SLB Case Studies

Case study: Nishimatsu

Aligned SLB

Nishimatsu Construction Co., Ltd is a large multinational Japanese construction company, primarily engaged in civil engineering projects and real estate development. In 2022, Nishimatsu reported total GHG emissions of 3.3mt CO₂, of which approximately 2% were scope 1 and 2 emissions, and 98% scope 3. Scope 3 category 11 emissions associated with energy use during the operational phase of completed and delivered buildings comprise over 75% of total emissions. 

 

To achieve carbon neutrality by 2030, Nishimatsu has developed a CO₂ Emissions Reduction Plan (ZERO30 Roadmap) that outlines comprehensive Scope 1, 2, and 3 targets covering all material sources of emissions.

 

As part of this plan, Nishimatsu Construction issued its first Sustainability-Linked Bond in July 2023.

 

Amount Issued JPY20.0bn (USD142m)
Issue Date	27 July 2023	Maturity Date	27 July 2028
Financial Mechanism: Redemption Premium (Green Electricity Certificate/Carbon Offset) FM Amount: 0.070 (Target 1) and 0.03 (Target 2)
Key Performance Indicator(s)	Scope 1+2 emissions reduction rate	Sustainability Performance Target	Annual reduction 42% vs. 2020 baseline
	Scope 3 (Category 11) emissions reduction rate		Annual reduction 25% vs. 2020 baseline
Assessment: Fully Aligned

 

Emission sources required by SLB Database Methodology for sector

Scope 1, 2, and 3 or 80% of total emissions

 

The company aims for a 45.3% reduction in scope 1 and 2 emissions by 2025 and 54.8% by 2030, both against 2020 baselines. The remaining emissions in 2030 will be offset using renewable power generation, which represents <1% of Nishimatsu’s total footprint, well below the 10% threshold required by the SLBD Methodology.

 

The targets for reductions in scope 3 targets of 26% by 2025 and 27% by 2030 (v. 2020) cover category 11 emissions, relating to energy used in their completed buildings. Target emission levels have also been identified for each interim year between the reporting period of 2022 to 2030.  Together, these SLB targets represent 85.2% of the company’s total emission footprint, above the 80% threshold required by the SLBD Methodology. The Science Based Targets initiative (SBTi) validated these targets as significantly below the emission reduction level required to limit warming to 2°C, and the company is seeking SBTi 1.5°C certification by 2024. 

 

Nishimatsu’s action plan quantifies short- and medium-term levers, such as energy factor reduction, energy conservation, and introduction of renewable energy. The company’s strategy for scope 3 emissions entails expanding zero-emission buildings (ZEBs) construction, so that it becomes the default for projects by 2050. This will be supplemented by the development of carbon-reduction technologies and construction materials, as well as increasing supplier engagement. Robust annual reporting practices indicate that these levers have kept Nishimatsu on track to deliver on short-, and medium-term goals as of 2022.

 

Nishimatsu’s targets are detailed, front-loaded, and more ambitious than the SBTi 1.5°C emission level. Additionally, the granularity of forward and backwards-looking reporting for levers and strong governance practices is to be commended. Even so, Climate Bonds would urge greater transparency in emission data reporting and caution against offset-reliant pathways.

 

Case study: Heathrow

Not-aligned SLB (partially not in line with pathway)

 

Heathrow is the UK’s busiest airport and reported 14.7 Mt CO₂e of GHG emissions in 2022, of which 0.2% were scope 1 and the remaining 99% scope 3. Heathrow is the first and only airport (as of Jan 2024) to issue an SLB targeting absolute emissions relating to flights, covering all material emission sources.

 

While Heathrow’s on the ground target aligns with the SBTi ACA pathway, the in the air target is not aligned with the TPI 1.5°C Airlines pathway so the bond is categorised as not aligned. Nonetheless, we celebrate Heathrow’s leadership and encourage other Airport SLB issuers to follow suit.  

