“For our Group, sustainability equals value. The IFR awards further confirm this equation, by acknowledging our sustainability-linked financing framework, an innovative tool that we were the first to launch and which has since been replicated by other players around the world. The flexibility of the framework makes it relatively easy for us to add other financing instruments, and we are considering new sustainability-linked instruments for 2021.”
Enel selected two KPIs for the framework, focusing on scope 1 greenhouse gas emissions reduction and increasing the percentage of renewable energy, in line with UN Sustainable Development Goals (SDGs) 13 “Climate action” and 7 “Affordable and clean energy”, respectively. The Sustainability Performance Targets (SPTs) will be updated on a rolling basis as the Group’s Strategic Plan is revised annually.
A third of Enel’s gross debt is now sustainable, which is expected to reach almost 50% in 2023 and more than 70% in 2030 through refinancing and raising new sustainable debt, as outlined in November 2020, with the 2021–2023 Strategic Plan that includes a 10-year vision to 2030.
In May 2020, Enel issued a 5 billion euro sustainability-linked loan, followed by a first of its kind SDG 7 Target Guaranteed Euro-Commercial Paper Program of up to 6 billion euros in the same month, both linked to the UN SDG 7.
The new framework was unveiled along with the first-ever pounds sterling sustainability-linked bond, the related bilateral sustainability-linked cross-currency swap, and another 1 billion euro sustainability-linked loan.
The 500 million pounds sterling, seven-year sustainability-linked bond, was aligned with the International Capital Market Association’s (ICMA) sustainability-linked bond principles, with a second-party opinion from Vigeo Eiris, and proved to be highly successful after raising orders of more than 3 billion pounds sterling.
Through the deal, Enel became the first company to issue sustainability-linked bonds in all three major currencies (US dollars, euros and pounds sterling) to increase its investor base. This milestone allowed Enel to substantiate the value of its sustainability actions by estimating an average “sustainability premium” of around 15bps across the deals.
Enel also issued an innovative 500 million pounds sterling derivative to swap the sterling proceeds back to euros. The first-ever bilateral sustainability-linked cross-currency swap was one of the first sustainable debt instruments to require a bank counterparty to match a company’s KPI commitments with similar pledges from the bank itself.