VALEO AUTOMOTIVE GREEN BOND FRAMEWORK

The operation consists in the purchase by the EIB of green bond instruments issued by Valeo under its Green Financing Framework (2023).

The aim is to finance new eligible 'green projects' across the EU in line with the EU Taxonomy and/or with the EIB's Climate Action and Environmental Sustainability (CAES) framework and eligibility criteria for areas not covered by the Taxonomy delegated acts. The eligible "Green Projects" are expected to primarily include the promoter's investments for the development and deployment of clean transport technologies, renewable energy and energy efficiency equipment and solutions.

The set of investments to be supported by the issuance of the Green Bonds by the promoter include primarily projects for the development and deployment of innovative technologies contributing to the decarbonisation of the automotive industry, the increased use of renewable energy and the improved energy efficiency at the promoter's buildings and plants. They will contribute to further knowledge creation and diffusion, to the transformation of the automotive and transport industry in the direction of electrification and increased sustainability, and to directly and indirectly help preserve and scale up R&D and manufacturing employment in Europe and therefore contribute to economic growth.

The projects to be financed with the proceeds from EIB purchase of the Green Bonds will support the EIB "Innovation, Digital and Human Capital" PPG, a part of them also the EIB "Sustainable Energy and Natural Resources" PPG, and they will contribute to the EIB Climate Action and Environmental Sustainability (CAES) policy objective. They will contribute to address projects with positive environmental and knowledge externalities generation.

The promoter's experienced management and project implementation capabilities, its focus on innovation and sustainability, its technology edge and industrialisation capability will help implement sound and sustainable investments in eligible projects, integrating positive environmental and social dimensions, contribute to address and mitigate market failures, and through its additionality, contribute to the Bank's policy objectives.

The recent developments on the bond market have evidenced a higher level of volatility in investor demand for issuers with a low investment grade or a sub-investment rating. In this context, EIB's investment in a bond issuance is expected to effectively bridge a market gap and provide a higher level of visibility over the success of a bond issuance, and therefore support the issuer in attracting long term financing from public debt markets for their green investments.

Furthermore, EIB's involvement in a bond issuance process through a significant investment is expected to expand the issuer's green investor base and thereby diversify its funding sources.

The operation is also expected to have a material signalling effect, as EIB's expertise and involvement in selected green bond issuances is expected to have a significant value for other investors. It is therefore expected to meet demand for labelled green products in the context of the development of Capital Market Union objectives and European regulatory standards, including CSRD and the EU Green Bond Standard, contributing to advance European policy goals.

The project activities to be financed with the proceeds from the EIB purchase of green bonds are expected not to fall under any of Annexes of the Environmental Impact Assessment (EIA) Directive 2011/92/EU as amended by Directive 2014/52/EU. All such projects are expected to contribute to climate action and environmental sustainability objectives, in particular to climate mitigation and transition to circular economy. The EIB will assess the capacity of the promoter to ensure the projects' compliance with the relevant EU and national environmental and social legislation. Environmental and social due diligence will focus on the capacity of the promoter to identify, assess, manage and monitor environmental, climate and social impacts and risks, and to ensure that underlying schemes comply with national and EU legislation.

The promoter is assessed as a private company not being subject to EU rules on public procurement or concessions. However, if at project appraisal, the EIB were to conclude that the promoter is subject to the EU public procurement legislation then the promoter will have to apply those rules.