ESG Finance: a new lending paradigm. by MIB Trieste School of Management

ESG – ENVIRONMENT SOCIAL GOVERNANCE Section 5

A NEW LENDING PARADIGM ESG lending ESG lending is taking center stage in the world of finance thanks to the recent growing accent by both Governments and economic agents on the topics of social and environmental responsibility

The framework for ESG financing and investing is still being developed and many financial agents still struggle with the practical implementation of the concept These difficulties are likely to create certain barriers for new-finance providers such as direct lenders with respect to banks, which are naturally more structured to deal with new regulation and act as monitoring agents of those rules Naturally, this process is not likely to last for very long as a better awareness of the ESG framework is shared among financial participants and it becomes common practice This section will review ESG products and highlight critical aspects of their implementation

Bespoke products Regulated products

Low regulation vanilla products

Regulated bespoke products

Regulated and ESG products

Barriers to entry

ESG DEBT CATEGORIES According to ICMA standards, ESG debt can be structured with (A) proceeds dedicated to specific projects, or (B) terms linked to the achievement of specific ESG targets defined at company level In (A), the loan/bond will be typically defined as Green, Social or Sustainable (combination of Green and Social projects) depending on the specific assets being financed In (B), while the specific targets to which the instrument's T&Cs refer to belong to Green or Social categories, the instrument is not related to a specific project and is therefore defined as a Sustainability-Linked Bond/Loan

ESG Categories

Bond/Loan

Green, Social or Sustainable Debt

structured

with

proceeds

dedicated to finance/refinance projects

defined

Sustainable

Green,

depending

specific

Social the

asset

categories they belong to

The main terms of the bond/loan are linked to

the

achievement

Green/Social

Sustainable

specific objective.

Typically:

In case of loans, the margin grid is based

SustainabilityLinked Debt

on the achievement of specific targets (usually more than one) In case of bonds, a coupon step up is envisaged

should

the

company

not

achieve the pre-defined target within a certain period of time

Climate change mitigation

Climate change adaptation

Green buildings

Energy efficiency

Natural resources conservation

Renewable energy

Pollution prevention and control

Clean transportation

Biodiversity conservation

Affordable basic infrastructure

Access to essential services

Food security

Green

Social

Project

Sustainable

UN’s Sustainable Development Goals

PROJECT BASED ESG BOND– ICMA GUIDELINES

1. Use of proceeds

Main ESG Categories identified by ICMA as shown in the previous slide could be linked to Green/Transition projects, Social projects or a combination of the two

2. Process for Project Evaluation and Selection

The Company that incurs in new ESG Debt should clearly communicate to creditors: Its environmental/social sustainability objectives Process by which the issuer determines how the selected projects fit within the eligible ESG Projects categories The related eligibility criteria applied to identify and manage potentially material environmental and social risks associated with the Projects

3. Management of Proceeds

The net proceeds of the ESG Debt should be tracked by the company in an appropriate manner and as long as the Debt is outstanding, the balance of the tracked proceeds should be periodically adjusted to match allocations to eligible Green, Social or Sustainability Projects made during that period The Guidelines recommend that a company’s management of proceeds be supplemented by an independent third party, to verify the internal tracking method and the allocation of funds from the proceeds

4. Reporting

Companies should make and keep readily available up to date information on the use of proceeds to be renewed annually until full allocation, and as necessary thereafter in the event of material developments The Guidelines recommend the use of qualitative performance indicators and, where feasible, quantitative performance measures (e.g. volume of water saved, renewable energy produced, avoided recourses waste, reduction of hazardous material used, number of jobs created etc.) and disclosure of the key underlying methodology used in the quantitative determination Companies should timely report to investors in the case of material developments

5. Documents to be produced

Green and Sustainable Debt Framework • Document that articulates the company's ESG positioning and strategy. It includes information on the possible eligible categories (as per the Green Debt Principles) encompassing the projects being financed as well as the company's internal ESG policies and reporting to the market. The framework refers to all the debt raised in an ESG format. It is usually drafted with the support of an investment bank acting as Green Structuring Advisor. Expected timing is 4/6 weeks Second-Party Opinion (SPO) • Drafted by the SPO provider which ensures that the projects being financed and the related Key Performance Indicators (“KPIs”) are in line with market best practices. Expected timing is 1 week

