In a move set to redefine sustainable financing in the maritime sector, Mitsui O.S.K. Lines, Ltd. (MOL) is making waves by becoming the world’s first shipping company to issue “blue bonds.” The announcement, made on December 15, 2023, marks a significant leap forward in aligning financial practices with environmental responsibility.
Blue Bonds: Charting a Course for Sustainable Seas
Derived from the guidance provided by the International Capital Markets Association (ICMA) and other esteemed organizations, blue bonds represent a paradigm shift in the shipping industry. MOL’s Blue Bond Framework, tailored for the issuance of these bonds, ensures that the proceeds will be dedicated exclusively to fostering a sustainable blue economy. Notably, these blue bonds have garnered the prestigious “Blue1(F)” rating from the Japan Credit Rating Agency, Ltd. (JCR), underlining their potential positive environmental impact.
Navigating the Blue Bonds
A blue bond is a specialized form of green bond, earmarked for financing projects addressing environmental challenges. In the case of MOL, the use of proceeds is limited to initiatives focused on marine pollution prevention, sustainable marine resources, and related endeavors. This strategic move aligns seamlessly with MOL’s commitment to environmental conservation, a cornerstone of its group management plan, “BLUE ACTION 2035.”
Setting Sail for Sustainability
Under the ambit of “BLUE ACTION 2035,” MOL has earmarked a substantial 650 billion yen to tackle environmental issues from FY2023 to FY2025. Blue bonds will play a pivotal role in financing transformative projects. Examples of potential applications include capital expenditures for offshore wind power generation projects and vessels equipped with innovative technologies like the Wind Challenger sail, embodying the ethos of a new era in shipping.
Unveiling the Blue Bond Blueprint
Outlined as the 26th series unsecured corporate bonds, MOL’s blue bonds boast a 5-year maturity. The planned issue amount is an impressive 10 billion yen, with the issuance slated for January 2024. Key players in this historic endeavor include lead managers Daiwa Securities Co., Ltd., Nomura Securities Co., Ltd., Mizuho Securities Co., Ltd., and Shinkin Securities Co., Ltd., with Daiwa Securities Co., Ltd. acting as the blue bond structuring agent.
Shaping the Future: Blue Bonds as Catalysts for Change
The international practitioner guidance on blue bonds, developed by ICMA, IFC, UNEP FI, UN Global Compact, and ADB, has provided a solid foundation for MOL’s groundbreaking initiative. By securing the highest rating under the JCR Blue Bond Framework Evaluation, MOL is not only ensuring the eligibility and transparency of its framework but also enhancing its appeal to environmentally conscious investors.
As MOL prepares to set sail into uncharted waters with the issuance of blue bonds, the maritime industry watches closely. This strategic move not only reflects MOL’s commitment to sustainability but also signals a broader shift in the shipping sector towards more responsible and eco-friendly financial practices
