Volkswagen Group has successfully placed €2 billion Green Bonds into the market for the first time. These bonds, which have been certified by the Climate Bonds Initiative, have coupons of 0.875% and 1.250%, with respective terms of 8 and 12 years. Excitingly, strong levels of interest have already been demonstrated by investors, including from both international and specialised green bond fields.
This innovative placement is the first that is based on the automaker’s Green Finance Framework for financial instruments that are sustainability orientated, which was introduced in March earlier this year. Sustainalytics, a prominent independent rating provider, additionally have confirmed that there is compliance with both the Green Loan Principles of the Loan Market Association (LMA) and the Green Bond Principles of the International Capital Market Association (ICMA).
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The financial gain obtained from these bonds will be invested in the modular electric drive matrix (MEB), along with the new battery electric vehicle models; the VW ID.3 and ID.4. More specifically, this financial investment will be aimed towards design concepts, production and development of the MEB, infrastructure, production facilities, important components, tools and supplier systems and of course the aforementioned electric vehicles. The environmental impact and the use of these funds will also be announced annually, to ensure a sense of transparency for investors.
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Frank Witter, Member of the Group Board of Management, responsible for IT and Finance explained; “With the issuance of our first Green Bonds, we are giving investors the opportunity to make sustainable investments in the future of e-mobility. It is a strategic milestone in our financing strategy, which we combine with our corporate target of CO2 neutrality in 2050. The Volkswagen Group is thus successfully active in the key growth segment of green bonds. Within the framework of our comprehensive electric offensive, this will increasingly be the case in the future.”
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Having previously commenced this “comprehensive electric offensive” in 2016, the Volkswagen Group is now striving to become the e-mobility world market leader. The Group was the first Automaker, in 2018, to create a commitment to the Paris climate goals and in 2019 it produced ‘goTOzero’, its environmental mission statement.
This mission statement outlines the Group’s goal of a neutral CO2 balance by 2050 and an aim to become environmentally compatible, with a focus on four key areas; air quality, climate change, environmental compliance and resources. By 2024, it will therefore be investing around €33 billion, with €11 billion solely for the Volkswagen brand and by 2029, it aims to produce up to 75 all-electric models and approximately 60 hybrid models in its fleet. In this time, the Volkswagen Group is also hoping to sell around 20 million vehicles based on the MEB platform.