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Teva Pharmaceuticals: Driving the sustainability agenda from treasury


At the intersection of finance and sustainability, Teva Pharmaceuticals’ $5 billion sustainability-linked bond (SLB) issue stands as an achievement in the pharmaceutical industry. This initiative not only signifies a substantial evolution in the treasurer’s function but also profoundly influences the company’s Environmental, Social, and Governance (ESG) journey.

Speaking at the 2023 International Treasury Management conference, David Hanhart, EMEA Treasurer at Teva Pharmaceuticals, shared his insights on the impact that the transaction has had on Teva’s ESG journey and the challenges and opportunities the treasury team faced in driving sustainable financing initiatives.

The Genesis of the Issuance 

Teva Pharmaceuticals’ (Teva) decision to issue a $5 billion sustainability-linked bond in 2021 represented a notable shift in the company’s approach to corporate finance. This initiative was primarily driven by the company’s recognition of the increasing importance of sustainability in business operations and the need to align financial strategies with this evolving sustainability.

The concept of the sustainability-linked bond emerged as Teva sought to integrate its core mission of providing access to quality medicines. Given its role in the pharmaceutical industry, particularly in the generics sector, Teva identified an opportunity to leverage its financial operations to support broader sustainability objectives. The bond issue was thus seen as a way to align the company’s financial endeavours with its commitment to environmental and social sustainability.

The development of the bond issuance required detailed planning and a deep understanding of both financial markets and sustainability metrics. These included linking the bond to the “traditional” environmental targets including a 25% reduction in Scope 1 and Scope 2 greenhouse gas (GHG) by 2025. But not only that, Teva also did what was then still unheard of: incorporating very relevant social targets for the pharmaceutical industry like a commitment to increase by 150% the access to Teva’s portfolio of essential medicines to address non-communicable diseases in low- and middle-income countries (LMICs) by 2025. These ESG targets were integral to the bond’s structure, unlike traditional bonds, sustainability-linked bonds necessitate clear, quantifiable goals and tangible outcomes. The treasury team had to ensure that the bond’s framework would accurately reflect and promote the company’s ESG initiatives. 

The treasurer’s role in pioneering change

Traditionally viewed as managing financial risks, ensuring liquidity, and overseeing corporate finance, the treasury team transcended these roles in the issuance of the sustainability-linked bond. This initiative marked a departure from conventional treasury functions, embracing a holistic approach that fused financial instruments with the company’s environmental and social objectives.

This required orchestrating cross-functional collaborations, adeptly managing expectations from a diverse range of stakeholders, and effectively communicating the strategic significance of the bond issue both internally and externally. 

Collaboration was pivotal in the inception of the bond. The treasury team engaged with a spectrum of internal stakeholders, including Teva’s ESG department and Teva’s Top Management (CEO and Board of Directors). Their efforts were geared towards gathering insights and shaping a bond structure that resonated with Teva’s strategy and market’s expectations. 

Furthermore, external engagements of the team were equally crucial. Their interactions with investors, banks, and financial advisors were key in crafting and disseminating a compelling narrative about the sustainability-linked bond. For instance, to validate the bond’s alignment with ESG objectives and increase its credibility, Teva actively engaged with external evaluators. This process involved obtaining second party opinions from ISS ESG and from the Access to Medicine Foundation, which assessed the social impact of Teva’s health access goals in Low- and Middle-Income Countries. 

“Donating is nice, but a financial commitment is much more influential. The decision to issue an SLB followed an in-depth analysis which covered the instrument itself, what Teva’s existing and potential new investors would be interested to buy and recent transactions in and outside the pharma space. The conclusion was that issuing an SLB would best match the specific needs of the company, our investor base and at the same time dramatically accelerate our ESG journey,” explains Hanhart. 

Advancing corporate sustainability

Teva’s venture into sustainability-linked financing is not a one-off event but marked the beginning of a continual commitment. Hanhart noted the improbability of reverting from this path, signalling the company’s ongoing dedication to sustainability in its future financial operations. Following the success of this bond, the company has already incorporated ESG targets to its multi billion Revolving-Credit-Facility (RCF), its Supply-Chain-Financing (SCF) facilities as well as to another SLB issued in March 2023, underlining the company’s enduring commitment to sustainability-linked financial strategies. Like its predecessor, this bond is tied to specific targets, such as enhancing access to Teva’s medical portfolio in low- and middle-income countries and reducing the company’s overall greenhouse gas emissions.

The issuance of this bond has set a trend within the pharmaceutical industry, showcasing how companies can use financial tools to advance sustainability goals. By linking substantial sustainability goals with its financing activities, Teva has demonstrated how the pharmaceutical industry can contribute to global sustainability efforts, including enhancing healthcare accessibility and reducing environmental impacts.