SUSTAINABILITY-LINKED BOND – ICMA GUIDELINES

1. Selection of KPIs

2. Calibration of sustainability performance targets (SPTs)

3. Debt characteristics

KPIs should be: i. Relevant, core and material to the company’s overall business, and of high strategic significance to the company’s current and/ or future operations ii. Measurable or quantifiable on a consistent methodological basis iii. Externally verifiable iv. Able to be benchmarked, i.e. as much as possible using an external reference or definitions to facilitate the assessment of the SPT’s level of ambition SPTs should be ambitious, i.e: i. Represent a material improvement in the respective KPIs and be beyond a “Business as Usual” trajectory ii. Where possible be compared to a benchmark or an external reference iii. Be consistent with the companies’ overall strategic sustainability / ESG strategy iv. Be determined on a predefined timeline, set before (or concurrently with) the issuance of the debt They can vary depending on whether the selected KPI(s) reach (or not) the predefined SPT(s), i.e. the SLD will need to include a financial and/or structural impact involving trigger event(s) (variation of the coupon being the most common example) The KPI(s) definition and SPT(s) (including calculation methodologies) and the potential variation of the SLD’s financial and/or structural characteristics are a necessary element of the debt documentation Companies that incur in SLDs should publish, up-to-date information on the performance of the selected KPI(s), including baselines where relevant

4. Reporting

Verification assurance report relative to the SPTs and the related impact, and timing of such impact, on the debt’s financial and/or structural characteristics Any information enabling investors to monitor the level of ambition of the SPTs Companies should seek independent and external verification of their performance level against each SPT for each KPI by a qualified external reviewer with relevant expertise , at least once a year

5. Verification

The verification of the performance against the SPTs should be made publicly available As opposed to the pre-issuance external review such as a Second Party Opinion, which is recommended, post issuance verification is necessary

6. ECB eligibility

On 22nd of September, the ECB signaled its support to innovation in the area of sustainable finance with the decision to consider eligible for both credit operations and outright purchases under the APP and the PEPP (provided that such instruments comply with all other eligibility criteria) those IG-rated bonds with coupon structures linked to certain sustainability targets Sustainability targets must be defined in accordance with EU Taxonomy Regulation and/or with UN Sustainable Development Goals (SDGs)

GREEN LOANS VS SUSTAINABLE LOANS (1/2) What is a Sustainability Linked Loan (‘SLL’)?

What is a Green Loan? Green Loans (‘GLs’) are any type of loan instruments made available exclusively to finance or re-finance, in whole or in part, new and/or existing eligible Green Projects that must bring a clear and tangible environmental benefit that can be measured, quantified and reported GL must align with the four core components of the Green Loan Principles (‘GLPs’) GL should not be considered interchangeable with loans that are not aligned with the four core components of the GLP

Sustainable Loans (‘SLs’) are loan instruments which incentivize the borrower’s achievement of predetermined sustainability performance objectives Borrower’s sustainability performance is measured using sustainability performance targets (‘SPTs’) which include: key performance indicators (‘KPIs’) and/or external ESG rating Unlike GL, Sustainability Loans can be used for general corporate purposes just like a traditional financing as SLLs look to improve borrower’s sustainability profile aligning loan terms (e.g. the margin) to the borrower’s performance against the relevant predetermined SPTs

Sustainable Project - Target Categories*

Green Project - Eligibility Categories*

Renewable energy Energy efficiency Pollution control

Clean transportation

prevention

and

Sustainable water wastewater management

Environmentally sustainable management

Climate change adaptation

Terrestrial & aquatic biodiversity conservation

Green Buildings

Eco-efficient products

Energy efficiency

Sustainable sourcing

Greenhouse gas emissions

Circular economy

Renewable energy

Sustainable farming and food

Water consumption

Biodiversity

Affordable housing

Global ESG assessment

*Indicative and non-exhaustive list Source: LMA Green Loans Principles, Sustainable Linked Loans Principles, Mediobanca

GREEN LOANS VS SUSTAINABLE LOANS (2/2) Project evaluation and Selection: The borrower of a GL should clearly communicate to its lenders: Their environmental sustainability objectives The process by which the borrower determines how its projects fit within the eligible categories

The related eligibility criteria applied to identify and manage potentially material environmental risks associated with the proposed projects Management of proceeds: The proceeds of a GL should be credited to a dedicated account or tracked in an appropriate manner to maintain transparency

Relationship to Borrower’s CSR strategy: The borrower of a SLL should clearly communicate to its lenders its sustainability objectives, as set in its CSR strategy, and how these align with its proposed SPTs Measuring the sustainability and setting targets of the Borrower: A borrower may elect to arrange its SSL with the assistance of one or more “Sustainability Coordinator(s) or Agent(s)” to negotiate the SPTs with the borrower. The latter may be encouraged to seek a 3rd party opinion as to the appropriateness of their SPTs as a condition precedent to the relevant SLL product being available.

