Railroad company Norfolk Southern entered the green bond market with a $500 million offering as part of its decarbonisation efforts.

The proceeds are directed solely towards advancing its target of achieving a 42% reduction in Scope 1 and 2 emissions by 2034.

Norfolk Southern said it will improve the fuel efficiency of its locomotive fleet and invest in intermodal terminals to promote the shift of freight from trucks to train. The proceeds will also be used to make "environmental benefits in the communities where employees live".

It is the first Class 1 railroad in North America to issue green bonds and had demand of over $1.8 billion.

The Environmental Finance Bond Award judges were impressed by its strong framework and industry goals, saying: "It is good to see a company in a sector known for providing efficient means of transportation make efforts to decarbonise its locomotive fleet".

"At Norfolk Southern, we're in the business of a better planet – committed to being a sustainability leader for the transportation industry and throughout the communities we serve," said Josh Raglin, chief sustainability officer for Norfolk Southern.

"Over the past year, we have taken notable steps to further our long-term sustainability goals, such as establishing a science-based target for greenhouse gas emission reductions and becoming the first major North American railroad to issue green bonds. Our $500 million in green bond financing allows us to do even more to help customers reduce their carbon footprint, improve air quality, restore natural habitats, and drive long-term value for shareholders."