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SK Hynix Issues Industry’s First Sustainability-Linked Bond at $1 Billion

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SK Hynix Issues Industry’s First Sustainability-Linked Bond at $1 Billion

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  • Semiconductor memory industry’s first issuance of ESG target-linked bond
  • Investor orders boost initial plan to raise $500 million
  • “Successful issuance underlines expectations for a turnaround in semiconductor industry and investors’ trust in SK Hynix’s ESG management.”

SK Hynix Inc. announced that it successfully issued a Sustainability-Linked Bond (SLB) with a total amount of USD 1 billion.

“The company is highly encouraged by the large-scale investment even during the downturn in the semiconductor industry,” SK Hynix said. “We see this as a result of global investors’ trust in the company’s commitment to climate action, along with the prospects of a turnaround in the semiconductor industry later this year.”

Orders from more than 304 global institutions surpassed the company’s expectations and thus, resulted in a decision to increase the total amount of the issuance from USD 500 million to USD 1 billion.

SLB is a type of bond for which the interest rates can vary depending on whether the issuer achieves predefined environmental, social, and governance (ESG) management objectives. SK Hynix aims to reduce Scope 1 and 2 greenhouse gas (GHG) emissions intensity by 57% compared to the company’s 2020 baseline by 2026.

With SLB recently having been thrust into the limelight as one of the corporate sustainability management strategies, SK Hynix became the first global semiconductor memory manufacturer to issue such bond.

See related article: Air France-KLM to Present Sustainability-Linked Financing Framework to Investors

Image: SK Hynix Vice Chairman and CEO Park Jung-ho. Source: SK Hynix

The company plans to disclose the performance against target for GHG emissions reduction transparently in its Sustainability Reporting System (SRS) every year. The company, subsequently after 2026, will also measure the final target achievement during the first half of the following year and adjust interest rates according to the results.

Prior to the issuance, SK Hynix received second-party opinions from global verification organizations on its predefined ESG targets. Moody’s and DNV evaluated that the company’s sustainability performance target is “ambitious” and that it will have a “significant contribution” to corporate sustainability management when achieved.

Woo-hyun Kim, Head of Finance at SK Hynix said, “The successful issuance of SLB is seen as a result of global investors’ recognition of the company’s commitment to climate action,” adding the company “will continue to lead ESG management and contribute to increasing both economic value (EV) and social value (SV).”

Meanwhile, along with SLB, SK Hynix issued a green bond with an amount of USD 750 million along with SLB. Green bond is a type of bond with a special purpose, limited to use only to fund environmentally friendly projects. The company plans to invest in eco-friendly projects including water quality management, energy efficiency improvement, pollution prevention and ecological restoration with the funds raised through the green bond.

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