As sustainability anchored in ZF's strategy to accomplish climate neutrality by 2040, the global technology company has issued a green bond. Green Finance is a consequent step in accelerating the transformation towards next-generation mobility and prepares for the use of sustainable financing instruments.
According to the company, the bond, issued for the first time, used the proceeds of €500 million to finance its wind power and electric mobility business. The basis for the issue is the new Green Finance Framework that has defined the general conditions and criteria for sustainable financing. It meets the ICMA (International Capital Market Association) and European Union (Taxonomy Regulation and EU Green Bond Standard) international standards.
Under this Green Finance Framework, the proceeds will predominantly be directed to the ICMA's Clean Transportation and Renewable Energy categories. In this case, the €500 million will go to projects and investments in the wind power business unit and the production of electric vehicle drives, which are experiencing dynamic growth. This trend will continue in the long term due to global climate protection efforts.
In its independent Second Party Opinion (SOP), ISS ESG, a branch of Institutional Shareholder Services, certified ZF as having a convincing sustainability profile as a basis for issuing green bonds.
Dr Konstantin Sauer, CFO, ZF, said, “With this green bond, we have created an attractive financial instrument that helps us to finance sustainable future technologies. We are addressing new investors and can align our financing with our sustainability goals and our ‘Next Generation Mobility’ strategy.”
The bond issued by ZF Finance GmbH on the Luxembourg stock exchange, targeted at institutional investors, met with great interest and was six times oversubscribed. It has a six-year term and a yield of 2%. ZF made the issue as part of its EMTN (Euro Medium Term Note) programme set up last year, allowing the faster and more flexible issue of bonds.
“We are convinced that Green Finance is an effective tool for steering investments into projects that have an environmental benefit and contribute to achieving the global Sustainable Development Goals as well as those of the Paris Agreement,” Sauer added.