Automotive giant Daimler AG announced today the Green Finance Framework, a summary of principles under which Daimler will utilize green financing instruments. The framework will apply to a broad range of debt instruments such as green bonds, green promissory notes, green commercial paper and green loans.
The new framework released by Daimler comes as investor demand for sustainable financing products is experiencing strong growth around the world. Green bond issuance, for example, exceeded $250 billion in 2019, increasing more than 45% year-over-year globally.
Using green financing instruments will enable investors to participate in green projects such as the development and production of electric vehicles. For example, Daimler’s Mercedes-Benz Cars business has set a target of offering completely CO2-neutral new-vehicle fleet by 2039 under the heading “Ambition2039”. This project involves all stages of production manufacturing and vehicle lifecycle, from raw materials and the supply chain, the production of the vehicles, their use phase and recycling concepts. Additionally, the Daimler Trucks & Buses division anticipates offering 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.
Daimler has announced that it will allocate the net proceeds from the green financing instruments to the development and production of zero-emission vehicles such as battery-electric (BEV) and fuel-cell electric vehicles (FCEV), with more than 50% of the proceeds to be allocated to this “Clean Transportation” category. Proceeds may also be used for purposes including upgrading manufacturing facilities, construction of new facilities for the production of zero-emission vehicles and their drivetrains, and to establish the recycling of batteries and fuel cells.
Daimler also disclosed that its Green Finance Framework has received the highest rating of “Dark Green” from CICERO Shades of Green, a provider of independent, research-based evaluations of green finance frameworks.