How we calculate impact
NIB reports on the aggregated impact on productivity and the environment for different project categories, pro-rated to NIB’s share of financing.
General principles
Impacts of financed projects are estimated ex-ante according to a set of environmental and other sector-specific indicators and in line with the Harmonized Framework for Impact Reporting agreed with other IFIs under the Green Bond Principles. NIB finances projects in various stages of completion, therefore the ex-ante impact reflects information available to NIB at the time of NIB´s project assessment prior to signing the loan agreement. NIB bases the ex-ante impact estimates on the information provided by the client and on information available to NIB in official public data sources. On the best effort basis, data represents an average annual impact over the financed project’s lifetime.
When possible, the data provided by the client is benchmarked to similar NIB financed projects and verified using relevant sources. If the initial data provided to NIB is expressed as a range of estimate, the conservative end of the range is used for the purpose of impact reporting. The ex-ante impact estimates are not updated during the project execution or after completion. For projects in which it is not possible to come-up with sufficiently credible impact estimate, the impacts are not reported.
NIB reports reduced emissions based on direct reductions within the project financed, or alternatively indirect emission reductions in comparison with a baseline/alternative reference scenario. If a project partly replaces existing capacity or directly impact on the operation of other production units, only the difference in impact is reported. Alternatively, rehabilitated capacity numbers are reported. For carbon capture projects, annual carbon capture and permanent carbon mineralization capacity is used.
Aggregated impacts are pro-rated to NIB’s share of financing, i.e., disbursed loan amount divided by the total project cost, unless specified differently.
Limitations and exceptions
There are categories of projects/investments for which this impact reporting methodology does not apply and where a more limited set of impacts are reported if any. These categories include e.g. the lending green bond purchase programme, sustainability linked loans, response loans, intermediary lending to Financial Institutions, or projects of enabling nature (where direct impact is not precisely measurable, but they are facilitating the impacts upstream or downstream among the value chains).
Projects financed by NIB Environmental Bond (NEB) proceeds are reported on project-specific impact by NEB category. The impacts of financed projects are estimated ex-ante in accordance with a set of environmental and other sector-specific indicators and in line with the ICMA’s Harmonised Framework for Impact Reporting and additional specific indicators. See indicators used for NEB reporting that will be reported on a yearly basis.
NEB-projects that are EU Taxonomy-eligible need to comply with the relevant Technical Screening Criteria to be included in the NEB framework.
Measuring our impact
NIB’s financing activities generate impact through three channels:
Direct impacts
Activities and projects that cause a direct, measurable impact. This is what NIB reports with key metrics relevant to the impact achieved.
Enabling impacts
Activities and projects that enable an ultimate direct impact along the value chain. While the impact is not directly attributable to the activity itself, the activity is necessary for it to materialise.
Sustainability-linked impacts
Activities and projects where the impact is linked to the achievement of key performance indicators. The impact is more scattered across value chain and is measured in terms of fulfilment of the target.
Data for the installed capacity and predicted energy generation are provided by clients and/or are based on public documentation (for instance, permit documents, online data etc.). For intermittent renewable energy generation (e.g. wind power, solar power), the P90 estimate is used when possible, to mitigate uncertainty on the final generation and related climate impact.
Changes in energy use are estimated based on comparison of before and after investment, or if available using relevant baselines/alternative reference scenarios.
Greenhouse gas calculations are based on the Harmonized Approach to Greenhouse Gas Accounting, agreed with other IFI’s and coordinated by UNFCCC [1]. The EU grid emission factor for electricity, calculated as a combined margin (combination of built and operating margin), is used. For thermal energy, emission factors for the regional district heating system are utilized for calculation of changes in emissions. Emission factors for regional district heating systems are usually readily available online, alternatively we obtain information via the client.
For the comparison of added renewable energy or energy efficiency increase, the assumption of total final energy use in households of in amount of 18.6 MWh is applied, based on Eurostat data [2]. For the comparison of greenhouse gas emission savings the assumption of carbon footprint per capita in the NIB member countries in amount of 8 t CO2eq/a is used, based on Eurostat data [3].
