Sustainability within SpareBank 1 SMN & the Alliance

Transcription

1 Sustainability within SpareBank 1 SMN & the Alliance

2 Norway s path towards sustainability BEEG: Baltic Energy Efficiency Group Vote in Favour of Emission Standards for Gas- Fired Power: to reduce imports of coal-fired electricity Ratification of Kyoto Protocol Funding for Energy Savings Measures (150m NOK) Klimaløftet: Governmental campaign for public awareness on climate change ENERGIX Programme NREAP: National Renewable Energy Action Plan Paris Agreement High-level panel on sustainable ocean economy More new EVs sold than new petroleumfueled cars Wind Power Production Support: Support scheme for wind power production ENOVA SF: responsible for implementing energy efficiency policy and programmes 2002 National Hydrogen Commission 2007 NICFI: Norwegian Government s International Climate and Forest Initiative UN-REDD: UN Collaborative Program on Reducing Emissions from Deforestation and Forest Degradation in Developing Countries KLIMAFORSK: Large scale programme on Climate Research Norwegian Action Plan for Biodiversity Rainforest Alliance Award Norwegian Climate Act Implementation of the 2030 Agenda for Sustainable Development We support Norway s ambitious target to be a leading sustainable society, given our status as a regional savings bank 2

3 Core values within the SpareBank 1 Alliance Human rights The external environment Employee rights and social conditions allow us to continuously reduce our impact on the environment and, in turn, contribute to a more sustainable future Criteria for suppliers Ethical guidelines 3

4 Sustainability governance within the Alliance SpareBank 1 Alliance has signed up for the United Nations Global Compact Ensures all 10 principles of sustainability are integrated in day-to-day operations SMN reports annually about corporate social responsibility and sustainability efforts based on the guidelines of the of the Global Reporting Initiative The Sparebank 1 Alliance is a member of the Norwegian Green Building Council The Norwegian Green Building Council, a part of the World Green Building Council, was established in 2010 to drive sustainability in the Norwegian built environment, primarily through the introduction of environmental rating tools SMN and the other banks in the Alliance, have developed a joint policy on sustainability for suppliers 2 The joint policy encompasses all four major areas of sustainability, including environmental factors The SpareBank 1 Alliance s asset manager and SMN Utvikling are guided by sustainability in their investments The SpareBank 1 Alliance s asset manager Odin is a signatory of the UN PRI (Principles for responsible investments) SpareBank 1 SMN Utvikling invests in projects designed to support a positive development of society. NOK 60m has been invested in infrastructure projects and venture funds.(gri 203-1) SpareBank 1 SMN (Trondheim) SpareBank 1 SMN is Ecolighthouse certified in Norway This is an initiative where over 5400 Norwegian companies, public institutions and other organizations have become certified and follow certain industry specific rules and principles to reduce their environmental impact. The EU recognised Norway s Eco-lighthouse arrangement in December 2017, meaning it complies with the ecomanagement and audit scheme (EMAS) in the European Union

5 At the heart of Central Norway s community We are the region s leading financial group and we are present in 42 municipalities. We want to contribute to society s value creation through responsible banking operations that give confidence to the people Savings bank We are a savings bank. This gives us the opportunity to be in step with people s lives and to give back to the local community: every year we share a portion of our profits with the local community Supporting local business and SMEs We have a responsibility to create growth and development in Central Norway and to support local businesses and small, medium and microenterprises in the region Donations We have defined donations as a strategic priority area and we return some of the profits to the society since Through the distribution of social profits, We support volunteerism, young talents, sports, theater Environment and procurement We work continuously to reduce our consumption of energy, paper and resource demanding travel. Our procurement policy requires all purchase contracts to include documentation of CSR Strong retail focus We develop sustainable banking products with the main purpose of ensuring good banking and focusing on developing customers advisers especially in the retail area Ethics and Diversity We operate following our strict ethical guidelines in terms of human rights, respect of the environment and anti-corruption. We strive for diversity with regard to ethnicity, religion, sexuality, gender and age 5 Source:

