Maersk issues 1st green bond to finance methanol-powered newbuilds

Danish container shipping and logistics giant A.P. Moller – Maersk has placed its inaugural €500 million ($567 million) green bond to fund the construction of its first feeder vessel and the series of 8 large ocean-going containerships which will be capable of operating on carbon-neutral methanol.

Illustration; Image credit Maersk
Illustration; Image credit Maersk

As informed, the 10-year green bond comes under the umbrella of Maersk’s newly launched Green Finance Framework and has met a final orderbook of €3.7 billion.

The transaction priced at coupon of 0.75%, the lowest annual interest ever for Maersk.

According to Maersk, the Green Finance Framework is designed to allow the company to issue a variety of sustainable financing instruments which may include bonds, loans, project finance and other instruments.

By establishing the new Green Finance Framework, Maersk intends to align its funding strategy with its goal to become carbon neutral by 2050.

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“Issuing Green Financing Instruments is a further step to integrating sustainability into our financing operations as it is an effective tool for channelling investments to projects with positive environmental impact and thereby contributing to the achievement of the UN Sustainable Development Goals (SDGs) and the Paris Agreement,” Patrick Jany, CFO at A.P. Moller – Maersk, explained.

“With this green bond, we aim at diversifying our investor base by reaching out to new investors and increasing the transparency of our ESG ambitions and performance even further towards our stakeholders.”

Cicero Green was appointed to review Maersk’s Green Finance Framework and ultimately verify its alignment with the ICMA Green Bond Principles 2021 and the Green Loan Principles 2021 and market practices. Based on the overall assessment of the eligible green assets under this framework and governance and transparency considerations, Maersk’s Green Finance Framework has received a Cicero Medium Green shading and a governance score of Excellent.

Methanol-powered containership era

In August this year, Maersk hit the headlines with an order for eight 16,000 TEU ocean-going container vessels capable of being operated on carbon-neutral methanol.

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The first newbuild in the series is planned to be completed in the first quarter of 2024. All units will be built by South Korean shipbuilder Hyundai Heavy Industries (HHI).

Maersk’s order to build a dual-engine methanol- or VLSFO-powered feeder vessel preceded the landmark eight-ship order.

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The ship will be launched in 2023, seven years ahead of the company’s initial 2030-ambition.

What is more, earlier this month, Maersk’s subsidiary Svitzer signed an agreement with naval architect company Robert Allan for the design of the world’s first fuel cell tug for harbour operations, running on green methanol.

The shipping major is also working with different industry players to ensure that carbon-neutral methanol is available in enough quantities. These projects are intended to support the overall Maersk decarbonization journey.