 

Amount Issued EUR650m (USD714.3m)
Issue Date	11 July 2023	Maturity Date	11 July 2033
Financial Mechanism: Step-up 25bps Amounts to USD10.7m maximum potential penalty (50bps extra on 3 coupon payments)
Key Performance Indicator(s)	On the ground GHG Emissions (Scope 1, 2, 3)	Sustainability Performance Target	-15% Absolute Emissions by 2030, against a 2019 baseline
	In the air GHG Emissions (Scope 3: Category 11)		Absolute emissions reduction of 46%  by 2030, against a 2019 baseline
Assessment: Not-aligned (partially not in line with pathway)

 

Emission sources required by SLB Database Methodology for sector

Scope 1, 2, and 3 or 80% of total emissions (inclusive of in the air emissions)

 

Heathrow’s transition plan details a comprehensive net-zero transition narrative. The in the air emission reduction levers include optimising airspace/operational efficiency, fuel-switching to sustainable aviation fuel (SAF), and zero-carbon flight R&D. To reduce on the ground emissions, there are plans to integrate EVs, supply-chain engagement, and infrastructure changes.

 

Climate bonds commends the levers spanning all material emission scopes, particularly engagement with airlines operating within the airport. While the plan’s decarbonisation capex allocation of £207m (USD265.4m) is a significant investment, more ambition in this respect will require require further capital.  Heathrow’s fallback position, should SAF and alternative-fuel plans not commercialise in time, places an overreliance on carbon capture utilisation and storage (CCUS), which is not considered a credible transition lever by Climate Bonds.

 

Overall, Heathrow exhibits robust governance via the Board’s subcommittee dedicated to sustainability issues, a Carbon and Sustainability Delivery Committee, and executives whose remuneration is tied to decarbonisation. Their disclosure is encouragingly granular, with annual scope-wise emission breakdowns reported and externally verified. 

Case study: Enel

Aligned SLB

Enel is an Italian multinational manufacturer and distributor of electricity and gas. Its businesses include green and thermal power generation, electricity distribution, and retail electricity and gas. As of June 2023, Enel had issued 30 SLBs worth USD31.1bn, four of which are tied to renewable energy installed capacity targets, one deal to greenhouse gas (GHG) scope 1 and 3 targets, and the remainder to GHG scope 1 targets. In 2022, Enel reported emissions of 132.9 MtCO₂eq, of which around 40% are scope 1, 3% are scope 2, and 57% are scope 3. Their scope 1 and 3 bond (described below) covered a total of 77.6% of their total emission footprint and is the only one of their bonds categorised as aligned in the Climate Bonds SLB Database.

 

Amount Issued EUR750.0m (USD800.6m)
Issue Date	20 February 2023	Maturity Date	20 February 2043
Financial Mechanism: Step-up 25bps
Key Performance Indicator(s)	GHG Emissions Intensity (Scope 1, 3 – related to integrated power)	Sustainability Performance Target	0 gCO2e/kWh
	GHG Emissions (Scope 3 – related to gas retail)		0 Mt CO2e
Assessment: Fully Aligned

 

Emission sources required by SLB Database Methodology for sector

Scope 1* or 80% of total emissions *If entity has fossil fuel-based business segment, scopes 2 and 3 are also required

 

Enel has short-, mid-, and long-term targets for all material scopes of emissions that align with the 1.5°C pathway for electrical utilities. These were revised in 2022 to increase the ambition of the decarbonisation pathway, targeting a reduction of 78% by 2030 and 100% by 2040 in scope 1 and 3 GHG emission intensity relating to integrated power (gCO2eq/kWh), both against 2017 baselines. This included a 90% reduction in absolute emissions for all scopes by 2040, vs 2017.

 

Enel has published detailed transition plans, reliant on exiting its existing coal and fossil gas businesses, replacing them with large-scale renewable energy installed capacity, and investments in its transmission and distribution arm, as well as smart energy demand management. Enel's commitment to phasing out the stranded fossil-based assets, supported by a robust investment plan, is to be commended.

