The 8-year bond has a volume of 500 million Euro and the annual coupon amounts to 3.250 percent. The proceeds of this tranche are intended to be allocated to green eligible projects, as described in the Green Financing Framework, published on August 23, 2024. This includes projects across four eligible green categories: clean transportation, renewable energy, energy efficiency and green buildings. The framework was evaluated by Moody’s Investor Services (Moody’s) in form of a Second Party Opinion. Moody’s assigned an SQS2 Sustainability Quality Score (very good), which confirms that the framework is in line with ICMA Green Bond Principles and LMA Green Loan Principles and also that it demonstrates a significant contribution to sustainability.

The 5-year bond has a volume of 600 million Euro and the annual coupon amounts to 3.000 percent. The proceeds of this tranche are intended for general corporate purposes, including the partial financing of the acquisition of the conventional rail signaling business of Alstom Signaling North America. In addition, parts of the proceeds will be used for the refinancing of existing liabilities maturing in 2025. 

Specifically, Knorr-Bremse has set targets of reducing its global production-related carbon emissions (Scopes 1 and 2) by 75 percent from its 2018 baseline by 2030. This means that Knorr-Bremse has once again significantly increased the 50 percent reduction target for Scope 1 and 2 emissions that was published already in 2019.

Furthermore, the absolute Scope 3 emissions from purchased goods and services, upstream transport and distribution, and the use of sold products are planned to be reduced by 25 percent from the 2021 baseline level by 2030.

The SBTi is a partnership between CDP, the United Nations Global Compact, World Resources Institute (WRI) and the World Wide Fund for Nature (WWF). It evaluates and validates the emission reduction targets that companies set based on the latest climate science.

The interest rate of the bond is linked to the achievement of a predetermined sustainability target. Knorr-Bremse has defined the target within a framework for sustainability-linked financing, called the Sustainability-Linked Bond Framework . Knorr-Bremse is committed to publish a Scope 3 emissions reduction target focusing on its value chain, approved by the Science-Based Target initiative. The framework was evaluated by ESG agency ISS Corporate Solutions (ISS) in form of a Second Party Opinion (SPO) . ISS confirms the ambitions and materiality of Knorr-Bremse’s targets and the alignment with common market standards. In case Knorr Bremse will not achieve the target, the interest rate will be increased by 20 bps. p.a., until the maturity of the bond. The proceeds of the issue are intended for general corporate purposes.

At the beginning of 2022 Knorr-Bremse already integrated sustainability elements into the syndicated credit and and is now expanding its financing instruments in this area by issuing a sustainability-linked bond.

EcoVadis is regarded as one of the world’s most prestigious providers of corporate sustainability ratings. Every year, the EcoVadis Sustainability Assessment closely scrutinizes companies’ sustainability performance in multiple categories, including environment, labor and human rights, ethics, and sustainable procurement. The assessment is based on information gathered from over 2,500 publicly available sources.

Further details of Knorr-Bremse’s sustainability initiatives and performance indicators can be found in our Sustainability Report 2021 .

Knorr-Bremse reduces CO₂ emissions

Knorr-Bremse’s Climate Strategy 2030 has set an ambitious target: to halve Scope 1 and Scope 2 carbon emissions from all Knorr-Bremse sites by 2030. This reduction will be achieved by leveraging three parameters: energy efficiency, in-house energy generation, and procurement of energy from renewable sources. Any unavoidable emissions that may remain once the company has reached its reduction target will be further reduced by using additional renewable energy, or otherwise offset by subscribing to Gold Standard climate protection projects.

As a result of intensive, ongoing investment in the three solutions described above, residual emissions were cut to 35,000 metric tons by the end of 2021. For comparison, in baseline year 2018, Knorr-Bremse sites were still generating a total of 133,000 metric tons of carbon emissions. Both production and service sites were responsible for a significant proportion of these emissions. The successful reduction was largely due to the use of green energy, which accounts for a steadily increasing share of Knorr-Bremse’s energy consumption. In 2021, 98 percent of the electricity supplied to Knorr-Bremse worldwide came from renewable energy sources, obtained through green-energy contracts or certificates. Since 2019, Knorr-Bremse has also implemented projects for saving 5,500 MWh of energy per year, and for expanding the Group’s in-house electricity generation capacity by 1,900 MWh per year.

In May this year, Knorr-Bremse will disclose selected Scope 3 emissions for the first time, together with information required by the TFCD (Task Force on Climate-related Financial Disclosures), in the Group’s Sustainability Report 2021.

Knorr-Bremse’s Climate Strategy 2030 acknowledged by CDP

In the latest assessment by global non-profit environmental organization CDP, Knorr-Bremse was awarded a “B” – Management Level – rating for its transparency and climate action initiatives. Every year, CDP adopts an investor’s perspective and evaluates the transparency of companies and cities worldwide with respect to their impact on climate change, deforestation and water security. Knorr-Bremse’s good CDP score reflects the transparency and effectiveness of Knorr-Bremse’s climate protection activities.

Further details of Knorr-Bremse’s climate actions and other key performance indicators may be found in the Group’s Annual Report 2021 .

Total energy consumption at Knorr-Bremse was reduced by 4.5 percent to 406 GWh in 2020 (2019: 425 GWh). To further improve Knorr-Bremse’s energy efficiency going forward, systematic potential analyses were conducted at selected sites. The energy efficiency measures implemented in 2020 at the sites in Acuña, Watertown, Suzhou, Aldersbach and Budapest will save 2,000 tonnes of CO₂ per year. Activities included replacing lighting systems, as well as waste heat recovery and insulation measures. The savings equate to approximately 3.8 percent of Knorr-Bremse’s global CO₂ emissions. Further energy audits are planned for 2021 to identify additional potential savings.

