Burberry Plans Ethical Luxury Investment

(Bloomberg) — Burberry Group Plc is offering a touch of luxury to ethical investors.

© Bloomberg
Burberry bags for sale in New York, U.S.

The trench-coat maker intends to sell a sterling sustainability bond, as the socially responsible debt market increasingly grows beyond utilities, banks and governments. Calls about the five-year deal start on Thursday, according to a person familiar with the matter, who asked not to be identified because they’re not authorized to speak about it.

Load Error

Burberry has highlighted a focus on corporate responsibility, including animal welfare and sustainable cotton farming, as it seeks to win over socially conscious consumers and investors. The planned bond sale also comes as the U.K. company starts to get over the worst effects of the coronavirus crisis, which caused sales to fall by almost half and prompted 500 job cuts worldwide.

The company has repaid a 300 million pounds ($388 million) banking facility, which it drew down at the height of the virus crisis, it said in a statement announcing its first-ever bond sale. The strength of its brand, a strong presence in China and “robust” liquidity also meant that Moody’s Investors Service Inc. gave the planned notes an investment-grade Baa2 rating.

Burberry’s score reflects “the global high awareness of its brand, balanced geographic diversification, and conservative financial policies,” Moody’s Vice President David Beadle, said in a statement.

Globally, the fashion industry is focusing more on the environment and sustainability amid consumer and regulatory pressure. An EU official called textiles the “new plastic” when it comes to trash earlier this year.

Companies in the industry have tapped ethical investors to help pay for projects. Prada SpA raised a sustainability-linked loan last year, while Timberland owner VF Corp. has sold green bonds.

Telecommunications provider Orange SA also issued a debut euro sustainability bond on Wednesday, underscoring growth in the ESG debt market. Luxury-car maker Daimler AG and Germany have both sold their first green bonds this month.

“If you want to make the most public and visible statement to investors around sustainability, you do it through a labeled bond format,” said Arthur Krebbers, head of sustainability, corporates at NatWest Markets. The bank is working on the Burberry sale, along with HSBC Holdings Plc, JPMorgan Chase & Co. and Societe Generale SA.

(Adds NatWest Markets comment in ninth paragraph)

For more articles like this, please visit us at bloomberg.com

©2020 Bloomberg L.P.