In line with its sustainable business strategy Daimler AG lays the foundation for sustainable financing to issue a broad range of sustainable finance instruments such as green bonds and green loans. With a Green Finance Framework the company is enabling investors to participate in the ambitious sustainability goals and creating new opportunities to finance significant upfront investments towards CO2-neutral technologies and services.
Daimler’s approach to sustainability means generating economic, environmental and social value added for all stakeholders: customers, investors, employees, business partners and society as a whole. Climate protection, air quality, human rights and resource preservation are part of the core action fields in Daimler’s group-wide sustainable business strategy.
In accord with the Paris Climate Agreement, Mercedes-Benz Cars wants to offer a completely CO2-neutral new-vehicle fleet by 2039 under the heading “Ambition2039”. This includes topics such as raw materials and the supply chain, the production of the vehicles, their use phase and recycling concepts. One milestone along this path is the interim goal of having five all-electric passenger cars and 20 plug-in hybrid variants on the market by the end of 2020.
The Daimler Trucks & Buses division aims to offer only new vehicles that are CO2-neutral in driving operation (“tank-to-wheel”) in the major markets of Europe, Japan and North America by 2039. Mercedes-Benz Vans is following the Mercedes-Benz Cars strategy for its vans for private use and the strategy of Daimler Trucks & Buses for its vans for commercial use.
Green Finance Framework
The Green Finance Framework is a summary of principles under which Daimler will utilize green financing instruments in the future. It applies to a broad range of debt instruments such as green bonds, green promissory notes (Schuldscheine), green commercial paper and green loans. Due to Daimler’s frequent and standardized public reporting, the company is creating transparency on the positive climate effects of the financed projects.
Daimler follows the best practices in relation to green bonds and loans as market standards develop and as the EU classification of environmentally sustainable economic activities (taxonomy) and the EU Green Bond Standard enter into force. Swedish Bank SEB has acted as green structuring advisor.
Daimler will allocate the net proceeds from the green financing instruments to develop and produce zero-emission vehicles such as battery-electric (BEV) and fuel-cell electric vehicles (FCEV), for example. More than 50% of the proceeds will be allocated to the category “Clean Transportation”. Furthermore, proceeds may be used, for example, to upgrade manufacturing facilities or construct new facilities for the production of zero-emission vehicles and their drivetrains, and to establish the recycling of batteries and fuel cells.
Next year the all-new EQS from Mercedes-Benz will enter the showrooms. This all-electric vehicle will be based on a newly developed, dedicated battery electric vehicle architecture. The electric flagship model from Mercedes-Benz will drive off the production line in the new “Factory 56” in Sindelfingen, about 20 kilometers from the Daimler headquarters in Stuttgart. This ultramodern production facility is consistently applying innovative technologies and processes in vehicle production that are digital, flexible and sustainable. The EQS will be partially equipped with CO2-neutral battery cells. The entire battery package will be manufactured in Mercedes-Benz’s global battery production network.
The large-scale development, production and commercialization of fuel-cell systems for heavy-duty commercial vehicles and other applications is planned in a Joint Venture with Volvo Trucks. The common goal is for both companies to offer heavy-duty vehicles with fuel-cells for demanding long-haul applications in series production in the second half of the decade.
“Dark Green” shading in second-party opinion from CICERO
Daimler has consulted CICERO Shades of Green, a leading provider of independent, research-based evaluations of green finance frameworks to assess the environmental robustness of its framework. Daimler’s framework obtained the highest rating, “Dark Green”, from CICERO. The Second-Party Opinion from CICERO is available on Daimler’s website.
Daimler will provide a Green Finance Investor Report on an annual basis until full allocation of the proceeds, and thereafter in the case of any material change to allocation, in order to create transparency for investors and the public on the financed projects. Examples of indicators and metrics could be, for the “Clean Transportation” category, the number of zero-emission vehicles (BEVs, FCEVs) sold or for “Energy Efficiency”, the reduction of annual CO2 emissions.
The next milestone will be the issuance of a green bond under the new Green Finance Framework, which is planned near term.