PepsiCo Borrows to Go Green
On Wednesday, PepsiCo (NASDAQ: PEP) issued a filing with the Securities and Exchange Commission that at first blush could be mistaken for a quite routine notification. The company announced its pricing on Monday, Oct. 7, of $1 billion in senior notes due in 2049, which collectively sport a coupon of 2.875%, payable semiannually. Like its peer consumer staples titans, PepsiCo is a frequent issuer of debt, which it uses for capital investments and other plain-vanilla purposes.
However, this newest debt offering is unique for PepsiCo in that it represents the organization's first "green bond." Proceeds will be used solely to fund sustainability initiatives under three major priorities: "Sustainable Plastics and Packaging," "Decarbonization of Operations and Supply Chain," and "Water Sustainability."
Of these priorities, which are aligned with U.N. Sustainable Development Goals or SDGs, the sustainable plastics and packaging effort seems the most ambitious. PepsiCo intends to reduce its virgin plastic manufacturing content by 35% by the year 2025. Funding from the green bonds will be allocated within this priority to "projects that purchase compostable, biodegradable and/or recyclable material for use in product packaging, and by investing in the development of packaging that includes bio-based PET bottles and compostable and biodegradable snacks flex films."
Source Fool.com
