A financial partner to support the energy transition

Strategy
13/12/2019

On the occasion of the COP25 in Madrid, discover how the Bank supports its clients in their climate-friendly projects, all around the world.

OUR CLIMATE STRATEGY

To restrict the use of fossil fuels and limit global warming to 2°C by the end of the 21st century, the Crédit Agricole S.A. group announced in May 2015 its decision to cease the financing of coal mining and fossil fuel operations in 2017.

In June 2019, the Group introduced a climate strategy aligned with the Paris Agreement which provides in particular for a complete withdrawal from the coal sector and incorporates the challenges of the energy transition in client relationships.
Clients are thus given a transition rating which is a tool to create  a dialogue with them and support them. It measures their commitment level and their ability to adapt their business model to the challenges of the energy transition and the fight against climate change.

114 billion euros in new financings dedicated to the energy transition between 2016 and 2018
As part of its medium term plan Will open in a new tab , the Group is aiming to further strengthen its initiatives and commitments in favour of the energy transition (link MTP).

Since 2015, Crédit Agricole CIB has made strong commitments to finance the energy transition, with ambitious climate-related financing targets. 

For several years, we have been working to better understand and manage climate risks : we have assessed the carbon footprint linked to financings and investments using a scientific methodology developed with the Ecole Polytechnique and Paris Dauphine University, we have published sector policies and we have defined a method to assess the climate risks linked to credits.
 

OUR CONTRIBUTION TO SUSTAINABLE AND INNOVATIVE FINANCINGS

For nearly 10 years, Crédit Agricole CIB has supported its clients in their financial transactions in the key sectors of the energy transition: energy, infrastructure, transport, real estate…

The financing of renewable energy is a key component of Crédit Agricole CIB’s strategy. The bank is one of the leading players in renewable energy project financing. The project finance business line financed a total of 435 windfarms representing more than 24 000 MW in wind-generated energy and 9 000 MW in solar energy.

In November, the Formosa 1 offshore windfarm project was inaugurated in Taiwan.

“Taiwan is currently one of the fastest growing markets globally for offshore wind. Inaugurated on November 12, the Formosa 1 project is the very first offshore wind project under the 5.5 GW of upcoming offshore wind capacity in Taiwan. The attendance of President Tsai to the inauguration ceremony of the windfarm underlined the government’s commitment to Taiwan’s energy transition and her vision for the domestic offshore wind industry to maintain its leadership in Asia. Crédit Agricole CIB is proud of the completion of this project which showcases our extensive expertise in the renewables sector and our commitment to being a facilitator of change in the financing of energy transition in Asia-Pacific.”
Quentin Slight, Head of Energy and Infrastructure Group Asia – Crédit Agricole CIB

Icon showing a house with a leave outside the chimneyOur clients in the real estate sector have made a commitment to sustainable growth and to reduce their carbon emissions. In this sector, our role is to structure and place green bonds to finance energy-efficient buildings or buildings running on passive solar energy. We also structure loans whose margins are indexed on reaching environmental criteria within the projects financed and on achieving corporate objectives.

In Spain, MERLIN Properties SOCIMI S.A. has recently completed the largest ESG transaction ever in the European Real Estate sector. 

“MERLIN Properties is strongly committed to environmental friendly initiatives in our portfolio by investing significantly in energy efficiency improvements, externally certifying our assets with LEED/BREEAM for energy and AIS for handicapped accesses, and promoting electric consumption sourced by renewal energy.  Around this backbone we have successfully completed the largest ESG indexed loan ever completed by an European Real Estate Investment Trust and this has been possible to the effort and support of prestigious and innovative financial institutions such as Crèdit Agricole CIB.”
Miguel Ollero, Corporate Managing Director / COO – Merlin Properties SOCIMI S.A.
 

DEVELOPING PRODUCTS WITH A POSITIVE IMPACT

Green bonds allow issuers – companies, international organizations and local authorities – to raise funds to finance environment-friendly projects or investments.

