Johnson Controls issues $500m sustainability-linked bond

It will pay a higher interest rate to bond investors if it fails to meet its interim targets for reducing Scope 1, 2 and 3 emissions by September 2025

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Sustainable buildings firm Johnson Controls has has issued its first $500 million (£366m) sustainability-linked bond.

It follows the adoption of a new set of ambitious environmental goals in January 2021, which were approved by the Science-based Targets initiative.

The company has committed to cut operational emissions by 55% and reduce customers’ emissions by 16% before 2030.

Johnson Controls issued the sustainability-linked bond based on these commitments, which ties the interest rate on the bond to the achievement of the environmental goals.

That means the company will pay a higher interest rate to bond investors if it fails to meet its interim targets for reducing Scope 1, 2 and 3 emissions by 16th September 2025.

It will use the net proceeds to the green bond within one year of issuance on projects aimed at driving energy efficiency, both internally and for its customers.

George Oliver, Chairman and CEO, Johnson Controls said: “Experts say that an additional $1-2 trillion [£0.7-£1.5tn]/year must be invested in sustainability and cutting greenhouse gases if we are going to have any chance of meeting the steep carbon reductions science tells us is urgently required.

“Governments alone will not be able to mobilise this sum of money so private sector capital needs to get sustainable and fast. Building the market for sustainable finance is therefore an imperative and ensuring that the highest standards are met so that dollars flow to projects that truly accelerate decarbonisation, is also critical. With our continued commitment to sustainable finance and aggressive sustainability targets, we are showing our leadership in the field.”