For hydrogen production, designed production capacity of the facility is used for impact accounting. Hydrogen production, however, is not included in energy generation calculations and is accounted separately.
Heat recovery is accounted as additional energy generation only if it is produced from renewable energy sources.
[1] https://unfccc.int/climate-action/sectoral-engagement/ifis-harmonization-of-standards-for-ghg-accounting
[2] Statistics | Eurostat (europa.eu) – Number of households by household composition, number of children and age of youngest child [lfst_hhnhtych] & Complete energy balances [nrg_bal_c__custom_9343376]; Year 2021; Data for Denmark, Estonia, Finland, Latvia, Lithuania, Norway and Sweden
[3] Statistics | Eurostat (europa.eu) – Air emissions accounts by NACE Rev. 2 activity [env_ac_ainah_r2__custom_9344095] & Population on 1 January by age and sex [demo_pjan__custom_9344132]; Average of years 2020-2022; Data for Denmark, Estonia, Finland, Iceland, Latvia, Lithuania, Norway and Sweden
Impacts describing the investments into electricity networks are expressed as kilometres of networks (for lending impacts only). This information is usually provided by the clients and for larger projects can be validated in public documentation (for instance, environmental impact assessments and permits). The number includes both distribution and transmission networks including overhead lines and underground cables. Both extension and replacement of existing cables is accounted for where data is available from the client.
Renewable energy connected to the grid is expressed as connected capacity (MW), or where feasible, as volume of transmitted energy (GWh/a). Greenhouse gas savings are reported only for projects with energy efficiency gains within the system as such, not for indirect benefits arising from transmitted renewable energy.
Estimates of changes in transportation modes, based on best efforts, are expressed in transport kilometers for passengers or tons of freight. The associated greenhouse gas savings are calculated assuming the replacement of equivalent fossil fuel-based transports. The transport estimates are based on modelling conducted by the client. To validate client data and/or when client data is not available, NIB uses the Network for Transport Measures database [4], or equivalent data sources for estimating greenhouse gas savings.
Impacts for financed road/tracks infrastructure projects are provided in kilometres of roads/tracks built/renewed. The length of the road is not adjusted based on the number of lanes or the type of the road. Therefore, the impact number includes various types of roads – from light traffic roads in smaller towns, pedestrian roads and bike lines to high intensity highways connecting large cities.
Main indicator for wastewater projects is the added or upgraded treatment capacity presented as population equivalents (PE). One PE approximately equals the pollution load in household sewage produced by one person. The value of one PE is in general expressed as biochemical oxygen demand is 60-70 grams of oxygen per day (BOD5 or BOD7), depending on the applicable national standards for wastewater treatment. PE can also be based on the load of nutrients (phosphorus and nitrogen), when specifically targeting reduction of nutrient pollution (for instance, in case of industrial loads). When connecting new households to centralized wastewater treatment, the number of PE’s are estimated based on the number of additional persons being connected. Projects include expansion of existing wastewater treatment capacity or replacement of less efficient wastewater treatment solutions, e.g., collection infrastructure, connection of households to centralized plants or refurbishment of wastewater treatment.
Reduction of nutrient discharges due to upgraded wastewater treatment are based on comparison of nutrient load before and after investment, taking into account changes in treated wastewater flow and treatment efficiency.
Data on treatment capacity and incoming/outgoing pollutant load are provided by the client and documentation connected to the project, such as Environmental Impact Assessments (EIA’s), feasibility studies and environmental permitting.
Indicators for buildings include gross floor area constructed, certification level, and estimates for own carbon-neutral energy generation (solar or geothermal). These are provided by the client based on technical planning documents available at the time of project assessment.
For green building certification, initial scorecards are typically reviewed to ensure a high likelihood that the targeted certification level is achievable based on the gross certified area. For new green buildings, NIB does not report energy savings compared to energy use levels in the national building code.