6 SMN s Sustainability Strategy Contribute to society s value creation through responsibly-minded banking operations Environment & Climate - Reduces bank s energy consumption of materials and energy - Certifies its offices as Eco-lighouse to reduce harm to the environment SMN aims to use CSR as a competitive advantage to boost innovation and contribute to the further development of Norway Ethical Management - Works on ethics and anti-corruption and implements strict guidelines - Promotes good corporate governance through ethical management Requirement on suppliers - Procurement policy requires all purchase contracts to include documentation on CSR - Requirements on financial suppliers are material to ensure responsible asset management Supporting the community - Focus on financing innovation, developing entrepreneurship & start-ups - Supporting the cultural development of the community with a special focus young people 6 Source: SpareBank1 SMN CSR Document

7 Green Bond Framework

8 SMN Green Bond Framework Highlights Rationale for structuring a Green Bond Framework Green Bonds contribute to global and national environmental objectives Close alignment with sustainability ambitions of SMN s corporate clients in Central Norway Contribution and alignment with the UN Sustainable Development Goals (SDG s) Highlighting SpareBank 1 SMN s sustainability strategy to capital market participants Green bonds will help to diversify SMN s investor base and to broaden dialogue to existing investors Addressing the call for more sustainable assets Addressing increasing demand for more sustainable assets by responsible investors Supporting customers environmental values SMN Green Bond Framework Highlights Use of Proceeds: Energy efficient commercial buildings (methodology from Nordic building consultant: Multiconsult) Sustainability certifications Sustainable Fisheries, Aquaculture and Agriculture (MSC, ASC, BAP and Global GAP certifications) Eco-efficiency lending (Eco-Lighthouse and Nordic Swan certifications) The Green Bond Framework adheres to the latest edition of the Green Bond Principles (June, 2018) 1 Sustainalytics has given a positive opinion on the Green Bond Framework 8 1 Published by the International Capital Markets Association

9 UN Sustainable Development Goals Contribution of the Framework to the SDGs Financing of sustainable fisheries, aquaculture and agriculture SDG 14 aims by 2025, to prevent and significantly reduce marine pollution of all kinds, in particular from land-based activities, including marine debris and nutrient pollution Finances loans for energy efficient commercial buildings in Norway The most energy efficient commercial buildings in Norway will only be considered, and the methodology is in line with the Climate Bond Initiative standard As per target 7.3, this will contribute to doubling the global rate of improvement in energy efficiency by 2030 As per target 11C, SMN directly supports the financing of green buildings Finances companies with selected sustainability certifications on products, processes or buildings Through the use of established eco-labelling schemes in Norway, SMN contributes to the prevention, reduction, recycling and reuse, of processes, which can be typically wasteful and not sustainable, as per target 12.5 In keeping with target 8.4, SMN is supporting the global endeavour to decouple economic growth from environmental degradation 9

10 The four pillars of the Green Bond Framework Project Management Use of Proceeds Evaluation & Selection of Proceeds Reporting The net proceeds of the Green Bonds will be allocated to a Green Loan Portfolio consisting of: Green buildings Lending to companies (mainly SME s) with selected sustainability certifications: Sustainable Fisheries, Aquaculture and Agriculture Eco-efficient and/or circular economy adapted products, production technology and processes Eligibility Criteria: Green Buildings: New or existing buildings belonging to the top 15% lowcarbon buildings in Norway 2 Certified buildings: LEED Gold, BREEAM or BREEAM- NOR Excellent and Nordic Swan Ecolabel Refurbished buildings with an improved energy efficiency of at least 30% 2 Loans to enterprises with selected sustainability certifications The proceeds of the Green Bond will be managed in a portfolio approach SMN will ensure that, at all times, the balance of Eligible Green Loans matches or exceeds the total balance of its outstanding Green Bonds SMN will remove from the Eligible Green Loan Portfolio the loans that cease to be eligible and replace them when necessary for the balance, as soon as reasonably practicable Reporting will be based on the Eligible Green Loan Portfolio, which will be aggregated for all outstanding Green Bonds Post issuance disclosures will cover both allocation and impact reporting Impact reporting available at issuance 10 2 In accordance with the methodology defined by Multiconsult

