Bocconi Students for Sustainable Finance

Sustainable Issuer of the Year: Enel

The company has been awarded the title Sustainable Issuer of the year by the International Financing Review (IFR), the world’s leading provider of global capital market intelligence.

The award, obtained for the second year in a row, recognizes the company’s commitment to integrating in its sustainable-linked strategy new financing instruments, including bonds, loans, CPs and cross currency swap.

The Italian utility company used its experience in 2019 to go further and become the driver of the development of the first sustainable financing framework.

Enel created two KPIs which focused on decreasing scope 1 gas emissions and increasing the percentage of renewable energy, aligning the project with the world strategy to not exceed global warming to more than 1.5 degrees. Instruments with intermediate maturities were linked to the renewable energy KPI and those with longer maturities were tied to the greenhouse gas KPI, while the SPTs update is examined annually.

Year 2020 for Enel was marked by successful programme closures.

In May, Enel linked its commercial paper programme to UN’s Sustainable Development Goal for affordable and clean energy. The deal, the first to be issued in sustainability-linked format, cannot be used if the company fails to hit its KPIs.

In October, Enel successfully innovated the derivatives market, with the first-ever bilateral sustainability-linked cross-currency swap. The group issued £500m bilateral cross-currency swap to euros, aligned with the International Capital Market Association’s sustainability-linked bond principles. This step determined Enel to be the first company to issue SLBs in all three major currencies (dollars, euros and sterling), and helped the group obtain an average upfront premium of -15bp across the deals.

As the head of ESG DCM for EMEA at Deutsche Bank Federica Calvetti stated, this company approach gives very clear signal to the market, booming demand for ESG debt while increasing the green light to a wider range of sustainable financing products, all appreciated by investors.

Indeed, JP Morgan followed Enel’s step and just like the latter committed to pay a step-up if it missed its own KPI target to lend at least US $200bn annually in financing to drive action on climate change and the UN’s SDGs from 2020 to 2022.

But Enel is nowhere near to stop. The company is expected to convert 50% of its gross debt to sustainable debt in 2023 and more than 70% in 2030. Moreover, the elasticity of the framework makes it comparatively easy for Enel to add other financing instruments, and it is considering new sustainability-linked instruments for 2021, including subsidized and development finance, factoring and trade financing.

Author: Mariapia Oddo

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Sustainable Issuer of the Year: Enel

The company has been awarded the title Sustainable Issuer of the year by the International Financing Review (IFR), the world’s leading provider of global capital market intelligence.

The award, obtained for the second year in a row, recognizes the company’s commitment to integrating in its sustainable-linked strategy new financing instruments, including bonds, loans, CPs and cross currency swap.

The Italian utility company used its experience in 2019 to go further and become the driver of the development of the first sustainable financing framework.

Enel created two KPIs which focused on decreasing scope 1 gas emissions and increasing the percentage of renewable energy, aligning the project with the world strategy to not exceed global warming to more than 1.5 degrees. Instruments with intermediate maturities were linked to the renewable energy KPI and those with longer maturities were tied to the greenhouse gas KPI, while the SPTs update is examined annually.

Year 2020 for Enel was marked by successful programme closures.

In May, Enel linked its commercial paper programme to UN’s Sustainable Development Goal for affordable and clean energy. The deal, the first to be issued in sustainability-linked format, cannot be used if the company fails to hit its KPIs.

In October, Enel successfully innovated the derivatives market, with the first-ever bilateral sustainability-linked cross-currency swap. The group issued £500m bilateral cross-currency swap to euros, aligned with the International Capital Market Association’s sustainability-linked bond principles. This step determined Enel to be the first company to issue SLBs in all three major currencies (dollars, euros and sterling), and helped the group obtain an average upfront premium of -15bp across the deals.

As the head of ESG DCM for EMEA at Deutsche Bank Federica Calvetti stated, this company approach gives very clear signal to the market, booming demand for ESG debt while increasing the green light to a wider range of sustainable financing products, all appreciated by investors.

Indeed, JP Morgan followed Enel’s step and just like the latter committed to pay a step-up if it missed its own KPI target to lend at least US $200bn annually in financing to drive action on climate change and the UN’s SDGs from 2020 to 2022.

But Enel is nowhere near to stop. The company is expected to convert 50% of its gross debt to sustainable debt in 2023 and more than 70% in 2030. Moreover, the elasticity of the framework makes it comparatively easy for Enel to add other financing instruments, and it is considering new sustainability-linked instruments for 2021, including subsidized and development finance, factoring and trade financing.

 

Author: Mariapia Oddo