Companies setting net-zero goals typically don’t face any real punishment for missing those targets. Unless, that is, they raise money through a growing market for sustainability-linked bonds.
The fashion giant Chanel, maker of tweed suits and No.5 perfume, missed an interim renewable energy target for 2021. Instead of meeting 97% of its electricity needs from renewable sources, it only reached 92%. This is relevant to investors as the company raised 600 million euros ($613 million) in 2020 through a bond and tied its interest payments, called coupons, to successfully meeting climate targets.