Mastercard follows Visa to issue first Sustainability Bond
Building on its pledge to achieve net zero emissions by 2050 and commitment to bring 1 billion people and 50 million small businesses into the digital economy by 2025, Mastercard has issued its first-ever Sustainability Bond, priced at US$600 million at a fixed rate of 1.90%.
Mastercard is the second major player in the payments industry to issue such a bond, following Visa which unveiled a green bond back in August 2020.
Mastercard’s Sustainability Bond proceeds will support both “social and green initiatives to drive inclusive and sustainable growth for our company and the communities we serve around the world”, according to Michael Miebach, CEO.
Investors will now have the opportunity to contribute to the advancement of these efforts. Specific green and social projects will align across 11 areas and will contribute to the advancement of the US Sustainable Development Goals.
The 10-year bond will pay interest semi-annually at a fixed rate of 1.90% and Mastercard expects to allocate the net proceeds from the Sustainability Bond to eligible initiatives within three years of the transaction.
Building inclusive and sustainable digital economy
Lat year, Mastercard reached a global milestone of achieving financial inclusion for 500 million previously unbanked people and further committed US$250 million to supporting the recovery of small businesses global and US$500 million to closing the racial wealth gap in the US.
On the environment front, as well as pledging to net zero emissions, Mastercard was first in the payments industry to gain Science Based Targets initiative (SBTi) approval for its GHG goals, aligning with the Busineess Ambition for 1.5C pledge. The company has also achieved its goal of 100% renewable electricity and is committed to regerow 100 million trees over 5 years through the Priceless Planet Coalition.
Rise of the sustainability bond
Broadening public awareness has made ESG topics increasingly relevant for North American banks, as regulators, investors, customers and other stakeholders increase their focus on banks’ attitudes and policies on climate change and economic inequality issues.
Since 2013, the Bank of America has issued five green bonds, two social bonds and its latest ‘sustainabiity’ bond in September last year, a US$2 billion first-of-its-kind broad ESG-themed security designed to advance racial equality, economic opportunity and environmental sustainability.
Payments giant Visa was the first digital payments network to unveil a green bond, back in August 2020. Priced at US$500 million, it is being used to finance an array of projects designed to reduce Visa’s greenhouse gas emissions.
In banking, Citigroup issued ts first USD-denominated benchmark green bond in May 2020, and in September 2020, JP Morgan Chase completed its in augural green bond issuance of US$1 billion bonds, while the same month Goldman Sachs issued its first-ever sustainability bond, valued at US$800 million, with proceeds used to finance loans and investments made in projects and assets such as clean energy, sustainable transport and financial inclusion.
- Business Chief brief US: 8 things to know this weekLeadership & Strategy
- Mastercard’s Ajay Banga crowned 2021’s global brand guardianLeadership & Strategy
- Mastercard leads on climate action in payment industrySustainability
- GM, Goldman Sachs and Mastercard partner on credit cardsCorporate Finance