Reporting: Borrowers should make and keep readily available information to be provided to those institutions participating in the loan at least once per annum. Principles recommend the use of qualitative and quantitative performance indicators and the disclosure of key underlying methodology and/or assumptions used. Review: The need for external review is to be negotiated and agreed between the borrower and lenders on a transaction-by-transaction basis. For loans with no publicly available information a qualified external reviewer is recommended. External reviews might include: Review of second party opinions by expert consultants Verification by auditors of ESG providers Certification against an external green assessment standard Rating by research providers or rating agencies In case no external review is sought, it is recommended that the borrower demonstrates or develops the internal expertise to validate the calculation of its performance through a self-certification. Taking into account confidentiality and competitive considerations, borrower should make public available the external review or the documentation about internal expertise via website or at the least communicate to institutions participating in the loan on request.

Source: LMA Green Loans Principles, Sustainable Linked Loans Principles, Mediobanca

ESG DCM MARKET – OVERVIEW & OUTLOOK ESG volume surged to new records in 1H21 accelerating the trend started in 2020 ESG global supply totalized USD 220bn in 2Q21 (more than 2x larger than 2Q20) reaching ca. USD 470bn in 1H21 and establishing a new half-year record with volumes almost 3x larger than 1H20 (and ca. USD 30bn shy of FY20 total) Such performance brought ESG supply to represent ca. 8% of the total global 1H21 volume, slightly less than the previous two quarters Such overall volume growth has been supported by outstanding quarterly volumes across all formats, with a particularly large contribution from SLBs – USD 94bn Green, USD 46bn Social, USD 49bn Sustainability and USD 31bn SLBs in 2Q21 As said, the main growth driver has been represented by SLBs, with 2Q21 supply reaching USD 31bn (vs. USD 9bn of 1Q21) supported by ambitious corporate agendas and strong investor demand. On the back of such positive dynamic, SLB volumes are now expected to top USD 100bn for the entire 2021 2021 outlook The overall ESG supply for the FY21 is now expected to easily overcome the USD 950bn figure, persistently supported by issuers across all sectors and regions continuing to explore how to add ESG features to their capital markets activities In terms of breakdown, Green bonds are expected to remain the main asset class, with USD 450bn of supply for the entire 2021. USD 200bn are instead expected from each of the Social and the Sustainability format. Finally, as already mentioned, USD 100bn are expected from SLBs Main trends for the upcoming months EU is set to remain at the forefront of the ESG market and regulation, with the new sustainable finance strategy published by the EC on 6th July placing a strong emphasis on reporting, disclosure and monitoring of ESG risks. Furthermore, the EC has recently put forward a legislative proposal to create a European green bond standard (EU GBS) and also proposed a draft report for enlarging the current EU Taxonomy to Social objectives (as of now, just environmental ones are included) – more details in sections 2 and 3 Access to the primary market with an ESG label actually turning from a “nice to have” to a “must have” faster than expected. In a not-so-far-future we expect investors to start discriminating issuers that (i) have not incorporated ESG features into their strategic plans and (ii) do not systematically approach the market with ESG transactions Increasing ESG concern also from “conventional” accounts with increasing issuers incorporating ESG considerations within their credit assessments

USDeq. bn

~ USD 200bn FY18

~ USD 325bn FY19

~ USD 500bn FY20

USD 470bn 1H21

12,0%

240 210

10,0%

180

8,0%

150 120

6,0%

4,0%

2,0%

30 0

0,0% 1Q18

2Q18

3Q18

4Q18 Green

1Q19

2Q19 Social

3Q19

4Q19

Sustainability

1Q20 SLB

2Q20

3Q20

ESG as % of global bonds

Sources: Bloomberg, Moody’s Sustainable Finance Report, ICMA, Mediobanca, September 2021

4Q20

1Q21

2Q21

TIMELINE FOR TAXONOMY’S REMAINING STEPS

Publication of the Delegated Acts These documents contain the technical screening criteria relating to climate change mitigation and adaption

Apr-21

Companies under NFRD need to disclose for activities related to climate change mitigation and adaptation covering the FY21 - publication in the course of 2022

Financial market participants need to disclose for activities related to climate change mitigation and adaption

Jun-21

By end-2021

Publication of the Delegated Acts

Specification of disclosure obligations for financial and non-financial companies

Technical screening will be released for the other environmental objectives

Delegated Acts and Screening Criteria

Sources: TEG Technical Report (Mar-20), Mediobanca, April 2021

Companies under NFRD need to disclose for activities related to all environmental objectives covering the FY22 publication in the course of 2023

