Sustainable solutions for life
BayWa is an international trading company operating in the fields of energy, agriculture and building materials. In this thematic report, which is the first of a sequence of short notes on BayWa, we examine how the group is able to make a major contribution to limiting the effects of climate change by adapting both its strategy and internal operating processes. These adaptations help BayWa, its customers and its suppliers reduce their negative effect on climate change and their exposure to the potential impact of climate change. The group’s emphasis on a more sustainable business model is also helping it secure green investment, which is accelerating the growth of BayWa’s renewable energy business, creating a virtuous circle.
Sustainability drives the group’s strategic direction
While BayWa serves several defensive markets, they are not static. The group has developed new, strategically significant business activities as each of the segments evolves in response to the challenges presented by climate change. The clearest example of this development is the rapid growth of the renewable energy business. Although this business was formed as recently as 2009, it accounted for 37% of group operating EBIT in FY20. The Agriculture and Building Materials segments are also adapting their portfolios of products and services to provide more environmentally friendly options.Operations adapting to meet climate targets
BayWa has established a group-wide climate strategy with fixed objectives for reducing energy consumption and greenhouse gas emissions, all of which are intended to keep warming below 1.5°C in line with the United Nations’ target. The group achieved its first climate target during 2020 by meeting 100% of its electricity needs with energy from renewable sources. This helped it achieve a significantly improved climate rating from the Carbon Disclosure Project in 2021.Over half of borrowings covered by green financing
Since June 2019 the group has issued a €500m green bond to finance wind and solar parks, sold a 49% equity stake in its renewable energy business for €530m, signed an agreement for an environmental, social and governance (ESG)-linked syndicated credit facility of €1.7bn and placed a €350m bonded loan, also linked to its sustainability rating. More than 50% of BayWa’s borrowing portfolio is covered by sustainable and green financing products.
BayWa is a client of Edison Invesment Research limited
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