Empty ESG Pledges Ensure Bonds Benefit Companies, Not the Planet (1)

Fashion giant Chanel, known for its iconic perfume and tweed suits, keeps up to date with changing tastes. These days that means showing consumers—and investors—that it’s doing its part to combat climate change.

So when the company needed to borrow money two years ago, it turned to a hot new financial product: sustainability-linked bonds, or SLBs. The investors who purchased Chanel’s €600 million ($589 million) of bonds also got a promise: If the company didn’t meet certain climate goals, it would pay them millions of euros more. In other words, they’d pay a penalty for not being green. Philippe ...