reuse, and landfill waste diversion for products and facilities
- expenditures related to projects and technologies that facilitate the use of greener materials in products, through the use of bio-based materials, the use of recyclable materials or the elimination of toxic substances that are commonly used in the industry in accordance with the Regulated Substances Specification
The Climate Bonds Initiative said the bond had a seven-year tenor, semi-annual coupon of 2.85 per cent and was rated Aa1 by Moodys. Lead underwriters for the deal are Bank of America Merrill Lynch, Deutsche Bank, JP Morgan and Goldman Sachs.
It said Apple had committed to a pre- and post-issuance review, in line with the Climate Bonds Standard, which would provide greater assurance to investors that their money was definitely going to something with tangible environmental benefits.
“This positive signal to future US corporate issuers [is] not only about green bonds but also that getting an independent review on the green credentials is a fairly standard process,” it said in a statement.
“There is a lot of potential for the US corporate green bond market and we expected it [to] kick off in 2015. Clearly it didn’t get the momentum last year but with Apple leading the way this year we may see a ramping up of the market.”