Volvo Cars funds new EVs with green bond

Volvo Cars has successfully placed its first green bond, raising 500 million euros to fund the design, development and manufacturing of fully electric cars in line with the company’s recently established Green Finance Framework.

A green bond is a type of fixed-income instrument that is specifically earmarked to raise money for climate and environmental projects.

The bond issue was oversubscribed five times, illustrating both the current market demand for green investment products and the financial community’s strong confidence in Volvo Cars’ strategy, the company says.

“I am very pleased that we successfully placed our first green bond,” Volvo Cars chief financial officer Carla de Geyseleer says.

“The financial community has a critical role to play in supporting sustainable development, including the transition to a low carbon economy.

“In this respect, it’s very encouraging to see so much investor interest in helping us electrify our fleet and deliver on our climate ambitions.”

Volvo Cars’ Green Finance Framework was reviewed by Cicero, a leading provider of independent, research-based evaluations of green bond investment frameworks, and received its highest possible rating – Dark Green.

Last year, Volvo Cars launched a comprehensive climate plan which addresses carbon emissions across all its operations and products as it strives to become climate-neutral by 2040.

The plan goes beyond addressing tailpipe emissions through electrification.

The company will also tackle carbon emissions in its manufacturing network and wider operations, its supply chain and through recycling and reuse of materials.

As a first tangible step towards its 2040 vision the company aims to reduce its lifecycle carbon footprint per car by 40% between 2018 and 2025.

This includes a 50% reduction in tailpipe emissions per car, a 25% reduction per car in operational carbon emissions, including from manufacturing and logistics, and a 25% reduction per car in supply chain carbon emissions.

The 500m euro bond was issued under Volvo Cars’ Euro Medium Term Note programme. The bond matures in October 2027 and pays a fixed coupon of 2.5%.

The settlement date is expected to be October 7 and the bonds will be listed on the Luxembourg Stock Exchange.