A Greener Future: VF Corporation’s Tax Fairness Investment in Renewable Energy Projects
In July 2022, VF Corporation launched the largest renewable energy tax equity investment in the footwear and apparel industry. This investment, which is expected to be completed within the next 6 months, will finance the development of four large-scale solar projects in South Carolina, which are expected to generate 47,000 MWh of renewable energy per year, or approximately 23% of the world’s electrical load. of VF for fiscal year 21. .
“VF’s recent tax fairness investment aligns with our commitment to fight climate change and increase our use of renewable energy,” shares Jeannie Renne-Malone, Vice President of Global Sustainability at VF. “We are delighted that this investment is good for business and good for the planet. We hope that investments like this and our first industry green bond will inspire other great companies in our industry and beyond to make similar financial investments for the betterment of people and our planet.”
For context, a fair tax investment is a transaction in which an investor leverages its balance sheet to fund a project or set of projects. In return, the investor receives a tax credit through their investment, which can become neutral or potentially cash flow positive, even taking into account the cost of the renewable energy certificates (RECs) generated. Investments in tax fairness are key to financing renewable energy projects. Without such investments, these types of sustainability projects would likely not be built at the same pace in the United States.
“We are very proud to have made the largest fiscal investment in renewable energy in the apparel and footwear industry,” said Matt Puckett, executive vice president and chief financial officer of VF. “We believe that financial and environmental stewardship are not mutually exclusive. It’s an example of the ideal scenario, when forward-looking financial investments help us move forward toward our scientific goals while meeting our business needs.
Investments in tax fairness are possible through ambitious public policies that support renewable energy. For example, this type of operation could only be executed thanks to the investment tax credit (ITC). While ITCs have been available for years, the recently passed Inflation Reduction Act (IRA) extends these tax credits and incentives for investing in sustainable development and green energy projects for 10 years. It’s a perfect example of why public policy is essential and an important lever to help companies successfully achieve their sustainability goals.
In total, VF is investing nearly $17.7 million in cash for these four South Carolina solar projects, collectively known as Iris 4. In addition to environmental benefits, Iris 4 aims to create 229 jobs between construction and operational management. The financial investment partner for these projects is the US Bancorp Community Development Corporation (USBCDC), the tax credit division of US Bank. This is the first time that VF and US Bank have worked together to develop and finance a solar project.
“Solar tax capital investments are growing in popularity among non-traditional investors, including companies like VF“, said Erica Garry, who specializes in tax fairness syndication in solar projects for USBCDC. – and a strong commitment to sustainability, fighting climate change and protecting people and the planet, we are delighted to help VF add renewable energy to its portfolio. »VF’s tax equity investment is the second largest in the apparel and footwear industry and one of approximately 30 non-financial companies to complete such a deal. We hope that tax fairness investments will become more common and continue to be important tools used to finance and develop renewable energy.