Zagrebacki Holding Sustainability-Linked Bond

Overview
Project Summary Document
Environmental and Social Documentation
Procurement
Complaints

Overview

The EBRD invested EUR 72.5 million in the Zagrebacki Holding's (the "ZGH") EUR 305 million sustainability-linked bond ("SLB"). The bond has a 5-year maturity and was issued to refinance the ZGH's existing EUR 305 million bond issued in 2016 and 2017, in which the EBRD also invested.

The bond will be listed on Zagreb Stock Exchange.

Project ID 54399

Status Signed

Location

Croatia

Business Sector

Municipal Infrastructure

Notice Type

State

Project timeline

Exploratory
Passed Concept Review
Passed Structure Review
Passed Final Review
Board Approved
Signed
Implementing
Completed

Company Contact Information

Marta Magic / Petra Arambasic
info@zgh.hr
+385 (0)1 6420 000
www.zgh.hr
Ulica grada Vukovara 41, 10000 Zagreb, Croatia

Project ID 54399

Status Signed

Location

Croatia

Business Sector

Municipal Infrastructure

Notice Type

State

Environmental Category

Approval Date

28 Jun 2023

Disclosure date

12 Jul 2023

As permitted by paragraph 2.6 of Section III of the Access to Information Policy, disclosure of this PSD was deferred in accordance with paragraph 1.4.4 of the Directive on Access to Information.

Project description

The bond will be listed on Zagreb Stock Exchange.

Project objectives

With its investment, EBRD supported the first SLB issuance by municipality / public sector in Croatia. The bond is aligned with the International Capital Market Association's (ICMA) guidelines for sustainability-linked bonds as verified independently by second party opinion provider. The bond will also support ZGH in improving the waste management practices and increasing a share of renewable energy consumption. The key performance indicators of the SLB are found to be relevant to the SLB principles and material. The Project supports local capital market development as well as ZGH's balance sheet restructuring, improving ZGH's resilience to external shocks and investment potential.

Transition impact

ETI Score:60

Project's transition impact derives from the following qualities:

Green: As a part of the Project, ZGH committed to implementation of the Sustainability Framework and Strategy, with the focus on two KPIs related to improvement in waste management and increase in share of renewable energy consumption.

Resilient: The Project contributes to the development of Croatian capital market by introducing a new instrument - the first municipality / public sector issuance of the SLB instrument on the local market. Given current market uncertainty, the Bank's participation further supports the Resilient quality by ensuring a successful placement of the bond, thereby helping to maintain investors' confidence in the local capital market.

Client information

ZAGREBACKI HOLDING DOO

Zagrebacki Holding, a limited liability company, is the largest utility company in Croatia providing water supply and wastewater collection services, solid waste management, roads maintenance, public surfaces maintenance, gas distribution, parking and other communal services to the City of Zagreb's population through a network of its branches and subsidiaries.

EBRD Finance Summary

EUR 91,500,000.00

EUR 72,500,000.00 invested.

Total project cost

EUR 305,000,000.00

Additionality

The EBRD's participation is additional as it contributes to closing the funding gap by investing in an innovative instrument, provides comfort to other potential investors, and supports relevant market standard for the ESG components of the SLB.

Environmental & Social Summary

Categorised B in line with the EBRD's 2019 Environmental and Social Policy. The Project is a capital markets transaction (sustainability-linked bond). The Bank's in-house due diligence was based on publicly available information, review of the past due diligence and reporting by Zagreb City where Zagreb Holding was also assessed as a beneficiary, and additional documentation provided by ZGH. The available information allowed for an assessment of the ZGH's E&S capacity and environmental and social risks of this Project in accordance with the Bank's Performance Requirements (PRs). The use of proceeds is focused exclusively on refinancing of the previous bond used for municipal purposes and will explicitly exclude any new high-risk or category A projects. ZGH's Sustainability Linked Bond Framework is in line with the requirements of the ICMA's 2020 Sustainability-Linked Bond Principles (SLBP), as verified independently by second party opinion from S&P Global. In this SLB framework, ZGH is committing to future improvements in sustainability outcomes within a 5-year period through (i) improving separate municipal waste collection and preventing it from going to the landfill, and (ii) increasing use of renewable energy such as biogas and distributed solar.

The ESDD has reviewed the status of compliance and the Client's approach to environmental and social governance (ESG) principles and E&S capacity to implement the Bank's PRs and focussed on a corporate-level review of the Client's management systems, ZGH's Sustainability Strategy and decarbonisation efforts, and its current compliance status. ZGH has corporate management systems in place for environmental management and occupational health and safety in line with international standards, and it is working towards gradual greening and decarbonisation. The Client also is committed to corporate social responsibility and is proactively aligning their practices with ESG requirements and sustainability reporting in line with EU CSRD framework. Internal institutional capacity of ZGH will be further strengthened by establishing and staffing a separate unit responsible for overall ESG sustainability management by the end of 2023. Overall, ZGH's operational practices are in compliance with the national regulations.

