ENGIE Chile – tapping multilateral finance to support a just transition

The International Finance Corporation (IFC) has provided innovative financing to support ENGIE Chile’s ambitious energy transition, reinforcing the company’s social policies and processes to help ensure its transition is just and socially responsible.

Summary

• ENGIE Chile is embarking upon an aggressive decarbonisation programme, in close cooperation with its workers and policymakers.
• The company is committed to phasing out 1.5 GW of coal by 2025, through disconnecting 0.8 GW and decommissioning or converting 0.7 MW to run on natural gas or other fuels, and to developing 2 GW of supply from renewables.
• Facing challenging market conditions, in 2022 ENGIE Chile approached IFC to support its transition with an innovative green and sustainability‑linked loan, with coupon payments linked to decommissioning coal plants, building out renewables and promoting more women within the business.
• Although the transaction was not explicitly linked to just transition outcomes, it has helped enhance ENGIE Chile’s social policies and stakeholder engagement. The company has a just transition strategy based on three pillars: employment and training, local development and environmental management.
• The transaction will support both the company’s decarbonisation and clean energy employment opportunities for its workers.
• For the wider sustainable finance market, linking such transactions to just transition outcomes will be a crucial next step, although identifying metrics to measure success will be challenging.