Texan foodservice distribution company Sysco this week closed its debut US$500 million Sustainability Bond, in a US$1 billion issuance comprised of 50% in 10-year 2.44% senior notes (the sustainable half), plus an additional US$500 million in 30-year 3.31% senior notes.
The food services giant, which saw US$60 billion in revenues last year, claims to be one of the first companies within the sector to enter the ESG marketplace.
“We are proud to lead our industry in issuing our first ever Sustainability Bond, demonstrating our deep commitment to caring for people, sourcing products responsibly and protecting the planet,” says Neil Russell, Sysco’s vice president of corporate affairs. “The high level of interest from institutional investors for this offering indicates the market’s support for our CSR strategy.”
According to Sustainalytics data the company has a relatively low ESG score of 13, sitting in the third percentile. “Sysco has a higher ESG score than its peers, but specific targets and metrics are lacking from the company’s CSR reports,” warned the MIT Sloan Sustainability Lab in a recent investment report for Breckenridge Capital Advisors.
However, Sysco last year committed to a five-year program to raise its corporate standards, including boosting its use of renewable energy and promoting more sustainable fishing and farming practices by 2025 – from which the recent transaction is just the latest development.
“As the global leader in foodservice distribution, it is our responsibility to operate in a manner that meets the needs of our customers today, while producing positive, lasting change,” says Tom Bené, Sysco CEO. “Our 2025 goals are a solid foundation that further demonstrate our global sustainability commitment. We are leading our industry with our CSR initiatives and by including specific long-term goals that align with our strategic business priorities, we are living our vision of becoming our customers’ most valued and trusted business partner.”
According to market reports the sustainable segment of the issuance was more than US$1 billion oversubscribed, suggesting that investors are keen to lap up the firm’s sustainable efforts – leading to impressively tight pricing for the sustainable paper. Moody’s gave the debt offering A3 ratings, while S&P Global assigned it a score of BBB+.