The green bond: sustainable financing

2017 was a key year for sustainable projects. According to Climate Bonds Initiative data, the green bond market alone grew by 78%, reaching 129 billion euros.  The special characteristic of this financial instrument is that the earnings obtained are exclusively allocated to financing or refinancing projects with a certain sustainable impact (social or environmental).

“In order to obtain this “green” denomination, companies are obliged to inform annually about the use of funds and projects to be developed until the funds are exhausted. In addition, a framework establishing the issuer’s commitments must be published. The issuer must obtain a second opinion from a third independent party that verifies, apart from what has been mentioned, that the issuer possesses a good performance in sustainability issues, has a selection process with projects alienated with the Green Bond Principles of ICMA, and that the eligible projects have a measurable impact in the environment or in other social ambits.

It is recommended that the report where the issuer annually publishes the eligibility of projects, the use of funds and the development of projects, is verified by an independent external auditing company.

The fact that companies start to search for this sources of funding demonstrates that sustainability is beginning to integrate and becoming to be considered important in investors’ strategies and decision-making processes.

The role played by large companies from different sectors as pioneers in the issuing of these financial instruments is notable. In the oil and gas industry, Repsol was the first company in the world to issue a green bond for 500 million euros certified by the specialized consulting firm Vigeo Aeris.

This is a new way to attract funds that Leticia Padura, Head of Socially Responsible Investor Relations, has experienced firsthand. She stated that this “investment will help develop energy efficiency projects and low emissions technology projects in the company’s refineries and chemical plants in Spain and Portugal.”

“The green bond works to communicate to society the company’s commitment to sustainability and particularly to fighting climate change,” Leticia Padura, Head of Socially Responsible Investor Relations.

The company has sought out external liquidity to take on the over 300 planned projects. This bond was issued with the principal aim of “communicating to society our commitment to climate change and to share everything we’re doing with regard to sustainability,” stated Leticia Padura.

In this regard, Leticia explained that: “we’ve been committed to mitigating climate change for a long time and we are working on it through our CO2 emission reduction and energy efficiency programs.”

This is a financing proposal that was very positively received by all of the parties involved, especially the investment community.  “The number of requests from investors was five times the number needed to finance the projects,” she recalled.

The actions included in the green bond are part of the company’s Carbon and Energy Plan that aims to cut 5 Mt CO2 every year. The green bond will specifically allocate €500 M to energy efficiency and low emission technology shares that will contribute to an estimated reduction of 1.2 Mt CO2 by 2020. As Leticia explains, this means that “through these measures and the investment made, in ten years we can expect to prevent the accumulation of approximately 50 Mt of CO2.”

Good practice consists of, moreover, in tracing the projects funding. To this end, Repsol has constituted a committee specifically to select, revise and monitor projects financed with funds obtained through Green bonds to guarantee the reach of such bonds and their adequacy with the eligibility criteria.

By issuing this Green Bond, Repsol reaffirms its commitment to fighting climate change. We support the Paris Agreement, and we are working to make our company part of the solution to the climate problem. A long term vision committed to innovation to continue making progress in efficiency, in which gas plays a very important role.


After over a decade of hard work to contain greenhouse gas emissions, the issue of green bonds constitutes a natural step within the company’s sustainability strategy. These “green” debt securities have been on the market since May last year, and they represent a significant milestone in the fight against climate change, with Repsol named as winner in the Petroleum Economist’s Cleaner Energy Initiative of the Year category, one of the magazine’s prestigious annual awards in the energy sector.

The judges, who lauded the industry’s best directors, companies, and projects, highly valued the company’s innovation and commitment to reducing emissions in its operations.

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