11 Use of Proceeds: Eligible Assets Project Management Use of Proceeds Evaluation & Selection of Proceeds Reporting Green Buildings Eligibility Criteria: New or existing commercial buildings belonging to top 15% low carbon buildings in Norway - Multiconsult s report 3 New, existing or refurbished commercial buildings which received at least one or more of the following classifications: LEED Gold, BREEAM or BREEAM-NOR Excellent, or equivalent or higher level of certification Nordic Swan Ecolabel Refurbished buildings with at least 30% improvement in energy-efficiency 3 Sustainable Fisheries, Aquaculture and Agriculture Eligibility Criteria: Companies with selected sustainability certifications on products, processes or buildings: Marine Stewardship Council (MSC) - international, independent and accredited certification for sustainably caught fish Aquaculture Stewardship Council (ASC) - international, independent and accredited certification for fish farming Best Aquaculture Practices (BAP) certification standard coordinated by the Global Aquaculture Alliance (GAA) for aquaculture companies Global G.A.P. - The Worldwide Standard for Good Agricultural Practices Eco-efficiency Lending Eligibility Criteria: Companies with selected sustainability certifications on products, processes or buildings: Nordic Swan Ecolabel Eco-Lighthouse 11 3 Multiconsult s report on commercial buildings is available on SMN s dedicated green bond website

12 [Kwh/m2] Project Evaluation & Selection: Green Buildings Project Management Use of Proceeds Evaluation & Selection of Proceeds Eligibility Criteria New or existing commercial buildings belonging to top 15% low carbon buildings in Norway, in accordance with the methodology defined by Multiconsult: Office buildings, retail buildings, industrial buildings and warehouses: Buildings finished in 2010 or later qualify (2 years lag is applied) Hotel buildings: Buildings finished in 2011 or later qualify (3 years lag is applied) New, existing or refurbished commercial buildings which received at least one or more of the following classifications: LEED Gold, BREEAM or BREEAM-NOR Excellent, or equivalent or higher level of certification Nordic Swan Ecolabel Refurbished buildings with 30% improvement in energy-efficiency Reporting SMN Green Commercial Buildings vs. Norwegian Average Average Energy Demand for Commercial Buildings in Norway Average Energy Demand for Commercial Buildings in SMN's Green Portfolio Distribution of Commercial Buildings complying with the Norwegian building code of 2007 (TEK07) and later codes: Retail Buildings: 5.1% Office Buildings: 5.1% Industry Warehouses: 13.9% Hotels: 6.8% This complies with and is well inside the Climate Bond Initiative s recommendation of 15% 50 0 Office buildings Commercial buildings Hotel buildings Small industry and warehouses 12 Note: All figures have been validated by Multiconsult ASA

13 Project Evaluation & Selection: Certifications Project Management Use of Proceeds Evaluation & Selection of Proceeds Reporting Eligibility Criteria: Enterprises must benefit from selected sustainability certifications on products, services or processes 1. Sustainable Fisheries, Aquaculture & Agriculture: MSC, ASC, BAP and GAP certification labels 2. Eco-efficiency lending: Eco-Lighthouse, Nordic Swan Ecolabel certification labels Given the GCP nature of such loans, SMN targets only impactful green activities: Pure play lending to enterprises which are expected to derive 90% turnover from certified activities (mostly SME s 4, but also larger enterprises) For SME s with <90% certified activities, SMN uses a proportional approach only the portion of turnover from certifications is eligible for the Green Loan Portfolio Certifications: Loan #1 Loan #2 Potential Green Loan ineligble loan Eligible Green Portfolio of certified Assets ineligble loan Loan #3 Eligible Green Certified Assets Green Loan Portfolio SMN adheres to the European Union s definition and categorization of SMEs:

14 Management of Proceeds Project Management Use of Proceeds Evaluation & Selection of Proceeds Reporting The proceeds of the Green Bond will be managed in a portfolio approach SMN flags green loans through an internal monitoring system Eligible Green Loans are already on SMN s balance sheet at issuance SMN will ensure that, at all times, the balance of Eligible Green Loans matches or exceeds the total balance of its outstanding Green Bonds SMN will remove from the Eligible Green Loan Portfolio the loans that cease to be eligible and replace them when necessary for the balance, as soon as reasonably practicable Eligible Green Loan Portfolio Green Bonds Outstanding 14

