Sustainable Finance
We have made a name for ourselves as a pioneer in ‘green’ financing.
Since 2019 we have been linking all long-term elements of our corporate financing to a sustainability component. This means that, depending on how we score in the ESG categories of Environmental, Social and Governance, our financing costs will either decrease or increase.
Sustainable Finance Framework published
Our → Sustainable Finance Framework provides the framework for future corporate financing guided by sustainability principles. It specifies how sustainable financing instruments, such as green bonds and “Schuldschein” loans, are to be used. We thus create an important prerequisite for being able to raise funds on the financial market for environmental and climate protection projects or the development of sustainable products. The projects include, for example, the construction of energy-efficient buildings and the installation of photovoltaic systems and charging stations for electric cars at the locations.
With our Sustainable Finance Framework, we offer investors the opportunity to support sustainable projects – with a high degree of transparency and credibility.
In addition, we have determined three sustainability indicators. If these are met, interest payments will decrease; if they are not met, however, the payments will increase. A target value known as the Sustainability Performance Target (SPT) was defined for each indicator. One example of this are the reduction targets for greenhouse gas emissions embedded in our → climate strategy. In addition, we are committed to improving a → sustainability rating prepared by the ISS ESG agency. Our aim is to achieve “Prime” status by 2025, thus joining the circle of the best companies in the mechanical and plant engineering industry.
EcoVadis rating as a benchmark for sustainability
We have linked several financing instruments to the development of our sustainability rating. This is how ecologically and socially responsible business operations also have a financial pay-off for us, for example through reduced interest rates or avoided compensation payments.
The sustainability rating prepared by the EcoVadis rating agency is applicable. In its assessment, EcoVadis considers the categories of environment, labor and human rights as well as integrity and procurement. The respective scores are weighted differently in the final result, taking into account the sector to which a company belongs. The 21 assessment criteria make up a maximum score of 100 points. Some of the aspects taken into account are energy and water consumption, CO2 emissions as well as anti-corruption protection and social practices of suppliers.
Increase to 72 points
We have increased our rating by 6 points compared to the previous year. With a current score of 72 points, we are among the top 3% of all the companies rated by EcoVadis.
Thanks to the increase of our EcoVadis rating to 72 points, we benefit, in terms of our sustainable financing instruments, from a reduction in our interest rate of up to 5 basis points. In addition, the latest improvement in our rating has also enabled us to avoid compensation payments. If we had failed to achieve a certain minimum score, we would have paid a pre-defined sum to UniCredit Bank, which uses this money to support sustainable projects.
We will invest the funds we have saved in internal → climate protection projects at our own sites, for example in energy-efficiency measures and in our own generation of renewable energy.
Convertible bond*
- In September 2020 we issued a convertible bond, to which we linked a sustainability component in the form of a separate interest derivative.
- The interest derivative is linked to our EcoVadis sustainability rating.
- If we do not achieve two specified ratings improvements, we will have to pay a certain sum to UniCredit Bank AG, which uses this money to support sustainable projects.
- The improvement targets are: at least 62 points by October 2022 and at least 66 points by October 2024.
- Term: 5.3 years
- Coupon: 0.75%
- Conversion premium: 40%
* The convertible bond has been placed with qualified institutional buyers (QIBs) only and the information above does not constitute an offer or a solicitation of an offer to purchase securities of the Company or any of its subsidiaries in the United States of America, Germany or any other jurisdiction.
Sustainability Schuldschein loans
- In June 2019 we were the world's first company to issue a sustainability-oriented Schuldschein loan for € 200 million. The threshold for reducing the interest rate by 2 basis points is 62 points.
- In March 2020 we issued an additional sustainability Schuldschein loan to the tune of € 115 million, also with a sustainability component. The threshold for reducing the interest rate by 2 basis points is 62 points.
- Issue of a third sustainability Schuldschein in the amount of € 200 million in December 2020. The threshold for reducing the interest rate by 5 basis points is 66 points.
- Interest rates are dependent on our EcoVadis sustainability ranking.
Syndicated loan with sustainability component
- Interest rate linked to the EcoVadis sustainability rating
- Threshold for reducing the interest rate: 62 points
- Maturity date: August 7, 2024