In its efforts to halve CO₂ emissions at its sites by 2030 – emissions generated by energy consumption at its production plants around the world and by its fleet of vehicles – Knorr-Bremse is focusing on three levers. The first concerns energy efficiency initiatives and the use of low­carbon fuels in heating systems and the vehicle fleet. The second involves investing in measures designed to increase the proportion of own-generated renewable energy at Knorr­Bremse sites. And the third relates to upping the share of renewable energy sourced externally through long­term power purchasing agreements, green energy products and certificates.

Offsetting projects certified to independent Gold Standard

“As an additional contribution to climate action, we have pledged to achieve carbon neutrality at our sites from the end of 2021,” adds Frank Markus Weber. “To this end, we’re going to be increasing the proportion of electricity from renewables that we use. And we are aiming to offset the residual unavoidable emissions in the amount of 40,000 tonnes of CO₂ by means of high-quality climate protection certificates. In this context, Knorr­Bremse has signed an offsetting agreement with the Berlin-based climate protection organization atmosfair gGmbH.”

Knorr-Bremse has selected two projects which reached the implementation stage early this year: the Clean Drinking Water project in Kenya and Tanzania, and the Efficient Wood Gas Stoves project in India. Both these carbon offset projects are certified to the independent and internationally recognized Gold Standard. These projects contribute to several UN Sustainable Development Goals (SDGs) on which Knorr-Bremse is focusing: SDG 5 “Gender Equality”, SDG 8 “Decent Work and Economic Growth” SDG 9 “Industry, Innovation and Infrastructure”, and SDG 13 “Climate Action”. The Clean Drinking Water project, run by local project partners Boreal Light GmbH and Waterkiosk Ltd, supports access to clean drinking water for rural households in Kenya and, in future, in Tanzania. In the second project, which is being implemented in collaboration with Sapient, the local project partner in Kolkata, low-income households in rural West Bengal are supplied with efficient wood gas stoves that can reduce firewood consumption by 50 to 60 percent. Reducing wood consumption also helps protect the mangrove forests of West Bengal. Both projects are being realized together with Knorr-Bremse Global Care.

Investing in own generation: new photovoltaic system in Huntington (USA)

In addition to the existing photovoltaic systems in Suzhou (China), Pune and Faridabad (India) and Munich (Germany), a new photovoltaic system will come on stream in Huntington (USA) in the course of this year. The new system will increase the own-generation of renewable energy at Knorr-Bremse from approximately 1,400 MWh/year to approximately 3,300 MWh/year. This will save around 1,000 tonnes of CO₂ per year, which equates to approximately 1.9 percent of Knorr­Bremse’s global CO₂ emissions in 2020.

As part of its climate strategy, Knorr­Bremse is also keen to purchase more renewable energy from external suppliers. In 2020, 86 percent of electricity was sourced from renewables. As in 2019, the Group’s Italian sites in Arcore and Buccinasco continue to purchase electricity from Italian hydroelectric and solar plants via green energy tariffs. Knorr-Bremse’s Austrian sites are supplied with Austrian hydroelectric power in line with a green energy tariff that came into force in 2020. Electricity generated from Spanish wind power with Guarantees of Origin (GoOs) was purchased for all other European sites. These certificates were generated by plants less than five years old. Green power with Renewable Energy Certificates (RECs) is also sourced for all Knorr-Bremse sites in China (Chinese International RECs), the USA and Canada (US RECs). The certificates from Europe and the majority of those from China are from non­supported power plants. The North American certificates are from supported plants and also carry the Green­e label.

The most recent CDP rating for Knorr-Bremse included Leadership level ranking in the fields of Governance, Emission Reduction Initiatives and Business Strategy & Financial Planning. The CDP score also reveals that Knorr-Bremse has further potential in terms of climate protection transparency, particularly relating to the publication of emissions figures for the upstream and downstream supply chain (Scope 3). This is an area in which Knorr-Bremse will continue to develop and introduce new measures going forward.

Every year, CDP evaluates the transparency of companies and cities around the world in relation to climate change, forests and water security, from an investor’s viewpoint. In 2020, more than 9,600 companies reported their data to CDP, which ranks participating organizations from ‘A’ (top rating) to ‘D-’. Companies that fail to provide information or provide only insufficient data are rated ‘F’.

In the context of its Climate Strategy 2030, Knorr-Bremse has set itself the goal of halving the Scope 1 and Scope 2 CO2 emissions at its sites by 2030. In concrete terms, this will mean reducing the CO2 emissions from the energy consumed by the company’s manufacturing sites worldwide and from the Knorr-Bremse vehicle fleet by 50.4 percent by 2030. This equates to an average reduction in CO2 emissions of 4.2 percent per year, compared to 2018 levels. These targets take their lead from the Science Based Targets initiative of the WWF and the Paris Agreement on climate change. In addition, from 2021, Knorr-Bremse will compensate for remaining emissions through carbon offsetting, in order to achieve carbon neutrality.

Further information on Knorr-Bremse’s climate protection activities can be found in the company’s 2019 Sustainability Report on pages 53-57: https://www.knorr-bremse.com/media/6000_medien/6400_publikationen/sustainability_report_2019-2.pdf