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While it is important to focus on enabling change and the pivot towards a more responsible future, it is also key to make sure that these changes can be continued for the forseeable future. Here, we examine Sustainable Bonds, combining both green and social initiatives into one responsible and sustainable product.

Sustainable bonds: Combining green and social initiatives

David Katimbo-Mugwanya David Katimbo-Mugwanya Senior Fund Manager
Edentree Insight reports

The Rise of Social and Sustainable Bonds

David Katimbo-Mugwanya

Senior Fund Manager
30 Dec 2020

Chapter 7

Sustainable bonds: Combining green and social initiatives

Not content with the choice of either environmental or social objectives, some issuers have opted for project selection criteria that incorporate elements of both. Sustainable bonds support undertakings that aim to generate clear environmental benefits, while also deploying funds to those tackling societal issues and / or targeting a specific demographic of the population.

Co-Operative Group

Co-Operative Group issued one such bond in May 2019. The UK’s largest consumer co-operative raised GBP300 million to fund its social and environmental projects that include expanding its Fairtrade campaign, establishing more academies in the north of England, as well as improving its environmental impact.

Already sourcing 100% of its energy from renewable sources since 2005, the Co-Op Group has embarked on bettering its environmental efficiency by targeting a 50% reduction in direct greenhouse gas (GHG) emissions by 2025. The Group is also seeking to lower its product-related emissions by 11% over a 9-year timeframe commencing from 2016 and has set science-based GHG reduction targets to limit both direct and indirect climate impacts. Co-Op published its first full end-to-end GHG footprint data for 2019 and committed to publishing details of its approach at the end of 2020. The company further notes that its science-based targets align with the ‘ambitious best practice’ standards set by the Science Based Targets Initiative (SBTi) to limit global warming to no greater than 1.5°C. To that end, the group is investing in technology and infrastructure to increase energy efficiency.

The Co-Op Group has embarked on bettering its environmental efficiency by targeting a 50% reduction in direct greenhouse gas emissions by 2025

As one of the first UK retailers to sell Fairtrade products across all of its stores in 1998, well before it became ‘fashionable’, Co-Op has remained an avid supporter of equitable and sustainable trading. The retailer is the UK’s largest convenience seller of Fairtrade products. Co-Op has allocated GBP240.3 million1 of its sustainable bond proceeds towards the purchase of Fairtrade products, focusing on segments where it has the greatest impact on producers such as wine, cocoa, tea, sugar, flowers, coffee and bananas. Co-op aims to strengthen producer communities and workers by embedding the costs of bringing Fairtrade products to customers, such as certification, packaging and transportation.

Besides Fairtrade, Co-Op has also identified water sanitation projects and education as key planks of its sustainable bond framework in its desire to promote socio-economic advancement and empowerment. With a goal of improving access to clean water, Co-Op donates 3p/litre of its own-brand bottled water to The One Foundation and a further 1p/litre to the Global Investment Fund for Water. Efforts have included the construction of piped water infrastructure and community toilets in ten cocoa-producing towns, which improved water sanitation for 178,000 people in sub-Saharan Africa.

Through its Co-Op Academies Trust, that focuses on the north of England, the Group has grown the number of academy schools that it runs in Greater Manchester, Yorkshire, Wirral and Staffordshire to 25. It aims to reach a tally of 40 academies by the end of 2021 by funding the noneducational costs of converting schools to Co-Op Academies, while also sponsoring costs associated with their education programme. The retailer also took the commendable step of extending free school meals to the applicable 6,000 Co-Op academy students during the summer of 2020.




1. Co-Op Sustainability Report 2019