Starbucks issues $1 billion sustainability bond

Funds from the bond will support Starbucks ongoing work including the donation of coffee trees to farmers.

Starbucks has completed issuance of a $1billion sustainability bond to support ethically sourced coffee and establish greener retail. It is the largest the company has issued to date and follows two previously issued sustainability bonds in 2016 and 2017.

Patrick Grismer, chief financial officer of Starbucks said: “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.”

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.”

The bond will also help fund the company’s Greener Retail commitments, including its Greener Stores initiative 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.

“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,” said Dolph Habeck, head of ESG Debt Syndicate at Morgan Stanley.

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