The Environmental and Social Action Plan (ESAP) has been developed and agreed based on the findings of the ESDD, to structure the project in line with EBRD PRs and includes requirements relating to corporate-level management systems, some improvements in existing working practices such as traffic safety, designing and implementing a Paris Agreement-aligned decarbonisation strategy in line with existing leading practice and guidelines, and SLB KPIs related measures. ESAP will be included in the Framework Agreement with ZGH and the City of Zagreb. The Bank will monitor ZGH's performance through reviewing annual reports prepared by the Client and published on its website.

Technical Cooperation and Grant Financing

n/a

Company Contact Information

Marta Magic / Petra Arambasic
info@zgh.hr
+385 (0)1 6420 000
www.zgh.hr
Ulica grada Vukovara 41, 10000 Zagreb, Croatia

PSD last updated

12 Jul 2023

Understanding transition

Further information regarding the EBRD’s approach to measuring transition impact is available here.

Business opportunities

For business opportunities or procurement, contact the client company.

For business opportunities with the EBRD (not related to procurement) contact:

Tel: +44 20 7338 7168
Email: projectenquiries@ebrd.com

For state-sector projects, visit EBRD Procurement:

Tel: +44 20 7338 6794
Email: procurement@ebrd.com

General enquiries

Specific enquiries can be made using the EBRD Enquiries form.

Environmental and Social Policy (ESP)

The ESP and its associated Environmental and Social Requirements (ESRs) set out the ways in which the EBRD implements its commitment to promoting “environmentally sound and sustainable development”. The ESP and the ESRs include specific provisions for clients to comply with the applicable requirements of national laws on public information and consultation, and to establish a grievance mechanism to receive and facilitate resolution of stakeholders’ concerns and grievances, in particular, about the environmental and social (E&S) performance of the client and the project. Proportionate to the nature and scale of a project’s environmental and social risks and impacts, the EBRD also requires its clients to disclose information, as appropriate, about the risks and impacts of projects or to undertake meaningful consultation with stakeholders and consider and respond to their feedback.

More information on the EBRD’s practices in this regard is set out in the ESP.

Integrity and compliance

The EBRD's Office of the Chief Compliance Officer (OCCO) promotes good governance and ensures that the highest standards of integrity are applied to all of the Bank's activities in accordance with international best practice. Integrity due diligence is conducted on all Bank clients to ensure that projects do not present unacceptable integrity or reputational risks to the Bank. The EBRD believes that identifying and resolving issues in the project assessment and approval stages is the most effective means of ensuring the integrity of Bank transactions. OCCO plays a key role in these protective efforts andhelps to monitor integrity risks in projects post-investment.

OCCO is further responsible for investigating allegations of fraud, corruption and misconduct in EBRD-financed projects. Anyone, either within or outside the Bank, who suspects fraud or corruption should submit a written report to the Chief Compliance Officer by email to compliance@ebrd.com. OCCO will follow-up all matters reported. It will review all matters reported. Reports can be made in any language of the Bank or of the Bank's countries of operation. The information provided must be made in good faith.

Access to Information Policy (AIP)

The AIP, which entered into force on 1 January 2025, sets out how the EBRD discloses information and consults with its stakeholders to promote better awareness and understanding of its strategies, policies and operations. Please visit the Access to Information Policy page to find out what information is available from the EBRD website.

Specific requests for information can be made using the EBRD enquiries form.

Independent Project Accountability Mechanism (IPAM)

If efforts to address environmental, social or public disclosure concerns with the Client or the Bank are unsuccessful (for example, through the client’s project-level grievance mechanism or through direct engagement with Bank management), individuals and organisations may seek to address their concerns through the EBRD’s Independent Project Accountability Mechanism (IPAM).

IPAM independently reviews project issues that are believed to have caused (or to be likely to cause) harm. The purpose of the mechanism is: to support dialogue between project stakeholders to resolve environmental, social and public disclosure issues; to determine whether the Bank has complied with its Environmental and Social Policy or the project-specific provisions of its Access to Information Policy; and where applicable, to address any existing non-compliance with these policies, while preventing future non-compliance by the Bank.

Please visit the Independent Project Accountability Mechanism webpage to find out more about IPAM and its mandate and how to submit a Request for review. Alternatively, contact IPAM by email at ipam@ebrd.com for guidance and more information on IPAM and how to submit a request.

Environmental and Social Documentation is not available for this project.

Selected procurement notices related to this project may be shown below. Further procurement opportunities related to this and other projects, if available, maybe be viewed in the EBRD Procurement Portal.

The EBRD's Environmental and Social Policy (ESP), Access to Information policy (AIP) and Project Accountability Policy (PAP) enable sound and sustainable development in its projects. The Independent Project Accountability Mechanism (IPAM) deals with complaints about environmental, social and disclosure matters related to the Bank’s investments.

No complaints about this project have been made so far.

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Zagrebacki Holding Sustainability-Linked Bond

Overview

Project timeline

Company Contact Information

Project description

Project objectives

Transition impact

Client information

EBRD Finance Summary

Total project cost

Additionality

Environmental & Social Summary

Technical Cooperation and Grant Financing

Company Contact Information

PSD last updated

Understanding transition

Business opportunities

General enquiries

Environmental and Social Policy (ESP)

Integrity and compliance

Access to Information Policy (AIP)

Independent Project Accountability Mechanism (IPAM)