Natural gas and electricity provider NRG Energy Inc. said Wednesday it’s issuing $900 million in bonds tied to its performance in meeting sustainability targets, with the proceeds to go toward the company’s previously announced acquisition of Direct Energy.
The event marks the first issuance of such an instrument, dubbed a Sustainability-Linked Bond (SLB), in North America, according to NRG. The SLB “aligns NRG’s business and financing with company commitments and values by creating a direct link between climate and funding strategies,” the company said.
The SLB ties financing to NRG reaching its previously stated goals to reduce absolute greenhouse gas (GHG) emissions by 50% by 2025 versus the 2014 baseline, with the longer-term target of net-zero GHG by 2050.
“For over a decade, we have considered our comprehensive sustainability framework foundational to our company strategy,” said NRG Vice President Jeanne-Mey Sun, head of sustainability. “We have a legacy of leading our sector in sustainability, transparency and disclosure, and the issuance of this Sustainability-Linked Bond is another example of our dedication to lead in the energy transition.”
NRG Senior Vice President and Treasurer Gaetan Frotte said the company has seen an “overwhelmingly positive response to this offering, demonstrating the depth of interest for this type of instrument in the market.”
The SLB will be measured in terms of a performance indicator and an associated sustainability target that supports United Nations goals for affordable and clean energy and for action to curb climate change.
NRG said it has set a target for absolute GHG emissions of 31.7 million metric tons of carbon dioxide equivalent by the end of 2025. Reaching this goal would equate to removing more than 6.8 million passenger vehicles from the road for a year, the company said.
The target will cover emissions from production of wholesale electric power at facilities owned by NRG, emissions resulting from electricity purchased and consumed by the company, and emissions resulting from employee business travel.
NRG said its GHG emissions will be reported annually through a sustainability report and in a separate report from a third-party auditor.
Earlier this year, NRG reached a definitive agreement to acquire leading North American natural gas retailer Direct Energy for $3.625 billion. Operating in the United States and Canada, NRG provides energy and natural gas to more than 3.7 million residential, small business, commercial and industrial customers.
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