By end-2022

Financial market participants need to disclose for activities related to all environmental objectives in periodic reports, pre-contractual disclosures and on websites

Obligations for financial market participants and large companies

A SELECTION OF ESG INVESTORS Norges Bank Aberdeen Standard Life

FRM

MS IM

Achmea

Affirmative

Insight

PGIM

Aegon

Amia

Invesco

Pimco

Aviva

JP Morgan AM

Sona

Blackrock

L&G

Standard Life Aberdeen

Columbia Threadneedle

M&G

T Rowe Price

Swedbank

APG AM PGGM

Degroof Petercam AM

BNP AM

La Mondiale

Assurances du Credit Mutuel

Amundi

Carmignac

Mirova

AXA IM

La Francaise AM

CaixaBank AM Renta 4 Santander AM

Allianz Global Inv.

DWS

ODDO BHF

Ampega/Talanx

First Capital Man.

Schroder IM

Bankhaus Lampe

Internationale Kapital.

Union Investment

Deka Investment

Lazard AM

Warburg

Deutsche Apotheker

LBBW AM

Donner & Reuschel

Merkur

Kepler

Uniqa

Raiffeisen

Volksbank

Anima

Fideuram Mediolanum / Mediolanum Vita

Bank J. Safra

UBS

Azimut

LGT

Vontobel

Eurizon

Swiss Life

Zürcher Kantonalbank

MEDIOBANCA'S DCM TRACK RECORD IN THE PUBLIC BOND MARKET & ESG [●]

October 2021

[●]

October 2021

September 2021

Triple-tranche SLB Notes

Undisclosed

Undisclosed € 500m 0.500% 6NC5 Senior Preferred Notes due October 2027

Joint Bookrunner & ESG Structuring Advisor

August 2021

Joint Bookrunner

July 2021

Inaugural SLB € 500,000,000 1.000% April 2034 Joint Bookrunner & ESG Structuring Advisor

June 2021

€ 300m 4.750% 10.25NC5.25 Subordinated Tier 2 due January 2032

Sole Arranger of the EMTN Programme /Joint Bookrunner

June 2021

Sustainability

September 2021

Dual-tranche Green Hybrid

€ 1,250,000,000 0.000% May 2026 € 1,000,000,000 0.375% May 2029 € 1,250,000,000 0.875% September 2034

Joint Bookrunner

September 2021

€ 500,000,000 Senior Green Notes 0.875% September 2031

€ 750,000,000 1.500% 60.5NC5.5 € 500,000,000 1.875% 60.5NC8

Dual-tranche Sen. Unsec. € 1,000,000,000 1.000% September 2027 € 850,000,000 2.000% September 2032

€ 1,000m 0.010% Covered bond due October 2028

€ 500m 0.750% 7NC6 Senior Non-Preferred bond

Joint Bookrunner

Bookrunner

Joint Bookrunner

June 2021

May 2021

Triple-tranche SLB Notes € 500m 0.050% Senior Preferred Bond due September 2027

Joint Bookrunner

May 2021

€ 1,800,000,000 Senior Unsecured Notes 0.125% May-26 0.750% May-31 1.500% May-41

Inaugural Green issue: € 500m 6NC5 Senior Preferred Bond due July 2027

€ 500,000,000 Sustainability-Linked Notes 0.625% July 2031

Joint Green Structuring Advisor & Joint Bookrunner

Joint Bookrunner

May 2021

€ 600,000,000 Senior Unsecured Notes 0.625% September 2028

Social Bond

€ 1,000m 0.750% 7NC6 Social Senior Non-Preferred due May 2028

Green Dual-Tranche $ 850,000,000 4.750% 10NC5 £675,000,000 4.500% 10NC5 Joint Bookrunner

€ 500m 1.713% Inaugural Sustainability Tier 2 Bullet Notes due June 2032

Joint Bookrunner

April 2021

€ 410,000,000 Senior Secured Notes 3.375% 5NC2

€ 500,000,000 Sustainability-Linked Notes 1.750% July 2031

Joint Bookrunner

March 2021

Joint Bookrunner

Dual-tranche Hybrid Notes € 1,250,000,000 1.375% PNC6.5 € 1,000,000,000 1.875% PNC 9.5 Joint Bookrunner

January 2021

€ 750m 0.010% Covered Bond due February 2031

Joint Bookrunner

March 2021

Inaugural Social issue: € 500m 1.375% 6NC5 Senior Preferred Bond due March 2027

€ 1,000m 0.125% 6NC5 Senior Preferred Bond due March 2027

Joint Bookrunner

December 2020

Dual-Tranche Sen. Secured € 830,000,000 3.750% 7NC2 € 450,000,000 3mE+400bps 7NC1 Joint Global Coordinator & Joint Bookrunner

