Sustainability & Responsibility
Sep 12, 2022

A Greener Future: VF Corporation’s Tax Equity Investment on Renewable Energy Projects

In July 2022, VF Corporation initiated 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 fund the development of four utility-scale solar projects in South Carolina, anticipated to generate 47,000 MWh of renewable energy per year, roughly 23% of VF’s FY21 global electricity load.

“VF’s recent tax equity investment aligns with our commitment to address climate change and increase our use of renewable energy,” shares Jeannie Renne-Malone, VF’s Vice President of Global Sustainability. “We are excited that this investment is good for business and the planet. We hope investments such as this and our industry-first green bond will inspire other major companies within our sector and beyond to make similar financial investments for the betterment of people and our planet.”

For context, a tax equity investment is a transaction in which an investor leverages their balance sheet to fund a project or set of projects. In return, the investor receives a tax credit through their investment, which can turn cash flow neutral or potentially cash flow positive, even when accounting for the cost of the renewable energy certificates (RECs) generated. Tax equity investments are critical to the financing of renewable energy projects. Without such investments, these types of sustainability projects would not likely be built at the same pace in the United States.

“We take great pride in executing the largest renewable energy tax equity investment in the apparel and footwear industry,” said Matt Puckett, Executive Vice President and Chief Financial Officer for VF. “We believe that financial and environmental stewardship are not mutually exclusive. This is an example of the ideal scenario, when forward-looking financial investments help us to advance progress toward achieving our science-based targets while also supporting our business needs.”

Tax equity investments are possible because of ambitious public policies that support renewable energy. For instance, this type of deal 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 sustainability and green energy projects for 10 years. This is a perfect example of why public policy is critical and is an important lever to help corporations successfully meet 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 is intended to create 229 jobs between construction and operational management. The financial investment partner on these projects is the U.S. Bancorp Community Development Corporation (USBCDC), the tax credit division of U.S. Bank. This is the first time VF and U.S. Bank have worked together to develop and finance a solar project.

“Solar tax equity investments are increasing in popularity among non-traditional investors, including corporations like VF,” said Erica Garry, who specializes in the syndication of tax equity in solar projects for USBCDC. “As a company with brands that are synonymous with the outdoors – like The North Face®, Timberland®, etc. – and a strong commitment sustainability, fighting climate change, and protecting people and the planet, we’re excited about helping VF add renewable energy to its portfolio.” VF’s tax equity investment is the 2nd and largest in the apparel and footwear sector and one of only about 30 non-financial corporations to complete this type of deal. We hope that tax equity investments become more common place and continue to be important tools used to finance and expand renewable energy.  

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