Constellation offers first-ever corporate green bonds
In a bid to generate up to $900 million in additional funding for nuclear energy projects, Constellation Energy announced this week that it will issue corporate green bonds in the United States.
The company will use proceeds from the 30-year term offering for investments such as maintenance, expansion, and life extensions of its nuclear fleet. Constellation is the nation’s largest producer of carbon-free energy and operator of its largest nuclear fleet.
Quotable: “Elected officials on both sides of the aisle, climate and sustainability advocates, and the general public are increasingly recognizing the value nuclear energy delivers,” said Dan Eggers, executive vice president and chief financial officer of Constellation. “The strong market response shows the investment community agrees nuclear energy is a unique clean-energy technology that is going to play a critical role for decades to come and is a safe, long-term investment.”
“With the nation’s first-ever corporate nuclear green bond issuance as part of our long-term financing mix, Constellation and the market have again confirmed: Nuclear investments are long-term sustainability investments,” He continued.
The green stuff: A green bond is a financial instrument issued specifically to support projects or activities that deliver positive environment or climate impacts. The purchase allows investors to actively support sustainability and help address environmental challenges.
Green bonds are not new—the World Bank issued the first labeled green bond in 2008. By June 2015, the World Bank had issued $8.5 billion in more than 100 green bond transactions in 18 currencies, supporting 70 climate mitigation and adaptation projects around the developing world.
Constellation’s plans: This nuclear green bond offering is based on a new green financing network developed by Constellation.
To choose which projects are financed from the bond sale, Constellation will form a selection committee, including personnel from its sustainability, treasury, finance, controllership, and legal departments. Areas that are eligible for funding include the following:
- Acquisition, operation, increased capacity, and maintenance of existing reactors.
- Research, development, demonstration, and deployment of innovative reactors.
- Nuclear fuel purchase to support the existing fleet.
- Installation, maintenance, and operation of renewable generation technologies (such as wind, solar, and hydropower).
- Investments in decarbonizing existing natural gas–fired generation assets.
- Installation, maintenance, operation, and storage of clean hydrogen systems.
Supporters say: The firm Sustainalytics has verified the environmental benefits of Constellation’s framework and its alignment with the 2021 and 2023 Green Bond Principles, issued by the International Capital Markets Association and the Loan Market Association. These are voluntary guidelines to support a green label for Constellation’s bonds.
Crédit Agricole CIB, the international corporate and investment banking arm of Crédit Agricole Group, served as Green Structuring agent in Constellation's nuclear green bond offering.
“This groundbreaking transaction is a testament to Constellation’s ambitious sustainability efforts, and such leadership in the sustainable finance capital markets will undoubtedly serve as an inspiration for future global nuclear focused green bond issuances,” said Romina Reversi, head of sustainable investment banking for the Americas at Crédit Agricole CIB.
Learn more about Constellation’s sustainability performance in its 2023 sustainability report.
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