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Sustainability Quality of the Issuer and the Green Finance Framework Energie Burgenland 07 May 2021
VERIFICATION PARAMETERS
Type(s) of instruments
contemplated • Green Bonds, Green Loans and Green Schuldscheindarlehen
Relevant standards • Green Bond Principles and Green Loan Principles (as administered
by ICMA and LMA)
Scope of verification • Energie Burgenland Green Finance Framework (as of April 2021)
Lifecycle • Pre-issuance verification
Validity • As long as the Green Finance Framework does not change
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C O N T E N T S
Scope of work ......................................................................................................................................... 3
ISS ESG ASSESSMENT SUMMARY ........................................................................................................ 3
ISS ESG SPO ASSESSMENT ....................................................................................................................... 4
PART I: GREEN FINANCE FRAMEWORK LINK TO ENERGIE BURGENLAND’S SUSTAINABILITY STRATEGY
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Scope of work
Energie Burgenland (“the issuer” or “EB”) commissioned ISS ESG to assist with its Green Finance
Framework by assessing three core elements to determine the sustainability quality of the instrument:
1. Green Finance Framework link to Energie Burgenland’s sustainability strategy – drawing on
Energie Burgenland’s overall sustainability profile and issuance-specific Use of Proceeds
categories.
2. Energie Burgenland’s Green Finance Framework (April 2021 version) – benchmarked against
the International Capital Market Association's (ICMA) Green Bond Principles (GBPs) and Green
Loan Principles (GLPs).
3. The Eligibility criteria – whether the projects contribute positively to the UN SDGs and perform
against ISS ESG’s issue-specific key performance indicators (KPIs) (See Annex 2).
ISS ESG ASSESSMENT SUMMARY
1 ISS ESG’s evaluation is based on the Energie Burgenland’s Green Finance Framework (April 2021 version) and the ESG indicative assessment
of the company based on ISS ESG Corporate Rating methodology.
SPO SECTION SUMMARY EVALUATION1
Part 1:
Green Finance
Framework
link to issuer’s
sustainability
strategy
Energie Burgenland’s line of business includes the generation,
transmission, and distribution of electric energy. The company’s
energy generation is almost exclusively based on wind and biomass.
Additionally, Energie Burgenland also produces a minor share of its
total generation from solar energy, block-type thermal power stations
and one small-scale hydropower plant.
The Use of Proceeds financed through this bond are consistent with
the issuer’s sustainability strategy and material ESG topics for the
issuer’s industry. The rationale for issuing green bonds is clearly
described by the issuer.
Consistent
with issuer’s
sustainability
strategy
Part 2:
Alignment
with GBPs and
GLPs
The issuer has defined a formal concept for its Green Finance
Framework regarding use of proceeds, processes for project
evaluation and selection, management of proceeds and reporting. This
concept is in line with the Green Bond Principles and Green Loan
Principles.
Aligned
Part 3:
Sustainability
quality of the
Eligibility
criteria
The overall sustainability quality of the eligibility criteria in terms of
sustainability benefits, risk avoidance and minimisation is good based
upon the ISS ESG assessment. The green finance instrument will (re-
)finance eligible asset categories which include solar p.v. and wind
energy.
Those use of proceeds categories have a significant contribution to SDGs 7 ‘Affordable and clean energy’ and 13 ‘Climate action’. The environmental and social risks associated with those use of proceeds categories have been well managed.
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PART II: ALIGNMENT WITH GREEN BOND PRINCIPLES AND THE GREEN LOAN PRINCIPLES
1. Use of Proceeds
An amount equivalent to the net proceeds raised by the issuance of Green Financing Instruments will
be used to finance or re-finance, in part or in full, new or existing Eligible Assets providing distinct
environmental benefits (“Eligible Green Assets”).
Eligible Green Assets relevant for use under the Framework include:
ELIGIBLE CATEGORY ELIGIBILITY CRITERIA
Renewable Energy
Investments in or expenditures for the acquisition, construction, development, operation and installation as well of re-powering of renewable energy production and storage units.
Renewable energy projects may include the following categories:
Wind power:
▪ Onshore wind power plants ▪ Re-powering / refurbishment of existing wind power plants
Solar Photovoltaics:
▪ Open space installations ▪ Roof installations ▪ Dedicated support infrastructure installations
Furthermore, the eligibility criteria described above comply3 with the recommendation of the
Technical Expert Group (TEG) final report on the EU Taxonomy (the “EU Taxonomy”) published in
March 20204, which establishes a system to classify environmentally-sustainable activities by setting
out metrics and thresholds. Under the current version of the EU Taxonomy activities that generate
electricity from wind power and solar PV technology are eligible and contribute to the climate change
mitigation goal.
Opinion: ISS ESG considers the Use of Proceeds description provided by Energie Burgenland’s Green
Finance Framework as aligned with the GBPs and GLPs. Environmental benefits are described.
Furthermore, the projects selected show alignment with the sustainability strategy of the issuer.
3 ISS ESG did not review the alignment of the eligibility criteria displayed in the framework against the EU Taxonomy. 4 March 2020 version of the TEG Report: Technical annex to the TEG final report on the EU taxonomy (europa.eu)
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2. Process for Project Evaluation and Selection
To ensure that allocations are made to Eligible Green Assets as specified in the use of proceeds section above, Energie Burgenland has established a Green Finance Committee (“GFC”), consisting of members of EB’s Finance, Sustainability and Project Management teams.
