Enel has issued what it claims is the first bond to link its coupon to the company’s achievement of a renewable energy generation target in line with the UN Sustainable Development Goals (SDGs).
The company will use the proceeds from the $1.5 billion, five-year issuance for general corporate purposes.
However, the coupon it pays investors will increase by 25 basis points if Enel does not achieve, by 31 December 2021, a percentage of installed renewable generation capacity equal to or greater than 55% of total consolidated installed capacity. It will mandate an auditor to provide an assurance report to verify whether it has achieved the target. As of 30 June, the figure already stood at 45.9%.
Enel said working toward the target would demonstrate its contribution to SDG 7 (Affordable and clean energy).
Tanguy Claquin head of sustainable banking at Crédit Agricole, said the structure is simpler than that of a green bond, because the issuer does not need to identify eligible assets, prepare a second opinion report, a green bond framework or report on set of assets. This structure has potential to be replicated by any type of company – any company would usually have a strategy to manage the transition to a low-carbon economy and would have a metric that is both core business and reecting how this transition is happening.