Global memory semiconductor company issues first ESG goal-linked bonds
Exceeding initial target amount, box office success, “Expectations for business recovery, ESG management consensus”
The semiconductor industry is characterized by high carbon emissions. As global memory manufacturers focus on reducing carbon emissions and using renewable energy, SK Hynix has killed two birds with one stone by implementing ESG management and attracting investment funds through sustainability-linked bonds.
SK Hynix announced on the 11th that it successfully issued a Sustainability-Linked Bond (SLB) worth 1 billion dollars (approximately 1.2 trillion won).
SK Hynix said, “The company is encouraged by the large-scale investment despite the semiconductor downturn,” adding, “This is the result of global investors’ expectations that the semiconductor industry will rebound this year, as well as their trust in our commitment to responding to climate change, as expressed in these bonds.”
In fact, SK Hynix initially set the target issuance amount for SLB at $500 million, but as many investors, centered around 304 institutions, showed greater interest than expected, the issuance amount was expanded to $1 billion, which is twice the target amount.
SLB is a bond whose interest rate, etc. is adjusted depending on whether ESG management goals are achieved. As a condition of this bond issuance, the company set a target to reduce its greenhouse gas Scope 1 and 2 emissions intensity by 57% by 2026 based on 2020 performance.
Greenhouse gas Scope 1 refers to greenhouse gases (direct emissions) generated during the product manufacturing stage, while Scope 2 refers to greenhouse gases (indirect emissions) generated during the process of generating electricity or steam used in business establishments.
▲Scrubber that treats greenhouse gases and harmful gases generated during the manufacturing process (Image: SK Hynix Newsroom)
Recently, as the global market is paying attention to SLB as one of the sustainable management strategies of companies, SK Hynix is the first global memory semiconductor company to issue this bond. It plans to disclose the reduction performance compared to the target in the 'Sustainability Reporting System (SRS)' every year, and after 2026, the final target achievement will be measured and disclosed in the first half of the following year, and the interest rate will be adjusted according to the results.
In addition, prior to issuing this bond, SK Hynix also received verification from a global certification agency regarding its previously established ESG goals. Moody's and global certification agency DNV (Det Norske Veritas) evaluated the company's goals as challenging and that achieving them would significantly contribute to sustainable management.
Kim Woo-hyun, SK Hynix’s Vice President (CFO), said, “We believe that the successful issuance of this SLB is the result of global investors recognizing our commitment to responding to climate change,” and added, “We will continue to lead ESG management and strive to increase both economic value (EV) and social value (SV).”
Meanwhile, SK Hynix issued green bonds worth 750 million dollars (about 900 billion won) along with this SLB. Green bonds are special purpose bonds that can only be used to raise funds for environmentally friendly investments. The company plans to invest the funds raised through green bonds in eco-friendly projects such as water quality management, energy efficiency, pollution prevention, and ecological restoration.
