ENGIE’s 2014 Green Bond
On 12 May, ENGIE issued a €2.5 billion Green Bond with the aim of supporting the Group’s strategy and the process of energy transition.
In May 2014, ENGIE issued a Green Bond totalling €2.5 billion to help finance projects on renewable energy and energy efficiency measures designed to combat climate change.
Issued in two tranches, respectively worth €1.2 billion (with a maturity of 6 years and a 1.375% annual coupon) and €1.3 billion (with a maturity of 12 years and a 2.375% annual coupon), at the time this Green Bond was the largest ever issued by a company. It proved a major success with French, German and British institutional investors, and particularly with socially responsible investors, who took up 64% of the issue, helping to improve the diversification of investors in the Group’s capital.
To qualify for funding, projects have to meet 10 environmental, social and societal criteria drawn up in conjunction with the non-financial ratings agency Vigeo, covering 5 domains:
- Protecting the environment: curbing environmental impact and combating climate change;
- Involving local communities: contributing to local development and to the well-being of local communities;
- Ethics and entrepreneurial behaviour: promoting ethical practices throughout the supply chain and sustainable relations with suppliers;
- Human resources: ensuring responsible working conditions and relations;
- Project governance: making sure that projects are subjected to an internal ESG assessment (environmental, social/societal and governance).
The investment costs of the selected projects are allocated to the Green Bond, provided they are unsubsidised and the expenditure post-dates 1 January 2013. The selected projects have to undergo a traceability procedure managed by the Finance Division (CFTID) backed by the SERD and actively involving the BUs carrying out the projects in question. These BUs have to fill in the Vigeo grid and field any requests. The procedure is checked annually by a statutory auditor (Deloitte & Associates) who audits certain projects. This results in a detailed progress report in the reference document.
Allocations as at end 2014
The Green Bond CAPEX allocation procedure carried out between October 2014 and March 2015 selected the following 15 projects, 6 of which were audited (see the asterisks):
As at end 2014, 35% of the Green Bond (€866.7 billion out of €2.5 billion) had been allocated.
Allocations as at end 2015
The Green Bond CAPEX allocation procedure carried out between November 2015 and March 2016 selected 15 more projects, 5 of which were audited (see the asterisks):
This 2015 CAPEX total is supplemented by the €190.5 million spent on the 15 projects from 2014, making a total allocation in 2015 of €847.1 million. While the auditors acknowledged an improvement in the documentation of compliance with the CSR criteria associated with the inclusion of an ‘ethics and CSR’ clause in the main suppliers’ contracts, they also noted inadequate formalisation of the training given to purchasers in business ethics, responsible procurement and reputation risks associated with suppliers and sub-contractors. Furthermore, in connection with certain projects involving acquired companies, they spotlighted the inconsistent degree of maturity with which consideration is given to ethical and CSR-related risks depending on the countries involved. This means that implementation of the process will have to be monitored at the Corporate level.