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Smurfit Kappa boosts circular economy practices with €1B Green Bond

October 8, 2022
Energy & Chemical Value Chain

Smurfit Kappa has published its first Green Bond Allocation and Impact Report, demonstrating that the company’s assets will go to promoting a circular economy and managing natural resources in environmentally sustainable manners.

The report details the use of the proceeds of its inaugural €1 billion (US$980 million) dual-tranche Green Bond issued in September 2021.

“The circularity at the heart of our business model is firmly integrated into our funding strategy. Through our Green Finance instruments, we are giving investors the opportunity to invest funds in sustainable business practices. With interest growing in investments that support the environment, we are seeing a strong appetite for this kind of opportunity,” says Smurfit Kappa group treasurer, Emer Murnane.

In accordance with Smurfit Kappa’s Green Finance Framework, the proceeds were allocated to assets associated with circular economy adapted products, production technologies and processes or certified eco-efficient products (96%).

They were also allocated to environmentally sustainable management of living natural resources and land use (4%).

Issuing green finance instruments
Smurfit Kappa’s Green Finance Framework is intended to reflect the sustainable nature of its business model, with eligibility criteria that span the geographic scope of the group’s operations and take into account its circular business practices.

This is done by using sustainable raw materials, with post-consumer recovered paper as the main material, and implementing circular production processes that are subject to continuous improvement.

Commenting on the report, chief sustainability officer, Garrett Quinn, says: “This report highlights the significant steps we are taking to ensure that our [environmental] sustainability strategy and funding strategy become seamless.”

“By issuing green finance instruments we are embedding sustainability into our capital structure. Today’s report reflects our sustainability ambitions and the progress we are making, which we hope is both reassuring and attractive to existing and potential investors.”

In the report, Smurfit Kappa also demonstrates that its purpose is to create paper-based packaging solutions for its customers, protect products in transit and resources for future generations.

In September 2021, the company launched its Green Finance Framework in order to further integrate circularity at the heart of its business model into its funding strategy, alongside its sustainability-linked €1.35 billion (US$1.32 billion) revolving credit facility and €330 million (US$323 million) securitization facilities.

The report details that the allocations made under its eligible asset categories support UN Sustainable Development Goal 12 – “Responsible consumption and production” and Goal 15 – “Life on land,” and the goals of the Paris Agreement. In September 2021, Smurfit Kappa issued its inaugural green bond of €1 billion (US$980 million), which was allocated to refinancing our portfolio of eligible assets which totaled €2.658 billion (US$2.600 billion) on December 31, 2021.

Smurfit Kappa in the news
Earlier this year, the company released a Sustainable Development Report detailing that it had achieved a 6% year-on-year drop in carbon emissions – an over 40% reduction since 2005.

In May, Smurfit Kappa launched its vegan-certified packaging company after obtaining the Vegan Society trademark for corrugated solutions produced at its Markham Vale site in the UK.

The company also launched a water-resistant paper that does not sacrifice recyclability. Branded AquaStop, the paper is part of the company’s TechniPaper portfolio, which consists of an array of high-performance papers designed to handle the most complex supply chains.

Edited by Natalie Schwertheim


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