The new $1 billion Sustainability Bond will
support Starbucks ethical coffee sourcing and its Greener Retail
initiative
A portion of the funds will support a new $20
million equity investment in responsAbility Investments AG as part
of Starbucks Global Farmer Fund that supports coffee farmers and
their communities
Starbucks Corporation (NASDAQ: SBUX) today announced that
it has completed issuance of a $1 billion Sustainability Bond. It
is the largest Sustainability Bond the Company has issued to
date and follows two previously issued Sustainability Bonds in
2016 and 2017.
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the full release here:
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Funds from the bond will support
Starbucks ongoing work around ethically sourced coffee, including
its work around agronomy research and development and the donation
of coffee trees to farmers. (Photo: Business Wire)
“We are very pleased to see that our new Sustainability Bond
attracted significant investor interest and was oversubscribed,”
said Patrick Grismer, cfo of Starbucks. “The bond demonstrates
Starbucks commitment to meaningful, continual progress toward our
aspiration of sustainable coffee, served sustainably. It also
illustrates a trend toward heavier interest from investors in our
socially and environmentally focused projects – in this case
supporting coffee farmers and leading in green retail.”
Grismer added that Starbucks leadership in social and
environmental responsibility “is a defining element of who we are
as a company. Our intent is that, by issuing a Sustainability Bond,
we’re providing investors an opportunity to participate in our
sustainability efforts, and our hope is that this inspires others
to pursue more sustainability-related investing opportunities.”
Support for Coffee Farmers
As with the two previously issued Sustainability Bonds, funds
will support ethically sourced coffee. The scope includes
purchasing coffee that is verified by Coffee and Farmer
Equity (C.A.F.E.) Practices; the continued development
and operation of Farmer Support Centers and agronomy
research and development centers in coffee-growing
regions around the world; and new and refinanced loans to
coffee farmers made through Starbucks $50 million Global
Farmer Fund.
New to the Starbucks Global Farmer Fund and supported by funds
from the bond, Starbucks has partnered with the lending
organization, responsAbility, on a $20 million equity investment to
provide financing to coffee communities in Latin America, Africa
and Asia in the form of loans that can help replace old, less
productive trees with new trees, buy new equipment, and take other
actions to improve their coffee crops’ quality and
productivity.
“We are excited to have the Starbucks Global Farmer Fund as a
significant investor,” said Anand Chandani, Global Head of
Agriculture Debt Financing at responsAbility. “We see synergies
with Starbucks in building the sustainable coffee value chain,
supporting smallholder farmer engagement and in fostering market
linkages.”
Greener Retail
As a new, expanded scope, the bond will also help
fund the company’s Greener Retail commitments, including its
Greener Stores initiative, announced in September, to design,
build and operate 10,000 Greener Stores globally by 2025. The
open-source Starbucks Greener Store Framework, which
Starbucks developed in partnership with World Wildlife
Fund (WWF) and SCS Global Services, focuses on commitments to
energy efficiency, renewable energy, water stewardship, waste
reduction and more. In addition to Greener Stores, funds will
also support investments in greener cups and packaging as Starbucks
works to reduce our environmental footprint with such projects as
the global rollout of strawless lids and identifying the next
generation of recyclable and/or compostable cups.
According to Sustainalytics, which provided a Second-Party
Opinion on the bond, Starbucks has aligned its Eligible
Sustainability Projects in the new bond with the priorities
outlined in the U.N. Sustainable Development Goals, established in
2015, as well as with the 2018 Sustainability Bond
Guidelines (SBG).
“We applaud Starbucks efforts to broaden its social and
environmental programs and to align its eligible projects with the
U.N. Sustainable Development Goals,” said Heather Land, executive
director of Sustainalytics’ Sustainable Finance Solutions team. “In
addition, Starbucks inclusion of its Greener Retail initiative is a
meaningful addition to its Sustainability Bond.”
As with any Sustainability Bond and outlined in the Green Bond
Principles, the company must report on how the funds are spent and
the impact they have made against the initiatives. Starbucks will
publish annual updates of the allocation of the proceeds throughout
the term of the sustainability bond until the proceeds have been
fully allocated to projects meeting the eligibility
criteria. These updates will be reported publicly at
www.starbucks.com and may include additional descriptions of select
projects funded with sustainability bond proceeds and their
environmental and/or social impacts.
“Morgan Stanley is proud to support Starbucks in their
third and largest Sustainability Bond in three years, and their
continued commitment to the U.N. Sustainable Development
Goals,” said Audrey Choi, Chief Sustainability Officer at
Morgan Stanley, which acted as the Sustainability Structuring Agent
and a joint book-running manager on the transaction.
“The market capacity to raise $1 billion of earmarked funds
directed to Starbucks existing and new sustainability
objectives, including the design, construction and operation of
10,000 Greener Stores globally by 2025, demonstrates
increasing awareness and growth of support of sustainability
objectives amongst the investor community,” added Dolph
Habeck, Head of ESG Debt Syndicate at Morgan Stanley.
The 30-year Sustainability Bond is part of a larger bond
offering of $2 billion, with another $1 billion bond issued
for general corporate purposes including the repurchase of common
stock as part of the previously communicated $25 billion
shareholder return target. The issuance is in line with Starbucks
commitment to a leverage cap of 3x lease-adjusted EBITDAR and a
minimum credit rating of BBB+Baa1.
For more information on Starbucks priorities related to
sustainable coffee served sustainably, visit this piece on
Starbucks Stories. For more information on impact to date from past
Sustainability Bonds, visit our website’s environment and ethical
coffee sections.
About Starbucks
Since 1971, Starbucks Coffee Company has been committed to
ethically sourcing and roasting high-quality arabica coffee.
Today, with more than 30,000 stores around the globe, Starbucks is
the premier roaster and retailer of specialty coffee in the world.
Through our unwavering commitment to excellence and our guiding
principles, we bring the unique Starbucks Experience to life for
every customer through every cup. To share in the experience,
please visit us in our stores or online at
https://stories.starbucks.com/ and www.Starbucks.com.
Forward-Looking Statements
Certain statements contained in this release are
“forward-looking statements” within the meaning of applicable
securities laws and regulations, including statements about the
expected closing of a public offering or senior notes and the use
of proceeds of such offering. Such forward-looking statements are
based on current management expectations and satisfactions of
certain conditions that are subject to various risks and
uncertainties, including market conditions and those risks detailed
in the Company’s filings with the Securities and Exchange
Commission, including the “Risk Factors” section of the Starbucks
Annual Report on Form 10-K for the fiscal year ended September 30,
2018, and the prospectus and prospectus supplement delivered in
connection with the public offering of senior notes discussed in
this release. The company assumes no obligation to update any of
these forward-looking statements.
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