Global energy and electricity provider Iberdrola announced a €300 million (USD$328 million) ESG-linked green loan from the World Bank, through its private sector investment arm, International Finance Corporation (IFC), aimed at funding renewables projects in countries that depend coal, including Morocco, Poland and Vietnam.

The new loan marks an expansion of the collaboration between Iberdrola and the World Bank launched last year to promote energy transition in emerging countries. At the time, a green loan linked to sustainability targets of $150 million was signed to finance digitalization and energy efficiency improvements in the electricity distribution networks operated by Iberdrola’s subsidiary in Brazil.

Alfonso Garcia Mora, IFC Vice President for Europe, Latin America and the Caribbean said:

“This loan is a significant step in the global IFC-Iberdrola Energy Transition Partnership, which aims to support Iberdrola’s expansion and re-entry into emerging markets that need to decarbonise their energy matrix.”

The new green loan follows the company’s announcement in 2021 of plans for its financing structure to have an increasingly higher percentage of green and sustainable products, estimated to account for nearly two-thirds of its debt by 2025. Iberdrola currently has almost €20 billion of outstanding green bonds, and more than 96% of its €20 billion credit line portfolio is now sustainability-linked. In December, Iberdrola announced a €5.3 billion credit line, its largest ever, with conditions linked to the company’s performance towards its climate and social goals.

The new ESG-linked loan is subject to meeting two strategic sustainability targets for Iberdrola, including its goal to reduce absolute direct and indirect greenhouse gas emissions across the company’s operations, customers and supply chains by more than 60% by 2030 compared to the 2020 baseline, and to more than double Iberdrola’s clean energy installed capacity by 2030, which at the end of the third quarter of 2023 exceeded 41,000 clean MW.

€170 million (USD$186 million) of the agreed amount has already been committed to finance onshore wind energy projects in Poland.

Iberdrola and the World Bank said that both institutions continue to analyze collaboration options to develop new clean energy projects in emerging countries, including offshore wind and green hydrogen generation.

José Sainz Armada, Iberdrola’s Director of Finance, Control and Corporate Development, said:

“This loan will allow Iberdrola to continue contributing to the energy transition, decarbonisation and electrification in developing countries – which are still highly dependent on fossil fuels. It also consolidates IFC as one of Iberdrola’s major allies in providing financing for renewable projects.”