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Bond spotlight

Chemicals sector: synthesising impact with SLBs

Written by Thomas White, Stephanie Mielnik & Josephine Richardson

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The chemicals sector has become an essential part in many of the supply chains we rely on in modern life. However, it is the third largest industry subsector in terms of CO2 emissions, and generates a considerable impact on nature, so ensuring greater climate alignment is essential. SLBs are a powerful tool for raising capital for this transition, whilst aligning an issuer’s corporate structure with clear sustainability targets.

Given the current under-representation of chemicals companies and in particular investment-grade issuers in the SLB market, there is a real opportunity for improvement and impact in this space.

This note provides an overview of SLB issuances in the sector as well as the transition pathways of the sector, and provides recommendations on how to maximise the impact of SLBs for chemicals issuers.

We find that SLBs using scientifically verified targets, diverse KPIs and material step-structures, could help investors ensure their capital is assisting the chemicals sector in its necessary climate transition. Furthermore, increased SLB issuance, especially from the largest corporates in the sector, would bring enhanced sustainability dialogue between investors and issuers.

About the authors

Thomas White

Thomas was previously a Junior Research Analyst at AFII.

Josephine Richardson

Josephine Richardson

Managing Director, Head of Research

Based in London, Jo leads AFII’s research and a global team supporting fixed income investors as they align their portfolios with climate and sustainability goals. She joined AFII after 18 years in fixed income markets at JPMorgan.

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