Indicators for major renovations include the Energy performance certificate (EPC) class before and after renovation. These are provided by the client based on the technical planning documents available at the time of project assessment.
Impacts for fuel production and infrastructure include the calculated annual GHG emissions reduced or avoided, measured in kilotons per annum (kt/a). Additionally, the energy content is calculated using the formula: (energy content in fuel) x (production amounts). Greenhouse gas calculations and energy content in fuel and production amounts are provided by the client.
Impacts describing the investments into healthcare infrastructure are expressed in number for persons affected by the infrastructure. When possible, the number of people living in the potential catchment area of the healthcare facilities is provided by the client. To validate client data and/or when client data is not available, data on people living in the catchment area is obtained from official public source (e.g., national statistical office).
Impact of education infrastructure is expressed in number of pupils/students affected by the investments into the infrastructure (pre-schools, kindergartens, schools, universities). The numbers of pupils/students are typically provided by the client. In larger projects, we validate the numbers according to public documentation like education infrastructure development plans. Separate numbers are aggregated for university students given the different channels and magnitude of impacts of university studies compared to pre-school and primary education.
For R&D programmes the total loan amount and the number of R&D programmes financed is reported.
We also report number of employees working in R&D operations of the companies financed (only R&D full-time equivalent employees in Nordic-Baltic countries, not pro-rated to NIB’s share of project cost).
For loans to SMEs and onlending to financial institutions for the environmental projects only the total loan amounts and the number of programmes is reported.
Renewable energy
- Taxonomy Activity
- Taxonomy Substantial contribution criteria alignment
- Type of energy
- Renewable energy capacity (MW)
- Renewable energy capacity (New/rehabilitated)
- Increased renewable electricity generation (MWh/a)
- Increased renewable thermal generation (MWh/a)
- GHG emissions avoided (kt/a)
- Type of energy network (Transmission (above 220kV)/ Distribution/ Transmission + distribution)
- Increased renewable energy storge (MWh)
- Type pf storage
Sustainable fuel production & infrastructure
- Taxonomy Activity
- Taxonomy Substantial contribution criteria alignment
- Type of fuel
- Annual GHG emissions reduced or avoided (kt/a)
- Energy content (GWh/a)
Clean transportation
- Taxonomy Activity
- Taxonomy Substantial contribution criteria alignment
- Type of transportation or infrastructure (Rail/light rail & metro/bicycle lines/ electric vehicle/ stations or terminals/ ferries)
- Passenger-kilometres or tonne-kilometres
Green buildings
- Taxonomy Activity
- Taxonomy Substantial contribution criteria alignment
- Type of contribution (New/refurbishment)
- Type and level of green building certification
- Number of buildings
- Certified gross floor area
- EPC class (before renovation)
- EPC class (after project)
Water management and protection
- Taxonomy Activity
- Taxonomy Substantial contribution criteria alignment
- Wastewater collected and treated (PE value)
Climate change adaptation
- Taxonomy Activity
- Taxonomy Substantial contribution criteria alignment
- Reducing or avoiding weather-related disruption, damage
Sustainable technology innovation, sustainable manufacturing and carbon capture storage
- Taxonomy Activity
- Taxonomy Substantial contribution criteria alignment
- Annual GHG emissions (kt/a)
- Value chain regarding CCS (CCS/transport & storage/ transport/ Capture)
Sustainable thematic investments and impact reporting
The share of sustainable bond investments in the liquidity portfolio has increased over the recent years, reaching 13.9% of the bond holdings as of the end of 2024. NIB is now reporting the impacts enabled by those investments by using five widely used key performance indicators (KPI).
While impact data is provided by the issuers, it is collected, classified, and assessed by an independent sustainability adviser, MainStreet Partners. The contribution of each investment to the KPI’s is prorated based on its average holding period within the portfolio over the year. MainStreet Partners’ proprietary methodology is outlined, at a high level, in the methodological note.