The first three referenced two circular economy related Sustainability Performance Targets (SPTs). The most recent, used two new SPTs; the first was direct emissions but with a more stretching target than the financing framework, and the second was the portion of Scope 3 emissions from purchased goods and services.
We praised this SLB structure, but observed that it seemed to be priced flat or wide to the existing SLBs. This pricing suggested the market was not assigning a material value to the potentially higher probability of receiving step-up coupons under a more ambitious framework.
When SLBs have higher chances of receiving step-ups, investors should accept lower spreads.