8 Nov 2018
EUR 104.75 million
Financial institutions and SMEs
The Funding team from NIB recently invited investors in its environmental bonds to visit projects they helped finance in Finland. The first stop on the tour is Vantaan Energia’s new waste-to-energy plant, which reduces the Helsinki region’s dependence on imported fossil fuels. The second visit is to S Group’s energy-efficient grocery distribution centre in Sipoo, which utilises geothermal and condensing heat.
“These projects clearly illustrate the power and the responsibility that big investors have in making investment decisions that help us do both well, financially and good for society”, says Sari Lintumaa, CEO of Zurich Global Corporate Finland.
“We are all exposed to issues such as climate change and social challenges. Following the money for seemingly little actions may be difficult, but it's worth it: these sites were proof points that we can all make a real difference.”
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. While the bond risk and yield return aspects of NIB’s bonds are well known to investors, the novel aspect is in analysing the impacts of NIB’s environmental bonds.
“This is why we think it is important to show our investors the actual outcome of their investment decisions”, says Lars Eibeholm, Head of Treasury at NIB.
Or, as a NEB investor put it, “kind of kicking the wheels"…
NIB’s EUR 64 million loan for Vantaan Energia Oy’s waste-to-energy plant is financed by NIB Environmental Bond proceeds. The cities of Helsinki and Vantaa own the company, which incinerates mixed household garbage from southern Finland to produce 920 GWh of district heat and 600 GWh of electricity a year. The energy produced reduces the use of imported fossil fuels and significantly decreases the amount of mixed waste sent to landfill.
Investors said the key things to take away from visiting Vantaan Energia are the transition to a better environment, going from coal to renewable sources of energy and reducing flue gases.
“It is impressive to actually see how Vantaan Energia monitor these flue gases, and also to learn how efficient Vantaan Energia and other waste-to energy plants are compared to other parts of the world”, says Philip Dencker Svendsen, Portfolio Manager at Danish pension service provider PKA A/S.
Pontus Soramäki, Portfolio Manager with Ålandsbanken Abp in Finland, says he appreciates the “hands-on evidence” of how NIB uses the funds raised through its NEBs.
“It makes me feel good as an investor to note that the funding is aimed at meaningful projects that in the long run will make our region a better place to live”, Soramäki says, adding that sustainable investments are an integrated part of Ålandsbanken’s investment process.
S-Group’s logistics centre
NIB’s EUR 125 million loan to S-Group logistiikkakeskukset Oy’s grocery distribution centre the largest of its kind in Europe, is also financed by NEB proceeds. The distribution centre is the size of 30 football fields and will, once it is finalised in August 2018, be packed with automated parcel handling equipment to be operated by some 600 logistics professionals.
The distribution centre is aiming for an “Excellent” rating in accordance with the BREEAM certificate, which is one of the world's most widely used environmental assessment standards to evaluate the sustainability performance of buildings.
To qualify, S-Group uses a geohybrid energy operation system, using geothermal energy from 300 wells drilled beneath the building, and wood chips to temporarily store heat in huge accumulators.
Centralising S-Group’s grocery logistics is expected to reduce the amount of transportation required, so the positive outcome of this NEB project is therefore the reduction in emissions of pollutants, the energy efficient building and the use of renewable energy.
“You read the environmental reports and know a project is good, but it is completely different to come here and experience it, to actually see that it works from a CSR perspective”, says Samantha Stephens, SRI Analyst with Mirova, the responsible investment subsidiary of Natixis Asset Management in France.
Peter Castrén, Head of Fixed Income at the Finnish firm Local Tapiola Asset Management, says that the key message for him was to get a feeling of what kind of projects NIB channels the “green money” into.
“When investing in green bonds, it is not due to a particular green mandate, but rather how the green aspect helps companies perform better, which leads to our clients having a better return on their investment over time”, Castrén says.