A significant event for a company that has sustainability in its DNA and becomes an increasingly more significant element in terms of diversifying financial sources.
“Sustainable finance operations, such as issuing Green Bonds, are a tangible sign of Acea Group’s commitment to sustainable objectives and the strategy to reach them.” Says Amodio Acone, Head of Structured Finance & Sustainable Finance at Acea Group.
“Our investments have always been linked to green finance and devoted to sustainability projects involving energy efficiency, managing water resources, production of electricity from renewable sources, and circular economy.” Amodio adds.
What is sustainable finance?
Sustainable finance is the combination of public funding instruments, such as for example the National Recovery and Resilience Fund, or private funds, such as Green Bonds, destined for green projects, i.e. projects and initiatives that have a positive impact on society and the environment. Social development, environment protection, and more in general Environmental, Social, and Governance (ESG) policies become the drivers of investment decisions in the financial sector. Known as ethical finance or green finance, sustainable finance can involve public and private investments. The Green Bonds issued by Acea are an example of private funding: the issuance of bonds used to fund green projects in public services managed by the companies part of the Group.
“In recent years, on one hand we observed the market and noted the growing interest shown by companies and investors for green finance initiatives.” Amodio explains. “On the other, we made sure to have in place procedures, processes, skill sets and systems that could enable the Acea Group to make the most of these financial tools.”
Today more than ever our sustainability strategy is integrated in our business with clear and solid objectives.
The issuance of Acea Green Bonds was preceded by the publication of the Green Financing Framework, the document that explains to investors how funds will be managed and used in terms of sustainable finance.
Work on the Green Financing Framework started with a first stage to select the eligible green projects based on the sector’s international criteria. “A permanent work group, formed by representatives of the Finance, Planning and Control, and Sustainability areas, was created.” Says Amodio.
The green projects to be included in the framework were selected among all the initiatives with sustainability targets included in the Business Plan. Four main groups were identified coherently with the UN 2030 Agenda:
For each initiative, the framework shows actions planned, environmental targets, and the UN SDGs to which the project contributes towards.
We are talking about approximately 30 green projects, from which we expect positive impacts in the fight against climate change, but also in society, in terms of employment and smart city modernizations.
As set out in the framework, the work group will also monitor investments funded by the Green Bonds, providing investors with an annual report showing the progress and results obtained against the sustainability KPIs declared for each green finance project.
“Lastly, the document was certified by an independent company and then presented to investors with the aim of providing in-depth information on each single sustainable finance project and company strategies”. Amodio concluded.
Thanks to the great teamwork of all involved, Acea’s Green Bond issuance, worth in total 900 million euros, attracted requests 7 times higher than the offer allowing for competitive pricing, much higher than a hypothetical standard issuance (the so-called greenium); the first tranche due in five years was issued with negative yielding, an absolute first for bonds from Italian listed companies. “70% of requesters were investors specializing in ethical finance, while the remaining 30% were classic investors.”
A success that confirms two important points. The first is Acea’s credibility and the solidity of its Business and Sustainability Plan. The second is the fact that today sustainable finance is an actual trend that is continuing to grow. “Green finance offers advantages for everyone: for companies and their businesses, who may receive funds at lower prices compared to standard financial instruments; for investors, who get a return on assets characterized by high-quality, durability, and low risk; for environmental transaction and for society, thanks to more efficient services and infrastructure. We like to imagine that in the long term, if expectations are confirmed, there will be no distinction: all finance will be sustainable.” Amodio adds.
Investing in the future: an expression that in a sustainable finance context assumes a much deeper significance.
In January 2023, Acea issued its second Green Bond (by placing a benchmark amount of €500m and a further Tap issuance of €200m).
What are Green Bonds?
Green Bonds are bond issued by national or supranational financial institutions, such as the World Bank and the ECB, or by private companies such as the Acea Group.
Green Bonds are among the instruments adopted by ethical and sustainable finance. They differ from traditional bond issuances because the funds they raise are destined exclusively to fund green projects that have a positive impact on the environment and society. For example, Green Bonds are used to fund investments that contribute to fighting against climate change, to developing a circular economy, and to protecting the environment and natural resources.
These are the 4 guidelines that must be followed by anyone who wants to issue Green Bonds:
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