Second-Party Opinion Download

Sustainalytics is of the opinion that the Arcos Dorados Sustainability-Linked Financing Framework aligns with the Sustainability-Linked Bond Principles 2020 and the Sustainability-Linked Loan Principles 2021. This assessment is based on the following: 

Selection of Key Performance Indicators (KPIs)

Arcos Dorados Sustainability-Linked Financing Framework includes two KPIs: KPI 1 absolute GHG emissions reduction (scopes 1 and 2 in tCO2e) and KPI 2 GHG emissions intensity reduction (scope 3 in tCO2e/ tonne of food and packaging) (see Table 1). Sustainalytics considers KPI 1 to be adequate given its limited scope of application (under 10% of total emissions), whereas KPI 2 is considered strong given its extensive scope of applicability (over 90% of total emissions). Furthermore, both KPIs are considered to be a measurement on a material issue. 

Calibration of Sustainability Performance Targets (SPTs)

Sustainalytics considers the SPTs to be aligned with the issuer’s sustainability strategy. Sustainalytics further considers SPT 1 to be ambitious and SPT 2 to be moderately ambitious based on the lack of historical performance, alignment with industry peers, and where possible alignment with science-based targets. 

Security Characteristics

Arcos Dorados will link the financial characteristics of any security issued under the Sustainability-Linked Financing Framework (“Framework”) to the achievement of the SPTs, namely a coupon step-up in case: (i) KPI 1 or KPI 2 has not been achieved by the observation date of the respective SPTs or (ii) the Company fails or is unable to provide satisfactory notification in accordance with the financial instrument’s documentation.  

Reporting

Arcos Dorados commits to report on an annual basis on its progress on the KPIs in its corporate sustainability report or similar report on its website. Arcos Dorados commits to disclose relevant information that affect KPI performance. The reporting commitments are aligned with the SLBP.  

Verification

Arcos Dorados commits to have external limited assurance conducted against the performance of each SPT and for each KPI at least once a year and whenever relevant leading to a potential coupon adjustment, which is aligned with market expectations.