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Responsible Business Plan Updated: 10 Oct 2017

BBVA signs first green loan for an energy utility with Iberdrola

On Wednesday, BBVA signed a green loan in favor of Iberdrola for 500 million euros. In addition to being the first operation of this type for an energy sector company, this agreement involves the highest sum as of this date.

Iberdrola green loan
Elisabet Furió
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Iberdrola is the only Spanish electric utility among 100 most sustainable companies worldwide as well as the leading wind producer in the world. Its strong commitment to sustainable development has been the impetus for the first green loan granted to an energy utility. And BBVA was its bank of choice. This loan is in keeping with and reinforces Iberdrola's strategy wherein a significant portion of its debt must be in green format.

Green loans are governed by the same criteria as green bonds. The green certificate is obtained through an environmental consultant and it is granted to the debt instrument to obtain funding for specific environmental initiatives, such as investments in renewable energy, energy efficiency or sustainability projects.

Wind energy

Economy

How do businesses finance themselves? Loans vs bonds

In a context marked by financial market volatility, the advantages of diversifying the sources of funding are evident for businesses, regardless of their size. In long-term financing, the two more broadly used funding instruments are loans (syndicated or bilateral) and bonds, placed among institutional investors. Both instruments can be more or less tailored to fit a series of parameter, including the company’s needs, mainly maturity and price, its credit profile, repayment capacity, the market’s momentum, etc…

This long-term loan to Iberdrola is fully financed by BBVA and has been structured as a green instrument under which Vigeo Eiris, a renowned independent provider of services and publications about environmental, social and governance (ESG) criteria, granted the relevant certification in compliance with the Green Bond Principles.

The purpose of this loan is to fund several projects related to enegy efficiency and renewable energy, basically. Vigeo Eiris considers that these projects observe the following UN Sustainable Development Goals: number 7 -Affordable and Clean Energy- and number 12 -Responsible Consumption and Production-.

green enegy

Corporate Responsibility

2015, a record year for the issuance of green bonds

In 2015, green bond issues totaled 41.3 billion dollars, 15% more than the volume issued in 2014. The main issue currencies are the U.S. dollar and the euro, along with a very small proportion of other currencies which development banks are testing in their capital market development programs. BBVA Global Markets Research estimates that in 2016 these issues will reach at least 50 billion dollars, on a global basis.

This green loan represents a significant and unique operation for both Iberdrola and BBVA and reflects the commitment of both institutions to sustainability and green principles.

Fighting against climate change and transitioning to a low-carbon economy are a major challenge faced by society, and financial institutions play a very important role in meeting it. BBVA is already a leading bank in terms of green bonds and this green loan represents a further step forward in its catalog of innovative solutions that meet its customers' needs and create opportunities for social impact.