February 2021

€ 1,000,000,000 Senior Unsecured Notes 1.875% February 2028

Joint Bookrunner

November 2020

€ 1,250,000,000 Senior Unsecured Notes 2.000% December 2028

€ 250m 2.300% 10NC5 Subordinated Tier 2 due November 2030

Bookrunner

Joint Bookrunner

February 2021

Triple-tranche Sen. Unsec. € 500,000,000 0.750% November 2026 € 750,000,000 1.250% January 2029 € 1,250,000,000 2.000% February 2033

Joint Bookrunner

November 2020

Senior Unsecured Notes € 500,000,000 0.750% June 2029

Joint Bookrunner

April 2021

Dual-tranche Sen. Notes € 1,050,000,000 1.625% 5NCL € 1,050,000,000 2.125% 8NCL

Dual-Tranche Sen. Notes. € 725,000,000 3.375% 7NC3 CHF 300,000,000 3.625% 5NC2 Joint Global Coordinator & Joint Bookrunner

Joint Bookrunner for the 8y tranche

January 2021

February 2021

Dual-Tranche Sen. Unsec. € 500,000,000 0.000% February 2028 € 500,000,000 0.500% February 2033

Dual-Tranche Transition € 500,000,000 0.000% August 2025 € 250,000,000 - Tap 0.750% June 2030 Joint Bookrunner

Joint Bookrunner

November 2020

€ 1,000,000,000 0.000% June 2027 € 1,250,000,000 0.500% June 2030 € 1,000,000,000 0.875% June 2036

Joint Bookrunner

April 2021

€ 500,000,000 Senior Unsecured Notes 1.750% April 2031

Joint Bookrunner

January 2021

€ 300,000,000 Senior Unsecured Notes 1.000% June 2031

€ 500,000,000 Senior Unsecured Notes 1.375% June 2030

€ 1,000,000,000 Senior Unsecured Notes 1.500% June 2028

Joint Bookrunner

April 2021

€ 300m 1.500% Senior Unsecured Bond due April 2028

€ 850m 0.000% Senior Unsecured Bond due April 2024

USD 750,000,000 Senior Secured Notes 4.125% 5NC2

Joint Bookrunner

Bookrunner

January 2021

€ 750,000,000 Green Hybrid Bond 1.875% 60.5NC5.5

€ 500,000,000 Senior Unsecured Notes January 2031

€ 600,000,000 Hybrid Bond 2.875% PNC6.25

Joint Bookrunner

November 2020

October 2020

March 2021

January 2021

€ 1,000,000,000 Senior Unsecured Notes 2.000% January 2030

Joint Bookrunner

October 2020

€ 600,000,000 Senior Transition Notes 0.000% December 2028

€ 500,000,000 Senior Unsecured Notes 0.250% December 2030

€ 300,000,000 Inaugural Green Bond 1.625% February 2029

€ 600,000,000 Senior Unsecured Notes 0.875% February 2031

€ 500,000,000 Senior Unsecured Notes 0.375% November 2032

€ 600,000,000 Senior Unsecured Notes 0.875% October 2027

€ 1,000,000,000 Senior Unsecured Notes 1.750% October 2030

Joint Bookrunner

Joint Bookrunner & Green Bookrunner Structuring Advisor

Bookrunner

Joint Bookrunner

Deals in the Energy space

€ 1,000m 0.625% 8NC7 SNP Green Bond due June 2029

ESG issues

MEDIOBANCA € 500M INAUGURAL SENIOR PREFERRED GREEN 7Y – SEPTEMBER 2027 Terms & Conditions September 2020

Inaugural € 500m 1.000% Senior Preferred Green Bond due September 2027

Issuer: Issuer Rating (M/S/F): Expected Issue Rating (M/S/F): Issue Type: Amount: Issue Date: Settlement Date: Maturity Date: Coupon: Spread: Re-offer Price: Re-offer Yield: Listing / ISIN: Minimum Denomination: UoP: Governing Law: Documentation:

Joint Bookrunner

Mediobanca’s role: Second Opinion Provider:

Book Analysis # of order s > 220

Total amount of orders > € 3.5bn

Breakdown by Investor Type Mediobanca S.p.A. Baa1(neg)/BBB(neg)/BBB-(sta) Baa1/BBB/BBBSenior Preferred Green € 500m 1 September 2020 8 September 2020 [T+5] 8 September 2027 1.000% MS+135bps 99.564% 1.065% Dublin / XS2227196404 € 100k +1k Refinancing Green Assets eligible under the Green and Sustainability Framework Italian EMTN Programme Sole Green and Sustainable Structuring Advisor &Joint Bookrunner ISS-ESG

