Accelerating hydropower's clean energy developments with innovative sustainable financing

25/03/2021

VERBUND AG, the leading producer of hydropower in Austria, issues the first ever EU-taxonomy aligned “Green and Sustainability-Linked Bond”. Societe Generale is on board as one of VERBUND’s trusted relationship banks.

Renewable hydropower is a reliable, versatile and low-cost source of clean electricity generation. Modern hydropower plants are helping to accelerate the energy transition, providing essential power, storage and system flexibility. Hydropower today accounts for more than half of total installed power generating capacity in Austria, but demand is expected to increase by 14-20 TWh (Terawatt hours) by 2030.1 Thus, existing hydropower plants in the country need to be upgraded and the power grid network bolstered.

In this context, Austria’s leading utility company and international green finance pioneer, VERBUND, is adding another chapter to its sustainability story. In March 2021, the company has placed a EUR 500 million, 20-year senior unsecured bond featuring a variety of sustainable characteristics.

The bond represents an innovation on the sustainable capital market, as it combines a clearly defined environmentally sustainable (“green”) use of proceeds with a coupon step-up that is linked to company-wide sustainability targets (“sustainability-linked”). The coupon of the bond increases if the company fails to meet two predefined sustainability targets. VERBUND intends to use the proceeds from the bond issue for the renewal and expansion of an existing hydropower plant, as well as for the expansion of its power grid in Austria. 

“ With the VERBUND Green & Sustainability-Linked Bond, we continue to contribute to a green energy future with another innovative financing tool, while at the same time responding to the market’s growing demand for green finance products. We are thankful to have been able to rely on the expertise and support of our banking partners such as Societe Generale in the transaction. ”

Peter F. Kollmann
CFO, VERBUND AG

This new transaction underlines Societe Generale’s willingness to accompany its clients on innovative projects which have a positive impact on society at large. It accentuates its strong positioning in sustainable finance in the German-speaking region.

Societe Generale had already supported VERBUND with the issue of the first ever Austrian Green Bond in 2014 and was an ESG structuring advisor for VERBUND’s first green revolving credit facility in 2018. This time around, the bank acted as Joint Bookrunner responsible for marketing and the roadshow organization.
 

« Societe Generale has demonstrated time and again that it is at the forefront of backing pioneering projects in the field of Sustainable & Positive Impact Finance. Our support for this unique transaction which will help to finance critical elements of Europe’s energy transition gives testimony to our commitment. »

Ralph Neher
Senior Banker, Societe Generale


1- International Hydropower Association. https://www.hydropower.org/country-profiles/austria. Accessed 22 March 2021