Only projects/assets which are approved by all members of the GFC can be selected as Eligible Green Assets. After approval by the committee, Eligible Green Assets will be recorded in a Green Asset Register which will be managed by a nominated team within the company.
The Green Finance Committee will be responsible for:
• Ensuring the potential Eligible Green Assets are aligned with the categories and eligibility
criteria as specified in the Use of Proceeds section above, and approving any proposed
changes to the List of Eligible Green Assets in the event that the Assets no longer meet the
eligibility criteria
• Ensuring that the allocations are aligned with the relevant general company policies and
company’s ESG strategy
• Approving the annual Allocation and Impact Report
The GFC meets at least on an annual basis and until full allocation.
Exclusions
Energie Burgenland commits to use the proceeds of the Green Financing Instruments only for Eligible Green Assets described in the use of proceeds section above and explicitly excludes financing of fossil fuel generation, nuclear energy generation, the weapons and defense industries, gambling or tobacco industries.
Opinion: ISS ESG considers the Process for Project Evaluation and Selection description provided by Energie Burgenland’s Green Finance Framework as aligned with the GBPs and GLPS. The issuer has developed a clear and transparent screening selection process. Furthermore, the issuer has created a green bond committee composed of different departments. Lastly, Energie Burgenland has put in place exclusion criteria, reflecting best market practices.
3. Management of Proceeds
An amount equal to the net proceeds raised by the Green Financing Instruments will be allocated to
Eligible Green Assets as specified in this Framework. Energie Burgenland will establish a Green Asset
Register in relation to Green Financing Instruments issued by Energie Burgenland for the purpose of
monitoring the Eligible Green Assets and the allocation of the net proceeds from Green Financing
Instruments to Eligible Green Assets. The Green Asset Register will form the basis for the impact
reporting.
All Green Financing Instruments issued by Energie Burgenland will be managed on a portfolio level.
This means that a Green Financing Instrument will not be linked directly to one (or more) pre-
determined Eligible Green Assets. Energie Burgenland will nominate a dedicated department which
will then be responsible for keeping track and ensuring that there are sufficient Eligible Green Assets
included in the Green Asset Register matched to the proceeds of Green Financing Instruments until
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Renewable Energy
▪ Installed renewable energy capacity (MW) ▪ Renewable energy produced (MWh) ▪ Estimated annual GHG emission avoided (tCO2e)
Where impact data is reported, details of the methodology applied in compiling the data will be
disclosed in the report.
Opinion: ISS ESG finds that the reporting proposed by Energie Burgenland’s Green Finance Framework
is aligned with the GBPs and GLPs. Furthermore, Energie Burgenland has provided Key Performance
Indicators for each use of proceeds categories as per the recommended harmonized framework for
impact reporting published by ICMA.
External review
Second party opinion (pre-issuance)
To confirm the transparency and robustness of Energie Burgenland Green Finance Framework the Framework has been reviewed by an external second party opinion provider ISS ESG, confirming the alignment with the ICMA Green Bond Principles.
Audit of the Allocation Report (post-issuance)
Allocation of the proceeds will be subject for an annual review by an independent auditor confirming that an amount equal to the net proceeds of Green Financing Instruments has been allocated to Eligible Green Assets. A verification report provided by the external auditor will be published on company’s website.
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ANNEX 1: Methodology
ISS ESG Green KPIs
The ISS ESG Green Bond KPIs serve as a structure for evaluating the sustainability quality – i.e. the
social and environmental added value – of the use of proceeds of Energie Burgenland’s Green Finance
Framework.
It comprises firstly the definition of the use of proceeds category offering added social and/or
environmental value, and secondly the specific sustainability criteria by means of which this added
value and therefore the sustainability performance of the assets can be clearly identified and
described.
The sustainability criteria are complemented by specific indicators, which enable quantitative
measurement of the sustainability performance of the assets and which can also be used for reporting.
If a majority of assets fulfill the requirement of an indicator, this indicator is then assessed positively.
Those indicators may be tailor-made to capture the context-specific environmental and social risks.
To review the KPIs used in this SPO, please contact Federico Pezzolato (details below) who will send
them directly to you.
Environmental and social risks assessment methodology
ISS ESG evaluates whether the assets included in the asset pool match the eligible project category
and criteria listed in the Green Bond KPIs.
All percentages refer to the amount of assets within one category (e.g. wind power). Additionally, the
assessment “no or limited information is available” either indicates that no information was made
available to ISS ESG or that the information provided did not fulfil the requirements of the ISS ESG
Green Bond KPIs.
The evaluation was carried out using information and documents provided to ISS ESG on a confidential
basis by Energie Burgenland (e.g. Due Diligence Reports). Further, national legislation and standards,
depending on the asset location, were drawn on to complement the information provided by the
issuer.
Assessment of the contribution and association to the SDG
The 17 Sustainable Development Goals (SDGs) were endorsed in September 2015 by the United Nations and provide a benchmark for key opportunities and challenges toward a more sustainable future. Using a proprietary method, ISS ESG identifies the extent to which Energie Burgenland’s eligible criteria contributes to related SDGs.