Bloomberg reported that JSW Group plans to switch a majority of its bonds to green instruments as the industrial giant seeks access to longer-term borrowings. JSW Group Chief Financial Officer Mr Seshagiri Rao said in an interview “There is a high-probability that the company will switch to only selling sustainability-linked bonds or green bonds over the next five years. More and more investors, banks and the entire financial system will look to investing only in those companies which are ESG-compliant and those firms which have a roadmap on how they will reduce emissions. Otherwise raising financing itself will become difficult in the future. So the company has to evolve in that direction.” JSW group has raised about USD 1.6 billion via SLBs and green bonds. Last year, flagship JSW Steel raised a USD 500 million SLB that was linked to its ability to trim emissions from three mills in India by about 23% to around 1.95 tons of carbon dioxide per ton of crude steel produced by the end of the decade. The target took into account emissions from the company’s own production scope 1 & energy usage cope 2. JSW will have to pay a one-time coupon step-up of 37.5 basis points if it fails to meet the commitments. The group has outlined plans to spend USD 1 billion to cut emissions at its steel mills and USD 9.8 billion to shift its power business, JSW Energy, away from coal to renewable sources. While changes at industries like the group’s steel and cement operations are being made in the backdrop of India’s own national target to turn carbon neutral by 2070, a large part of the push is being driven by overseas investors and customers. Green bonds are instruments used to raise money for environmentally friendly projects. SLBs, on the other hand, may be used more broadly, but are linked to sustainability targets such as carbon reduction. Companies across the world are increasingly raising sustainable debt through instruments linked to their environmental goals as pressure intensifies from investors and regulators.
Bloomberg reported that JSW Group plans to switch a majority of its bonds to green instruments as the industrial giant seeks access to longer-term borrowings. JSW Group Chief Financial Officer Mr Seshagiri Rao said in an interview “There is a high-probability that the company will switch to only selling sustainability-linked bonds or green bonds over the next five years. More and more investors, banks and the entire financial system will look to investing only in those companies which are ESG-compliant and those firms which have a roadmap on how they will reduce emissions. Otherwise raising financing itself will become difficult in the future. So the company has to evolve in that direction.” JSW group has raised about USD 1.6 billion via SLBs and green bonds. Last year, flagship JSW Steel raised a USD 500 million SLB that was linked to its ability to trim emissions from three mills in India by about 23% to around 1.95 tons of carbon dioxide per ton of crude steel produced by the end of the decade. The target took into account emissions from the company’s own production scope 1 & energy usage cope 2. JSW will have to pay a one-time coupon step-up of 37.5 basis points if it fails to meet the commitments. The group has outlined plans to spend USD 1 billion to cut emissions at its steel mills and USD 9.8 billion to shift its power business, JSW Energy, away from coal to renewable sources. While changes at industries like the group’s steel and cement operations are being made in the backdrop of India’s own national target to turn carbon neutral by 2070, a large part of the push is being driven by overseas investors and customers. Green bonds are instruments used to raise money for environmentally friendly projects. SLBs, on the other hand, may be used more broadly, but are linked to sustainability targets such as carbon reduction. Companies across the world are increasingly raising sustainable debt through instruments linked to their environmental goals as pressure intensifies from investors and regulators.
