LafargeHolcim links €850m to decarbonisation goals

The world’s largest cement manufacturer, LafargeHolcim, has priced an €850m bond linked to the company’s sustainability targets.

LafargeHolcim’s €850m sustainability-linked bond comes with a “coupon bond” – a debt obligation representing interest payments – of 0.5% that matures in 2031. Investors into the bond will access a higher coupon yield if the company is unable to meet the sustainability targets tied to the bond, including an aim to reduce emissions to 475 kg net CO₂ per tonne of cementitious material by 2030. The CO2 target was recently unveiled by the company as part of a new set of decarbonisation goals.

According to the company, an order book of EUR 2.6 billion linked to the bond “demonstrates the confidence of investors in the company’s financial strength, strategy and ability to deliver on its sustainability targets”.

LafargeHolcim’s chief sustainability officer Magali Anderson said: “This announcement demonstrates the company’s commitment to reach the most ambitious CO2 reduction target of the industry for 2030. Today’s bond issuance brings our ESG related funding agreements to €5.5bn.”

New sustainability goals

LafargeHolcim has committed to becoming the first global building materials company to have targets approved by the Science Based Targets initiative (SBTi). The company has joined the SBTi’s Business Ambition for 1.5°C, committing to science-based targets aligned to the highest ambition of the Paris Agreement, with a long-term trajectory of reaching net-zero emissions by 2050 at the latest.

Intermediate targets have been set for 2030 to reduce scope 1 and 2 emissions by 21% per tonne of cementitious materials against a 2018 baseline. This target will see scope 1 emissions reduced by 17.5% and scope 2 emissions by 65% in the same timeframe. LafargeHolcim will reduce its transportation and fuel-related emissions by 20%. All of these targets have been approved by the SBTi.

The company has also committed to opening and operating its first net-zero carbon cement production facility in the future. More than 20 Carbon Capture Usage and Storage (CCUS) projects will be trialled across Europe and North America.

Earlier this year, a group of the world’s leading producers of cement issued a new industry commitment to deliver carbon-neutral concrete by 2050.

The joint industry ‘2050 Climate Ambition’ sees 40 global cement companies commit to delivering a carbon-neutral cement by 2050, aligning with the aspirations of the Paris climate accord. Companies included in the ambition are LafargeHolcim, Cemex, Dalmia Cement and Heidelberg.

LafargeHolcim’s Anderson recently spoke at edie’s Net-Zero Live virtual event. The event saw hundreds of sustainability and energy experts gathering with the shared aim of accelerating ambition and action. Here, we round up the key takeaways.

Matt Mace