Your Word Is Your Bond: Strategic Communication for Sustainable Bonds Issuance | Brunswick Group

Your Word Is Your Bond: Strategic Communication for Sustainable Bonds Issuance

Brunswick insights into the alignment of sustainable bonds and corporate ESG strategies

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How companies communicate the issuance of sustainable debt matters and has implications for their broader ESG and business strategies. These instruments offer corporates and investors a valuable tool to achieve their ESG objectives.

Sustainable bonds are a relatively recent market that will continue to grow steadily this decade as financial institutions are compelled to redirect capital to help fund the transition to net-zero emissions and the delivery of the UN Sustainable Development Goals (SDGs). Companies may benefit from this form of sustainable finance “at a greenium,” obtaining more advantageous terms than those offered by vanilla bonds, while enjoying the “halo effect” of aligning capital with environmental and societal challenges.

However, these securities require a specialist communication engagement from the beginning that highlights the objectives of the issuance, use of proceeds and key milestones. It requires a tailored approach that is consistent with the company’s existing ESG communication strategy and adapts to the needs of its sector and industry classification.

Poorly designed and managed communication can undermine a bond and bring reputational and financial risks. For example, it can prevent the security from inclusion in sustainable bond indices. The main index providers and ESG rating agencies routinely evaluate the credentials of bonds and engage with issuers on their progress. To avoid greenwashing, they check that the use of proceeds is appropriately earmarked.

Forthcoming ESG regulations, combined with increased scrutiny from stakeholders, adds another layer of complexity that requires careful planning. Brunswick Group, as a global critical business issues firm with ample cross sector expertise, is well placed to assist issuers from the early stages of a sustainable bond transaction.

Challenges and opportunities
In conversation with Brunswick Group, CBI CEO Sean Kidney says sustainable bonds represent the marriage of capital and purpose. He says investors have discovered they can get better returns while addressing long-term ESG risks in their portfolios.

Kidney says: “Bond investors are defensive and every time there's a downturn, green bonds hold their value relative to vanilla bonds. That makes them very valuable and drives down primary pricing – the ‘greenium’ issuers receive.”

Watch the full interview with Sean Kidney

Six recommendations for an effective sustainable bond strategy

  1. Make the issuance of sustainable bonds part of your broader ESG and communication strategies. Coherence between your overall messaging and strategy will shape the future of the bond.

  2. Stress-test the fitness of your ESG narrative in search of perceived signs of greenwashing from the outset. Identify the use of proceeds and back the projects that best align with your ESG narrative. The market is becoming a crowded space where it is hard to stand out, but at the same time, it is easy to be singled out when things go wrong.

  3. Design a strategy that addresses the needs and concerns of all the stakeholders involved in the bond issuance: from investors to third-party opinion providers and rating agencies. Bond investors at the roadshow stage would have specific technical questions about the project; different from those of the media and NGOs that would often target the ESG narrative of the bond itself.

  4. Get your internal communication right. The issuance will require coordination between different departments within the company. From treasurers to sustainability and communication professionals to investor relations. Keep your internal communication lines open and well oiled.

  5. Design a defence strategy for the entire lifespan of the bond. The narrative of your issuance could be challenged at any time as information is disseminated in the market through assurance and third-party opinion reports.

  6. Do not neglect communicating the impact of the bond. This information is key to show the success or failure of the bond, yet it tends to remain underreported.

Brunswick’s Global ESG Practice

Brunswick is trusted advisor to the world's leading companies on ESG critical issues and critical stakeholders. Our unique offering recognises the importance of social value and financial risk, leverages deep sectoral and regional knowledge, and is fully integrated across our practice groups and sectors. We enable clients to understand the global ESG conversation and emerging trends, to define their ESG ambition, and to communicate and engage effectively with ESG stakeholders.

From financial situations through to capital markets, regulatory and public affairs, climate and environmental action, social issues, crisis, cyber, litigation and employee engagement, clients rely on Brunswick for ESG insight, advice, preparedness and campaigns.

Covering all regions, our ESG experts are based in major offices across the globe.