German multinational utility company E.ON has unveiled its new green bond framework.
The new green bond framework was presented by the utility during an international investor meeting held on 1 March 2021.
The new framework has two key differences from the one the utility initially published in 2019.
The differences include:
In addition to the full alignment with the so-called ICMA Green Bond Principles, which set the standard for green bonds in the capital market, the new E.ON Framework is also the first across Europe to fully comply with the criteria of the EU Taxonomy on sustainable economic activities and the Draft Delegated Act.
The EU Taxonomy defines which economic activity is classified as environmentally sustainable and thus sets a Europe-wide standard for sustainable investments.
The new framework focuses on sustainable projects in both the Energy Networks, as well as the Customer Solutions business.
The new framework is expected to help the utility to revolutionise its grid network in line with the demands of the energy transition. Projects prioritised by the framework will include the decarbonisation of the grid and the integration of the energy network with carbon emissions intensive generation plants.
Under the new Green Bond Framework, E.ON will first include its German and Swedish power grids, which already allow renewable energy to be fed into the grid to a very large extent.
From the Customer Solutions segment, projects such as highly efficient combined heat and power solutions that E.ON develops for industrial or municipal customers, such as in its Swedish Medicon Village project, shall be included.
External investors will be allowed to (re-)finance sustainable projects of the E.ON Group that comply with the Green Bond Framework.
The introduction of the new green bond framework comes at a time the trend toward sustainable investments continues to grow steadily.
For international investors, the topic of sustainability in their investment decisions is becoming increasingly important.
For bondholders, ‘green bonds’ – fixed-income securities whose issue proceeds are used to finance sustainable investment projects – are at the center of this development.
E.ON’s CFO Marc Spieker, said: “Over the past years, E.ON has established green financing as a core element in its funding strategy. With our updated Green Bond Framework, we create a platform to use green bonds as an integral part of our financing mix also going forward. We expect to cover more than 50 percent of our annual funding requirements with green bonds going forward. We are very proud that our new Green Bond Framework is the first corporate framework to be completely aligned with the current version of the EU Taxonomy and its Delegated Act. E.ON highly appreciates that with the EU Taxonomy and the draft EU Green Bond Standard, the EU fosters a way towards harmonized assessment criteria for sustainable investments.”
E.ON’s COO for Energy Networks, Thomas König, adds: “Electricity Networks play a key role for the energy transition and serve as the central platform to make the transition towards a more sustainable and decarbonised society a success. Applying smart technologies and consequently fostering the digitalisation of grid infrastructure allows us to manage our existing grids at high efficiency and at the same time expand our networks in a resource-efficient way. With our new Green Bond Framework, we give investors the opportunity to support us in making our energy systems cleaner and smarter and allowing us to supply our customers with green energy more efficiently.”