Commentary Amount allocate d € 500m

 On Tuesday 1st of September, after having conducted a virtual roadshow (26-28 Aug) involving more than 65 investors, Mediobanca decided to tap the market with Oversub its inaugural Senior Preferred Green Bond .  The bond was issued under the newly established Green & Sustainable Framework, which was previously vetted by a second party opinion from ISS-ESG > 7.0x  The deal represents the issuer´s return to the market after the lockdown and is consistent with Mediobanca’s sustainability policy, which had been previously announced at the 19’-23’ industrial plan presentation  The size (€ 500m (no-grow)) and the tenor (7y) for the transaction were announced to the market the day before, on Monday 31st of August, following the feedbacks collected during the previous week. The following day at 9.00 CET, supported by numerous Indications of Interest from investors, IPTs were released at MS+165bps, implying a new issue premium of ca. 20/25bps vs. estimated fair value  The book grew quickly and by 10.30 CET a message was sent to the market to communicate the demand had already surpassed the € 1.5bn mark. Later, with a book size of more than € 3bn the guidance was published at MS+140bps area  The book grew even further and at 11.50 CET orders topped € 3.5bn, with final terms communicated at MS+135bps, crystalizing a negative NIP of ca. -5/-10bps and a spread reduction vs. IPTs of 30bps  The final book counted more than 220 geographically diversified accounts for a total size of more than € 3.5bn. International investors accounted for 85% of final allocations; lead by France (25%) and followed by Germany & Austria (15%), Italy (15%), UK (14%), Nordics (10%) and Spain (10%)  In terms of investor type, 61% was allocated to funds, follow by banks (25%), CB and OIs (10%) and insurance & pension funds (3%)  Relevant to highlight that there was a significant involvement of SRI investors 41

Central Banks and OIs 10%

Insurances & PFs Others 3% 1%

Funds 61%

Banks 25%

Breakdown by Geography

Nordics 10%

BeNeLux Others 2% 4% Italy 15%

Switzerland 5% Iberia 10%

France 25%

UK 14% Germany & Austria 15%

ENEL – NEW € 3.5BN SENIOR SLB TRIPLE-TRANCHE Main Terms & Conditions September 2021

SLB

New Senior SLB triple-tranche: € 1,250m 0.000% May-26 € 1,000m 0.375% May-29 € 1,250m 0.875% Sep-34

Issuer: Guarantor: Ranking and Format: Guarantor’s rating (S/M/F): Expected Issue Rating (S/M/F): Settlement: Size: Maturity: Early redemption options: Reoffer spread: Reoffer yield: Reoffer price: Coupon: Step-up margin: Step-up event: Docs / Law / Listing / Denom.: Use of Proceed: Mediobanca’s role:

Joint Bookrunner

Execution steps 09:50 CET

12:55 CET

Commentary 14:05 CET

Long 4 years IPTs ms+65bps area

Guidance ms+40bps area

Final Terms ms+35bps Book > € 3.5bn (pre-rec)

Long 7 years IPTs ms+80bps area

Guidance ms+55bps area

Final Terms ms+48bps Book > € 3.3bn (pre-rec)

13 years IPTs ms+100bps area

Guidance ms+75bps area

ENEL Finance International N.V. (Ticker: ENELIM) ENEL S.p.A. Senior, Unsecured, Reg S Bearer, NGN BBB+ (stable) / Baa1 (stable) / A- (stable) BBB+ / Baa1 / A28th September 2021 (T+5) € 1,250m € 1,000m € 1,250m Long 4 years (May-26) Long 7 years (May-29) 13 years (Sep-34) 1m par call (L4y) / 3m par call (L7y & 13y) / MWC / Clean-up Call (80%) ms+35bps ms+48bps ms+70bps 0.064% 0.388% 0.915% 99.702% 99.902% 99.512% 0.000% 0.375% 0.875% 25bps 25bps 25bps Direct GHG Emissions as of DecDirect GHG Emissions as of Dec-23 being above 148g/kWheq 30 being above 82g/kWheq EMTN / English / Euronext Dublin / € 100k+1k General Corporate Purposes and Refinancing of Outstanding Debt Joint Bookrunner

Final Terms ms+70bps Book > € 3.5bn (pre-rec)

