Sustainable Finance: A2A’s strategy and commitment

Sustainable Finance is rapidly emerging as one of the fundamental topics of finance globally, with Europe  leading the way through the EU Sustainable Finance Action Plan  launched in 2018. Currently, the majority of the assets under management (AUM) in Europe, amounting to 7 trillion Euros out of a total of 12 trillion, is invested in ESG (Environment, Social & Governance) funds or strategies which take into account the sustainability objectives. This growing interest of investors in ESG-linked products has led to an ever-greater variety of sustainable finance products available in the market.

In line with this trend, Italy is aiming to play a leading role in the market, as demonstrated by the organizing of Sustainability Week, an emblematic event of the Italian Stock Exchange on sustainability topics, which celebrated its seventh edition this year. The event, started out as just a day dedicated to sustainable finance,  has quickly become a week of appointments involving the entire international circuit of Euronext, the pan-European stock exchange, with the intent to connect  investors and companies  joining the forces in promoting the sustainable financial instruments.

It is crucial, however, to ask if these efforts are sufficient to achieve the Sustainable Development Goals set by the United Nations (UN SDGs) and the EU Green Deal. According to a recent report “Global Private Sector SDG Stocktake” of the UN Global Compact-Accenture, which assesses the progress made towards SDGs every five years, for 85% of the targets there was an insufficient progress in achieving 2030 goals. As for Sustainable Finance, there is an estimated  financing gap of 3.3 to 15 trillion US dollars in achieving 2030 goals. It is also clear that all the stakeholders involved, including companies, need to scale up the concrete actions, with the support of policy makers, especially where they can have the greatest impact.

So, what is the most effective approach, and which Sustainable Finance strategies can a company adopt to significantly contribute to achieving the 2030 goals?

For the A2A Group, Sustainable Finance is a key lever for achieving the two pillars of its strategy:

• energy transition
• circular economy

The Group has maintained a constant commitment in this area since 2019, by adopting a proactive approach that can be summed up in the following principles.

Gruppo A2A has set itself some challenging goals when it comes to the consolidated sustainable finance instruments, such as those related to the ESG debt, for which it commits to exceed 76% out of total debt by 2026 and 90% by 2030. Currently, the Group has already achieved 67% ESG debt out of total (as of 30/09/2023, compared to 58% at the end of 2022).

Our Group has been at the forefront in adopting innovative financial instruments. In 2021, a new Sustainable Finance Framework was launched  combining, for the first time in Italy, two approaches:

• Green - Use of Proceeds, which ensures maximum transparency of the use of proceeds for specific short-term projects and
• the Sustainability-Linked component, which links the debt instruments to one or more of the Group's medium- and long-term sustainability goals. 

Furthermore, in addition to issuing the various ESG debt instruments (among which: five Green Bonds, two Sustainability-linked Bonds, three Sustainability-linked RCFs and the loans of the European Investment Bank) and structuring green deposits and an ESG share buyback program with a donation to Banco dell’Energia, A2A was the first company in Italy to stipulate a Civil and General Liability insurance policy linked to the achievement of five sustainability goals.

The A2A Group considers as crucial the involvement of all main stakeholders among which investors, banking partners, institutions and legislators. It has recently taken part in the numerous events, conferences, and roundtables on Sustainable Finance, including the above-mentioned event organized by the Italian Stock Exchange.

Furthermore, A2A has been a member of the Corporate Forum on Sustainable Finance, with 25 members from 9 countries, since 2019. The goal of the forum is to promote sustainable finance as an instrument to tackle the climate change and to achieve a more sustainable economy through sustainable finance strategies that use innovative financing instruments. Over the past four years, the forum has responded to the main consultations held by the European Union, including those on EU Taxonomy and EU Green Bond Standard . 

This strategy has brought advantages to the Group both in terms of the cost of capital and its reputation with financial stakeholders and could be a useful benchmark for other market players.  At this time in history, the efforts must be united to drive the acceleration needed to safeguard the well-being of our planet, the only home we have, and of the people.

Patricia Gentile,
Group Head of Finance and Insurance A2A

Marina Sabinina,
Sustainable Finance Manager A2A