Net zero energy production: ambition is growing, as well as financing

11/07/2022

ENEL: the world’s first Sustainability-Linked bond by a multinational energy group involving a full decarbonization path

Enel has carried on its sustainable oriented strategy and business model with the launch of a new multi-tranche 3.5 billion U.S. dollar Sustainability-Linked bond in U.S. and international markets.


Starting from the inaugural USD 1.5 billion SDG-Linked Bond issued in 2019, new bonds and financing instruments issued by Enel are linked to the achievement of Group’s sustainable objectives. The Group has committed itself to reduce direct greenhouse gas emissions from the production of electricity and heat by 2040 (Scope 1, greenhouse gas emissions that occur directly at the company level). Doing so, will contribute to the United Nations Sustainable Development Goal 13 (focus on Climate Action) and will follow the Group’s Sustainability-Linked Financing Framework.


Enel also takes another strategic step towards its refinancing strategy. It includes the longest KPI (Key Performance indicator) ever used ending in 2040 and for the first time ever for a multinational energy group, a bond is linked to a trajectory towards full decarbonization, with the 30-year tranche of this issuance being linked to the Group’s target of achieving zero direct greenhouse gas emissions (Scope 1) by 2040 from the production of electricity and heat.


Enel brought forward its “Net Zero” commitment by 10 years, from 2050 to 2040, for both direct and indirect emissions from electricity generation. This commitment includes the deployment of new renewable capacity to have a 100% renewable fleet by 2040, phasing out coal-based generation by 2027 and exit from the generation and sales of gas by 2040.


The successful issue of the Sustainability-Linked bond is a clear acknowledgement of the Group's sustainability strategy and of its ability to generate value by contributing to the achievement of the Sustainable Development Goals. The new issue also allows to further accelerate the achievement of the Group’s targets of sustainable finance sources on its total gross debt, set to around 65% in 2024 and more than 70% in 2030.


Finally, despite the difficult market environment in 2022 due to Russia / Ukraine war, inflation, rate rise and China’s lockdown, Enel has already successfully issued approximately EUR 7 billion equivalent of bonds in EUR, USD and GBP, a superlative result that stressed once more the strong investors’ appetite across the globe on Enel’s credit and Sustainability strategy.


Starting from the inaugural SDG-Linked bond issued in 2019, Societe Generale accompanied Enel in several incredibly successful transactions, including the world’s largest ever Sustainability-Linked Bond (SLB) in EUR and USD in 2021, several derivative instruments linked to Sustainability including the world’s first SDG-Linked Cross Currency Swap in 2019 and the Sustainability-Linked Guarantee Agreement for a total amount of EUR 440 million. 

Once more, Societe Generale is pleased to accompany Enel in such a strategic transaction proving so a trusted and long-lasting relationship.

“ With this new Sustainability Linked Bond, we are further accelerating towards our sustainable finance objectives and fully implementing the concept of Stakeholder Capitalism. Long-term value creation will only be possible if it is based on business models that are sustainable and take into account all relevant stakeholders. This transaction, the first of its kind to be launched by a multinational energy group, also includes a tranche that is linked to the Enel Group’s target of achieving zero direct greenhouse gas emissions by 2040. The transaction will contribute to the trajectory of debt cost reduction set for the 2022-2024 period, to the implementation of our Strategy which will be beneficial for all of our stakeholders as well as to the energy independence of the countries where we operate. ”

Francesco Starace,
Enel Group CEO

“ Enel remains at the forefront of the sustainable bond market. The success of their latest triple-tranche USD sustainability-linked bond is another recognition of the ambition of the company’s sustainability strategy, notably reflected in its net-zero Scope 1 emissions target advanced by 10 years to 2040. As a further evidence of Enel’s innovative approach, the 30-year tranche of the transaction is the very first sustainability-linked bond by an energy group to include a full decarbonization path.

Societe Generale is honored to be a long term and privileged partner to Enel in its sustainable finance journey, from its green bonds and inaugural SDG-linked bonds to the latest transactions and for the years to come. ”

Stephane Marciel,
Global Head of Sustainable Bonds, Societe Generale