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A2A Issues the First Green Bond Under New EUGB “Gold Standard”

Italian utility company A2A announced that it has raised €500 million (USD$521 million) in a new green bond offering, with the issuance marking the first by a European corporate issuer to use the EU’s new European Green Bond (EuGB) label.

Adopted by the EU in November 2023, and taking effect last month, the EuGB regulation was launched by the European Commission to establish a “gold standard” for green bonds, in order to combat greenwashing and advance the sustainable finance market in the EU.

Under the regulation, all proceeds from instruments issued under the new EuGB designation are required to be invested in economic activities that are aligned with the EU Taxonomy, although the rules include a flexibility pocket enabling 15% to be invested in economic activities that comply with the taxonomy requirements, but in sectors that don’t yet have established taxonomy criteria, with issuers clearly explaining where these funds will be allocated.

In addition to the investment rules, companies issuing bonds under the EuGB designation are required to follow strict transparency criteria, including disclosing how the proceeds from the bonds will be used, as well as committing to a green transition plan, and reporting on how the investments contribute to the those plans.

A factsheet by A2A for the new issuance outlined four categories for eligible use of proceeds from the green bond, including renewable energy, energy efficiency, transmission and distribution networks, and pollution prevention and control. Projects included under these categories range from solar PV, wind power, hydropower, energy storage and installation, maintenance and repair of energy-efficiency equipment to upgrading and expanding electricity grids to support renewable energy integration, and waste collection initiatives.

A2A reported strong demand for the new green bond, with the offering nearly 4.4x oversubscribed at €2.2 billion of orders.

Luca Moroni, CFO of A2A, said:

“This issuance confirms A2A’s position as reference institution in the development of sustainable finance instruments. This new product, together with the ESG instruments already adopted by the Group, supports the path towards ecological transition through investments aligned with the European Taxonomy, as detailed in the Strategic Plan.”

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