Taking sustainability to the next level - step by step

Mr. Waldegger, how did the idea of developing sustainable financing in the form of an ESG-linked Schuldschein loan together with RBI come about and how successful was the transaction?

The collaboration between PALFINGER and RBI already existed before my time, but the joint ESG journey began in 2021, where we first held advisory discussions on potential sustainable financing solutions, ESG KPIs and CSRD reporting requirements. These eventually led to our first ESG KPI-linked loan with RBI for EUR 85m in March 2022, followed by an ESG KPI-linked interest rate swap to hedge rising interest rate risks. This was the first ever ESG KPI-linked swap for an Austrian company, a true first in terms of sustainability.

The journey finally continued with a transaction in 2023 and this year in March with the successfully placed ESG KPI-linked Schuldschein loan in the amount of EUR 160 million, with RBI acting as joint lead arranger. The Schuldschein loan was issued with a marketing volume of EUR 100 million and offered maturities of 3, 5 and 7 years with fixed and variable interest rates and was linked to ESG KPIs such as the reduction of CO2 emissions (Scope 1-2) and the reduction of the accident rate. The transaction was three times oversubscribed and met with enormous investor demand, resulting in an increase to a total volume of EUR 160 million. 

How does the current financing fit in with Palfinger's sustainability strategy?

Even before the coronavirus crisis, we had already decided to raise any significant financing as sustainable financing and also sought support from the banks. This also involved advising investors on their expectations with regard to sustainable structures, which KPIs are of interest to investors and which KPIs are considered ambitious by the market. We also benefited greatly from this partnership in close cooperation with our sustainability department, the Management Board and the bank's experts. 

In close cooperation with RBI, we started with the specific core issues of our company and derived the KPIs for our financing from them. This meant that we did not have to rely on a more general ESG rating as a measure of sustainability improvement, but were able to create our own structure in line with our sustainability strategy 

What hurdles and challenges were overcome in the financing process together with RBI?

One challenge was defining the KPIs, as there were sometimes different ideas within the banking consortium as to which sustainability targets we had to achieve. RBI always showed us a great deal of understanding for our business model and our growing sustainability strategy.

We know that the development of sustainability targets is a dynamic process. In our industry, we are dependent on many factors that we cannot influence directly, such as the motorization or electrification of trucks, which can then be equipped with our electrified products. This will probably also result in an expansion of the KPIs in the area of Scope3 to very ambitious but achievable targets, which will certainly also be seen by the market as a clear commitment to our sustainability strategy.

Our support team at RBI really listened to us and provided valuable input. The experts at RBI support us in successively adapting and expanding our sustainability targets and KPIs to the maturity of the market instead of insisting on hard targets, the achievement of which can only be influenced to a limited extent due to the dependence on external factors.

What advice do you have for other companies that want to implement sustainable financing?

Banks can not only provide profound expertise when it comes to setting up sustainable financing but can also generally draw on extensive know-how in the development of a sustainability strategy, the corresponding reporting and thus the entire sustainability framework, which has provided us with corresponding added value. I would therefore recommend every company to make use of the ESG consulting expertise of banks.

Why do you think RBI is a good partner for achieving sustainability goals together? 

One key point is, of course, delivery and performance on the product side. The corresponding trust in the decision-makers, but also the commitment to the customer relationship in good and challenging times, is a key factor in being seen as a core bank in the Group. Raiffeisen has always proven this in the past and this has resulted in a relationship of trust at both operational and top management level that is constantly maintained. This supports the business relationship in a way that we ultimately consider necessary for a core bank.

As a global market leader with an international, but also strong local production footprint in Austria, there is no getting around RBI, which is also a valued partner for PALFINGER with its network outside of Austria. 

For us, RBI is a perfect banking partner with whom we exchange views on strategic issues and who also demonstrates its high level of service and advisory expertise in the operational business on a daily basis through the support of highly qualified employees in customer care.

Thank you for the interview!