Fashion giant Chanel, known for its iconic perfume and tweed suits, keeps up to date with changing tastes. These days that means showing consumers — and investors — that it’s doing its part to combat climate change.
So when the company needed to borrow money two years ago, it turned to a hot new financial product: sustainability-linked bonds (SLBs).
The investors who purchased Chanel’s €600 million ($589 million) of bonds also got a promise: If the company didn’t meet certain climate goals, it would pay them millions of euros more. In other words, they’d pay a penalty for not being green.