In July 2014, the Hera Group launched a green bond, with the aim of financing the sustainability investments, so as to contribute via its activities to an improved environmental quality.
The bond issue, availing of the euro medium term notes programme, for a total of 500 million repayable in 10 years, was illustrated to the investors and analysts via a roadshow which was staged in the main European financial marketplaces. The instrument is destined to finance or refinance projects linked to sustainability in four main spheres: the fight against climate change, reduction in emissions, quality in water treatment and the waste cycle.
The instrument envisages a coupon of 2.375% and a return on 2.436%. The orders received were mainly taken from investors resident outside Italy (75%) with France, Germany and the UK which reported the greatest percentages, and a predominance of asset managers. 69% of demand came from investors who have Environment, Social and Governance (ESG) among their investment criteria, so-called “sustainable” investors.
The Hera Group thus unveils, in Italy as well, a form of financing already used in Europe by other leading utilities, which places funding at the service of the environment, with resources which will then be specifically allocated to investments linked to improving the environmental performance in the area.
The list of the projects eligible for funding has been established by Hera on the basis of precise environmental criteria and subsequently confirmed by DNV GL to ensure the correct allocation of the funds. With regard to each sphere of the project, a set of indicators have been identified which reflect the environmental benefits associated with the individual initiatives. These indicators are shown within the various sections of the chapter “Smart use of energy” in this Sustainability Report.
|%||Total funds raised||Number of projects|
|Increase in energy generation from non-fossil sources||57.1||10|
|Increase in energy efficiency||219.1||7|
|Increase in the use of waste-to-energy plants for the treatment of waste||173.||4|
|Improvement of the water treatment plants||31.9||4|
|Increase in separate waste collection and reduction in the use of landfills||18.8||1|
Downstream from the fund raising, 26 projects were financed/refinanced, belonging to the categories indicated in the table presented above. The overall projects financed reached Euro 500 million, covering the entire amount of the bond
The Green bonds in Italy and Europe
Green bonds are those which associate environmental-type investments and activities with the funds raised in a clear manner. The first financial instrument of this type was issued by the World Bank in 2008. Interest for green bonds has grown over time and 2017 was a record year in terms of number of issuers. The last report of the Climate Bonds Initiative envisages that the issues of green bonds will reach US$ 155.5 billion in 2017.
In Italy, the Hera Group was the first to launch this new financial instrument (for an equivalent value of 500 million) and opened the way up for other operators in the utility sector or otherwise. The bond was very successful, with applications for an equivalent value of around three times the amount of the bond.