11 Sep 2018
EUR 100 million
Financial institutions and SMEs
Trends and regulations within sustainable finance are driven by the capital markets, especially the tremendous development of the green bond market. “Today we discuss sustainability in almost every investor meeting. As an issuer you clearly need to have a sustainability policy in place”, Lars Eibeholm, Head of Treasury, says. “The unit fits very well into treasury operations.”
The green bond market is setting the trend and sustainability is moving into the core of banks’ lending operations. For banks, it is seen as a competitive advantage to be among the first movers. For NIB, it is a question of showing leadership.
“Assessing and comparing environmental benefits has been an essential function here at NIB for the last two decades. The methodological framework is constantly being developed to meet best practice. It entails standards, benchmarks and criteria that the projects should meet in order to receive NIB funding”, says Eibeholm.
During 2010-2017, NIB analysed approximately 700 projects and the amount of funds allocated to projects meeting NIB’s environmental criteria is about EUR 9.5 billion.
The Sustainability & Mandate unit, which previously was part of NIB Lending, is responsible for assessing the sustainability of all projects that NIB lends to. The unit consists of eight analysts, of which five are environmental analysts, who rate each loan project according to sustainability and the degree to which they support NIB’s mandate of supporting the region's productivity and environment. These assessments are also the foundation for selecting the green bonds used in the NIB Environmental Bond issuance.
Committed to green
Since 2011, NIB has issued 19 NIB Environmental Bonds under its green bond framework.
“We believe the framework supports the goals of the Paris Agreement”, says Lars Eibeholm.
The Bank ranks as the largest Nordic green bond issuer. The latest NIB Environmental Bond, a 7.5 year long EUR 500 million, was launched 24 April and bought by more than 50 investors.
“We often bring our environmental analysts to meet our investors as they can provide deeper insight into how NIB assesses and measures the impact of the projects that we finance.”
In 2017, NIB expanded the impact reporting for its NIB Environmental Bonds to further meet reporting requirements from green investors. This development work will continue in 2018. The metrics reported include greenhouse gas emissions, renewable energy capacity and generation, added wastewater treatment capacity, and added green building areas.
Developing a sustainable financial system
In recent years, NIB has started an ex-post assessment procedure to monitor the actual benefits achieved from its many years of lending. These assessments provide valuable “lessons learned” for NIB’s methodology and for sharing with clients and other stakeholders.
“Given our extensive experience in dealing with sustainable finance, we believe NIB can contribute to the development of a sustainable financial system and a low carbon economy. In 2017, NIB acted as an observer to the High-Level Expert Group (HLEG) on Sustainable Finance for the EU Commission. We are therefore quite keen to continue our work in the Green Bond Principles’ Executive Committee”, says Eibeholm.
The voting period for the Green Bond Principles’ Executive Committee membership is 21 May to 8 June.