UNSTOPPABLE GROWTH FOR SUSTAINABLE FINANCE IN EUROPE – IN 2021 OVER €300 BILLION IN BOND AND LOAN ISSUANCE
FINCANTIERI OVER THE PAST 12 MONTHS HAS SECURED SUSTAINABILITY LINKED FINANCING FOR A TOTAL OF APPROXIMATELY €2.5 BILLION
In Europe green finance accounted for nearly 12% of total capital market activity in 2021. European governments, banks, and businesses collected a record €311 billion in green funding, nearly doubling the amount collected in 2020 (source: Bloomberg- New Financial). Approximately €200 billion were raised through bond issuances, while another €100 billion were collected by companies through sustainability linked financing, meaning directly tied to the achievement of target levels in certain key ESG (Environmental, Social and Governance) indicators, such as the amount of CO2 emitted or the minimisation of toxic production waste. If the company fails to meet these goals, the coupon payments will automatically grow, thus increasing the total cost of financing.
THE TARGETS: SUSTAINABILITY RATINGS, ENERGY EFFICIENCY, SUSTAINABLE SUPPLY CHAIN
Since 2021, Fincantieri has also been using this specific financing channel, with a view to aligning its financial strategy with international best practices in terms of sustainability and green finance. More recently, in July 2022, a sustainability-linked revolving credit facility was signed with Intesa Sanpaolo for a maximum amount of €500 million. The three-year financing is aimed at covering the financial requirements for the construction of cruise ships and is tied to the achievement of two specific Key Performance Indicators (KPIs): the sustainability score awarded annually by S&P Global through the Corporate Sustainability Assessment (CSA) questionnaire and the energy efficiency of cruise ships delivered each year (EEDI Index).
Also this year, in February, BNP Paribas Italian Branch and Fincantieri finalized an agreement to convert the guarantee line of up to €700 million granted by the bank into a “sustainability linked Guarantees Facility”. The agreement has a minimum tenor of over four years and was the first transaction of this type for Fincantieri. The BNP Paribas' guarantees line is defined as “sustainability linked” because it is tied to the achievement of two KPIs of the Group's 2018-2022 Sustainability Plan: efficient energy consumption management and sustainability of the supply chain. The agreement provides for an upward or downward mechanism for the guarantees’ cost based on whether these targets are met.
THE FIRST OPERATION IN 2021
The first loan of this type for the Fincantieri Group is dated 2021, when a “sustainability linked” construction loan of up to €300 million was signed with Intesa Sanpaolo and Cassa Depositi e Prestiti (CDP) to cover the financial needs associated with the construction of a cruise ship due to be delivered in 2023. In this case, the cost of financing was tied to the achievement of three KPIs in the Group's 2018-2022 Sustainability Plan: efficient energy consumption management, sustainability of the supply chain and employee training on sustainability issues. A mix of environmental, social and governance KPIs were selected in order to cover the broadest possible spectrum of ESG issues.
As confirmation of the topicality and market attention to sustainability and green finance issues, the news of the financing has received significant media coverage, with estimated 19 million users reached on a global scale and an excellent level of positive sentiment of 73.5%.