Budapest Airport Signs Green Financing Agreement

Budapest Airport Plc. has concluded its first ESG-based financing agreement, i.e. one that is responsible from an environmental, social and corporate governance perspective, which is unique among airports not only in the region, but also in Europe, a company press release says.

The operator of Budapest Airport is fully committed to ensuring sustainable operations, and is actively working to reduce its direct greenhouse gas emissions. The derivative agreement provides for a nominal interest rate swap of EUR 325 million.

ESG is an acronym for environmental, social and governance, and denotes a framework that enables investors and financiers to assess the activities of different organizations from a sustainability perspective, not only from a financial point of view. Eligibility for ESG financial products highlights the company’s commitment to sustainability, as well as other socially relevant issues, in its day-to-day operations. ESG-linked instruments can provide benefits in the form of lower financial costs (or “greenium”) for organizations that achieve ambitious ESG goals.

The EUR 325 million interest rate swap agreement concluded by Budapest Airport Zrt. has a term of 2.5 years. The company’s counterparties are BNP Paribas Hungary, which acted as coordinator and subscribed for EUR 200 million, and Crédit Agricole CIB. Rothschild & Co acted as advisers, and assisted with preparation and implementation. The financial objective of the contracts is to swap interest rates, i.e. the variable interest rate on the company’s senior loans for a fixed rate, which will give the company predictability in its interest payments. For Budapest Airport, the financial benefit of the agreement was a less important consideration than the long-term reference to the environmental performance of airport operations. The cost of these sustainability commitments far outweighs the financial benefits of the derivative agreement. Budapest Airport looks forward to future green financing opportunities.

Chris Dinsdale, the CEO of Budapest Airport highlighted that “with the newly signed, ESG-linked swap agreement, we have taken another step towards our goal of net zero carbon emissions for the airport by 2035. Over the past ten years, Budapest Airport halved its direct carbon emissions and cut its emissions per passenger to a third of what it was. As part of this agreement, we have committed, amongst other things, to meeting our full electricity needs entirely from renewable sources, the airport operator will develop a solar power plant with a minimum capacity of 5 MW and will install at least 100 new electric charging stations at the airport.” He added: “My colleagues are constantly working to explore new opportunities to even further improve our social responsibility, in order to make sustainable decisions during the operation and financing of Budapest Airport.”

Budapest Airport joined the 'NetZero by 2050' initiative of Airports Council International (ACI) in 2019, which is a commitment for the company to achieve net zero carbon emissions from its operations by 2050 at the latest. However, the company recently announced that it is working hard to reduce its net emissions to zero by no later than 2035, up to 15 years earlier than the current 2050 target date.