Desjardins Offers ESG Cash Back for Investments
Desjardins is proud to inspire businesses to meet their environmental, social and governance (ESG) commitments by including cash back in its new ESG swap offer.
The financial institution also announced its participation in one of the first projects to use this financial product in Canada, with a $125 million swap covering Desjardins's portion of the financing for the Paintearth Wind Project, an onshore wind farm located near Settler, Alberta. In doing so, Desjardins is proving its intention to continue playing a key role in educating and finding ways for economic players to be a part of the energy transition.
The new ESG swap financial product is designed to cover the debt's interest rate risk and reward the company for achieving ESG key performance indicators. The amount of the cash back is based on the ESG impact of the commitments and the efforts required by the business to achieve them.
"Through the innovative financing behind this Alberta wind farm, Desjardins Group is reaffirming its commitment as a leading player in the energy transition across Canada. We want to use this new financial tool to support businesses that want to invest in green initiatives and reward them for achieving ESG objectives by providing cash back," said Guy Cormier, President and Chief Executive Officer of Desjardins Group.
The Paintearth Wind Project was developed by Potentia Renewables Inc., on behalf of the Power Sustainable Energy Infrastructure Partnership, and Greengate Power Corporation, both developers having a broad background in renewable energy generation.
"Potentia Renewables Inc. is thrilled to have closed financing for the Paintearth Wind Project, including one of the first ESG swaps in Canada. We are excited to be part of this innovative financial transaction and look forward to achieving or exceeding our ESG targets for Paintearth," said Jeremy Jagt, President of Potentia Renewables Inc.
ESG benefits guaranteed
Businesses that don't meet their ESG performance objectives will be required to give the cash back to an organisation that meets the United Nations Sustainable Development Goals. If this happens, Desjardins will also pay the same amount to an ESG organisation.
The Paintearth Wind Project will have 38 wind turbines manufactured by Siemens Gamesa Renewable Energy, capable of generating 190 MW of clean energy. The design, construction, and commissioning of turbines will be carried out by Borea Construction, a subsidiary of Pomerleau. The wind farm is expected to start operation in 2024. Once commercial operation begins, Microsoft Corporation has committed, under a 15-year agreement, to purchase 543 GWh of renewable energy each year.
Net zero emissions by 2040
Desjardins Group has implemented an ambitious plan to achieve net zero emissions by 2040 in its extended operations and in its lending activities and own investments in three carbon-intensive sectors: energy, transportation and real estate.
To achieve this, Desjardins will boost the share allocated to renewables in its lending to large energy corporations from 24% in 2020 to 35% in 2025. The co-op will also build a $2 billion investment portfolio in renewable energy infrastructure (up 66% over 2020) and provide financial support for five development projects to convert organic waste, largely from agriculture, into renewable energy (biomethanization).