Vehicle leasing firm Zenith raises £475m for first green bond

Image: Zenith Group

Proceeds from the bonds will be spent to help Zenith integrate more electric vehicles (EVs) across its three divisions, which serve corporate clients as well as individual motorists. Zenith said in a statement that it is “experiencing strong consumer demand from EVs” from both corporate clients and its direct-to-consumer brand ZenAuto. It is notably a member of The Climate Group’s EV100 initiative.

Funding will be allocated to EV charging and maintenance as well as initial purchasing. All decisions about which initiatives can and cannot be financed through bond proceeds will be made through a green finance framework developed by Zenith and vetted by Sustainalytics. The decisions will be made by a newly-established Green Finance Working Group within the business, comprising professionals specialising in ESG, finance, legal and operations fields.

A key part of the green finance framework is alignment with Zenith’s commitment to delivering a carbon-neutral managed fleet by 2030 and a net-zero value chain by 2050. In total, the Leeds-based firm manages some 150,000 vehicles.

Proceeds from the bond will be spent within a two-year period. As well as raising the bond, Zenith entered into a new £65m revolving credit facility (RCF) without green provisions, to replace its existing credit facility.

Zenith Group’s chief executive Tim Buchan said: “Sustainability is a key aspect of our strategy and we are always looking at how we can reduce our own impact on the environment. This green bond will enable Zenith to remain at the forefront of sourcing and financing EVs to meet the record levels of demand from UK motorists for low-emission transport.”

According to an analysis from HeyCar, EV sales in the UK were up 76.3% year-on-year in 2021. Almost 191,000 battery EVs were registered last year, representing 11.6% of all new car sales. Hybrid cars represented a further 7% of all new car sales. Drivers of this trend include the upcoming ban on new petrol and diesel car sales, the introduction and expansion of clean air zones and the increasing price of road fuel. HeyCar is predicting that, by the end of 2022, EVs will outsell diesel in the UK. 

As well as for EVs, 2021 marked a boon for green bonds. The Climate Bonds Initiative revealed in January that it certified more than $200bn of bonds in 2021, from more than 220 issuers, marking a record high. Projects financed by these bonds included public transport expansion and decarbonisation, building retrofitting and low-carbon new-build homes.

Sarah George