UniCredit's first Senior Preferred Green Bond supports renewable energy and green buildings in Italy

Published on: 12 July 2022
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The First Sustainability Bond Report from UniCredit S.p.A. Proceeds fund socially beneficial projects. Welfare and social support services (75.1%) have been prioritized. UniCredit S.p.A. and UniCredit Bank Austria have issued green bonds. 75% of earnings went to renewable energy and 25% to green buildings.

Following the successful issuance of the Bank's inaugural Senior Preferred Green Bond for EUR 1 billion in June 2021 and its first Retail Social Bond for EUR 155 million in September 2021, UniCredit S.p.A. has published its first Sustainability Bond Report.

The entire Green Bond proceeds have been allocated to renewable energy, specifically photovoltaic (EUR 408 million), wind (EUR 293 million), and biomass (EUR 44 million) energy sources, as well as green buildings, including the Top 15% of Mortgages (rated for energy performance) across all regions (EUR 228 million) and Real Estate (EUR 27 million) in Italy.

The proceeds of the Social Bond have been used to fund projects with a positive social impact. So far, the emphasis has been on welfare and social support services (75.1 percent of allocations). Education and training, health and medical assistance, and additional social services are also supported. The bond proceeds have resulted in a total of 1.52 million beneficiaries (149% of the target for 2021); the delivery of 2.62 million training hours, 482 training courses, 193 professional internships, 108 social integration activities; and the provision of 1,322 beds in elderly homes, 1.21 million medical services, and 555 social houses (mainly in social tourism).

One example of a social asset financed is the Macerata-based Anffas Sibillini Onlus, which conducts activities to protect the rights of people with intellectual and/or relational disabilities and to support their families. UniCredit helped the organisation build "La Casa del Cuore," a facility where it can run its initiatives and provide independent housing to people with severe disabilities.

UniCredit CEO Andrea Orcel stated:

"At UniCredit, we are dedicated not only to the transition to green energy, but also to ensuring that it is a fair and just transition for all of society. Sustainability is central to how we do business: it underpins our corporate culture and ensures we are always acting in the best interests of all our stakeholders. We will build on the success of our first Green and Social Bonds to create a more sustainable and equitable future for businesses and individuals alike. As a bank, it is our responsibility to fulfil our mission of empowering communities to progress while also having a positive social and environmental impact."

Both issuances took place under the Group's Sustainability Bond Framework, which is based on the principles and guidelines of the 2021 version of the Green and Social Bond Principles and the International Capital Market Association's (ICMA) Sustainability Bond Guidelines, ensuring transparent allocation and tracking of proceeds. Furthermore, the framework enables all of the Group's major issuers (particularly UniCredit S.p.A., UniCredit Bank AG, and UniCredit Bank Austria) to issue green, social, and sustainability bonds as a regular part of UniCredit's funding activity.

The proceeds of the Green Bond have been allocated in full, with 75% going to renewable energy and 25% going to green buildings. The majority of the portfolio (44%) is based in Centre-South Italy, with the remainder split between the North-West (21%), the North-East (4%), and the rest of the country (31%). The Corporate segment has received 77% of the portfolio's allocation, which includes renewable energy and commercial building projects, while the Top 15% of Mortgages has received 23%. (rated for energy performance across all regions in Italy). So far, the total annual CO2 savings total 718,009 tonnes, reducing carbon impact intensity by 718 tonnes of CO2 savings per million allocated (tCO2/€m.y).

The Galileo photovoltaic plant portfolio, for example, serves the needs of approximately 70,000 households in Italy while saving approximately 83,750 tonnes of CO2 per year[1]. Another example is the refurbishment of the Hotel Britannique in Naples, which raised the building's energy efficiency class from "F" to "A1," resulting in a CO2 savings of 68 tonnes per year.

So far, the Retail Social Bond has funded 51 social impact initiatives in Italy, with 98% of the beneficiary organisations achieving, nearly achieving, or exceeding their social objectives. 100% have improved their ability to measure their social impact, while 96% have increased their economic and financial sustainability.

In addition to UniCredit S.p.A., UniCredit Bank AG issued its first Green Mortgage Covered Bond in September 2021 for EUR 500 million, and UniCredit Bank Austria successfully placed its first Green Covered Bond on the capital market in May 2022 for EUR 500 million.

UniCredit's 2022-2024 Strategic Plan prioritises sustainability. The Bank's ESG Strategy includes targets for all areas of the business, with a three-year goal of reaching EUR 150 billion in new cumulative ESG volumes. Environmental Lending (EUR 2.4 billion), Social Lending (EUR 1.1 billion), and ESG Investment Products (EUR 28 billion of fund conversion in accordance with the Sustainable Finance Disclosure Regulation (SFDR), article 8) made significant progress in 1Q22. Furthermore, UniCredit has reduced its own CO2 emissions by 32% between 2017 and 2021, continues to support Youth and Education with approximately 330,000 beneficiaries of its financial education and awareness initiatives last year, and is investing EUR 100 million across the Group to ensure equal pay for equal work.

Deloitte provided ISAE 3000 assurance for the allocations described in the Report.

Source: UniCredit news

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