Enel has committed EUR210bn between 2021–30 to increase its renewables energy mix (43%), continue the expansion of its distribution and transmission networks (44%), as well as its energy management business and support services (10%), with minimal investments in its conventional energy sources (3%).  Overall, low-carbon business areas represented 92% of total capex in 2022. While Enel's detailed financial commitment is notable, both GHG emissions and revenues from coal plants have increased year-on-year. Therefore, the front-loading of emission reductions and implementation of planned decarbonisation levers should commence as soon as is feasible.

 

This vision is supported by Enel’s sound governance structure. Progress on transition-related key performance indicators (KPIs) is reported directly to the Board and executive remuneration is tied to transition performance targets. Enel reports on a range of transition-related transition KPIs in its annual reports, and its SLB portfolio is tied to scope 1 emission and renewable energy targets. 

Case study: Chile

Fully-aligned SLB

The Government of Chile issued the first sovereign SLB in March 2022, and has issued a further five times since in a variety of currencies (as of Dec 2023). Chile has set a precedent for other sovereigns looking to issue SLBs as governments increasingly look for means to finance their commitments to decarbonise their economies. Although Chile’s GHG emission targets are in line with their nationally determined contributions (NDCs), they lack the ambition needed to achieve the core tenet of the Paris Agreement: to keep global warming to 1.5°C. This is despite setting materially relevant KPIs and initiating a programme to convert all existing debt issuance to GSS+ debt. Chile and other potential sovereign SLB issuers need to strive further in their ambition to align with 1.5°C.

 

Amount Issued USD2bn
Issue Date	7 March 2022	Maturity Date	7 March 2042
Financial Mechanism Type: KPI 1 & 2 Coupon step-up 6.25bp each KPI 3 Coupon step-up 12.5bp
Key Performance Indicator(s)	Absolute GHG Emissions	Sustainability Performance Target	A reduction of 15.4% (95 Mt CO2e) by 2030
	Maximum GHG Emissions		Achieve maximum of 1100 MtCO2e between 2020–2030
	Renewable Installed Capacity		60% of all energy sources by 2032
Assessment: Fully Aligned

 

Emission sources required by SLB Database Methodology for sovereigns

Emissions produced within the country

 

Although Chile has selected targets for a peak in emissions, a reduction of emissions overall, and a renewables target that will fuel its energy decarbonisation, this is only sufficient for a pathway to a below-2 degree scenario, according the evaluation of Chile’s absolute GHG emission pathway for KPI 1 by Climate Action Tracker (CAT), and the second party opinion (SPO) of the SLB example above.

 

Although energy production is responsible for 40% of the Chile’s emissions, and this KPI is significantly material to Chile, the sustainability performance target (SPT) falls short of the country’s National Energy Policy target of 80% renewables by 2030.  This is despite the fact that the second KPI, targeting a peak in Chilean emissions before 2030, supports and strengthens the first KPI, while the third KPI, targeting 60% installed capacity of renewables by 2032, proves more ambitious as it is within a 1.5°C pathway.

 

Both the Government of Chile's National Action Plan for Climate Change 2017–2022 and Long-Term Climate Strategy outline a variety of levers: green taxes, a national policy for decommissioning coal, a green hydrogen national strategy, and fostering public and private preferred lending for renewables.  Chile’s ambition to decommission 65% of its coal-powered generation by 2025 and efforts to make its 2050 GHG neutrality target legally binding are to be commended.

 

Accountability mechanisms surrounding Chile’s transition appear robust, including a series of legal and regulatory frameworks to assess, limit, and mitigate environmental impact, biennial reports on KPIs 1 and 2, and assurance for all KPIs.

 

Case study: JSW Steel

Aligning SLB

JSW Steel is India’s leading integrated steel company and issued its first SLB in 2021. In 2022, it reported scope 1 and 2 emissions of 49.3 m tCO₂ and scope 3 emissions of 1.28 m tCO₂.

