Green Finance

12/11/2018Vienna

VERBUND places the first ESG linked syndicated loan

After the Green Bond and the first green digital Schuldschein, VERBUND is now placing the world’s first loan evaluated purely in accordance with sustainability criteria.

VERBUND successfully placed the first ESG (Environmental Social Governance) linked syndicated loan in the amount of 500 million euros with 12 banks on 10 December 2018. VERBUND has thus set another milestone in the area of Green Finance. This loan is the first in the world whose company-related premium on the base rate over the entire term is no longer determined according to the financial rating at the established financial rating agencies but purely according to the sustainability rating provided by a sustainability rating agency.

Innovative green financial products 

As Austria’s leading power company, VERBUND places a high strategic focus on the topic of sustainability. Another milestone in the group-wide sustainability strategy is the firm anchoring of sustainable management in the financial sector as well. VERBUND has already built up a long-term track record and advanced numerous innovative financial products in the area of Green Finance. For example, in 2014, VERBUND was the first company in the German-speaking countries to issue a Green Bond (500 million euros), whose funds are used solely to finance certified projects in the area of hydropower and wind power, which make a lasting contribution to the avoidance of CO2 emissions. In 2015, VERBUND converted its long-term investments to cover pension and severance claims to sustainable criteria and in doing so gave another clear signal. In spring 2018, VERBUND issued the world’s first digital green Schuldschein (100 million euros) via the platform VC trade, whose funds were used to finance the high-voltage network expansion in Austria in order to guarantee the inclusion of new, renewable energies. 

Financial innovation measured by the sustainability rating

The current transaction is again an innovation: VERBUND is taking out a syndicated loan with 12 banks in the amount of 500 million euros and a term of 5 years. The company-related premium on the base rate is set once a year during the term of the loan and solely on the basis of an external sustainability rating. Sustainalytics, a leading global provider of ESG research and ratings, assessed VERBUND and provided the firm with its ESG Risk Rating score, which was used for the syndicated loan. If the sustainability rating of VERBUND declines, the cost of the loan rises; if the sustainability rating of VERBUND improves, the cost of the loan falls. . This means that there is an extensive decoupling here from the established financial rating. VERBUND is taking this step with the aim of underscoring the credibility of its sustainability strategy and providing new, international impetus in the direction of Green Finance as a driver of innovation.
Ingun Metelko Ingun Metelko

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