Infrastructure and renewable energy developer, Acciona, says it has arranged the first green letter of credit (L/C) in the European financial system with CaixaBank for a total of US$129 million.

The Spanish company says the L/C qualifies as "green" because it is linked to a sustainable development project aimed at mitigating climate change.

Commercial operation

The green L/C under which CaixaBank guaranteed the payments undertaken by Acciona was used to supply photovoltaic modules for the construction of the Puerto Libertad photovoltaic solar plant in the Mexican state of Sonora.

The 405 megawatt plant is already in commercial operation and produces enough electricity to supply 583,000 homes as well as avoiding the emission of more than 925,000 tons of carbon dioxide into the atmosphere each year.

Sustainability evaluated

An evaluation to ensure that the funds are allocated to a sustainable project examined the supplier selection processes, impact on the local energy balance and materials used as well as the criteria used by the financial institution when assessing and implementing the transaction.

Acciona says its use of a green L/C linked to sustainability factors is part of the company's strategy to drive and support investment flows into projects that contribute to progress in a way that is compatible with mitigating climate change.

Green pioneer

The company claims to be a pioneer in the issuance of green bonds and in arranging the first corporate sustainability-linked loan, under which the interest rate is tied to sustainability performance.

Currently, 25 per cent of Acciona's funding is in the form of financial instruments linked to sustainability.

This article represents the views of the author and not necessarily those of the ICC or Coastline Solutions.