The bank — which has committed to securing €100 billion in sustainable financing between 2018 and 2025 as part of its contribution in the fight against climate change — reached 40 percent of its sustainable financing target in June 2020. This figure includes transactions in green and social financing (62 percent of the total), social entrepreneurism and financial inclusion (13 percent), sustainable infrastructure and agribusiness (11 percent), and other sustainable sources (14 percent).
Two and a half years after BBVA launched its Pledge 2025, the bank has secured €40.1 billion, a clear demonstration of BBVA’s commitment to the fight against climate change, which contributes to the fulfillment of both the United Nations Sustainable Development Goals (SDGs) and the challenges set forth in the Paris Agreement on Climate.
Pledge 2025 is based on a three-pronged strategy: (i) financing to contain climate change and assist with the fulfillment of the SDGs by securing €100 billion between 2018 and 2025; ii) management of environmental and social risks associated with the bank’s business activity in order to minimize the potential direct or indirect negative impacts; and (iii) fostering engagement of all stakeholders by acting as a catalyst for the financial industry’s collective contribution to sustainable development.
With respect to the first prong of its Pledge 2025 strategy (financing), BBVA uses its knowledge, skill, and experience to provide its customers with superior advice on sustainable financing solutions. The bank has broken new ground in the field, establishing itself as a world leader in green financial products and loans. In 2019, the bank awarded a total of €10.2 billion in sustainable loans, to which it has added another €6.3 billion in the first half of 2020, adding up to a total of €23.9 billion secured since 2018. These loans include certified green and social loans, loans that are linked to environmental and social metrics (KPI-linked loans), loans tied to client ESG criteria, and green and social corporate financing.
BBVA has secured €40.1 billion as of the end of June 2020.
BBVA has also strengthened its commitment to green financing, which has picked up pace with the bank’s Pledge 2025. In March 2019, the bank led its first sustainable revolving credit facility in the United Kingdom with SSE, the largest producer of renewable energy in the United Kingdom and Ireland. In April of the same year BBVA assumed the role as sustainable agent for ACCIONA's first sustainable syndicated loan, one of the first funding instruments to also be governed by the Sustainability Linked Loan Principles (SLLP) and which incorporates interest rate adjustments based on the company's performance against sustainability criteria.
Other notable deals made in 2019 include the first revolving credit line linked to sustainability in Latin America, signed with Fibra Uno; a sustainable revolving credit facility that includes performance-based price adjustments, agreed with French energy company EDF; and the first syndicated sustainability-linked facility with a Chinese corporate client, (the agribusiness company, COFCO International).
The Sustainability Linked Loan Principles (SLLP), incorporating interest rate adjustments based on the company's performance against sustainability criteria
Already in 2020, BBVA has closed the first sustainable loan in Spain’s steel industry with Acerinox. As sole sustainability coordinator, it has provided guidance to Germany’s EnBW on how to incorporate environmental and social criteria into its primary banking finance. It has acted as the sustainable agent for the newly signed green loan with real estate group GMP. And, working with food company Borges, it has agreed a sustainable loan with terms that are tied to the environmental impact of the company’s industrial production.
Other clients who have continued to rely on BBVA in order to incorporate sustainable criteria in their bank financing include Gestamp, Redexis, Piñero, and Melíá, where the bank played the part of sustainable coordinator/structuring bank. Also of note are the first sustainable loans agreed under Spain’s Official Credit Institute (ICO) guarantee program, specifically those that BBVA led as sustainable coordinator/structuring bank, such as the deal with Grupo Piñero and Intermas. BBVA also participated in the (ICO) sustainable syndicated loan for Spain’s El Corte Inglés department store.
BBVA has closed the first sustainable loan in Spain’s steel industry with Acerinox.
Sustainable projects and green bonds
In 2019, the bank financed sustainable projects totaling €1.1 billion, primarily in the renewable energy sector. This figure rose by €479 million during the first six months of 2020, reaching an accumulated volume of €2.4 billion since 2018. Among the most important deals that were agreed, it is worth mentioning the financing of three wind farms in Italy, 11 in Spain, and the first offshore wind farm in France.
During the first half of 2020, the bank has kept apace with its sustainable project financing, participating in 11 deals representing new business and totaling €5.4 billion. The bank’s sustainable financing activity merits particular attention. In the first half of 2020, a total of four deals covering renewable projects were closed, including those with Kincardine (Scotland) and Monegros (Spain).
With respect to social activity, the bank has been particularly active in projects and financing for telecommunications, having participated as the lead bank in three agreements in the sector in the last six months. BBVA is prioritizing activity related to telecommunication infrastructure because of the important role it plays in social aspects, facilitating access to new technologies, digitalization, and contributing to economic development.
Regarding bonds, in 2019 BBVA acted as coordinator for 20 issuances, representing a total of €23.2 billion raised, with a market share of €3.4 billion. In 2020, this figure rose by €2.1 billion, reaching an accumulated volume of €6.9 billion since 2018.
In May 2020 it became the first private financial institution in Europe to issue a COVID-19 social bond
Some of these deals broke new ground, such as the first global green bond by a telecom and the first green structured bond using blockchain technology. With this activity BBVA is the seventh-ranked bank in number of issuances and the ninth by volume raised with green bonds. The bank is also promoting the social dimension of sustainability: in May 2020 it became the first private financial institution in Europe to issue a COVID-19 social bond.
BBVA is the seventh-ranked bank in number of issuances and the ninth by volume raised with green bonds.
Since the publication of its framework for the issuance of SDG-linked bonds in 2018, BBVA has established itself as one of the most active banks in green bond issuance. In 2018, it issued its first green bond for €1 billion, at the time the largest amount of any eurozone financial institution. In 2019, the bank issued a second green bond for the same amount. With the projects that were financed by green bonds issued by BBVA in 2018 and 2019, more than 724,000 tons of CO2 emissions were prevented in 2019, almost triple the amount from the year before.
In July 2020, BBVA was the first financial institution in the world to issue a perpetual, contingent-convertible (COCO) green bondin the amount of €1 billion. The funds will be used to finance eligible green assets in the BBVA portfolio, bringing the total to €2.9 billion. The portfolio is diversified between assets of different green sectors (energy efficiency, renewable energy, sustainable transportation, waste and wastewater management).
A fundamental part of the bank’s strategy is to help its clients adapt to the new environment
BBVA believes that financial institutions must incorporate both the risks and opportunities associated with climate change in their investment and financing decision-making. In addition, a fundamental part of the bank’s strategy is to help its clients adapt to the new environment, not only by providing financing but also by providing guidance about the transition to an environmentally friendly future. Within this context, the bank recently announced the rollout of a new feature in its One View financial aggregator, which uses data analysis to inform companies about the amount of greenhouse gases emitted as a result of their daily business activity. Armed with this data, clients are positioned to explore new, more sustainable lines of business that will help them make the transition to a new, green landscape.
BBVA allows companies to know the amount of greenhouse gases they emit into the atmosphere with their daily activities.
It is BBVA's goal to ensure that by 2020 all its products in Spain have a corresponding sustainable alternative for large companies, institutions, SMEs, and private customers alike.
Inclusion and entrepreneurship
BBVA helped galvanize inclusion and entrepreneurship, with a €5.2 billion contribution between 2018 and the first half of 2020, primarily through the work of the BBVA Microfinance Foundation. The Foundation uses its financing instruments in Latin America to promote social and economic development that is also sustainable and inclusive of at risk communities.