Sustainability-linked Bonds

Sustainability-linked Bonds

The Company decided to issue bonds whose terms vary depending on whether a predetermined sustainability performance target is achieved or not, in order to promote its actions to address climate change, which is one of its material issues. The Company selected the rate of reduction of greenhouse gas emissions (Scope 1 and 2) as the KPI for the bonds, believing that achievement of this target will contribute to realization of the Group Vision. Through issuance of the bonds, the Company will promote global environmental management to achieve the SDGs and will contribute to the realization of a decarbonized and resource-recycling society that is safe, secure and fulfilling for people.

What is a Sustainability-linked Bond?

Sustainability-linked bonds are issued under terms that vary depending on whether predetermined sustainability or ESG targets are achieved or not. The issuer of the sustainability-linked bonds will work to achieve its sustainability goals according to a specified timeline. Specifically, sustainability-linked bonds are financial instruments based on the evaluation of future performance using key performance indicators (KPIs) and sustainability performance targets (SPTs)* predetermined by the issuer. The terms of the bonds vary depending on whether or not the SPTs, which are set as target figures to be achieved for the KPIs, have been achieved.

  • * Targets based on the issuer's management strategy which determines the terms of issuance of the sustainability-linked bonds

Overview of Sustainability-linked Bonds

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Name The 4th Unsecured Bonds of Citizen Watch Co., Ltd.
(Sustainability-Linked Bond)
Maturity 5 years
Amount 10.0 billion yen
Interest rate 0.578%
Determination date of issuance terms September 13, 2023
Issue date September 20, 2023
Redemption date September 20, 2028
KPI Rate of reduction in the Group's greenhouse gas emissions (Scope 1 and Scope 2)*
  • * Scope 1 and Scope 2 emissions of the entire CITIZEN Group (in Japan and overseas)
SPT 33.6% reduction in greenhouse gas emissions (from FY2018 level) by FY2026
Characteristics of the bond after assessment If the sustainability performance target (SPT) is not achieved as of the assessment date (October 31, 2027), the characteristics of the Bonds vary and will have either or both of the characteristics described below. The Company will decide between (i) and (ii) below for the variable characteristics on or after the abovementioned assessment date.
(i) If the SPT is not achieved, the Company will donate an amount equivalent to 0.1% of the SLB issue amount to a public interest incorporated association, a public interest incorporated foundation, an international institution, a local government authorized NPO, a local government, etc. for the purpose of environmental conservation activities* by the redemption date of the Bonds.
  • * The name of the corporation or organization, etc. to which the Company actually donated, and the donation amount will be disclosed on the Company's website.
(ii) If the SPT is not achieved, the Company will purchase emission rights (credits or certificates representing greenhouse gas emissions reductions*) in an amount equivalent to 0.1% of the SLB issue amount by the redemption date of the Bonds.
  • * It is assumed that the Company will purchase J-Credits, Green Power Certificates or similar, but details such as the name, quantity and amount of emission rights purchased will be disclosed on the Company's website. However, if the Company is prevented from purchasing emission rights due to force majeure, the Company will donate an amount equivalent to the planned amount of emission rights purchased to the corporation, organization, etc. shown in (i).
Rating acquired A (Rating and Investment Information, Inc.)
Lead underwriters Nomura Securities Co., Ltd. (Lead Managing Underwriter), Mizuho Securities Co., Ltd., SMBC Nikko Securities Inc., Okasan Securities Co., Ltd.
Structuring agent*1 Nomura Securities Co., Ltd.
Third-party evaluation The Company obtained a third-party opinion from Rating && Investment Information, Inc. (R&I) to the effect that the Bonds complies with the Sustainability-Linked Bond Principles 2023 of the International Capital Market Association (ICMA) and the Sustainability- Linked Bond Guidelines 2022 of the Ministry of the Environment of Japan.
Framework Sustainability Linked Bond Framework (Japanese) (PDF: 1.20MB)PDF will open in a new window.
News Release August 24, 2023
Notice Regarding Issuance of Sustainability-linked Bonds (PDF: 2.34MB)PDF will open in a new window.
September 13, 2023
Notice Regarding Determination of Issue Terms of Sustainability-linked Bonds (PDF: 183MB)PDF will open in a new window.
  1. An entity that supports the issuance of sustainability-linked bonds through the establishment of a sustainability-linked bond framework, and advice on obtaining second-party opinions, etc.

Appropriateness as Sustainability-linked Bonds

The Company formulated the Sustainability-Linked Bond Framework for the issuance of the bonds and obtained a third-party opinion from Rating & Investment Information, Inc. (R&I) to the effect that the framework complies with the Sustainability-Linked Bond Principles of the International Capital Market Association (ICMA) and the Sustainability- Linked Bond Guidelines and the Sustainability-Linked Loan Guidelines of the Ministry of the Environment of Japan.