Volkswagen announces ‘Green Finance Framework’
The Volkswagen Group has presented a new Green Finance Framework (GFF) that takes into account the EU taxonomy rules defining sustainability. In the new GFF, only investments for battery-electric vehicles that are EU taxonomy-compliant are taken into account.
Capital expenditures for plug-in hybrids or pure combustion vehicles are completely excluded, as the group writes in the statement. Volkswagen will report at least once a year on the use of net proceeds from debt instruments issued on the basis of the GFF and on the environmental impact of BEVs where investments have been made in accordance with the GFF, it added.
“With the new Green Finance Framework we strengthen the position of the Volkswagen Group as an issuer of sustainable finance instruments and with that to the sustainable development of our company,” says CFO Arno Antlitz. “To support our increasing investments in electrification we simultaneously aim to increase the share of Green Debt Instruments in our funding mix. In doing so we contribute to the development of the sustainable financing market.”
The EU taxonomy is a (not entirely uncontroversial) set of rules for defining sustainability. It is intended to enable investors on the capital market in particular to assess whether a company is operating sustainably on the basis of clear criteria – in order to channel more funds into sustainable companies and technologies.
In the case of Volkswagen, the Group wants to demonstrate this sustainable management through the results of external certified life cycle assessments, which analyse the environmental impacts of BEVs over their entire life cycle and all stages of the value chain. This includes the extraction of raw materials, the production of materials, the processes at suppliers and the company’s own production at its locations, the use phase with vehicle emissions and the necessary provision of energy, and finally the recycling of the vehicle at the end of its life cycle.
With the Green Finance Framework, VW says it is reaffirming its strategy to focus exclusively on fully electric vehicles. Volkswagen has issued Green Bonds totalling €3.5 billion under the GFF, which was published in March 2020. The new GFF enables the group to issue various green debt instruments, “including green senior and unsecured bonds, green subordinated bonds, green promissory notes and green loans”, according to the company.