 

Amount Issued USD500.0m
Issue Date	23 September 2021	Maturity Date	5 April 2032
Financial Mechanism Type:  Step up FM Amount: 0.375
Key Performance Indicator(s)	GHG Emissions Intensity (Scope 1, 2)	Sustainability Performance Target	A reduction of 23.0% by 2030 vs a 2020 baseline (1.95 tCO2/t steel produced)
Assessment: Aligning

 

Emission sources required by SLB Database Methodology for sector

Scope 1 and 2

 

JSW Steel has short and medium-term emission intensity targets of 2.37 tCO₂/tcs by 2024 and 1.95 tCO₂/tcs by 2030. The company does not target net-zero emissions, nor does it have long-term emission goals. The SLB is categorised as aligning according to the Climate Bonds pathway because the SPT is not in line with the Climate Bonds pathway for steel, which demands a GHG Emissions Intensity of 1.8 tCO₂/t by 2030. However, its pace of GHG reduction is in line with the pathway. Furthermore, the company’s transition levers address all scopes of emissions, allocate capex specifically for sustainability interventions, and are governed by a dedicated Climate Action Group that steers mitigation efforts, giving its transition plan credibility.

 

JSW Steel’s transition levers include boosting energy and process efficiency, diversifying into hydrogen, engaging with suppliers, energy transition, and R&D into alternative fuels. However, JSW lacks a concrete, quantified roadmap against which to deploy these levers, which impedes the credibility of their strategy. Furthermore, only 3.13% of its capex is allocated to implementing sustainability initiatives. Given the heavy carbon footprint of the steel industry, Climate Bonds urges JSW to detail a comprehensive pathway to net zero in its transition strategy.

 

JSW’s reporting practices are robust, with annual disclosure of externally verified KPIs and emission source breakdowns, which means the transition plan meets the Climate Bonds standard for aligning bonds.

 

Case study: Holcim

Aligning SLB

 

Holcim Ltd is a Swiss manufacturer of building materials. In 2022, Holcim’s reported GHG emissions of 130 Mt CO₂e, of which 60% were scope 1 emissions, 4% were scope 2, and 36% were scope 3. As of November 2023, Holcim has issued seven SLBs, the GHG KPIs of which only cover scope 1 emissions.  The most recent one is detailed below.

Amount Issued  USD147.5m
Issue Date	19 May 2022	Maturity Date	5 April 2029
Financial Mechanism Type:  Step-up FM Amount: 0.35
Key Performance Indicator(s)	GHG Emission Intensity (Scope 1)	Sustainability Performance Target	520 kg CO2/t cementitious material by 2025
	Water Usage Intensity		Reduction of 25% vs 2018 by 2025
Assessment: Aligning

 

Emission sources required by SLB Database Methodology for sector

Scope 1

 

All of Holcim’s SLBs are assessed against Climate Bonds’ SLB Database Methodology as aligning because they miss the cement pathways of 539 kg CO₂/t cementitious by 2025 and 463 kg CO₂/t by 2030, but still meet the rate of reduction required by the pathway. Additionally, a robust transition plan and targets are in place (described below).

Holcim’s scope 1 and 2 emission intensity reduction targets of of 22.4% by 2030 and 95% by 2050, versus 2018 are SBTi 1.5°C validated. The scope 3 targets of 90% emissions reduction by 2050 and discrete medium-term targets for various scope 3 categories are in all consistent with well below 2ºC  scenarios. While the alignment and breadth of targets is to be commended, Holcim should continue to front-load its emission reduction to the short and medium term.

 

The company’s decarbonisation strategy for scopes 1 and 2 is well-detailed: the contribution of key levers, such as energy and design efficiency, clinker reduction, and energy decarbonisation is quantified. For scope 3, Holcim anticipates the use of downstream transport decarbonisation and supply chain engagement to reach its targets. In view of these plans, Holcim strives for an annual green capex of CHF500mn by 2025. Overall, credible governance structures underpin Holcim’s comprehensive transition plan, where climate-related performance and strategy is subject to direct board oversight, executive committee accountability, and is tied to senior management compensation.

 

Holcim’s financial commitment towards transition and sector-specific levers, particularly the decarbonization of its asset base through lower-emission cement, is notable.  However, this is overshadowed by the reliance on CCUS and other technologies for 44% of scope 1 and 2 emissions reductions. Climate Bonds would mandate avoiding CCUS for a materially significant proportion of emissions, to focus instead on credible transition strategies that mitigate, rather than offset, Holcim’s carbon footprint.