For example, Iberdrola recently issued a hybrid green bond and is one of the leading private providers of electricity in Spain, one of the world's largest producers of wind energy and a major global issuer of green bonds based in Spain.

“For the last two decades, and in anticipation of the energy transition, Iberdrola has been developing sustainable investments to support the increasing electrification of the global economy: more clean energy, more storage capacity, more backup power, more and smarter grids, and more digitalization. Today, the company is a benchmark in the fight against climate change and has an active presence at UN Climate Change Summits, where it is underlined that it is time to move from words to action to accelerate the energy transition towards a sustainable, secure and competitive model that replaces production with polluting sources by clean energies, and intensify the electrification of the world economy. Iberdrola is committed to an energy model that prioritizes the well-being of people and the preservation of the planet. This is rooted in the corporate purpose that inspires the entire strategy of the company: “to continue building together each day a healthier, more accessible energy model, based on electricity”. In this context, Green Financing including Bonds, hybrid and loans are a valuable tool that the company uses to develop its investment plan while giving investors the transparency to better allocate their funds and the ability to measure their contribution to sustainability. We are proud to join forces with Crédit Agricole CIB for working together in explaining the investors the Iberdrola green strategy and developing as much green financing as possible. In that sense the successful hybrid green bond issued by Iberdrola in 2019, with the support of Crédit Agricole CIB amongst other banks, confirm the close relation we maintain.”
Jesús Martínez, Deputy CFO – Iberdrola S.A

Another example is provided by EDP - Energias de Portugal, which earlier this year issued its inaugural hybrid green bond. EDP, that is present in 16 countries in 4 continents, is the fourth largest wind energy production company in the world and has over 70% of installed capacity from renewable resources technologies.

“Sustainability is a core part of EDP’s DNA and continuing to grow while meeting the challenges of sustainable development is a commitment we have with our stakeholders.  Green Bonds are a key instrument to align EDP’s financial policy with its strategy and the Inaugural Green Hybrid issued in January of 2019 is an example of the success of such alignment. EDP is privileged to count on the support of several financial institutions with strong focus on sustainability. Crédit Agricole CIB, a Joint Lead Manager in our Inaugural Green Hybrid, is one of such distinguished institutions, consistently promoting and delivering financial instruments that facilitate the goals of energy transition.”
Paula Guerra, Head of Finance, EDP – Energias de Portugal S.A.

Sustainability-linked bonds are standard bond issues with no allocation of the funds raised, and whose financing cost can be increased if certain sustainable performance targets are not reached.

In September, Enel launched the very first sustainability-linked bond on the market.

“Innovation is key to scale sustainable finance and accelerate capital flows towards sustainable investments. As Enel, we set up a new format in the financial markets and, with the SDG Linked Bonds, now issuers can link their own sustainability strategy to the bonds’ structure, reducing the cost of debt thanks to the value of sustainability. Crédit Agricole CIB took part in this journey and supported us with its prominent sustainability credentials.” 
Alberto de Paoli, Chief Financial Officer, Enel

Transition bonds are the latest innovation in green finance. They allow funds to be channelled into projects financing activities generally not tagged green but that contribute to the climate transition.

In November, Crédit Agricole CIB issued the first transition bond in the form of a private placement subscribed by AXA IM on behalf of the AXA Group. With this bond, the AXA Group will be able to finance projects that contribute to the environmental transition of carbon-intensive industries, such as liquefied natural gas (LNG) fuelled ships, energy efficiency investments in industry, and gas sector assets in countries where energy production currently relies on coal.

“AXA is keen to source sustainable and innovative investment opportunities. We are proud to join forces with Crédit Agricole CIB for the first issuance of a transition bond. Thanks to this new type of bonds, we aim to actively support companies that are transforming their business model and driving the transition to a lower carbon and resilient economy.”
Yo Takatsuki, Head of ESG Research and Active Ownership - AXA IM

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