On Tuesday 21st September, ENEL (rated BBB+ by S&P, Baa1 by Moody’s and A- by Fitch) approached the primary market with a new € 3.5bn senior unsecured multi-tranche Sustainability-Linked Bond issuance. The transaction, split among three different maturities (long 4, long 7 and 13 years), was successfully priced at ms+35bps, 48bps and 70bps (i.e. 30bps, 32bps and 30bps inside the IPTs, respectively) and represents the largest SLB ever issued Considering ENEL’s senior SLB curve as well as the size of the transaction, fair values for the three tranches were estimated at ms+32bps, 45bps and 60bps, implying a new issue concession of 2bps, 3bps and 10bps respectively The issuance was announced together with a tender offer on ENEL’s conventional USD-denominated notes maturing in May-27, Apr-28 and Jun-29. The maximum repurchase amount has been set at USD 1.5bn. Such liability management exercise has been launched with the main objective of optimizing the issuer’s debt structure not only in terms of overall interest cost, but also in relation with the particularly ambitious target set by ENEL to have ca. 50% of its debt in sustainable format by 2023 (>70% in 2030) As far as the new issuance is concerned, IPTs were announced around 10:00 CET at ms+65bps, 80bps and 100bps for a € benchmark size on each of the instruments. About 3 hours into the process, combined books were communicated above € 9bn. Such overwhelming demand from main European investors’ accounts allowed the issuer to release the guidance at ms+40bps, 55bps and 75bps (-30/32bps from IPTs), without WPIR wording Following such announcement, despite the aggressive tightening from IPTs, books continued to grow up to the north of € 10.3bn. On the back of such excellent response from the buy-side, the issuer has been able to further tighten 5/7bps, setting final terms at ms+35bps, 48bps and 70bps Further details and stats on investors’ distribution and breakdown are presented in the following slide

BPER BANCA € 500M 6NC5 INAUGURAL SOCIAL SENIOR PREFERRED BOND Terms & Conditions Social Bond

March 2021

Inaugural Social issue: € 500m 1.375% 6NC5 Senior Preferred Bond due March 2027

Issuer: Issuer Rating (M/F): Expected Issue Rating (M/F): Type: Size: Announcement Date: Settlement Date: Maturity: Optional Redemption date: Coupon: Spread: Re-offer Price: Re-offer Yield: Listing / ISIN: Minimum Denoms: UoP: Second Party Opinion Provider: Law: Documentation: Mediobanca’s role:

Joint Bookrunner

Breakdown by Investor Type BPER Banca S.p.A. Ba3 (neg) / BB (sta) Ba3 / BB Senior Preferred Social € 500m 25 March 2021 31 March 2021 (T+4) 31 March 2027 31 March 2026 1.375% MS+175bps 99.976% 1.380% Luxembourg / XS2325743990 € 100k + 1k The net proceeds will be allocated to Eligible Social Projects, such as Covid-19 related lending to SMEs, as outlined in the issuer’s Green, Social and Sustainability Bond Framework ISS ESG Italian law € 6bn EMTN Programme Joint Bookrunner

Transaction highlights

Others 4% CBs & Ois 13% AMs 58%

Banks & PBs 25%

Breakdown by Geography

BPER Banca S.p.A (BPER), further defining its commitment and strategy towards ESG aspects, successfully issued its inaugural bond off the newly presented Green, Social and Sustainability Bond Framework that obtained a Second Party Opinion by ISS ESG

Book Analysis # orders

Order Amount

Allocated amount

Oversub.

> 110

> € 1.25bn

€ 500m

2.5x

The Framework envisages several Social and Green eligible categories but the inaugural transaction focused exclusively on Social aspects to underline BPER’s extraordinary efforts to mitigate the pandemic effects on its client base

UK & Nordics Others 5% Ireland 3% Specifically the bond proceeds will be allocated to a selected portfolio of loans to SMEs which are 6% Germany covered by a government guarantee under the Liquidity Decree in response to the Covid-19 emergency

/ Austria / Switzerlan d 6% Taking into account the curve extension and the cost of the MREL call on one side and the benefit from the Social label on the other side, the bond priced close to fair value France 6% Despite the 25bps tightening from IPTs to landing, investors showed no pricing sensitivity and a few BPER’s Inaugural Social Bond – the first one in the Italian banking sector – was mainly issued for MREL purposes and the 6NC5 structure is a way to fully optimize this aspect

new accounts placed an order after the release of the guidance. Orderbook quality was very good and there has also been a strong participation of ESG investors

