How Iberdrola's Green Bonds Bolster Sustainable Procurement

Iberdrola, Iberia’s largest renewable energy infrastructure provider, has once again showcased its commitment to sustainability and innovation with the successful issuance of an €800m (US$864m) hybrid green bond in the Euromarket.

The funds raised will support renewable energy projects and bolster sustainable procurement practices, ensuring Iberdrola continues to lead the charge in climate-focused energy solutions.

The Bilbao-based utility giant’s bond attracted €3bn (US$3.17bn) in demand from more than 200 international investors, making the offering 3.75 times oversubscribed.

This strong investor interest highlights confidence in Iberdrola’s vision and the overall market for climate technology, even during challenging economic conditions.

The bond’s competitive coupon rate of 4.25%, the best Iberdrola has achieved in three years for hybrid transactions, reflects favourable market conditions and robust demand for green financial instruments.

Green financing for sustainable procurement

Iberdrola’s green bond issuance isn’t just a financial success—it demonstrates a strategic commitment to sustainable procurement.

By raising capital through green bonds, the company ensures its projects meet stringent environmental standards, extending sustainability efforts deep into its supply chain. The approach aligns its sourcing practices with its broader renewable energy goals, fostering collaboration with suppliers who prioritise environmental responsibility.

The funds will refinance renewable energy assets originally financed by a 2019 hybrid bond, maintaining a stable €8.25bn (US$8.72bn) hybrid stack. This strategy enables Iberdrola to fund projects that support decarbonisation while ensuring its procurement operations adhere to high sustainability criteria.

By prioritising sustainable procurement, Iberdrola not only reduces its environmental impact but also sends a strong market signal.

The bond’s 3.75 times oversubscription indicates confidence in Iberdrola’s ability to deliver on green initiatives and sustainable sourcing strategies. This market approval may inspire similar procurement approaches across the energy sector, encouraging the broader adoption of renewable and environmentally friendly practices.

“As a leading green bond issuer and renewable developer, Iberdrola supports sustainable finance to accelerate the energy transition, as well as any initiative to tackle climate change," comments Ignacio Galán, Executive Chairman of Iberdrola Group. 

Renewable energy and supply chain impact

The €800m green bond reflects Iberdrola’s ability to finance and scale its renewable energy projects while significantly influencing procurement practices. As it invests in wind, solar, and grid infrastructure, the company creates demand for sustainable equipment, materials, and services, reshaping supplier relationships across the renewable energy sector.

This approach impacts procurement in several key areas:

• Sustainable sourcing: Iberdrola’s procurement strategy prioritises suppliers who meet environmental criteria, ensuring materials are sourced responsibly with a lower carbon footprint.
• Renewable energy growth: The bond proceeds will fund new renewable projects, driving demand for green technologies and services.
• Financial flexibility: With the bond’s hybrid structure classified as 50% equity, Iberdrola gains additional flexibility to make strategic, large-scale procurement decisions for future projects.
• Market leadership: Strong investor demand reinforces Iberdrola’s position as a leader in sustainable procurement, sending a signal to the wider industry about the benefits of prioritising ESG-aligned practices.

By fostering partnerships with environmentally responsible suppliers, Iberdrola promotes the decarbonisation of its supply chain, contributing to the global energy sector’s transition to a low-carbon economy.

Iberdrola's self-belief and commitment to sustainability was summed up well by Rui Afonso, Managing Director of Iberdrola Portugal, in a recent interview.  

"We are active agents in the decarbonisation of industry," he said. "It is part of our corporate goals." 

A model for the green bond market

Iberdrola’s success with this bond is part of a broader financial strategy that has raised €6.6bn (US$7.19bn) in 2024 alone. This includes a €700m (US$740m) hybrid bond in January, a 335 million Swiss franc (US$369m) bond in June, and a £500m (US$634m) green bond in October, showcasing its ability to access diverse investor bases across global markets.

As sustainable finance continues to grow, with global green bond issuance reaching US$500bn in 2023 (a 15% annual increase), Iberdrola stands at the forefront of this movement. The company’s achievements reflect a bold vision for renewable energy, from decarbonisation goals to biodiversity initiatives and community engagement.

Iberdrola’s comprehensive strategy is key to its success:

• Decarbonisation: Carbon neutrality in Scope 1 and 2 by 2030 and net zero across Scope 3 by 2040.
• Sustainable investments: €100bn (US$105bn) invested in renewables, achieving a 6.5% capacity increase in 2023.
• Community impact: Strengthened relationships through contributions detailed in its Assurance Report 2023.

As Iberdrola continues to innovate in both finance and procurement, it sets a powerful example for the global energy sector.

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