Case study: Valeo SE

Fully aligned SLB

 

Valeo is a French producer of automotive parts. In 2022, the company reported GHG emissions of 45.2 MtCO₂eq, of which approximately 2% were scope 1 and 2, 19% were scope 3 upstream, and 79% were scope 3 downstream.

 

As of November 2023, Valeo has issued 3 SLBs, all of which have been assessed as fully aligned against Climate Bonds SLB Methodology. The most recent issuance, and the company’s transition plan, is outlined below.

 

Amount Issued  EUR750.0m (USD784.7m)
Issue Date	28th November 2022	Maturity Date	28th May 2027
Financial Mechanism Type:  Step up FM Amount: 0.750
Key Performance Indicator(s)	GHG Emissions (Scope 1, 2, 3)	Sustainability Performance Target	Reduction of 23.5% vs 2019 by 2025 (37.95 Mt CO2e)
Assessment: Fully Aligned

 

Emission sources required by SLB Database Methodology for sector

Scope 3 or 80% of total emissions

 

Valeo’s GHG targets cover all scopes of emissions in the short-, mid- and long-term. The company’s short-, and medium-term targets are SBTi 1.5°C ACA aligned, aiming for scope 1, 2, 3 emissions reduction to 37.95 MtCO₂e by 2025 and 27.88 MtCO₂e by 2030. Valeo is striving for carbon neutrality for all scopes in Europe and scopes 1, 2, and upstream 3 globally by 2050. It also has a separate set of net emission targets that consider the electrification benefits of Valeo's solutions. In 2022, the company surpassed the targets it set itself, which is an encouraging forward indicator.

 

Valeo’s CAP 50 carbon neutrality plan comprehensively describes specific levers with quantified targets, where relevant. These include expanding the proportion of low-carbon energy (80% by 2030), engaging with suppliers to tackle upstream scope 3 emissions, and decarbonising downstream transport. Over EUR400mn has been allocated towards decarbonising operations across the business.

 

Critically, the company’s strategy is driven by developing innovative technology for low-carbon mobility and decarbonising from the design phase of its products. Overall, the granularity of Valeo’s decarbonisation vision and the ambition of its credible targets, both of which are sector-specific and material to the company’s business, are to be commended. Yet, the company should prioritise tackling downstream scope 3 emissions globally, as they comprise the largest category of its carbon footprint.

 

Additionally, Valeo undertakes transparent disclosure and governance practices that include reporting annually on verified emissions data and progress against targets, governance by the Board of carbon-neutrality pathways, and CEO remuneration which is qualitatively tied to the CAP 50 plan.

Case study: Newmont Corporation

Fully aligned SLB

 

Newmont Corporation is the world’s leading gold mining company and became the first mining company to issue a SLB in December 2021. In 2022, the company reported 8.38 Mt CO₂eq in GHG emissions, of which 21% are scope 1, 18% are scope 2, and 61% are scope 3.

 

Amount Issued USD1000m
Issue Date	20 December 2021	Maturity Date	15 July 2032
Financial Mechanism Type:  Step up FM Amount: 0.250
Key Performance Indicator(s)	GHG Emissions (Scope 1, 2)	Sustainability Performance Target	A reduction of 32.0% vs 2018 by 2030 (2.42 Mt CO2e)
	GHG Emissions (Scope 3)		A reduction of 30.0% vs 2018 by 2030 (3.25 Mt CO2e)
	Women in Management		50% by 2030
Assessment: Fully Aligned

 

Emission sources required by SLB Database Methodology for sector

Scope 1, 2, and 3 or 80% of total emissions

 

Newmont Corporation targets a 32% reduction in scope 1 and 2 emissions to 2.4 Mt CO₂eq and a 30% reduction in scope 3 to 4.0 Mt CO₂eq by 2030. These targets, which correspond to the SLB SPTs, have been validated by the SBTi as aligned with well below 2°C. The company’s scope 1, 2, and 3 net-zero target year is 2050, which is supported by a robust transition plan.

