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Product cover image for The TELUS Sustainability-Linked Bond: Raising Capital to Fight Climate Change

The TELUS Sustainability-Linked Bond: Raising Capital to Fight Climate Change

Michael R. King

Product #:W42747
Supplier:Ivey
Discipline:Finance, Sustainability
Setting:Canada, 2021
Details:Case (PDF) • 15 pages • 2025-03-24

Subjects:

Environmental sustainabilityLeadership and managing peopleFinance and investingManagement

Industries:

Information technology and telecom sector

Geography:

CanadaNorth America
Your Price:$10.54

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TELUS Corporation (TELUS) issued Canada’s first sustainability-linked bond (SLB), in mid-June 2021. An SLB was a newer category of green bond that allowed companies to raise funds for general corporate purposes instead of specific environmental projects. This SLB supported TELUS’s sustainability journey and commitments, towards which it had made significant progress since setting its first climate targets in 2011. Building on this success, TELUS set new goals in 2021 to achieve net-zero carbon emissions by 2030 and had its targets approved by the Science Based Targets initiative—the first telecommunications company in Canada to do so. Two analysts were tasked with analyzing the bond’s structure, pricing, and other features to recommend the credit spread for the SLB.

Learning Objectives

Students will learn how to price a new bond issue by referring to outstanding comparable bonds from TELUS and its peers, using the credit spreads on these issues to anticipate the pricing of a new bond. The novelty of this case is the green bond setting, the potential incorporation of a greenium, and the uncertainty around what penalty would be appropriate for failing to meet the specified targets.

Working through the case and assignment questions will give students the opportunity to do the following:
  • Practice pricing a new bond issue based on outstanding bonds from the issuer and its peers.
  • Understand the purpose of SLBs and their role in supporting corporate environmental actions.
  • Understand the differences between SLBs (where the proceeds may be used for general corporate purposes) and other green, social, and sustainability bonds (where the proceeds must be used for specific environmental, social, and governance projects).
  • Evaluate the key features of SLBs: the key performance indicators, the sustainability performance targets, the role of third-party verification, and the penalties in case targets are not met.
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Case Study: The TELUS Sustainability-Linked Bond: Raising Capital to Fight Climate Change (English version) | Ivey Publishing