NRG provides customised renewable energy solutions that advance companies’ social responsibility strategies
(SLB) to make that possible. To finance the acquisition, NRG used the proceeds of about US$3.8bn via a five-tranche bond offering,6
which included the SLB linked to the company’s sustainability targets.
A press release on the company’s website says that the bond “presents the next step in aligning NRG’s business and financing with company commitments towards a low emissions future by creating a direct link between its climate and funding strategies”. The preference for an SLB over a green bond is that the former is “more adapted to its activities,” NRG explained, referring to the Direct Energy acquisition as an example. By contrast, green bonds have ring-fenced use of proceeds requirements and must be used to fund certain low-carbon projects or investments.
A press release also revealed that the SLB will support the company’s efforts to pursue growth, achieve its climate transition strategy and a low emissions future, and bring increasing value to its stakeholders.7
indicator (KPI) is absolute GHG emissions, with a sustainability performance target (SPT) of reducing emissions to 31.7 million metric tonnes (MMT) of CO2
equivalent
emissions by the end of 2025, which is based on the company’s previously issued public GHG reduction goal of 50% by 2025 from the current 2014 baseline.
Any divestments or acquisitions over the life of an SLB would not result in a recalibration of the SPT, in keeping with the overall net-zero ambition. Should NRG fail to achieve any of the targets included as part of the legal documents of any SLB, the
implications could include a coupon step- up, or an increased redemption fee.
Structuring the first US SLB The seven-year bond9
was part of an
overall debt package used to finance the Direct Energy acquisition. The US$900m secured notes were measured against the KPI absolute emissions target of 31.7MMT of CO2
equivalent at the end of 2025 By issuing the bond, NRG
is linking financing to the realisation of its GHG reduction goal. The company’s SLB framework8
aligns with the UN Sustainable
Development Goals (SDGs) relating namely to items 7 (Affordable and Clean Energy) and 13 (Climate Action). Its key performance
78
Together we will embrace the modern low-carbon economy by leveraging best-in-class tools and technologies
Mauricio Gutierrez, CEO, NRG Energy
(representing a 50% emissions reduction compared to the 2014 baseline). This covers emissions from the production of wholesale electric power at facilities owned or controlled by the company, emissions generated from electricity purchased and consumed by NRG, and emissions encompassed by employee business travel. If NRG fails to meet the target, this will result in a 25-basis point increase to the interest rate payable on the notes from and including the interest period ending on 2 June 2026, upon issuance of the 2.45% secured notes priced at 99.859%.
Working with bank partners In addition to the SLB, NRG issued US$500m of senior secured notes paying 2% interest and maturing in 2025, US$500m of senior unsecured notes paying 3.375% interest and maturing in 2029, US$1.03bn senior unsecured notes paying 3.625% interest and maturing in 2031, and US$900m of
Images: Alamy, NRG Energy
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