More and more investors are making their investment decisions on the basis of criteria such as environmental protection, social conduct and fair corporate governance. They want to invest in companies with a sustainable business strategy. Welcome to Daimler: With our Green Finance Framework, we have created the conditions for sustainable finance instruments such as green bonds and green loans.
Climate protection, air quality, human rights and resource preservation are part of the core action fields in Daimler’s group-wide sustainable business strategy. With our approach to sustainability we want to generate economic, environmental and social value added for all our stakeholders: customers, investors, employees, business partners and society as a whole. The goals we have set ourselves are ambitious.
To achieve them, we have to drive the transformation forward and create facts, which also requires substantial investment. By entering into green financing, we open an additional funding source and new opportunities for ourselves to cover these high future expenditures, for CO2-neutral technologies and resource conservation, for example. At the same time we address new groups of investors and offer them the opportunity to participate directly in our ambitious sustainability projects.
With our new “Green Finance Framework,” which we presented to investors and the public on June 18, we marks the next milestone of our sustainable business strategy an lay the foundation of a broad range of sustainable financial instruments, such as green bonds. This framework is a summary of the principles under which we will utilize green financing instruments in the future. It is based on international standards.
Our “Green Finance Framework” obtained the highest rating, “Dark Green,” from CICERO Shades of Green, a leading provider of independent evaluations of green finance. CICERO awards this rating to projects that already apply future solutions. We create transparency for investors and the public with an annual report on our financed projects.
The conditions for green financing have been created – the next milestone is already in sight. In the near future, we want to issue the first green bond.
Q&A on the Green Finance Framework
Green financial instruments include green bonds, green promissory notes, green commercial paper and green loans. They enable companies to raise funds in the capital market for climate and environmental projects. On the other hand, they offer investors the opportunity to invest specifically in recognized sustainable projects.
Green financial instruments are an important element for financing sustainable projects such as research and development and the production of zero-emission vehicles. They provide us with new opportunities to finance significant future investments in CO2-neutral technologies and services. At the same time, we are offering investors the opportunity to finance projects that accelerate Daimler’s transition to emission-free mobility.
One component of our approach is to reduce the CO₂ emissions of our vehicles along the entire value chain. By entering into green financing, we are supporting the EU’s Green Deal, which aims, among other things, to motivate institutional investors to channel more capital into low-carbon and climate-neutral projects. At the same time, we want to use green financial instruments also to attract new investors who have not yet invested in our company.
For fixed-income investors, bond issuers’ ESG strategy (environment, social, governance) is playing an increasingly important role. More and more investors are basing their investment decisions on sustainability factors. A good indicator of this development is the increase in voluntary commitments to sustainability initiatives on the part of investors.
The global initiative “Principles for Responsible Investment (PRI)” was launched by the United Nations with the goal of developing principles for responsible securities management.
Another indicator is the steady increase in money invested on the basis of sustainability criteria. Especially for investors with a long-term perspective, the consideration of ESG factors is one way of managing the risks in their portfolios. Strategically sustainable companies and business models are better positioned and therefore more robust over the long term with regard to meeting the challenges posed by climate change.
Proceeds from the issuance of green financial instruments are used solely to finance projects and assets that directly support the transition to a low-carbon, climate-resilient society.
For example, the net proceeds from green financing instruments will be used solely for the development and production of zero-emission vehicles with battery-electric drive (BEV) and fuel-cell electric drive (FCEV). More than half of the funds will be allocated to the “Clean Transportation” category. In addition, the proceeds can be used, for example, to modernize and upgrade production facilities and to build new plants for zero-emission vehicles and their drive systems, as well as to develop the recycling of batteries and battery cells.
With our frequent and standardized reporting, we are creating transparency on the positive climate effects of the projects we finance. We will present an annual Green Finance Investor Report to inform investors and the public about the use of the proceeds. Examples of impact indicators and key figures in the “Clean Transportation” category are the numbers of emission-free vehicles sold (BEVs and FCEVs). In the “Energy Efficiency” category, the annual reduction of CO2 emissions is an option.
In accord with the Paris Climate Agreement, Mercedes-Benz Cars wants to offer a completely CO2-neutral new-vehicle fleet by 2039 under the heading “Ambition2039”. This includes topics such as raw materials and the supply chain, the production of the vehicles, their use phase and recycling concepts. One milestone along this path is the interim goal of having five all-electric passenger cars and 20 plug-in hybrid variants on the market by the end of 2020.
The Daimler Trucks & Buses division aims to offer only new vehicles that are CO2-neutral in driving operation (“tank-to-wheel”) in the major markets of Europe, Japan and North America by 2039.
Mercedes-Benz Vans is following the Mercedes-Benz Cars strategy for its vans for private use and the strategy of Daimler Trucks & Buses for its vans for commercial use.