14 September 2023

Capital market début: The REWE Group successfully issues a sustainability-linked bond and makes sustainability a direct business factor

Reading time: 6 min.
  • The sustainability-linked bond, with an issue volume of 900 million euros, will enable investments

  • Sustainability-Linked Bond Framework published

  • Alignment with Science Based Targets initiative (SBTi) underscores REWE and PENNY’s commitment to the climate protection initiative

The REWE Group is the first German food retailer to successfully issue a bond on the capital market. The company’s corporate financing is directly connected with its sustainability efforts, which have been part of its corporate strategy since 2008.

The bond is a sustainability-linked bond (SLB), meaning that the amount to be repaid at the end of the term is directly linked to the achievement of clearly defined and objectively verifiable sustainability targets by REWE and PENNY. This strengthens the company’s commitment to its climate targets, as there are financial implications connected with the achievement of these targets. REWE and PENNY have committed to setting medium-term, company-wide reduction targets in line with the science-based net zero standard of the Science Based Targets initiative (SBTi).

The sustainability-linked bond, with a volume of 900 million euros and a term of seven years, is intended to facilitate the achievement of corporate targets for reducing greenhouse gas emissions along the supply chain and to support the necessary investments. More than 145 international investors have invested in the REWE Group.

The REWE Group has already stepped up its investment activities in order to meet ongoing challenges and extensive transformation requirements, especially in the areas of sustainability and digitalisation. Investments in fixed and intangible assets increased from 2.3 billion euros in 2021 to 2.8 billion euros in 2022. The REWE Group plans even higher investments this year.

Four joint lead managers helped the REWE Group with the bond issue: BNP Paribas, SEB, Société Générale, and UniCredit. S&P has given the sustainability-linked bond a BBB rating, the same as its rating for the REWE Group.

The REWE Group has also developed a Sustainability-Linked Bond Framework to link the company’s sustainable business strategy with its financing and to structure the bond in a sustainable manner. SEB provided support as the sustainability advisor. The framework was published on 1 September 2023 and was given a positive second-party opinion by Sustainalytics.

Telerik Shishmanov, CFO of the REWE Group, said: “A commitment to sustainability is becoming an increasingly important business factor.  There is no doubt that investors and capital market partners have clear expectations in this regard and consider such a commitment to be as important as other factors like revenue and earnings. Sustainability is not a luxury or a fig leaf. That’s why we have linked our interest rate structure to the progress we make in terms of sustainability. The confidence our investors have placed in us gives us the financial flexibility to pursue our growth and digitalisation objectives in parallel with our sustainability strategy. In short, we are adding some green elements to our financial colour palette.”

“Sustainability doesn’t come for free. The launch of the bond will give us the liquidity we need not only to realise our investment plans, but also to achieve our highly ambitious sustainability targets. We will report annually on our progress. REWE and PENNY have committed to setting medium and long-term emissions reduction targets throughout the entire company in line with the science-based net zero standard of the Science Based Targets initiative (SBTi). This is a major effort, one that we are undertaking financially as well,” adds Dr Daniela Büchel, REWE Group Board Member for Human Resources and Sustainability.

SBTi-based sustainability strategy

The Science Based Targets initiative (SBTi) is a partnership between CDP, the United Nations Global Compact (UNGC), World Resources Institute (WRI), and the World Wide Fund for Nature (WWF). It works closely with scientific institutions to develop climate targets that align fully with the Paris Agreement. SBTi targets are based on science, call for a long-term, holistic approach, and are consistently focused on achieving a significant reduction in the company’s direct and indirect emissions.

By opting for a net-zero target in accordance with the SBTi standard, the company is committing to comprehensive measures that effectively reduce its emissions and at the same time promote innovative solutions along the entire supply chain.

About REWE Group

The cooperatively organized REWE Group is one of the leading trade and tourism groups in Germany and Europe. In 2022, the company generated a total external turnover of 85 billion euros. Founded in 1927, REWE Group operates with around 380,000 employees in 21 European countries.

The sales lines include REWE, REWE CENTER and BILLA as well as BILLA PLUS and ADEG supermarkets and consumer stores, the discounter PENNY, IKI, the drugstores BIPA and the toom Baumarkt DIY stores. The company also operates convenience stores REWE To Go and the e-commerce activities REWE Lieferservice and Zooroyal. The Lekkerland Group comprises the wholesale activities of the business group in the area of on-the-go consumption.Travel and tourism under the umbrella of DER Touristik Group includes the tour operators DERTOUR, ITS, Meiers Weltreisen, Kuoni, Helvetic Tours, ITS Coop Travel, Billa Reisen, Koning Aap, Exim Tours and Fischer as well as more than 2,300 travel agencies (e.g. DERTOUR, DERPART, Kuoni, Exim, Fischer and cooperation partners), the hotel brands Sentido, Aldiana, Calimera, Cooee, and the online travel portal Prijsvrij Vakanties.

Andreas Krämer
Spokesperson REWE Group