The Volkswagen Group has presented a new Green Financing Framework (GFF) that takes into account the EU taxonomy rules that define sustainability. In the new GFF, only investments for battery electric vehicles that comply with the EU taxonomy 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 under the GFF and on the environmental impact of BEVs where investments have been made under the GFF, he added.
“With the new green financing framework, we strengthen the Volkswagen Group’s position as an issuer of sustainable finance instruments and with it the sustainable development of our company,” says CFO Arno Antlitz. “To support our growing investments in electrification, we aim to simultaneously increase the share of green debt instruments in our financing mix. In doing so, we contribute to the development of the sustainable financing market.”
The EU taxonomy is a (not entirely debatable) set of rules for defining sustainability. It aims to enable capital market investors, in particular, to assess whether a company is operating sustainably on the basis of clear criteria, in order to channel more funds towards sustainable companies and technologies.
In the case of Volkswagen, the Group wants to demonstrate this sustainable management through the results of certified external life cycle assessments, which analyze the environmental impacts of BEVs throughout their life cycle and all stages of the value chain . This includes the extraction of raw materials, the production of materials, processes at suppliers and the company’s own production at its locations, the use phase with vehicle emissions and the necessary energy input, 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 for a total of €3.5 billion under the GFF, which was issued in March 2020. The new GFF allows the group to issue various green debt instruments, “including senior and unsecured green bonds, bonds green subordinated, green promissory notes and green bonds loans,” according to the company.