Project Details
Project
Aegea Sustainability-Linked Financing Framework Second Party Opinion (2022)
Client
Aegea Saneamento e Participações S.A.
Project Type
Sustainability Linked Bond or Note
Industry Group
Utilities
Use of Proceeds
Water/waste water management
Location
Brazil
Evaluation Date
Mar 2022
Evaluation Summary
Sustainalytics is of the opinion that the Aegea Sustainability-Linked Financing Framework aligns with the Sustainability-Linked Bond Principles 2020 and Sustainability-Linked Loan Principles 2021. This assessment is based on the following:
Selection of Key Performance Indicators (KPIs)
The Aegea Sustainability-Linked Financing Framework defines three KPIs: (i) Energy consumption in water production and sewage treatment (kWh/m3), (ii) Percentage of leadership positions occupied by women employees, and (iii) Percentage of leadership positions occupied by black employees (see Table 1). Sustainalytics considers all the KPIs chosen to be strong based on their materiality, relevance and scope of applicability.
Calibration of Sustainability Performance Targets (SPTs)
Sustainalytics considers the SPTs to be aligned with Aegea’s sustainability strategy. Sustainalytics further considers SPT 1 to be highly ambitious given that it exceeds past performance and peer performance, and SPT 2 and SPT 3 to be ambitious.
Bond or Loan Characteristics
Aegea will link the financial characteristics of its sustainability-linked debt instruments to the achievement of the SPTs. The change in financial characteristics may trigger a step-up or step-down coupon adjustment, as applicable, and are to be detailed in the individual transaction documents.
Reporting
Aegea commits to reporting on its progress against the KPIs towards the relevant SPTs on an annual basis via its Corporate Sustainability Report or other similar report, which will be made available on its website. These reporting commitments are aligned with market expectation.
Verification
Aegea communicated to Sustainalytics that it commits to having an external verifier provide a limited assurance report with relevant expertise on the performance level against each SPT for each KPI. The verification will be done annually at a relevant date for assessing SPT performance leading to a potential adjustment in the sustainability-linked instruments, and will be made available on its website, which is aligned with market expectation.