Global leading commercial vehicle manufacturer, Scania has now issued its first green bond. About 30 Nordic banks, insurance companies and pension fund managers participated. The bidding resulted in Scania raising loans totalling SEK 1.25 billion with a 4-year maturity for investments that the company is making to convert to production of electric vehicles.
It was at the end of 2020 that Scania - as the first pure manufacturer of commercial vehicles - received approval for the company's framework for issuing green bonds.
"The great interest in our green bond confirms the financial community's willingness to enter into the partnerships needed to phase out fossil dependence in the world. At the same time, it also confirms the financial community's confidence in our work to drive the transition to a sustainable transport system," says Scania's Chief Financial Officer Johan Haeggman.
The Green Bond Framework constitutes the basis for identifying, selecting, verifying and reporting projects that are eligible for financing by green bond proceeds. Well-established Norwegian CICERO Shades of Green has rated the framework `dark green', which is allocated to projects and solutions that correspond to the long-term vision of a low carbon and climate resilient future.
Scania has set ambitious carbon-reduction goals as underwritten by the Science Based Target initiative. These include that from 2015 halving carbon emissions from its own operations by 2025 as well as reaching a 20-percent reduction of CO2 emissions from its trucks, buses and engines when in use, which constitutes more than 95 percent of Scania's environmental impact. Scania has already reached its 2020-target to transition all its ten major production facilities worldwide to fossil-free electricity.
The proceeds from Scania's green bonds are exclusively channelled to projects that will have a profound impact in reducing CO2 emissions. These might include boosting the performance of heavy electric trucks and buses, e-bus based public transport systems and establishing an efficient charging infrastructure for electric trucks and buses.
In accordance with the Green Bond Principles, proceeds will be managed in separate accounts and the allocation transparently reported with the obtained carbon savings.
Scania is also taking an important step in its growth strategy by expanding its operations in China with the establishment a wholly-owned truck production facility in Jiangsu Province, 150 km northwest of Shanghai. Series production is scheduled to start in early 2022.
"Our expansion in China will be made step by step and in pace with the positive development of market conditions and the increasing demand for modern vehicles with a higher technology content that will follow. Until the end of the 2020s, we will make significant investments in order to benefit from this development as well as to establish China as the third leg in our global production structure," says Scania's President and CEO Henrik Henriksson.
"Increasing the presence in the Chinese market is crucial for Scania and the TRATON Group's global growth. Our operations in the country will gradually be expanded and developed into a full-scale unit in Scania's global production and supplier structure. The goal is not only to make China our third industrial leg but also to a regional centre for sales to other Asian markets," says Henriksson.
Scania's investments in China also include establishing research and development in the country.
"This will strengthen the international competitiveness and ability of Scania to be leader in sustainable transport, as our presence provides increased access to leading technologies and expertise in areas such as electrified and autonomous vehicles."
China is the world's single largest market for commercial vehicles and currently accounts for 40 percent of global sales. The market is dominated by national manufacturers, but the demand for modern vehicles with a higher technology content, better performance and higher availability is increasing with the need for more efficient logistics and sustainable transport. Scania's entire product range of combustion engine technology for renewable biofuels as well as electrified products are therefore a good fit for the Chinese market.
"We are aiming for sales in China at the end of the 2020s of at least the same volume as that of our currently single largest market, Brazil," concludes Henriksson.
Scania's establishment of its own industrial operations in China has been made possible through the acquisition of Nantong Gaokai Auto Manufacturing Ltd.
Scania is a world-leading provider of transport solutions, including trucks and buses for heavy transport applications combined with an extensive product-related service offering. Scania offers vehicle financing, insurance and rental services to enable our customers to focus on their core business. Scania is also a leading provider of industrial and marine engines. With 51,000 employees in about 100 countries, our sales and service network is strategically placed where our customers need us, no matter where they operate. Research and development activities are mainly concentrated in Sweden, with branches in Brazil and India. Production takes place in Europe, Latin America and Asia with facilities for global interchange of both components and complete vehicles. In addition there are regional production centres in Africa, Asia and Eurasia. Scania is part of TRATON GROUP. Under this umbrella the brands Scania, MAN and Volkswagen Caminhões e Ônibus work closely together with the aim to turn TRATON GROUP and its brands into a Global Champion.