Sustainability | Sustainability ManagementFund Procurement through ESG Finance
Status of Progress of SPTs and KPIs for TDK Sustainability-Linked Bonds
TDK issued the TDK Sustainability-Linked Bonds, its 9th series unsecured straight bonds, in December 2021. Here, TDK reports on the Key Performance Indicators (KPIs) and Sustainability Performance Targets (SPTs) that it set and the status of progress toward achieving them.
In the TDK Environmental Vision 2035, TDK made the reduction of environmental load from a life-cycle perspective a key topic and set a target of halving CO2 emissions intensity by fiscal 2036 with fiscal 2015 as the base year. TDK set SPTs that reflect the actions taken to achieve this target and selected as the KPIs three indicators that will serve as the means of achieving the SPTs. By incorporating multiple inter-related measures, TDK believes that it is possible to gauge the Group’s actions from a more multi-faceted perspective.
SPTs
SPT-1: Reduce CO2 emissions intensity per sales (t-CO2 per 100 million yen sales) by 30% in fiscal 2026* compared to fiscal 2015
SPT-2: Maintain “A” or “A-” for the CDP Climate Change score in the calendar year 2025.
SPT-3: Achieve to raise the ratio of renewable energy sources to 50% of electricity consumption in fiscal 2026*.
*Targets until fiscal 2026 (ending March 31, 2026)
We will determine whether we have attained these goals based on the performance in fiscal 2026 for SPT-1 and 3 and in the calendar year 2025 for SPT-2. If we fail to achieve two or more of the above three SPTs, we will give donations to public interest incorporated associations, public interest incorporated foundations, international organizations, non-profit organizations certified by local governments, local governments, and organizations similar to the foregoing, whose purpose is environmental conservation activities, in the total cumulative amount equivalent to 0.3% of the bond issue amount before the redemption of the bonds. In addition to our own ESG initiatives, we will create an additional positive impact by supporting their activities through donations.
As a third-party evaluation, Rating and Investment Information, Inc. (R&I) has provided a second opinion stating that the sustainability-linked bond framework created for the issuance of TDK Sustainability-Linked Bonds conforms to the Sustainability-Linked Bond Principles 2020 established by the International Capital Market Association (ICMA).
*Sustainability-linked bonds: Debentures for which the bond issuer commits to investors to improving results based on sustainability related targets set in advance and for which the terms change depending on whether the targets are achieved.
SPT-1: Reduce CO2 emissions intensity per sales (t-CO2 per 100 million yen sales) by 30% in fiscal 2026 compared to fiscal 2015.
CO2 emissions intensity per sales is calculated by dividing the sum of Scope 1 emissions (directly produced emissions) and Scope 2 emissions (indirect emissions from purchased energy) by net sales stated on the consolidated statements of income.
| KPI-1 | Fiscal 2015 | Fiscal 2019 | Fiscal 2020* | Fiscal 2021* | Fiscal 2022* | Fiscal 2023* |
SPT-1 Fiscal 2026 |
|---|---|---|---|---|---|---|---|
| CO2 emissions intensity indexed to fiscal 2015 as 100 | 100 | 91.9 | 86.9 | 90.9 | 68.0 | 51.8 | 70.0 |
*The figures for fiscal 2020 onward are verified by a third party.
SPT-2: Maintain “A” or “A-” for the CDP Climate Change score in the calendar year 2025.
CDP Climate Change scores evaluate climate change initiatives of corporations and cities. CDP evaluates the participants’ response to its questionnaire and gives a score from the nine levels (A/A-/B/B-/C/C-/D/D-/F) based on quantitative and qualitative assessment criteria.
| KPI-2 | 2018 | 2019 | 2020 | 2021 | 2022 |
SPT-2 2025 |
|---|---|---|---|---|---|---|
| CDP Climate Change score | D | A- | A- | A- | A- | A or A- |
SPT-3: Achieve to raise the ratio of renewable energy sources to 50% of electricity consumption in fiscal 2026.
The ratio is calculated by dividing the total of electricity purchased from renewable sources with an Energy Attribute Certificate and electricity generated in-house by total electricity consumption.
| KPI-3 | Fiscal 2019 | Fiscal 2020 | Fiscal 2021 | Fiscal 2022 | Fiscal 2023 |
SPT-3 Fiscal 2026 |
|---|---|---|---|---|---|---|
| Ratio of electricity from renewable energy sources (%) | 20.3 | 18.2 | 23.9 | 30.0 | 39.9 | 50.0 |
TDK Corporation 9th series unsecured straight bonds (with special inter-bond pari passu clause) (TDK Sustainability-Linked Bonds)
| Total amount of bond issuance | ¥40 billion |
|---|---|
| Denomination of each bond | ¥100 million |
| Coupon rate (per annum) | 0.26% per annum |
| Issue price | ¥100 per ¥100 of face value of each bond |
| Redemption price | ¥100 per ¥100 of amount of each bond |
| Term and redemption method |
7 years Lump-sum redemption upon maturity (1) Final redemption date: December 1, 2028 (2) Retirement by purchase: The bonds may be repurchased and retired at any time from the day after the pay-in date |
| Interest payment dates | June 2 and December 2 of each year (the initial interest payment date is June 2, 2022) |
| Type of offering | Public offering |
| Offering period | November 26, 2021 |
| Payment date | December 2, 2021 |
| Collateral and guarantee | The Bonds are unsecured and unguaranteed, and no assets have been specifically reserved for the Bonds. |
| Financial covenants | A negative pledge clause (with special inter-bond pari passu clause) is attached. |
| Joint lead managers | Nomura Securities Co., Ltd., Daiwa Securities Co., Ltd., and Mizuho Securities Co., Ltd. |
| Application of the Act on Book Entry of Corporate Bonds and Shares | The Bonds are subject to the Act on Book Entry of Corporate Bonds and Shares. |
| Financial, issuing, and payment agent | Resona Bank, Limited. |
| Transfer agent | Japan Securities Depository Center, Inc. |
| Rating | Rating and Investment Information, Inc.: A+ |
