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Sustainability 29 Mar 2019

BBVA coordinates Iberdrola’s first sustainable credit facility aligned with the just transition principles, totalling €1.5 billion

Iberdrola has successfully signed, with BBVA acting as lead arranger and sustainable agent, a new €1.5 billion multi-currency syndicated credit facility linked to sustainability criteria. This is the first transaction aligned with the ‘just transition’ concept, introduced in the Paris Agreement.

The conditions of the facility are linked to the fulfillment of two sustainability indicators validated by independent firm Vigeo Eiris. The first one, which as a social dimension, is related to SDG 7.1, which seeks to ensure universal access to affordable, reliable and modern energy services. Thus, the loan announced today becomes the company’s first to be linked to criteria related to the promotion of universal access to energy. This transaction is aligned, therefore, with Iberdrola’s Electricity for All program, which materializes the company’s pledge to provide electricity to 16,000,000 people in emerging or developing countries who currently do not have access by 2030.

The second indicator, environmental in nature, is linked to the development of new renewable assets, in line with point 7.2 of the United Nations’ 2030 Agenda for Sustainable Development Goals: to increase substantially the share of renewable energy in the global energy mix.

By factoring in these two indicators, the transaction becomes the first credit facility aligned with the ‘just transition’ concept, introduced in the Paris Agreement. This approach is also promoted by the “Investing in a Just Transition” initiative, led by the Grantham Research Institute on Climate Change, the London School of Economics and the Responsible Investment Initiative of the Harvard Kennedy School. “This first of a kind sustainable credit facility shows how the just transition is now becoming embedded in financial practice, offering a powerful way of connecting the environmental and social dimensions of the energy transition”, celebrates Nick Robins, Professor in Practice in Grantham Research Institute on Climate Change.

“This first of a kind sustainable credit facility shows how the just transition is now becoming embedded in financial practice”

Once again, Iberdrola is relying on BBVA’s sustainable capabilities. Previously, both companies partnered in the arrangement of the world’s first sustainable loan by an electric utility; two additional sustainable loans last year, the two largest loans of their kind to date; the first green corporate loan in Latin America; or a sustainable syndicated credit line with Avangrid, Iberdrola’s U.S. subsidiary.

BBVA acted as sole global coordinator, bookrunner and sustainable agent with BNP Paribas. The transaction is backed by a total of 21 financial institutions.

BBVA, a leader in sustainable finance

As a sign of its firm commitment to the fight against climate change, BBVA approved its Pledge 2025 in 2018 through which the bank will mobilize €100 billion from now until 2025 in green financing, sustainable infrastructure, social entrepreneurship and financial inclusion.  The bank has the capacity, knowledge and experience to provide its clients superior advisory services for sustainable financial solutions and is playing a key role in developing this market.

BBVA has been a pioneer and the dominant player in the sustainable loan business. Today it is one of the most active organizations on the world stage in this field and the indisputable leader in Spain and Italy. In the past two years, BBVA has taken the lead on 30 sustainable finance deals in Europe and the Americas for customers in various sectors. It was also one of the entities that led the greatest number of transactions as sustainability coordinator in 2018.

Green, social and sustainable bonds went mainstream in 2018. As issuer, BBVA has approved its framework for the issuance of sustainable bonds linked to the UN Sustainable Development Goals and successfully concluded the inaugural green issues of BBVA and BBVA Bancomer, as well as Garanti’s first gender equality bond. As arranger and bookunner, BBVA has maintained its leadership in the market, participating in 13 transactions.

Also last year, the bank took another step towards its goal of helping its corporate clients with their sustainable financing strategies, developing a sustainable transactional product framework linked to the UN Sustainable Development Goals, the industry’s first. This new methodology allows classifying its clients’ transactional banking transactions as green, social or sustainable.

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