CapMan Lists First Sustainability-Linked Bond, Supporting Efforts to Reach Net-Zero Emissions

Private equity firm CapMan became the first Finnish company to list a sustainability-linked bond (SLB) on Nasdaq’s Sustainable Bond Market, tying the bond’s returns to two performance goals: publishing targets for reducing greenhouse gas emissions and integrating sustainability targets into compensation plans for upper management. By establishing these commitments, CapMan aims to advance its broader sustainability strategy. 

Nasdaq’s Sustainable Bond Market, which also lists green, social and sustainability bonds, helps companies finance projects that create positive change for the community, the climate, or a combination of both. SLBs are forward-looking instruments that enable issuers without large “green” capital expenditures to participate in the market. Private equity and real estate firms have been early adopters of this new structure, with companies like Kinnevik and Atrium Ljungberg leading the way in the Swedish market.

As the value of environmental, social and governance (ESG) continues to grow for investors, CapMan wanted to be the first to tie its ESG goals to the Finnish market.

“After committing to the Science-Based Targets initiative (SBTi), we continue to support the development of the sustainable finance market through the first SLB in Finland,” said Atte Rissanen, CFO of CapMan.

Nasdaq’s Sustainable Bond Market lists four types of sustainable bonds:

• Sustainability Bonds: loans used to finance projects that bring clear environmental and socio-economic benefits
• Green Bonds: loans used to finance projects and activities that benefit the environment
• Social Bonds: loans used to finance projects achieving positive socio-economic outcomes with a neutral or positive impact on the environment
• Sustainability-Linked Bonds: loans used to finance general corporate purposes where the bond terms depend on the issuers’ ability to meet a pre-defined set of sustainability performance targets.

As part of its SLB, CapMan is committing to:

• Publishing science-based targets for the reduction of greenhouse gas emissions approved by the Science Based Targets Initiative
• Integrating the group’s overall sustainability targets into its management remuneration plan

Publishing SBTi-approved targets means CapMan agrees to follow a clearly defined path to reduce emissions in line with the Paris Agreement. These goals are provided by SBTi, an independent, third-party company that offers target-setting resources and guidance. Meanwhile, tying its sustainability objectives to the compensation plans of upper management “aligns the incentives of decision-makers with sustainability targets and ensures action that prioritizes ESG matters,” said Rissanen.

If CapMan fails to meet these goals, the investor benefits, with the bond’s interest rate rising 0.5%. SLBs are designed this way for the market to encourage investors to fund ambitious ESG projects while companies are incentivized to meet investor expectations.

“[SLB] investors are a new group of stakeholders that follow the progress of CapMan’s sustainability work,” said Rissanen. “This not only provides additional incentives for us as a company to follow through on our targets but also raises awareness of how sustainability issues become part of the financial landscape.”

The reception to CapMan’s SLB has been largely positive, according to Rissanen. He hopes that CapMan’s participation as the first Finnish company to list on Nasdaq’s Sustainable Bond Market will encourage others to participate in the fight against climate change.

“As the first company to issue a sustainability-linked bond in the Finnish market, we hope that we inspire other companies contemplating issues of debt securities to link tangible sustainability targets to their financing,” said Rissanen.