Argentine companies Santander and San Miguel spearheadfirst Sustainability Linked Bond offering in excess of USD 50 million
In a significant move towards sustainable financing, San Miguel and Santander Argentina have issued the first Sustainability Linked Bond (SLB) in Argentina. This innovative financial instrument is designed to link bond economics with real sustainability outcomes, thereby supporting corporate governance in achieving measurable Environmental, Social, and Governance (ESG) improvements.
The SLB, worth USD 50,006,468, was placed by Santander Argentina and was awarded for its issuance. The bond's financial or structural features, such as coupon rates, are linked to the achievement of predefined sustainability performance targets aligned with ESG objectives. These targets are measurable through predefined Key Performance Indicators (KPIs) and assessed against predefined Sustainability Performance Targets (SPTs).
San Miguel, a leading company in the food and beverage industry, has committed to meeting a sustainability indicator: the supply of 66% of the electricity of the Famailla Industrial Complex from renewable sources over a period of 12 months. This goal is expected to generate an average saving of 6,300 tn CO2 per year. The company's sustainability strategy includes an ambitious 10-year Climate Action Plan, aimed at reducing its carbon footprint.
To ensure the verification of the framework for the SLB, Fitch's Argentine subsidiary, FIX, will provide independent verification. Additionally, Price Waterhouse Cooper will provide an annual report verifying the results obtained under the Sustainable Objective of the SLB. The fulfilment of the objectives of the SLB will be verified annually.
Santander Argentina, the leading private entity in the Argentine financial system by volume of deposits, has a team of over 8,000 employees and a presence in 22 provinces and the city of Buenos Aires. The bank has reaffirmed its commitment to sustainable investments, as it was also the placing agent of the first SLB issued on the local debt market.
Santander Argentina has an extensive responsible banking programme focusing on higher education, with over 90 collaboration agreements in place with Argentine public and private universities. The bank aims to deepen the positive impact of its operations through its forms of financing and to continue to nourish the long-term relationship with its stakeholders.
The regulatory framework for SLBs requires detailed disclosure of ESG-related KPIs, sustainability performance targets (SPTs), and aligns SLBs with global standards like the International Capital Market Association (ICMA) Principles. This strengthens market confidence and aligns bond issuance with broader environmental and social goals.
In the first half of the year, Santander participated in 32 issues for more than ARS 122,000 million, representing 79% of the total corporate bond market. This demonstrates the bank's active role in the corporate debt market and its commitment to sustainable financing.
The Nicholson y Cano law firm provided legal advice to San Miguel during the process of issuing the Sustainability Linked Bond. This collaboration underscores the growing importance of legal expertise in navigating the complex landscape of sustainable finance.
In conclusion, the issuance of the first SLB in Argentina marks a significant step forward in the country's sustainable finance market. By linking corporate debt transactions to measurable ESG improvements, SLBs provide a powerful incentive for companies to integrate ESG factors into their business strategy and operations, enhancing transparency, accountability, and impact measurement in ESG investing.
- The first Sustainability Linked Bond (SLB) in Argentina, related to corporate governance, aims to align bond economics with real sustainability outcomes, supporting companies like San Miguel in achieving measurable Environmental, Social, and Governance (ESG) improvements.
- The issuance of the SLB by San Miguel, a leading food and beverage company, is associated with a commitment to supply 66% of the electricity of the Famailla Industrial Complex from renewable sources over a 12- month period, a move that is expected to generate an average saving of 6,300 tn CO2 per year and promote environmental-science.
- The technology-driven regulatory framework for SLBs requires disclosure of ESG-related Key Performance Indicators (KPIs), aligns SLBs with global standards like the International Capital Market Association (ICMA) Principles, and strengthens market confidence, thereby making a significant contribution to sustainable financing and investing in technology.
