By Dieter Holger

 

Amazon.com Inc. has issued its first sustainability bond, aiming to raise $1 billion to support environmental and social projects as investors clamor for more sustainability bonds to "green up" their portfolios.

The Seattle-based e-commerce giant said Monday that the bond proceeds will fund renewable energy, affordable housing, cutting resources used by buildings and helping underrepresented groups enter the technology workforce through training. Investors oversubscribed to the sustainability bond, which matures in two years and yields 0.257%, an Amazon spokesperson said.

Amazon aims for net-zero greenhouse-gas emissions across its direct and indirect activities by 2040 and has rallied other big companies to target the same year.

The bond doesn't have special terms but Amazon will use the net proceeds as soon as possible for green or social projects, though a breakdown of funding for each project is not yet available, a spokesperson said. Down the road, companies often provide an update on how funds from green or sustainable bonds were used.

Amazon ranks second among 18 publicly-traded e-commerce companies for its management of environmental, social and governance matters, including disclosures and programs, according to The Wall Street Journal's ESG scores. EBay Inc. currently holds the top spot in the e-commerce section of the rankings, which update as more data becomes available.

Unlike green bonds that focus on climate change, sustainability bonds are tied to both environmental and social efforts and have gained in popularity in recent years. Investors who want to boost the sustainability profile of their holdings tend to oversubscribe to the bonds.

Late last month, home-appliance maker Whirlpool Corp. said it completed its first $300 million sustainability bond, a 10-year note with an interest coupon of 2.4%.

Loans that reward or punish companies with higher or lower borrowing costs if they meet self-made environmental and social targets continue to attract more corporate borrowers who want to add teeth to their commitments. Beverage giant Anheuser-Busch InBev SA signed a $10.1 billion sustainability-linked loan in February.

The growing number of net-zero pledges from companies are expected to boost the sustainable-debt market to record levels, analysts say. The global market hit $2.2 trillion during the first quarter and could surpass $3 trillion this year, according to the Institute of International Finance.

In 2020, companies and governments issued a record $732.1 billion in sustainable debt including bonds and loans, a 29% increase from 2019, according to BloombergNEF, a data provider.

Goldman Sachs Group Inc., Bank of America Corp., Wells Fargo & Co., Morgan Stanley, HSBC Holdings PLC, JPMorgan Chase & Co., Citigroup Inc., Societe Generale SA, Deutsche Bank AG and TD Securities are acting as bookrunners for Amazon's sustainability bond, the company's spokesperson said.

 

Write to Dieter Holger at dieter.holger@wsj.com

 

(END) Dow Jones Newswires

May 11, 2021 00:36 ET (04:36 GMT)

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