Italy 74%

IS ESG AN INVESTMENT FACTOR? ESG and the dynamics of factor investing ESG has become a significant determinant of investors’ choices when deciding allocation and weights of their portfolios The real question though is whether ESG is really a factor affecting the performance of investments, i.e. whether it has a true economic counterpart or whether it is merely a moral or fashionable obligation that finds no correspondence in the returns of ESG assets This topic is much debated and because of the relatively short-lived history of ESG investing it will take some more time to be able to discern the two aspects One thing is for sure, sustainable funds do achieve their ESG targets but very rarely have any significant outperformance with respect to others It could well be the case though that as ESG becomes more popular, it will impact the performance of non-ESG funds simple by triggering liquidation in some of those positions without impacting at all the real economic performance of ESG compliant issuers The truth is that, in some cases, being ESG compliant is even costly We have seen some examples of a few ESG debt issuances and in most of those the real benefit to issuing a standard instrument is limited to a handful of basis points

The trend is set, nonetheless, and we can surely expect to see more ESG issues around, they will also, slowly but surely, creep into the investment practices of direct lending funds who will then start to compete with banks even in this field

Q&A Section 6

REFERENCES Section 7

REFERENCES FitchRatings – European Direct Lending Perspectives, Q42020

AON – Understanding European Direct Lending, October 2018 CEPR – The bank business model in the Post-Dovid-19 World, 2020 EIB – Unlocking lending in Europe, October 2014 Journal of Financial Stability – Did the Basel Process of capital regulation enhance the resilience of European banks?, March 2019 Linklaters – Sustainability linked lending in the European leveraged lona market, 2021 European Commission – Overview of sustainable finance, 2021

DISCLAIMER The document has been drawn up by Mediobanca – Banca di Credito Finanziario S.p.A. (“Mediobanca”) and is addressed only to the recipient. The document contains, without claiming to be exhaustive, some preliminary remarks on a hypothetical transaction, which have to be evaluated by the recipient jointly with any verbal comments provided by Mediobanca. This document is being provided for information, promotional and marketing purposes only and does not represent in any way a public offer of financial instruments, investments advice, accounting, tax or legal advice, nor investments research; the document is merely indicative in nature, does not represent an offer to execute a contract and is not intended to create any obligation on or commitment for Mediobanca to provide any activity with respect to the financial instruments /transactions mentioned herein, or to take part to such transactions. Specifically, this document is not intended to represent the conclusive terms of any transaction or financial instrument, nor to notify the recipient with all the relevant risks, direct or indirect. The assumptions contained herein depend on current market conditions which may be subject to continuous variations; the validity of the assumptions and financial data represented herein is limited to short period of time. The information contained herein does not purport to be comprehensive and is subject to change without notice. This document has been drawn up on the basis of data and information which is in the public domain on which Mediobanca did not carry out either directly or indirectly any autonomous verifications, test and/or independent analysis. Information included herein has been selected within the scope and basis decided in good faith by Mediobanca. Such scope and basis, however, are not the only ones which might have been employed for the purpose of drawing up this document; accordingly the use of another scope and/or basis may lead, in good faith, to analyses and assessments that differ in whole or in part from those contained herein.

Any past result, back testing, forecast, projection, estimate or forward-looking statement contained in this document, as well as any information or evaluation derived therefrom is for illustrative purposes only and shall not be considered a reliable indicator of future performance. Mediobanca makes no representation or warranty nor accepts any responsibility with respect to the achievability of the forward-looking statements contained herein. The Bank disclaims any liability deriving from the use of data, information and evaluations contained herein. The solutions represented herein are addressed only to those who have the necessary knowledge and experience to enable them to evaluate the relevant risks and merits. The solutions contained herein may not be appropriate/suitable for the relevant recipient who shall in any case evaluate them on the basis of its own tax and legal situation. Mediobanca is part of a leading banking group whose affiliates are involved in a wide range of financial transactions, activities and investment services, for their own account and on behalf of customers which might represent a potential conflict of interests. Mediobanca adopted proper measures to identify and handle any potential conflict of interests. This document shall not be in any way reproduced, photocopied or duplicated, in whole or in part; nor transmitted or diffused to third parties other than the original recipient without prior authorisation from Mediobanca; it cannot be distributed or used by any person or entity in jurisdictions or countries where such use or distribution is contrary to laws or regulations. Mediobanca is authorized and supervised by European Central Bank (ECB), Bank of Italy and Consob, and is also subject to the supervision of the local authorities of the countries where it carries out investment services and activities. Mediobanca is deemed authorised and regulated by the Financial Conduct Authority under the Temporary Permission Regime. The nature and extent of consumer protections may differ from those for firms based in the UK. Details of the Temporary Permissions Regime, which allows EEA-based firms to operate in the UK for a limited period while seeking full authorisation, are available on the Financial Conduct Authority’s website. For further information, please consult the following website www.mediobanca.com.