Giant Chemicals Maker Dow Debuts Green Bonds to Slash Emissions

Dow Inc., a maker of plastics for packaging, is tapping the green-bond market for the first time as it looks to reduce its carbon emissions and plastic waste.

Author of the article:

Bloomberg News

Caleb Mutua

Published Feb 07, 2024 • 2 minute read

hw4n]lkrhenl8uajzg0a)72n_media_dl_1.png Source: Bloomberg

(Bloomberg) — Dow Inc., a maker of plastics for packaging, is tapping the green-bond market for the first time as it looks to reduce its carbon emissions and plastic waste.

It’s selling bonds in as many as two parts through its wholly owned subsidiary Dow Chemical Co., according to a person with knowledge of the matter. The longest portion of the offering, a 30-year security, may yield 1.6 percentage points above Treasuries, said the person, who asked not to be identified as the details are private.

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Bank of America Corp., Citigroup Inc., HSBC Holdings Plc., ING Groep and SMBC Nikko Securities America Inc. are managing the bond sale, the person said.

Bloomberg has reached out to Dow for comment.

Proceeds from such offerings will be used to fund a range of eligible projects, including energy efficiency, renewable energy, decarbonization and initiatives aimed at ending plastic pollution, according to its green financing framework.

Chemical companies are under pressure to address plastic waste that clogs oceans, damaging wildlife and ecosystems around the world. Dow aims to be carbon neutral by 2050, and plans to invest approximately $1 billion annually to drive both growth and decarbonization of its manufacturing assets, according to the framework.

It’s the latest company to seize on favorable borrowing costs to sell bonds earmarked for green and social projects. Global sustainable bond sales reached a record $150 billion in January and top underwriters of the debt are also expecting February to be busy.

Read more: Global ESG Bond Sales Reach $150 Billion in Busiest January Ever

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The company plans to build the world’s first net zero ethylene cracker in Fort Saskatchewan, Alberta, to help boost production of ethylene — the key building block of everyday plastics — with the goal of eventually reducing net emissions to zero by 2030. Jim Fitterling, chair and chief executive officer at Dow, said in a statement last month that construction will begin this year.

Dow has a tangible, profitable path to its low-carbon goals, and projects like the zero-carbon retrofit of its Alberta site show large opportunities to meaningfully deploy green capital, according to Bloomberg Intelligence analyst Jason Miner.

“Responding to pressure over plastics waste, Dow is funding a wide range of recycling and bio-based technologies across the globe,” said Miner. “Yet waste collection remains a significant challenge.”

—With assistance from Jiayu Liu.

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