What are green bonuses and what are they used for?

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Green bonds are specifically intended for financing or refinancing green projects, that is, sustainable and socially responsible projects in areas as diverse as: renewable energy, energy efficiency, clean transport or responsible waste management. Iberdrola has established itself as the largest group issuing green bonds in the world; and in early 2021, it issued the largest hybrid green bond in history, worth 2 billion euros. 90% of Iberdrola’s 2020-2025 investment plan — with a budget allocation of €75 billion by 2025 that will increase to €150 billion by 2030 — is aligned with the European Union taxonomy for mitigating climate change.

WHAT ARE GREEN BONUS?

Green bonds are a type of debt issued by public or private institutions to finance themselves and, unlike other credit instruments, they commit to the use of funds obtained from an environmental project or related to climate change.

On July 5, 2007, the European Investment Bank (EIB) launched a very special issue for the first time: green bonds. But what are these green bonds and why are they so relevant? They can be distinguished by their objectives: finance projects that contribute to the achievement of Sustainable Development Goals —number 7 (accessible and non-polluting energy) and number 13 (climate action) —.

MAIN USES OF THE GREEN BONUS

Green bonds are used entirely for green projects that have a positive impact on the environment. Including:

  • renewable installations
  • energy efficiency
  • clean transport
  • waste management

GREEN BONUS PRINCIPLES

Iberdrola has its own guidelines for issuing green bonds that are inspired by the criteria established by the International Capital Markets Association (ICMA): the Principles of Green Bonds [PDF]External link, opens in new window.. Its maxims are:

The funds will be used for green projects with a beneficial impact on the environment.
The issuer of a green bond must transparently communicate to investors the environmental sustainability objectives and allow for external evaluation and review.The management of the funds will be properly and transparently controlled by the issuer, which will allow for a complementary review by an auditor.

The bonus type issuer will periodically update information on the use of funds and on the environmental benefits obtained. In the latest green financing update, Iberdrola also included its alignment with the principles of the European Union taxonomy to promote private investment in sustainable growth and contribute to a climate-neutral economy, as well as EU green bond issuance standards. .

IBERDROLA, THE WORLD’S LARGEST GREEN BONUS ISSUING GROUP

In 2014, Iberdrola became the first Spanish company to issue green bonds. The group is an international reference model in this type of financing, a fact that has been recognized for several consecutive years in the Sustainable and Responsible Capital markets Awards.
External link, opens in new window., awarded by the magazine GobalCapital, in whose 2021 edition Iberdrola won first prize in two categories: Most Impressive Corporate Green/SRI Bond Issuer and Most Impressive Corporate Hybrid Capital Issuer, taking second place in the Most Impressive Corporate Borrower category.

Iberdrola remains the world’s leading corporate group in issuing green bonds, with more than 13.8 billion euros via capital markets and a total of 23 operations since April 2014. Likewise, 90% of the 2020 investment plan -2025 and growth to 2030 of the group — whose budget allocation is 75 billion euros by 2025 that will increase to 150 billion in 2030 — is in line with the aforementioned European Union taxonomy.