Etihad Airways, the Abu Dhabi government-owned airline, has announced that it is working on its third financing transaction linked to sustainable funding considerations.
Environmental, social, and governance (ESG) considerations are gaining traction in the oil-rich Gulf region, with debtors establishing ESG frameworks to transition to greener economies and capitalize on a global increase in awareness of sustainability threats following the COVID-19 pandemic.
In 2019, Etihad launched a Sustainable Development Financing Framework, raising $117.14 million to help fund the expansion of the “Etihad Eco-Residence,” a sustainable condo complex for cabin crew. It also has issued a Transition Finance Framework in 2020, which allows it to raise funds through transition bonds, sukuk, or loans, either through public or non-public placements.
Proceeds from debt sales under that framework can be used to fund investments in next-generation planes to replace the current fleet, as well as research and development into sustainable aviation fuels.
Mr. Daniel Tromans, Etihad’s group treasurer made the announcement regarding the sustainable funding while addressing a panel about sustainability at the ACT Middle East Treasury Summit, a web-based program.
The airline has pledged to be carbon-neutral by 2050. Etihad raised $600 million last year using “transition” sukuk intended to help companies shift to more environmentally sustainable operations over time.
Etihad Airways is expanding its carbon offset purchases while also pushing forward with a program that would allow passengers to buy more offsets for their flights. In November 2020, the airline had purchased 80,000 tons of carbon offsets.
In August, the airline has launched a partnership with New Zealand carbon offsetting company Carbon Click, “a platform that uses certified Gold Standard offsets to reduce the climate impact of aviation through ethical, fully traceable reforestation and renewable energy projects”, to develop its voluntary guest offset program.
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