Adidas will invest in more sustainable materials

Adidas will invest in more sustainable materials

German sportswear giant Adidas has placed its first 'green bond' as part of plans by the company to execute on its long-term sustainability roadmap, while also optimising its capital structure and financing costs.

The EUR500m (US$586m) bond has a term of eight years and a coupon of 0.00%. It will be listed on the Luxembourg Stock Exchange and has denominations of EUR100,000 each. The offering was more than five times oversubscribed.

The company says proceeds from the first-time bond placement will help fund environmental as well as social initiatives at Adidas.

More specifically, they will be used in accordance with Adidas' newly created sustainability bond framework. The framework has been validated by a second-party opinion from ratings firm Sustainalytics, who confirmed that the framework is "credible, impactful and aligned with established sustainability principles".

Eligible sustainable projects cover investments into more sustainable materials and processes as well as projects that positively impact communities. This includes purchases of recycled materials for sustainably sourced products, investments into renewable energy production and energy-efficient buildings as well as various initiatives to create lasting change for under-represented communities.

"We are committed to keep building on our industry leadership in the area of sustainability," says Adidas CFO Harm Ohlmeyer.

Adidas has taken number of steps toward optimising its capital structure and financing costs in the recent past. In early August, the company received strong first-time investment-grade ratings by both S&P and Moody's. While Standard & Poor's rated Adidas 'A+', Moody's granted the company an 'A2' rating.

In early September, the company also successfully placed two bonds totalling EUR1bn, each with a maturity of four and 15 years and coupons of 0.00% and 0.625%, respectively.

Adidas is one of a number of apparel companies to place sustainability bonds this year. Earlier this month, Burberry placed its inaugural sustainability bond, which it claimed was the first of its kind issued by a luxury fashion company. While VF Corp closed its inaugural EUR500m (US$551.5m) green bond offering in February.