Green Financing Framework

voestalpine intends to allocate an amount equal to the net proceeds from the sale of any Green Financing Instruments to finance or refinance, in whole or in part, one or more new or existing Green Eligible Projects carried out by voestalpine directly, or any voestalpine steel and technology Group companies, subsidiary and/or affiliate. 

Green Eligible Projects may include the following types of expenditures:

• Capital Expenditures (CapEx)
• Operating Expenditures (OpEx), related to the maintenance of Physical assets and limited to the expenditures assessed as aligned with the EU Taxonomy Regulation. 

Projects can be considered as Green Eligible Projects in the following table as per two sets of Eligibility Criteria:

• EU Taxonomy Regulation criteria – applicable to all categories without exception: alignment with the applicable Technical Screening Criteria (TSC), encompassing compliance with Substantial Contribution Criteria (SCC) and Do No Significant Harm (DNSH) criteria of the relevant Activity and Minimum Social Safeguards (MSS) at Group level.
• Manufacture of Steel through the electric arc furnace (EAF) technology where greenhouse gas emissions reduced by the amount of emissions assigned to the production of waste gases do not exceed 0.266 tCO2e/t product for high alloy steel and 0.209 tCO2e/t product for carbon steel. Computation of compliance with the threshold based on a more realistic energy emission factor representing the actual market-based energy mix applied to electricity consumption forecasts. The greentec steel project is expected to be aligned with the EU Taxonomy Regulation related to high alloyed steel products but might not comply with the required thresholds regarding carbon steel products. This means that a certain percentage of the CAPEX will be fully aligned with EU Taxonomy Regulation.

To avoid any doubt, voestalpine considers greentec steel project based on EAF technology as an independent aggregate to take into account the credible and viable step-by-step transition to Net Zero, that will gradually replace blast furnaces by electric arc furnaces and lead to 30% absolute GHG emissions reduction by 2030 compared to the base year 2019. Other voestalpine sites considered in the Green Financing Framework are already aligned with EU 
Taxonomy Regulation as reported in the Group’s latest CR Report.

The coexistence of the two sets of Eligibility Criteria is a pragmatic approach, based on the over-performance of relevant carbon intensity benchmarks, to take into account the parts of the steel value chain where the Substantial Contribution Criteria of the EU Taxonomy Regulation are not fully practical or operational to date based on current market practices.  

Over time, as voestalpine advances towards the next phases of the 
greentec steel project detailed in the previous section, the Group aims to adapt the Framework to comply with the first set of criteria based on the EU Taxonomy Regulation on a best effort basis.  

voestalpine has established a clear and robust process for the project evaluation and selection under its Green Financing Framework with the oversight of the Green Finance Committee (the “Committee”).

In addition to the process for project selection and evaluation described above, any Green Eligible Project is to comply with the voestalpine proactive risk management mechanisms:

• Identify / analyze: Risk recording
• Access: Risk assessment
• Manage / control: Measures, action plan
• Document: Risk Report (internal, external)
• Monitor: Risk monitoring, risk control

Read more on the Process for Projct Evaluation and Selection [Link to Document]

voestalpine intends to be issuer of Green instruments and has established an internal tracking system, the Green Finance Register, to manage the proceeds from the Green Financing Instruments appropriately on a portfolio basis under the responsibility of the Green Finance Committee. The Treasury department will ensure operationally, that at any time the portfolio of Green Eligible Projects exceeds, or is at least equal to, the amount of Green Financing Instrument proceeds raised under the Framework.

voestalpine intends to use the proceeds to refinance disbursements in Green Eligible Projects occurring pre-issuance of Green Financing Instruments with a lookback period of up to 36 months and/or to finance Green Eligible Projects occurring post-issuance of Green Financing Instruments with a lookforward period of up to 24 months. 

Pending full allocation of an amount equal to the net proceeds of the Green Financing Instruments, proceeds may be temporarily invested/held in accordance with the voestalpine treasury management policy at its own discretion, in cash and/or cash equivalents, other liquid marketable instruments,and/or to pay back a portion of its outstanding indebtedness, etc. In line with voestalpine‘s treasury management policy, these proceeds are temporarily invested in liquid and marketable instruments such as cash or cash equivalents, as outlined in our framework. This strategy of temporary investment is deliberately designed to maximize flexibility and ensure that funds are promptly available for redeployment into suitable Green Eligible Projects as soon as they are identified and validated. It is important to highlight that voestalpine manages its liquidity centrally, consolidating most of cash at the group level before reallocating it to green projects. This centralized approach allows us to maintain stringent control over the allocation, enhancing our ability to support our sustainability goals effectively.

We strive to ensure that these temporary investments align with 
voestalpine‘s overarching principles of environmental and social governance. While we do not categorically exclude the funds from specific activities, our investment decisions are made with a keen awareness of their potential environmental and social impacts.

In case of divestments, ex-post deviation from the eligibility criteria or material ESG controversy, voestalpine will reallocate an equal amount of the proceeds to other Green Eligible Project(s) on a best effort basis as soon as practically possible once an appropriate substitution option has been identified and validated by the Green Finance Committee.

Read more on the Management of Proceeds [Link to Document]

For every 12-month period after entering into a Green Financing Instrument, and thereafter each year until the maturity of the Green Financing Instruments, or in case of material changes to the allocation, voestalpine undertakes to prepare and publish an annual Green Financing Report on its website to enable investors or lenders to track the allocation of the net proceeds of the Green Financing Instruments in the portfolio of Green Eligible Projects and the impact associated with such Green Eligible Projects.

Pre-issuance Opinion

voestalpine has appointed Moody‘s ESG (the “Second Party Opinion Provider”) to provide a pre-issuance Second Party Opinion with regards to the alignment of the Framework with the four components of the Green Bond Principles, as published by the ICMA in June 2021 (including the updated Appendix I of June 2022), and the Green Loan Principles, as published by the APLMA, the LMA and the LSTA in February 2023.
The Second Party Opinion is available on voestalpine’s website as well as on Moody's website. The link can be accessed through: www.voestalpine.com/greenfinance

Any material amendment to the Framework will be subject to an updated Second Party Opinion.

Post-issuance Opinion

voestalpine will commission its auditor or another qualified external verifier  with relevant expertise to provide a post-issuance external verification on the allocation reporting section of the Green Finance Report by way of a limited assurance on an annual basis and until the maturity of the bonds. The external verifier will verify the internal tracking and earmarking of proceeds of the Green Financing Instruments to Green Eligible Projects.