What? Neste – an oil refining and sustainable fuels company based in Finland – has issued four green bonds in the past four years. The first, issued in March 2021, was a €500 million, 7-year green or sustainable bond with a coupon of 0.75%. The bond offering was allocated to ~120 investors and listed on Nasdaq Helsinki. Neste issued three additional green bonds in 2023.22 Two, issued in March, were €500 million green bonds with 6-year and 10-year maturities, paying a fixed coupon of 3.875% and 4.250% respectively. In November 2023, Neste issued a €600 million green bond with 7.5-year maturity and a fixed coupon of 3.875%.23 How? To access the funds, Neste applied for the bonds to be listed on Nasdaq Helsinki and Euronext Dublin. In addition to the usual process for listing conventional securities, Neste needed to align with sustainable bond frameworks, go through a third-party review and publish annual reports regarding the projects or activities that the bonds finance.24To define those activities, Neste developed its own green finance framework to support (re-)financing of eligible assets and projects. Neste ensured compliance with leading principles such as the Green Bond Principles of the International Capital Market Association (ICMA) and the Asia Pacific Loan Market Association’s principles. Impact: The total value of €2.1 billion from the issue of these four green bonds is used by Neste to invest in the development, operation, maintenance and expansion of its renewable and circular solutions. The funds have allowed Neste to expand its production capacities in Singapore, Rotterdam and Martinez, California – financing the Optionality project, the Martinez Renewables Project to produce renewable diesel, and increasing SAF production capacity at the Rotterdam refinery.25The EU and China have developed extensive green taxonomies to define sustainable activities, including SAF use in aviation for climate goals. In addition, market-based taxonomies exist, but their recognition of SAF in terms of green investments varies. For example, SAF is in scope for the Common Principles for Climate Mitigation Finance Tracking, published by the International Development Finance Club (IDFC);20 however, the Climate Bonds Initiative Taxonomy does not recognize activities under aviation and bioenergy as sustainable.21 Green bond issuers typically commit to transparency and reporting to ensure the funds are used appropriately and achieve their goals around carbon emission savings. This might include regular updates on the amount of SAF produced and its lifecycle emissions and other environmental impacts. CASE STUDY 12 Neste’s €2.1 billion of green bond issuances What? In January 2023, Air France-KLM issued a sustainability-linked bond for €1 billion, linked to a goal to reduce their scope 1 and 3 emissions by 2025. SAF use is one of four levers defined in the bond issue. How? The airline first worked with SBTi to adopt an approved trajectory, which includes a target of 10% SAF use by 2030. The bond was linked to an intermediate goal of a 10% decrease in well-to-wake emission intensity based on tonnes of CO2-equivalent per revenue-tonne-kilometre (RTK), compared to a 2019 baseline. Before issuing the bond, Air France-KLM also built a sustainability-linked financing framework,26 which received a “best practices” alignment with principles spelled out in a second party opinion from Moody’s Investors Services.27 The bond was offered in two tranches: €500 million with a 3.3-year maturity and 7.25% coupon and a further €500 million with a 5.3-year maturity and 8.125% coupon. The bond was 2.6x oversubscribed, with asset managers taking over 70% across both tranches, and banks and hedge funds taking around 10% each.28 Impact: The bond issue showed that investors are eager to subscribe to bonds linked to clear, measurable goals within SBTi-validated trajectories. As it applied specifically to SAF financing, this bond issuance helped mitigate the counterparty risk that offtake buyers may bring, as it created a financial incentive to meet the goal through SAF, reducing the risk that buyers will exit an offtake agreement early. While Air France-KLM selects only fuels certified by RSB or ISCC, future bond issues by other issuers could explicitly include sustainability criteria to strengthen the attractiveness of the bond, if needed. CASE STUDY 13 Air France-KLM’s €1 billion green bond issuance Financing Sustainable Aviation Fuels 37

Financing Sustainable Aviation Fuels 2025