Telefónica agrees to include more women in executive positions in exchange for paying less for the debt

Telefónica announced this Thursday an agreement with 30 financial entities to refinance around a fifth of its debt, 5.5 billion euros, as reported by the group to the National Securities Market Commission (CNMV). With this, the Spanish company manages to extend its maturity by up to seven years. The group has made a commitment with the creditor entities to certain commitments in equality and in reducing their environmental footprint in order to reduce the final cost of these credits.

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The company explains that it will pay "conditional interest" on the fulfillment of two commitments. The first of these is environmental. The multinational chaired by José María Álvarez Pallete points out that this commitment affects both its own activity and that of its clients in other economic sectors. Specifically, it commits to reduce 70% of emissions in three years (until 2025) and by 2030 reach 80%. The company has previously announced plans to reach net zero emissions by 2040, but this is the first time it has linked these commitments to the cost of its debt.

The second of the commitments that the company acquires with the signing of the refinancing of its liabilities is to include more women in executive positions. The goal set by the group is that by 2027, Telefónica will have 37% of executive positions held by women. In its 2020 annual report, waiting for the 2021 report to be published in the coming weeks, Telefónica reported that women held 27% of management positions, despite being 38% of the workforce. In the longer term, in 2040, Telefónica sets the goal of making up 40% of executive positions. "The aim is to improve decision-making in the company's decision-making bodies by incorporating different points of view, to be more competitive while increasing female participation," the company argued in a statement.

The operation has had the support of about 30 financial entities, with an oversubscription —more demand than the money that was sought to be refinanced— of more than 30%. Among the entities that have participated are Natwest as Agent and BNP Paribas as sustainable coordinator, who have had the legal advice of Clifford Chance. The company defends that the agreement announced this Thursday, when the market had just closed, represents progress in its objective of increasing the group's sustainable financing. In the past, it has made various debt issues labeled as green and sustainable. The objective is that the liabilities financed in this way reach 10,000 million in the coming years.

From a more purely financial point of view, Telefónica manages to extend the maturity of 5,500 million euros of debt to five years, although it has clauses that would allow it to be extended for another two years. According to the group's accounts until September last year, the company's debt reached 25,000 million euros (29,900 million with leases) after having managed to reduce it significantly in the last year with operations such as the sale of its telecommunications towers to American Tower or the merger of its business in the United Kingdom with Virgin.

The company has just closed an agreement with the unions in the last days of 2021 to reduce its workforce in Spain by 2,982 people through a voluntary redundancy plan for older workers. Specifically, the plan affects the group of employees over 54 years of age and is added to the ERE that rivals Vodafone and Orange presented last year.


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