EGA launches Green Finance Framework, reveals first green loan facility

The Emirates Global Aluminium (EGA), the largest industrial company in the United Arab Emirates outside oil and gas, today published its Green Finance Framework to support decarbonisation projects and initiatives that contribute to the transition to a low-carbon economy. The company also revealed that its recent acquisition of European speciality foundry Leichtmetall was fully funded with EGA's first green loan facility.

A green finance framework defines eligibility and governance mechanisms for financing from third-party institutions and funds that prioritise sustainability in their capital allocation, among other sources.

Publishing the framework advances EGA's sustainability goals by enabling access to a more diverse range of funding options for loans and bonds, potentially lowering the cost of borrowing while ensuring increased transparency.

Citi and ING acted as the lead sustainability structuring banks, and First Abu Dhabi Bank (FAB) acted as the sustainability structuring bank to support EGA in the framework's development.

EGA has publicly committed to reaching net zero greenhouse gas emissions by 2050, which aligns with the UAE's Net Zero by 2050 strategic initiative.

Aluminium demand is expected to grow worldwide by between 50 per cent and 80 per cent by 2050. Recycled and low-carbon primary aluminium are expected to account for around 60 per cent of supply growth between now and 2030, and around 70 per cent of supply growth between 2030 and 2040.

EGA completed the acquisition of Leichtmetall in May. Leichtmetall uses renewable energy to produce up to 30,000 tonnes per year of aluminium billets at its plant in Germany, with secondary aluminium comprising some 80 per cent of the input material.

Abdulnasser Bin Kalban, Chief Executive Officer of Emirates Global Aluminium, said, "The aluminium EGA produces plays an essential role in the development of a more sustainable society. It is also important how sustainably it is produced. This is both an enormous opportunity and a significant challenge for EGA and our wider industry. Our Green Finance Framework enables us to access a deeper pool of liquidity to finance projects and initiatives that advance our decarbonisation goals. Our use of green financing for our recent acquisition of Leichtmetall is another first for EGA in our sustainability journey."

Separately, in 2023, EGA rolled out the first ESG-linked supply chain finance programme in the UAE's manufacturing sector to advance sustainability in its supply chain. The programme has provided some $73 million in financing to EGA's suppliers since October last year.

In 2022, EGA was among the first in the region to open sustainable corporate bank accounts, which ensure cash balances are used to finance or refinance sustainability initiatives elsewhere in the economy. Over the past 20 months, EGA has deposited some $76 million in total in these accounts, maintaining an average cash balance of $25 million.