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Alphabet Issues $5.75 Bln Of Bonds For Environmental, Social Initiatives

alphabet aug04 lt

Google parent Alphabet Inc. has issued $5.75 billion in sustainability bonds, becoming the largest green or sustainability bonds issued by a company until now. This is part of a $10 billion debt offering.

Alphabet said the proceeds will be used to fund projects that are environmentally or socially responsible.

Alphabet has identified eight priority categories for eligible projects to receive support from the proceeds - energy efficiency, clean renewable energy, green buildings, clean transport, circular economy and design, affordable housing, racial equality, and support for small businesses in the wake of Covid-19.

Alphabet does not intend to use the proceeds from the offering for Google.org activities. The company added that it will report annually on the projects that have been funded from the bonds' proceeds, as well as their projected future impact in order to ensure transparency.

Google has been operating its businesses in an environmentally and socially responsible way since its founding in 1998. It has been carbon neutral since 2007 and is said to be one of the world's largest corporate renewable energy purchasers for the past three years.

To date, the company has committed about $4 billion to purchase clean energy from more than 50 wind and solar projects globally through 2034. Going forward, it is looking to source carbon-free energy for its operations 24 hours a day, seven days a week.

A number of companies have issued green bonds which are directed solely to environmental uses, but Alphabet's sustainability bonds support investment in both environmental and social initiatives.

These bonds are a type of fixed-income instrument that is earmarked to raise money for climate and environmental projects. They are typically asset-linked and backed by the issuing entity's balance sheet, so they usually carry the same credit rating as their issuers' other debt obligations.

According to a report published by Moody's in February, the issuance of green, social and sustainability bonds are expected to climb 24 percent to $400 billion in 2020 from a previous record of $323 billion achieved last year.

Green bond issuance will reach $300 billion this year, while social and sustainability bonds will reach $25 billion and $75 billion, respectively.

The first U.S. entity to issue bonds that fund environmental issues was the Commonwealth of Massachusetts, which in June 2013 sold $100 million worth of 20-year notes it referred to as "green bonds."

In February 2019, Verizon Communications had issued $1 billion of 10-year green bonds to fund various sustainability initiatives including renewable energy, green buildings, energy efficiency, and sustainable water management.

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