In autumn 2017, NIB’s Funding team invited investors in the Bank's environmental bonds to visit projects that they finance. The most recent visit was to Fortum Värme’s combined heat and power plant in Stockholm, the world's largest power plant adapted for biofuel. The second stop was at Vasakronan’s green office building, under construction in Uppsala, which is aiming for the highest LEED sustainability rating Platinum.
It was the second annual NIB's Green Investor Event arranged by the Bank's Funding team.
“It was hugely interesting to see with my own eyes how sustainability is fully integrated in Fortum Värme’s and Vasakronan’s businesses. When you make visits like this, you get deep insights that are hard to get from just reading reports”, says Christina Strand-Wadsjö, Senior ESG Investment Specialist at SEB Investment Management.
NIB issues green bonds to attract investors who particularly want to help finance a more sustainable future. The Bank allocates the funds from its NIB Environmental Bonds (NEBs) to projects that have significant environmental benefits. NIB publishes detailed information on its website about its framework, environmental bonds and eligible projects.
“As an issuer of environmental bonds in the still-developing green bond market, being transparent with investors is of the outmost importance. By holding this event, investors get a chance to verify that NIB has indeed used the proceeds from the green bond as promised. It also allows investors the opportunity to ask the project owners questions directly. In addition, the project owners get to hear what is important for investors when they are considering what to invest in”, says Angela Brusas, Senior Funding Manager at NIB.
NIB’s SEK 1.4 billion (EUR 156 million) loan for Fortum Värme’s combined heat and power plant in Värtan is financed by NIB Environmental Bond proceeds. The NIB-financed project has an annual electricity output of 750 GWh and 1,700 GWh of heat, equalling the annual heat consumption of about 190,000 apartments in Stockholm. The biofuel-fired Fortum Värme project therefore contributes to significant reductions of fossil greenhouse gas emissions.
“I was impressed by the technology and construction at Fortum Värme. For me as a fund manager in the green space, I need both depth and good stories to share with my investors. I also think the discussions were interesting, showing that there are no simple solutions”, says Marianne Gut, Portfolio Manager at SEB Investment Management.
Peter Castrén, Head of Fixed Income at Local Tapiola Asset Management, said “It was definitely interesting to see such a state-of-the-art facility and how they use sustainable energy sources and minimise emissions”.
During the day NIB’s Senior Environmental Analyst Magnus Andersson gave a detailed presentation on how the mandate unit at NIB assesses and selects projects eligible to be funded by the proceeds of NIB Environmental Bonds.
“I really enjoy meeting the investors and appreciate their questions about our internal processes”, Andersson says.
NIB’s SEK 445 million (EUR 48 million) loan to Vasakronan for the construction of two green office buildings in Stockholm and Uppsala is also financed by NEB proceeds. One of these, nick-named “The Hub”, is located in Uppsala Science Park, close to Uppsala University Hospital, the Swedish Medical Products Agency and several other academic and research institutions. Upon completion later in 2017, the building will have a floor area of 12,850 m² and provide space for offices, laboratories and a conference centre.
The “Hub” is aiming for an LEED Platinum-certificate, following one of the world's most widely used green building cetification schemes to evaluate the sustainability performance of buildings. Among others, the LEED framework promotes energy efficiency, use of construction materials with low environmental impacts and building locations that minimises the need for transportations.
“An LEED Platinum building is a better business case than a conventional building due to the higher attractiveness among tenants, the lower operating costs and the reduced waste volumes from construction”, says Anna Denell, Head of Sustainability at Vasakronan.
Thomas Nystedt, Group Treasurer at Vasakronan, agrees, adding that “Our environmental work has made available sources of financing that would otherwise not be available to us.”
Peter Castrén says he found it “interesting to see how Vasakronan has increased the energy efficiency of their buildings, and the use of sustainable materials and how that increases their revenue”.
Kim Krokfors, Senior Manager, Origination at NIB, says that “sustainability issues have become more and more important in our discussions with existing and potential loan clients”, adding that “NIB’s loan originators are increasingly able to identify at an early stage the probability of a project passing not only the credit assessment, but also the Bank’s sustainability assessment”.
Marianne Gut explains that SEB Investment Management in general invests in green bonds if the risk level is right and the underlying green projects are “green” enough.
“We have an internal process for evaluating the underlying quality for our sustainable funds, and we also have a set of additional criteria and screenings at the issuer level”, Marianne adds.
Angela Brusas says that “having an open dialogue between green bond issuers, responsible investors and project owners helps in mobilising green funds.”
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