The transition to a sustainable and carbon-neutral economy is in full swing. Sustainable energy is not only the basis for economic and social development but also a key factor in tackling one of biggest challenges we are currently facing: climate change. E.ON is committed to being part of the solution. In fact, our core businesses themselves – energy networks and customer solutions – are our biggest contribution in tackling climate change and in achieving the United Nations Sustainable Development Goals (SDGs). With our core businesses we promote affordable and clean energy (goal 7), offer solutions for sustainable cities and communities (goal 11) and contribute in the fight against climate change (goal 13). In order to achieve the SDGs and meet the global challenge of climate change, the financial system will have to shift toward rewarding sustainable businesses and climate-friendly solutions.
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.
We have first established a Green Bond Framework in 2019, which was updated in 2021. The new E.ON Green Bond Framework differs in one key aspect from the previous version: in addition to the full alignment with the so-called ICMA Green Bond Principles, which today set the standard for green bonds in the capital market, the new E.ON Framework also fully complies with the draft EU Green Bond Standard and 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 ongoing transformation and decarbonization of the energy world requires large investments. E.ON intends to issue Green Bonds to finance and/or refinance in whole or in part eligible assets and capital expenditures related to energy networks, renewable energy, energy efficiency, and clean transportation.
The eligibility criteria comply with the EU classification system for sustainable economic activities (the “EU Taxonomy”) as published in the draft Delegated Act for climate change mitigation and climate change adaptation activities of November 20201. We will provide aggregated disclosures of the allocation of the net proceeds to eligible green projects for all Green Bonds and other potential green financing vehicles outstanding along with our sustainability reporting from 2020 onward. Where feasible, we intend to report on the environmental impacts of the projects funded with the Green Bond proceeds.
E.ON continues to put its sustainability strategy into action: In addition to issuing Green Bonds, E.ON has implemented an ESG feature in its € 3.5 billion syndicated revolving credit facility. The facility has a maturity of 5 years and includes two options to extend the facility, in each case for one year. The first option to extend the facility for another year was exercised in October 2020. The facility is made available by 21 banks which constitute E.ON’s core group of banks.
By linking the credit margin to the performance of certain ESG ratings, E.ON sets itself financial incentives to pursue a sustainable corporate strategy. These ESG ratings are determined by three well-established agencies: ISS ESG, MSCI ESG Research, and Sustainalytics.
Find out more about how our energy networks and customer solutions businesses propel the transition to a clean and sustainable energy world