Asia Pacific’s Green & Blue revolution: How Societe Generale is supporting Energy Transition in one of the world’s fastest-growing and most exciting regions
From Australia to India, Societe Generale has backed more than half a dozen landmark clean energy projects over the past year that will create thousands of jobs, supply tens of thousands of homes and businesses with clean energy and prevent the emission of more than 1m tons of carbon dioxide a year.
These projects add up to more than EUR3.4b ($4.1b) of Positive Impact Finance, cementing Societe Generale’s position as a world leader in this field. It also advances the bank’s commitment, made in September 2019 to further accelerate the energy transition by promising to raise more than EUR120b by 2023 (from the pledged amount, EUR100b will be in sustainable bond issuance and EUR20b will be dedicated to the renewable energy sector through advisory and financing).
In supporting these transactions, Societe Generale has done much more than simply putting our balance sheet to work. That’s because in almost every case, Societe Generale has added value as financial advisor, lead or co-lead of the financing, by arranging hedges and derivatives or by fulfilling a more technical role, such as sustainability or green loan coordinator. In almost all of these deals, it has achieved at least one significant ‘first’.
In India, for example, the bank is helping two independent power producers install two new solar farms. In Rajasthan, Japan’s SB Energy is building a 600 megawatt (MW) facility via a USD333m (EUR406m) loan for which Societe Generale acted as Mandated Lead Arranger and Bookrunner, Hedge Provider and Letters of Credit Provider. It also provided SB Energy with a green cross-currency swap in what was the bank’s first-ever renewable energy project financing in India.
Neighboring Gujarat, meanwhile, is where ENGIE of France is constructing a 200MW solar power plant, India’s second-largest, which will create more than 1,000 jobs and replace 385,000 tons of carbon emissions. Alongside the Asian Development Bank, Societe Generale is leading a INR7.7b (EUR128m) project loan – the bank’s first local currency transaction for a renewable power project in India, acting also as a Green Loan Coordinator.
Solar power also features in Taiwan but here Societe Generale is helping to create what is effectively a new asset class: waterborne solar power. Floating solar projects can provide a better energy yield because the water cools the panels, while also having environmental benefits such as reducing water evaporation and algae formation; and they don’t take up precious land – which makes Asia, with our many small islands, a promising market. Already heavily involved in financing offshore wind farms in Taiwan, Societe Generale is providing the NT$7.3b (EUR223m) project loan for the 181MW Changhua project – the first industrial-scale floating solar platform in Taiwan and the first such project to be financed by the bank.
It is also helping long-standing client Marubeni, the Japanese trading house that is the main sponsor of Changhua, to develop Japan’s first large, commercial offshore wind farm in the northern province of Akita. In fact, Societe Generale is the only non-Japanese bank involved in the JPY100b (EUR847m) project, whose 140MW should generate enough electricity to supply 47,000 households.
And Societe Generale goes beyond green into blue. Our bank acted as a Joint Lead Manager on Bank of China’s debut Blue Bond late last year – a dual-currency issue worth USD942m (EUR1,150m) and the first of its kind in Asia. Blue bonds are a subset of environmentally sustainable green ones, with the proviso that the money is used specifically for marine-related projects. In this case, there are 25 of them, including additional sewage treatment capacity as well as a giant 3,000MW increase in offshore wind power.
Separately, Societe Generale has teamed up with Seaspan, the world’s largest container ship lessor, to help it align its financial strategy with its decarbonization initiatives, through the implementation of a sustainability-linked loan. The bank acted as Mandated Lead Arranger, Bookrunner and Lead Underwriter as well as Sustainability Coordinator and Sustainability-Linked Hedge Provider on this innovative USD250m (EUR305m) six-year ship financing.
Another landmark transaction was arranging the first sustainable bond for an Australian bank: ANZ’s EUR1b issue last year will count as Tier 2 capital and finance lending to sectors such as education, elderly care and the environment. The bond attracted a very positive response from more than 150 European and Asian institutions. More recently, this year, we worked with UOB in Singapore to issue its USD1.5b debut Sustainability Senior and Tier 2 notes, and helped Westpac launch its EUR1b debut Green Tier 2. Both transactions were heavily oversubscribed, and saw strong participation from dedicated global ESG funds.
The path to net zero is a challenging one, as the recent roadmap from the International Energy Agency lays out. The projects described above only fulfil a very small part of the ambitious decarbonization targets Asian governments are now setting themselves, with Japan and South Korea aiming for net zero carbon emissions by 2050, while China is targeting 2060. More specifically, Japan has 15 gigawatts (GW) – that is 15,000MW – of offshore wind projects in the pipeline; and India aims for 275GW of renewable energy capacity by 2027. More exciting clean energy projects are currently being finalized in Vietnam, Indonesia, Australia, India and China, as we strive to continue to expand our footprint in this asset class across the Asia Pacific region.
Every journey starts with a single, first step. And Societe Generale is committed to supporting our clients and wider society on every moment and milestone of that journey.