 

Newmont has mapped a scope 1 and 2 Reduction Roadmap to 2030, with the relative contribution of key levers including renewable energy projects, vehicle electrification, and energy optimisation, clearly quantified. Relevant technologies for operational decarbonisation are identified that guarantee that carbon offsetting will only be used as a last resort, never exceeding 10% of total emissions. Although less comprehensive, the company’s plan for scope 3 emission prioritises supplier engagement, which tackles the second most material category of their scope 3: emissions from purchased goods and services. The implementation of the strategy is steered by the Board and the Safety and Sustainability Committee, while also factoring into the compensation policy.

 

The depth and timebound nature of Newmont’s decarbonisation vision is impressive, and the concrete projects identified to transition the company are exemplary. Moreover, the recognition to prioritise technology over offsets is notable. As an entity significantly exposed to physical climate risks, Newmont’s adaptation measures are critical to its transition plan, hence its ambition to mitigate predictable physical climate impacts in local communities is well noted. Overall, Newmont’s reporting practices, including emission category breakdowns and external assurance are commendable, and its decarbonisation strategy is a compelling example for its industry. However, as scope 3 comprises a significant majority of the company’s carbon footprint, Newmont could go further and clarify levers for all scope 3 categories.

Case study: Nobian

Strongly-aligned SLB

 

Nobian is a leading European chemical producer. In 2021, the company reported total GHG emissions of 2039 Kt CO₂e, of which approximately 38.8% were scope 1, 49.3% were scope 2, and 11.8% were scope 3.

Amount Issued  EUR 525.0m (USD 609.0m)
Issue Date	1 July 2021	Maturity Date	15 July 2026
Financial Mechanism: Step-up 25bps
Key Performance Indicator(s)	GHG Emissions (Scope 1, 2)	Sustainability Performance Target	A reduction of 4% by 2022 (vs 2020) (1587Kt CO2e)
	Renewable Energy in Operations		29% by 2022
Assessment: Strongly-aligned

 

Emission sources required by SLB Database Methodology for sector

Scope 1, 2, and 3 or 80% of total emissions

 

Nobian has strong and detailed short-, mid-, and long- term targets: scope 1 and 2 reduction of 25% by 2025, 50% by 2030 and 100% by 2040, versus a 2020 baseline. Additionally, a scope 3 reduction of 2% by 2025, 20% by 2030, 50% by 2040, against the same baseline. The company will seek SBTi validation by 2023. Nobian is to be congratulated on its credible targets whose ambition exceeds Climate Bonds pathway for chemicals. While the targets used on this specific SLB are not in line with the pathway, it's 2025 and 2030 targets exceed the Climate Bonds pathway for Basic Chemicals, thus qualifying this deal as 'Strongly-aligned'. Additionally, Nobian deserves praise for updated scope 3 accounting and target setting, which are expected to be included in future SLB issuance.

 

To meet its 2040 carbon neutrality target, Nobian is prioritising decarbonising scopes 1 and 2 by electrifying processes, purchasing renewable energy, and investing in efficiency improvements. The company has undertaken multiple strategic partnerships with the same objective. Although levers are stated, and various projects (renewable energy, process efficiency) are already being implemented, Climate Bonds recommends a forward-looking plan that quantifies the rollout and contribution of each strategy. Moreover, Nobian states that the company is working on concrete plans for scope 3 emission targets, yet to date, has only addressed scope 3 by developing a green product portfolio and undertaken R&D for technologies that reduce CO₂. Give that scope 3 now comprises nearly half of the company’s carbon footprint, Nobian is strongly advised to accelerate its strategy to accelerate its ambition in addressing scope 3.

 

Nobian’s commitment to net zero by 2040 appears to be well governed, with direction from the Board and a dedicated core sustainability team. All material KPIs are annually reported and independently assured.

 

Nobian is unquestionably on the correct path for transition, with its ambitious goals and sustainable finance issuance. However, to continue on this trajectory, it is critical that the company brings wider areas of its business and value chain into its decarbonisation pathway.