Green Bond Framework
Proceeds from FSHOP’s green bonds will be used to finance or refinance the Company’s existing or future projects that are aligned with Green Bond Principles (“Green Projects”). For the Green Bond Framework seven sectors have been defined:
(1) green buildings,
(2) renewable energy,
(3) energy efficiency,
(4) Clean Transportation,
(5) living natural resources and land use,
(6) Climate Change Adaptation, and
(7) Efficient and climate resilient water management.
The following is a list of eligible Green Projects that FSHOP may finance and/or refinance under the Framework together with the Eligibility Criteria:
Sustainability-Linked Financing Framework
We at FSHOP are committed to protecting the environment, therefore, within our priority SDG we have proposed ambitious, quantifiable, and measurable targets that we believe will significantly reduce our energy consumption, and consequently contribute positively to climate change and to reducing GHG. These targets are:
- Decreasing energy intensity by 45% by 2024.
- Generating at least 45% of our energy needs from renewable sources by 2024.
- Having 100% LED lighting throughout all of our properties by 2024
For the second goal, we will continue with the project we started in 2019, which focuses on considerably decreasing our energy consumption and the related operating expenses. Given the conditions of luminosity and space available for installation, the project was structured in stages. In the first stage, four properties were selected, which are currently in operation and producing approximately 13% of FSHOP’s total annual consumption.
Throughout the remainder of this year and continuing into 2023, additional solar panels will be installed at 13 properties. The project will take 52 weeks to complete, including installation, testing, and operation, with an investment of approximately 100 million pesos. Once installed and operating, the total photovoltaic system will have the capacity to generate up to 52.6% of the energy FSHOP consumes in a year, which is more than 11.8 million kWh per year. This will result in a considerable decrease in GHG.
For strategic purposes, and to be able to compare reductions, the decision was made to use 2019 as the base year, as that was prior to the COVID-19 pandemic. During 2020, 2021 and 2022, the properties were partially closed and therefore do not represent a normal year of energy consumption.
Although we stated in our 2020 Sustainability Report that installing solar panels was not viable at all properties, we reviewed this conclusion with experts and realized that the only property where installing solar panels is not feasible is Nima Shops.
Reasons to Take Out Loans or to issue Sustainability-Linked Bonds
As has been stated throughout this Framework, electricity consumption is a very important part of FSHOP’s ESG strategy, as it contributes to reducing GHG and mitigating adverse impacts from climate change.
With this strategy and our progress to date in implementing our ESG strategy, in which we have reported very specific metrics and clear goals in our sustainability reports, FSHOP is ready to take out loans or issue debt linked to KPIs that are measured with SPTs and that are in line with our priority SDG.
The company’s debt issuances under this Framework will follow the guidelines established by the ICMA 2022 for “Sustainability-Linked Bonds” or “SLBs,” and “Sustainability-Linked Loans” or “SLLs,” by the LMA in March 2022, which guidelines recommend characteristics in line with good practices for structuring, releasing, and reporting related to SLBs and SLLs.
At FSHOP energy use is extremely relevant, and we believe that by increasing the use of renewable and clean energies we can have a large positive impact on the environment, and contribute significantly to reducing greenhouse gases. Therefore, for this Framework we will use some of our priority SDG:
Sustainability-Linked Financing Framework
1. Selecting Key Performance Indicators (KPIs)
KPI: Clean and Renewable Energy as a Percentage of the Total Electricity Consumed
The timeframe for observing and measuring KPIs and STPs regarding annual energy consumption will be once per year, from January 1 to December 31 of each year. That is to say, by January 30 of each year, the following will have been measured:
- Annual energy consumption measured in kWh from our photovoltaic systems.
- Annual energy consumed that is provided by the CFE.
- The total energy resulting from the sum of numbers one and two.
- The percentage of clean and renewable energy.
Evolution of the KPI