Bond issuer A2A failed to meet SLB targets, leading to a 25 basis point coupon increase.
In the realm of sustainable finance, A2A, an Italian energy company, made headlines for missing a renewable energy target associated with a Sustainability-Linked Bond (SLB) issued in 2022. This news, however, did not seem to have a significant negative impact on the company, according to current information.
Luca Moroni, A2A's chief financial officer, stated that the issuance of the EU Green Bond in 2025, the first ever listed on Euronext Milan, confirmed A2A's position as a reference institution in the development of sustainable finance instruments. As of mid-2025, there is no public evidence or reporting that A2A has missed any sustainability performance targets related to this EU Green Bond.
The company's H1 2025 report shows a strong commitment to ecological transition with a 23% increase in organic capital expenditure directed at sustainability efforts. This strong progress is a testament to A2A's ongoing achievements in environmental projects rather than any underperformance or missed green bond targets.
The missed target in the 2022 SLB triggered a 25bps step up in the bond's coupon rate. Josephine Richardson, AFII's head of research, noted that in previous cases where SLB targets have been missed, there have been sudden market re-pricing once the miss is confirmed or after Bloomberg adjusts the bond structure. However, in the case of A2A, the market seemed to have partially predicted the miss and effectively digested it on confirmation.
AFII's research suggests that there were early signs of A2A missing the target, as the company's strategy updates in early 2024 were on track to undershoot the renewable energy target of the bond in question. The institute's analysis also indicates that the SLB market is maturing, its awareness and efficiency are evolving, leading to a more efficient pricing mechanism for missed targets.
It is worth noting that another Italian energy company, Enel, also missed its SLB target in 2023. The Anthropocene Fixed Income Institute (AFII) published research analyzing the impact of the step up in both A2A and Enel's cases.
A2A has stated that the higher coupon will come into effect from the first interest rate period following the publication of its sustainability statement. The company also issued a green bond compliant with the EU's new green bond standard in January 2025, reaffirming its commitment to sustainable finance.
In conclusion, while A2A missed a sustainability target associated with an SLB issued in 2022, the current information suggests that the company has not faced significant negative impacts. The SLB market is evolving, with increased awareness and efficiency, leading to a more efficient pricing mechanism for missed targets. This evolution is likely to continue as more corporates and investors turn to sustainable finance instruments.
Business developments in the sustainable finance sector gained attention as A2A, an Italian energy company, missed a renewable energy target linked to a Sustainability-Linked Bond (SLB) issued in 2022, but this incident did not seem to have a major negative impact on the company.
Luca Moroni, A2A's chief financial officer, announced that the company's issuance of the EU Green Bond in 2025, the first listed on Euronext Milan, solidified A2A's status as a leading player in the development of sustainable finance instruments, without any public evidence of missing any sustainability performance targets related to this EU Green Bond.
