Alphabet shakes up sustainability bond market with massive $5.75bn issuance

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Google parent company makes ESG-focused bonds the centre piece of giant $10bn bond sale that secured record low borrowing costs

Google parent company Alphabet yesterday issued a massive $5.75bn in sustainability bonds, marking the largest sustainability or green bond issuance executed by any company.

The sustainability bonds formed the centre piece of a $10bn bond sale, which secured record low borrowing costs for the technology giant.

Proceeds from the sustainability bonds are set to support investment in both environmental and social initiatives, the firm said, contrasting the format to green bonds, which are directed solely for environmental uses.

Eligible projects must be within one of eight areas, the firm said: energy efficiency, clean energy, green buildings, clean transportation, circular economy, affordable housing, racial equality, and support for small businesses in the wake of Covid-19. The proceeds will not be allocated to any activities, the firm said, affirming that any investment would be in line with the International Capital Market Association's Green and Social Bond Principles.

Alphabet claims to have already made major strides in many of the areas supported by the new bonds. It said Google's data centre infrastructure is now twice as energy-efficient as typical enterprise data centres, and has been matching its total annual energy consumption with renewables since 2017. Last year, Google made what its CEO claimed was "the biggest corporate purchase of renewable energy in history", delivering a package of 18 wind and solar deals.

The new funding will also support a of raft clean transport projects designed to support the firm's drive to switch to bicycles and EVs, while circular economy funding will support efforts to "maximize the reuse of finite resources across our operations, products and supply chains and enable others to do the same", a goal that was adopted last year.

"Sustainability bonds are an emerging asset class and we hope this transaction will help develop this new market," said Ruth Porat, chief financial officer at Alphabet.

"The proceeds from these sustainability bonds will fund ongoing and new projects that are environmentally or socially responsible and enable investors to join us in tackling critical issues."


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