To accelerate change, we're helping companies switch gears - BNP Paribas CIB
 
Monday 16 November 2020

Sustainable finance is transforming the way in which companies operate. Nowhere is this clearer than in the automobile sector, which is making enormous investments into emissions-free electric vehicles (EV).


In order for the automobile industry to adapt and shift towards greater electric vehicle production, it will need to secure financing through the issuance of sustainable bonds and loans. BNP Paribas is in the driving seat and is helping corporates finance this transformation.

Financing the transition
Whereas historically companies raised financing through bonds, many are now leveraging more specialized bonds such as sustainability-linked bonds, green bonds and social bonds – namely fixed income instruments whereby the money raised is directed towards investments which produce a positive impact on the environment or society. This can help businesses with their transformation efforts towards becoming more sustainable.

To support clients in their transition, BNP Paribas has leveraged its extensive experience in sustainability and debt capital markets to become the industry leader in sustainable bond issuances (encompassing green bonds) - having supported deal activity totalling EUR eq. 77.2bn in the first three quarters of 2020.

Green bonds drive the move to electric vehicles
BNP Paribas has worked on a number of noteworthy issues involving the auto sector. The bank acted as a joint bookrunner on a €1 billion, 10-year green bond issued by Daimler, the German auto manufacturer, in what should help the company accelerate its clean transportation transition (see article below for more details). The bond was four times oversubscribed in what is indicative of the growing interest among investors in the green finance market. This transaction comes as the EU pushes ahead with its Sustainable Finance Taxonomy, which is designed to encourage businesses to improve on their environmental performance. BNP Paribas also acted as green structuring adviser to Volvo Cars when the company was establishing its Green Financing Framework. Under this framework, Volvo has raised funds to finance its own investment into electric vehicles, with a plan to make its entire passenger vehicle fleet either electric or hybrid by 2025.

Sustainability-linked loans reducing emissions
BNP Paribas is also very active in the sustainable loans market. In 2019, the bank participated in more than 60 sustainable linked loan transactions accounting for €6.2 billion. As in sustainable bonds, BNP Paribas is the industry leader, and now accounts for 7% of the world's Sustainability-linked loans (SLLs). High-profile transactions involving BNP Paribas included a $3.2 billion sustainability-linked loan which was provided to global cement manufacturer Cemex to assist it with significantly lowering its carbon emissions. The sustainability linked loan will help Cemex increase its usage of renewable energy sources and protect biodiversity across its sites.

Investment funds are also playing a major role in reshaping corporate behaviour and promoting sustainability. BNP Paribas Asset Management is a strong proponent of ESG (environment, social, governance) investing and applies strict sustainability criteria across its entire portfolio of assets.

Learn more about companies making the transition
BNP Paribas is also positioned as the strategic banking partner of game-changers in the global energy transition. Northvolt financing advisory is a great example of how the bank supports its clients' funding and development of sustainable business models.

The Swedish company, which was founded in 2016, is building Europe's first gigafactory, powered by renewable energy. The factory will produce the world's greenest high-performing batteries for its industrial partners.

BNP Paribas teams used their comprehensive experience in structured debt advisory to help Northvolt raise over €1bn of financing. This first-ever limited recourse financing in the industry was placed with policy-driven institutions, export credit agencies and commercial banks.

Watch the video to learn more with Carl-Erik Lagercrantz, Co-founder and Chairman of the Northvolt Board, Emma Nehrenheim, Northvolt Chief Environmental Officer, Eirik Winter, BNP Paribas CEO in the Nordic Region and Mark Muldowney, Managing Director, Energy, Resources & Infrastructure at BNP Paribas.


As organisations reposition their businesses to become more sustainable, they will need to engage with partners who can support them on their green journey. The selection of articles below are just a snapshot of some of the ambitious sustainable initiatives which BNP Paribas has supported their clients in. 

Accelerating green financing in the automobile market
With the recent green bond issuances for both Daimler and Volvo Cars, auto manufacturers are demonstrating their commitment to invest in clean transportation and electric vehicles. This articles delves into how the automobile sector is increasingly recognizing the need to future-proofing operating models to take into account the risks of climate change, and explores how sustainable finance support this. Read more
BNP Paribas joint bookrunner for Daimler's first green bond
As we discussed above, if climate change targets are to be met, the auto industry needs to implement some profound changes to its operating model. BNP Paribas is helping Germany's Daimler with their green transition. For Daimler BNP Paribas acted as a joint bookrunner on a green bond, which will help the company shift towards clean transportation and decarbonisation.
Read more
Electric dreams
The transformation of the auto industry moving away from fossil fuels towards EVs is not just happening in the west. China is already a key market for EVs and today in raw numbers is the leader in EV ownership. One of China's leading automotive manufacturers, Zhejiang Geely Holding Group, owner of Volvo Cars, launched its electric car-only platform in September, and in the same month, BNP Paribas acted as green structuring advisor to Volvo Cars. Read more



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