EESG Blog

Do you know what a green bond is? Find out everything about Rumo’s green bond

It is known that issuing bonds is one way for corporate, banks and governments to raise money. But the transition from to a greener economy is now showing more benefits for issuers and investors around the globe, reaching over 258 billion dollars.

This year, Rumo, Latin America’s largest logistics operator, achieved a 30% stake of green debts (composed of a green bond and a debenture) out of the total financing of the Company. This means that a relevant portion of the debt issued by Rumo is linked to sustainable projects. Green bonds are standard bonds, with a “green feature”. Thus the investor agrees to give the issuer a certain amount of money to fund projects that have a positive environmental or climate benefit. In Rumo’s case, for example, with investments aimed at increasing energy efficiency to make rail transport even cleaner and more efficient, contributing to the reduction of GHG emissions and mitigation of impacts on climate change.

Investments linked to green projects are a stimulus for sustainable development, considering the growing appreciation of sustainability aspects, demonstrating how the company is acting on the subject. These initiatives elevate rail transport as an excellent ally for the transition to a low-carbon and increasingly efficient economy. The existence of long-term GHG reduction targets is an important theme to reinforce Rumo’s commitment to environmental practices and the anticipation of this target brings the company to the levels of large global companies in the sector, which are references in Sustainability.

One of our commitments assumed is to seek financing that is linked to Sustainability criteria, ensuring the destination of the funds raised and transparency of information, with more attractive interest rates and generating a positive impact on the market. In less than a year, Rumo issued two large financial funding sustainability linked. In 2020, with the issuance of Green Bonds it was the first cargo transport railway in Latin America to carry out this type of collection.  In 2021, it became the first Brazilian company to carry out a Sustainability-Linked Debenture (“SLD”) through the Brazilian Law for infrastructure debentures (12.431/2011), which regulates the incentive debenture market and expands the financing alternatives in long-term resources. Both cases had external certifications, adding credibility to the process and attest to the robustness of the operations.

Click here to know more about green bond, trough Climate Bonds tips for best practices.