Friedrichshafen, Germany. Successful start in Green Finance: For the first time, ZF Friedrichshafen AG has issued a green bond. The company is using the proceeds of €500 million to finance its wind power and electric mobility business. ZF is the only technology company that is a key player in both technologies and can thus holistically reduce greenhouse gas emissions – because e-mobility that protects the climate needs sustainably generated electricity.
“With this green bond, we have created an attractive financial instrument that helps us to finance sustainable future technologies. We are addressing new investors and can align our financing with our sustainability goals and our ‘Next Generation Mobility’ strategy,” says ZF CFO Dr. Konstantin Sauer. An integral goal of ZF’s strategy is to be entirely climate-neutral by 2040.
The bond issued by ZF Finance GmbH on the Luxembourg stock exchange, targeted at institutional investors, met with great interest and was six-times oversubscribed. It has a six-year term and a yield of 2.0 percent. ZF made the issue as part of its EMTN (Euro Medium Term Note) program set up last year, allowing the faster and more flexible issue of bonds.
The basis for the issue is the new Green Finance Framework. In this 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 under this Green Finance Framework will predominantly be directed to the ICMA “Clean Transportation” and “Renewable Energy” Categories. In this case, the €500 million will go to projects and investments in the wind power business unit and the production of electric vehicle drives. Both areas are experiencing dynamic growth – a trend that will continue in the long term due to global climate protection efforts.
In its independent Second Party Opinion (SOP), 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 that 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,” says Dr. Konstantin Sauer.