Enel targets clean energy and climate action with €2.5bn SDG-linked bond

Italian gas and electricity giant Enel has placed its first 'general purpose' sustainability bond on the European market, with a multi-tranche issue of €2.5bn targeted specifically at boosting clean, affordable energy, and climate action, it announced yesterday.

The bond is linked to two of the UN's Sustainable Development Goals (SDG): SDG7 on ensuring clean and affordable energy for all, and SDG13 on taking urgent action to combat climate change.

Under the terms of the bond, Enel is aiming to ensure 55 per cent of its electricity generation capacity comes from renewables by the end of 2021, with the figure currently at just under 46 per cent.

Moreover, the bond is linked to the firm's Science-Based Target to cut its greenhouse gas emissions by 70 per cent by 2030 compared to 2017, including a goal to reach 125g of CO2 per kWh of energy generated.

Almost four times oversubscribed with total orders of about €8.5bn, the issuance was placed on the market by Enel's international finance arm. It is expected to be listed on the Irish Stock Exchange and will enable Enel Group to continue to diversify its investor base, the company said.

Enel CFO Alberto De Paoli said the strong demand for the bond issued yesterday confirmed investor appetite for the company's sustainability strategy and reflected the firm's push towards increasingly sustainable finance.

"There is a clear link between sustainability and value creation, as by investing in environmentally and socially sustainable projects companies can secure high profitability and minimise risks, while contributing to the achievement of SDGs," he said. "We are confident that companies will increasingly embrace this model, orienting their businesses towards an overall strategy that places sustainability at the core of their investment and financing decisions."

The issuance was supported by a cohort of 20 banks, including BNP Paribas, Banca IMI, Barclays, BBVA, Bank of America Merrill Lynch, CaixaBank, Credit Agricole CIB, Credit Suisse, Deutsche Bank, Goldman Sachs International, HSBC, ING, JP Morgan, Santander, and several others.

It follows the launch by Enel Finance International (EFI) of another SDG-linked bond in the US market last month for a total of $1.5bn, as well as three previous green bonds issued by EFI on the European market totalling €3.5bn.

An SDG bond differs from a green bond, as proceeds raised from the issuance can be focused on a wider range of social and economic issues potentially covering all 17 of the SDGs, rather than just environmental projects.

The move provides further evidence of the momentum that is building across the green and sustainable bond market.

Earlier this week, consumer goods giant Pepsico announced a $1bn green bond to fund projects that support its emissions, waste, and water goals.