Volvo Cars says it has established a Green Finance Framework, allowing the company to fund its ambitious climate plan and electrification strategy by issuing green bonds or obtaining green loans. It echoes the funding route followed by others, including Volkswagen Group.
Funds raised under this framework are earmarked for climate-related and environmental projects. The Green Finance Framework specifies how these projects are identified, selected and managed, providing transparency for investors.
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The company’s framework paves the way for Volvo Cars to issue its first green bond. The proceeds of such a bond will be used to fund new electric car models, new vehicle platforms and powertrain technology, as well as increased production capacity for batteries and electric cars.
Volvo’s Green Finance Framework has been reviewed by Cicero, a leading provider of independent, research-based evaluations of green bond investment frameworks, and received its highest possible rating, Dark Green.
“Volvo Cars has one of the most ambitious climate plans in the auto industry,” said Håkan Samuelsson, chief executive. “Our Green Finance Framework allows investors to participate in the transformation of Volvo Cars into an electric car maker.”
Last year, Volvo Cars launched a comprehensive climate plan which addresses carbon emissions across all its operations and products, as it strives to become climate-neutral by 2040.
The plan goes beyond addressing tailpipe emissions through electrification; the company will also tackle carbon emissions in its manufacturing network and wider operations, its supply chain and through recycling and reuse of materials.
As a first, tangible step towards its 2040 vision the company aims to reduce its lifecycle carbon footprint per car by 40 per cent between 2018 and 2025.
This includes a 50 per cent reduction in tailpipe emissions per car, a 25 percent reduction per car in operational carbon emissions, including from manufacturing and logistics, and a 25 per cent reduction per car in supply chain carbon emissions.
“We have ambitious investment plans in coming years to turn our climate objectives into reality,” said Carla de Geyseleer, chief financial officer. “I am happy we can now offer an opportunity to the financial community to make sustainability-focused investments in Volvo Cars, as the financial industry plays a pivotal role in stimulating and supporting sustainable development.”
Volvo Cars was the first established car maker to commit to all-out electrification and is the only brand to offer a plug-in hybrid variant on every model in its line-up. It will also introduce a range of fully electric models in coming years, starting with the XC40 Recharge, deliveries of which will start later this year.
Sales of its plug-in hybrid cars amounted to almost a quarter of sales in Europe during the first half of 2020.
See also: Volkswagen issues green bonds to finance MEB, EVs
