Volvo is giving investors the chance to help finance its effort to become climate neutral by 2040.
The automaker has established a Green Finance Framework, which allows it to fund its electrification strategy by issuing its first green bond,
The bond's proceeds will be used to fund new electric models, new vehicle platforms and powertrain technology, as well as increased production capacity for batteries and electric cars, the company said.
Volvo Chief Financial Officer Carla de Geyseleer told Automotive News Europe the automaker seeks to raise "a couple hundred million euros" with the green bond, which should be made available to the market before the end of the year.
When asked whether Volvo already has investors lined up she said: "We are convinced that we will have sufficient interested parties.," adding that Volvo would be in position to issue more green bonds if the first one proves succesful.
Volvo CEO Hakan Samuelsson believes the time is right for this financial move.
"There is big interest in green bonds. That should help us," he told ANE.
Volvo estimates the total annual investments needed for its green projects are equal to a quarter of its overall annual investments.
Volvo will also seek green loans using its Green Finance Framework, which specifies how these projects are identified, selected and managed, providing transparency for investors, the company said.
Volvo launched a plan last year to slash carbon emissions across all its operations and products, as it strives to become climate-neutral in the next 20 years.
To get there it will slash its life cycle carbon footprint by 40 percent to 31.8 tons of CO2 per car by 2025 from 53 tons in 2018.
Along with addressing tailpipe emissions through electrification, Volvo wants to reduce carbon emissions in its manufacturing network, supply chain and through recycling and reuse of materials.
"We have ambitious investment plans in coming years to turn our climate objectives into reality," de Geyseleer said in a release. "I am happy we can now offer an opportunity to the financial community to make sustainability-focused investments in Volvo Cars, as the financial industry plays a pivotal role in stimulating and supporting sustainable development."
The automaker said its Green Finance Framework has been reviewed by Cicero, a leading provider of independent, research-based evaluations of green bond investment frameworks, and received its highest possible rating, Dark Green.
