Universal Registration Document 2022

6.7 Information relating to the allocation of funds raised through Green Bonds issued by EDF

Since 2013, the Group has conducted six Green Bond issues for a total of around €10 billion in order to support its development in renewable energies.

After two bond issues chiefly intended to finance the building of new wind and solar power projects by its subsidiary EDF Renewables (€1.4 billion in November 2013 and $1.25  billion in October  2015), the Group expanded its Green Bond Framework to finance investments in the renovation and modernisation of its hydropower assets in mainland France. The new Framework was first applied to a €1.75 billion issue in October 2016 and then to a JPY26  billion issue in two tranches in January 2017. The Group further extended the scope of its Green Bond Framework in early 2020 by opening it up to international hydropower assets, energy efficiency projects and biodiversity conservation projects. In this context, the Group issued Green Bonds for an amount of €2.4 billion in September 2020, and new Green Bonds for an amount of €1.85 billion in November 2021 ⁽¹⁾. The Group expanded the scope of its Framework in July 2022, renaming it the Green Financing Framework to include any type of financing product in addition to bonds. This Framework is compatible with the European taxonomy, including the Nuclear Delegated Act which came into force in July 2022. The scope of investments has also been extended to electricity distribution projects and nuclear generation projects. Against this background, EDF carried out a bond issue of €1.25 billion in October 2022.

The commitments made by EDF in the context of these two bond issues follow the four Green Bond Principles ⁽²⁾ guiding (i) the use of proceeds, (ii) existing processes for evaluating and selecting Eligible Projects, (iii) the management of proceeds, and (iv) reporting procedures. A detailed description of these investments can be found in the EDF Green Bond Framework of January 2020 available on the Sustainable Finance page of the Company’s website.

This section provides a summary of these commitments and how EDF has fulfilled them as at the end of 2022.

Use of proceeds

EDF has committed itself to allocate the proceeds from its Green Bonds programme to finance new investments in renewable energy projects. Projects eligible for Green Bond financing as per the Green Bond Framework (the “Eligible Projects”) are:

• the construction or acquisition of a portfolio of renewable energy power generation projects including wind, solar, hydro, storage, biomass and geothermal projects;
• investments in existing hydroelectric facilities, including renovation and heavy maintenance; modernisation and automation; and development of existing facilities (including power increases);
• energy efficiency projects, including projects to reduce energy consumption, modernise lighting, heating and cooling network projects and projects involving the creation of charging stations for electric vehicles;
• biodiversity preservation projects, such as actions to mitigate the impact of EDF’s activities on biodiversity, site restoration or re-naturalisation and research and development;
• electricity distribution projects including investments in the distribution grid connected to the European system, connections of renewable energy production facilities, infrastructure supporting the electrification of transport (including electric vehicle charging stations) and smart meters;
• nuclear generation projects: investments in new construction projects and existing works, including research and development, demonstration and deployment of innovative reactors that generate energy from nuclear processes with minimal fuel cycle waste, projects authorised by the competent authorities for no later than 2045 for the construction and safe operation of power plants and for the extension of the life of existing reactors.

The Green Bond Framework provides that the funds may finance projects which would not have benefited from financing through a Green Bond within 3 years before the issue of the Green Bond (look-back clause). Similarly, the funds can be used to acquire a portfolio of renewable energy projects.

Assessment and selection of financed eligible projects

Each Eligible Project to be funded is assessed against the environmental and social eligibility criteria ⁽³⁾ (“E&S criteria”) specified in Appendix 1 of the Green Bond Framework. This assessment is based on five elements, including (1) compliance with ethical, transparent and sustainable human resources criteria; (2) monitoring of the project’s environmental impact; (3) promotion of occupational health and safety; (4) responsible supplier relations; (5) a commitment to organise a consultation process for each new project; and (6) compliance with the taxonomy criteria.

Only projects meeting the E&S criteria qualify for Green Bond financing.

Compliance with these criteria is certified by Deloitte (auditor) in accordance with the requirements of the Green Bond Framework. On this basis, the Finance Departments of the Group entities in question designate the Eligible Projects that are financed.

Management of proceeds

Proceeds raised are managed according to a strict ring-fencing principle in order to ensure that their use is exclusively and effectively reserved for financing Eligible Projects.

Once received by EDF’s Finance and Investment Department, proceeds from each bond issue are invested and tracked in a dedicated sub-portfolio of treasury assets until allocated to Eligible Projects. Proceeds are invested in priority in treasury assets identified as Socially Responsible Investments (SRI).

The Finance Divisions of the corresponding entities notify EDF’s Treasury Division, on an ongoing basis or at regular intervals, of the proceeds needed to cover investments related to the selected projects. Based on this information, the Treasury Division adjusts the amounts available in the dedicated treasury asset sub-portfolios.