Billion-dollar bonds: Asahi Japan taps rising local sustainability trend to diversify new project financing
Asahi Japan lays claim to being the first food and beverage firm in the country to ever issue green bonds, with its first round of such bonds issued for a five-year period back in October 2020 for a total raised amount of JPY10bn (US$73.3mn).
This year, the firm issued a fresh round of green bonds totalled at JPY25bn (US$183.2mn), more than double that of the initial round and also set to mature in five-years.
“In Japan, green bonds are bonds dedicated to raising funds exclusively for projects that contribute to solving environmental issues,” Asahi Group Holdings Executive Officer and Head of Sustainability Kayoko Kondo told FoodNavigator-Asia.
“The use of these green bond proceeds is solely allocated to our environment-related activities, which allows us to also increase external awareness for each of our environmental commitments.
“Ever since Asahi issued the first green bonds in the Japanese food and beverage sector in 2020, the number of green bond issuances in the local sector has been steadily on the rise.”
Asahi announced the most recent round of green bonds in February 2023. The bonds will hit maturity in March 2028, five years from now, and the expected coupon rate (the annual income investors expect to receive while in possession of the bond) of 0.544% per annum. Coupon payments will be made on March 8 and September 8 each year.
When asked why Asahi has opted to issue green bonds as a developmental strategy, Kondo explained that the benefits of this are twofold for the business.
“We expect the issuance of green bonds to both help finance our specific sustainability initiatives, as well as further to raise awareness of our environmental initiatives among a wide range of stakeholders,” she said.
“So this enables us to diversify our financing methods, as well as reach many more stakeholders as we do expect to attract interest from a wide range of investors including those who have not previously considered purchasing our corporate bonds.”
Specific targeting
Given the wide scope of both the terms ‘sustainability’ and ‘environment’, Asahi has also specified that the funds raised from these bonds will be directed towards two of the areas which have the most immediate impacts.
“Asahi revised our Asahi Group Environmental Vision 2050 in February this year, and there are four major pillars here: Climate Change, Packaging, Agricultural Raw Materials and Water Resources,” Kondo said.
“All of these pillars are important, but the proceeds from these green bonds will specifically target the Climate Change and Packaging areas raise the necessary funds for activities under these.
“In more detail, the funds will be used for initiatives such as capital investments, promotion of renewable energy for the energy to be used, initiatives for CO2 absorption in Asahi’s Tosu Brewery, procurement of recycled PET and biomass plastic, and purchase of renewable energy for the entire Group.”
The firm’s Tosu Brewery is scheduled to commence operations in 2026. It aims to achieve a Carbon Negative status for this brewery by that time, which will see CO2 absorption exceed CO2 emissions.
“From the previous round of green bonds raised, the JPY10bn proceeds were used in the procurement of recycled PET and biomass plastics, the purchase of renewable energy, and the conservation activities of our company-owned forest, ‘the Asahi Forest’,” she added.
“As this was the first green bond issue by a Japanese F&B company and the funds were mainly used for new projects rather than existing initiatives, there was strong investor response and we were able to further clarify and determine the [best] terms and conditions in the midst of a strong demand environment, [leading to this] new round.”
