COP21 Solutions – Green Bonds: funding energy efficiency and renewable energy development projects
The funding of energy efficiency and renewable energy development projects is crucial in combating climate change and succeeding in the energy transition. GDF SUEZ is helping by launching the largest-ever issue of Green Bonds.
Context and challenges
Conscious of its major role in the energy transition and with ambitious environmental targets of its own, GDF SUEZ issues its own Green Bonds as an innovative route to funding projects that focus exclusively on energy efficiency and the development of renewable energy.
GDF SUEZ launched an unprecedented €2.5 billion Green Bond issue in 2014. The cash raised by issuing these Green Bonds will be used to fund renewable energy and energy efficiency projects.
This bond issue enables the Group to develop its interests in generating energy from non-fossil fuel sources, such as solar power, wind power, geothermal and hydropower, as well as in reducing energy consumption through the use of remote consumption control systems (smart metering), cogeneration and the construction of local heating and cooling networks.
To be eligible for this funding, projects must also meet ten criteria developed in collaboration with Vigeo, the expert ratings agency that assesses the environmental, social and governance (ESG) performance of companies and organizations. Validated by Vigeo, these criteria cover environmental protection, the development and wellbeing of local communities, compliance with ethical and fair practice principles for suppliers and subcontractors, responsible human resources management and internal ESG assessment of adopted projects.
This highly successful Green Bond issue was enthusiastically welcomed by institutional investors in France, Germany and the UK. In fact, it was oversubscribed by around three times its initial amount. Demand was particularly strong from SRI (Socially Responsible Investment) funds, which were allocated 64% of the total issue value.
Green Bond total issue value: €2.5 billion.
Broken down into:
- €1.2 billion over 6 years at a yield of 1.375%
- €1.3 billion over 12 years at a yield of 2.375%
Average coupon rate: 1.895% for average maturity of 9.1 years.
64% of the total issue was allocated to investors applying ESG criteria
GDF SUEZ environmental targets:
- 40% growth in its energy efficiency business by 2018
- 10% reduction in specific CO2 emissions by 2020