Amazon Raises $1 bn Sustainability Bond, Issues $18.5 bn Debt

Seattle-based tech giant Amazon.com Inc. issued its first sustainability bond yesterday, raising $1 billion to fund ongoing and new sustainability projects in renewable energy, clean transport, greener buildings and affordable housing. The total debt issued by the company on the same day was a whopping $18.5 billion. The sustainability bonds enable investors to join the firm in tackling critical social and environmental issues.

While green bonds focus on climate change, sustainability bonds are connected to both environmental and social efforts, resulting in their increasing popularity in recent years. Oversubscription to these bonds is common among investors looking to boost the sustainability profile of their holdings.

The current initiative is part of a new Sustainable Bond Framework, aimed at investing in new technologies that decarbonize and preserve the natural world. Amazon says that it remains committed to powering all operations with 100% renewable energy by 2030, and is on a path to achieve this five years early, by 2025. The world’s biggest company is now joining a growing list of debt issuers tapping the market for green and sustainable bonds, which is swelling as asset managers come under pressure from their investors to advance environmental, social and governance (ESG) causes. According to Climate Bonds Initiative, global green bond issuance was the highest ever at $270 billion at the end of 2020 and is expected to be around $450 billion this year.

The framework explains that the projects under this initiative include the acquisition of electric vehicles for transportation fleets, as well as e-bikes and other electric-powered alternative delivery vehicles. It also cites sustainable building projects, like using an all-electric heating and cooling system run on renewable energy in the company’s new Arlington, Virginia, headquarters. The funds raised by Amazon for these projects may also be used for private equity investments in clean transportation and zero carbon buildings.

According to The Wall Street Journal’s ESG scores, Amazon currently holds the second position among 18 publicly-traded e-commerce companies for its management of environmental, social and governance matters, including disclosures and programs. EBay Inc. ranks first in the e-commerce section of the rankings, which are routinely updated on the basis of the availability of new data.

Bookrunners for Amazon’s sustainability bond are reported to be Goldman Sachs Group Inc., Bank of America Corp., Wells Fargo & Co., Morgan Stanley, HSBC Holdings PLC, JPMorgan Chase & Co., Citigroup Inc., Societe Generale SA, Deutsche Bank AG and TD Securities.