9:00 PM | November 16 2020
Volvo Cars raises EUR 500 million with first green bond
Initial bond issue that will help finance creation of fully electric Volvos was oversubscribed five times.
Volvo Cars has successfully placed its first green bond, raising EUR 500m ($820m) from a diverse group of institutional investors and further increasing the company’s financial flexibility.
The proceeds of the bond will be used to fund the design, development and manufacturing of fully electric cars in line with the company’s recently established Green Finance Framework. A report will be issued annually to provide full transparency to investors.
The bond issue was oversubscribed five times, illustrating both the current market demand for green investment products and the financial community’s strong confidence in Volvo Cars’ strategy.
“I am very pleased that we successfully placed our first green bond,” said Carla de Geyseleer, chief financial officer. “The financial community has a critical role to play in supporting sustainable development, including the transition to a low carbon economy. In this respect, it’s very encouraging to see so much investor interest in helping us electrify our fleet and deliver on our climate ambitions.”
Volvo Cars’ Green Finance Framework was reviewed by Cicero, a leading provider of independent, research-based evaluations of green bond investment frameworks, and received its highest possible rating, Dark Green.
Last year, Volvo Cars launched a comprehensive climate plan that addresses carbon emissions across all its operations and products, as it strives to become climate-neutral by 2040.
The plan goes beyond addressing tailpipe emissions through electrification; the company will also tackle carbon emissions in its manufacturing network and wider operations, its supply chain and through recycling and reuse of materials.
As a first tangible step towards its 2040 vision, the company aims to reduce its lifecycle carbon footprint per car by 40 per cent between 2018 and 2025.
This includes a 50 per cent reduction in tailpipe emissions per car, a 25 per cent reduction per car in operational carbon emissions, including from manufacturing and logistics, and a 25 per cent reduction per car in supply chain carbon emissions.