ZF Friedrichshafen has issued a green bond for the first time.
The company is using the proceeds of EUR500m (US$605m) to finance its wind power and electric mobility business.
“With this green bond, we have created an attractive financial instrument that helps us to finance sustainable future technologies,” said ZF CFO, Konstantin Sauer.
“We are addressing new investors and can align our financing with our sustainability goals and our ‘Next Generation Mobility’ strategy.”
ZF’s strategy is to be entirely climate-neutral by 2040.
The bond issued by ZF Finance on the Luxembourg stock exchange, targeted at institutional investors, was six-times oversubscribed. It has a six-year term and a yield of 2%. ZF made the issue as part of its EMTN (Euro Medium Term Note) programme set up last year, allowing faster and more flexible issue of bonds.
The basis for the issue is the new Green Finance Framework. In the framework, ZF has defined the general conditions and criteria for sustainable financing; it meets the ICMA (International Capital Market Association) and European Union (Taxonomy Regulation and EU Green Bond Standard) international standards. The proceeds made through this Green Finance Framework will predominantly be directed to the ICMA ‘Clean Transportation’ and ‘Renewable Energy’ Categories.
In this case, the EUR500m will go to projects and investments in the wind power business unit and the production of electric vehicle drives.
In its independent Second Party Opinion, ISS ESG, a branch of Institutional Shareholder Services, certified ZF as having a convincing sustainability profile as a basis for issuing green bonds.
“We are convinced Green Finance is an effective tool for steering investments into projects that have an environmental benefit and contribute to achieving the global Sustainable Development Goals as well as those of the Paris Agreement,” added Sauer.