15 Reporting Project Management Use of Proceeds Evaluation & Selection of Proceeds Reporting Reporting will be based on the Eligible Green Loan Portfolio, which will be aggregated for all green bonds outstanding Allocation Reporting Impact Reporting Total amount of proceeds allocated to eligible loans Total amount of green funding outstanding Balance of unallocated proceeds or the amount of new financing and refinancing Estimated ex-ante annual energy consumption in KWh/m 2 or energy savings in MWh Estimated annual GHG emissions reduced/avoided in tons of CO 2 equivalent Breakdown of company lending per eligible certificate and other aggregated key impact indicators as provided by the certifying body SMN will make and keep readily available reporting on the allocation of net proceeds to the Eligible Green Loan Portfolio after a year from the issuance of the applicable Green bonds, to be renewed annually until full allocation The impact reporting on green commercial buildings will be produced in connection with the consultant: Multiconsult SMN will disclose the proportion of SMEs revenue that is certified, which will be used to match the respective proportions for inclusion in the Eligible Green Loan Portfolio Both allocation report and impact report will be made available via the SMN website, in addition to the Green Bond Framework and Sustainalytics s Second Party Opinion 15

16 Current Eligible Green Loan Portfolio SMN Current Green Loan Portfolio (February 2019) Green Buildings Portfolio [sq.m] 24% 34% 8.4 bn NOK total weighted average maturity 4,9 years 5% Office buildings Commercial buildings Hotel buildings 9% 37% Small industry and warehouses 17% 44% 5 largest type of eligble fisheries (MSC) 15% 33% Fishery quotas (MSC) Eco-Lighthouse 30% Commercial Real Estate Other MSC/ASC/GAP/Nordic Swan 17% 14% 21% Trawl / Whitefish Trawl / Whitefish Purse seine / Pelagic Trawl / Whitefish 85 % of the 4,4 bn. NOK fishery portfolio is financing of vessels and quotas and according to the MSC certifications The portfolio is dominated by the whitefish trawl segment (41%) and the purse seiner/pelagic trawl segment (31%). Coastal vessels constitutes 23% of the portfolio 16 Purse seine / Pelagic

17 Current Impact of SMN s Green Buildings 200,000 SMN s Green Building Portfolio [sq.m] 162, ,945 Performance of eligible objects in the portfolio compared to average building stock 150, , ,041 Number of buildings Area Reduced energy compared to baseline Reduced CO2- emissions compared to baseline 50,000 0 Office buildings Commercial buildings 25,921 Hotel buildings Number of objects Small industry and warehouses Area total [m²] Office buildings ,653 Commercial buildings ,945 Hotel buildings 5 25,921 Small industry and warehouses ,014 Sum ,533 Eligible portfolio of Buildings GWh/year tons CO2/year 6,700 tons CO 2 / year saved (vs. Norwegian average) CO 2 reduction per year equivalent to 2 The calculated average specific energy demand for the eligible assets is 190 kwh/m2. This is 45 % lower than the calculated average of the total commercial building stock of same categories 1,435 passenger vehicles driven for one year 15,512 barrels of oil consumed 36.6 railcars' worth of coal burned All figures are approximations Note: All figures have been validated by Multiconsult ASA

18 Sustainalytics second party opinion Pillar 1: Use of proceeds Sustainalytics opinion Sustainalytics can confirm that the SMN Green Bond falls within the category of a Green Use of Proceeds Bond The designated Eligible Green Loans provide clear environmentally sustainable benefits Confirmation of alignment with the Green Bond Principles 2018 Pillar 2: Process for Project Selection and Evaluation Sustainalytics confirms that there are transparent defined criteria for projects eligible for Green Bond proceeds Pillar 3: Management of proceeds SMN will appropriately manage the green bond proceeds using a portfolio approach and maintaining a register to track new and existing Eligible Green Loans and companies Pillar 4: Reporting Sustainalytics can confirm that SMN commits to publishing a comprehensive allocation and impact report annually until bond proceeds have been fully allocated 18

19 19 Appendix

20 KWh/m2 BRA KWh/m2 BRA KWh/m2 BRA Statistics on Norwegian commercial real estate (1/2) These graphs give theoretical values for representative models of an office building, retail/commercial building, hotel building and industry/ warehouse, calculated in SIMIEN and in accordance to Norwegian Standard NS 3031:2014 Calculation of energy performance of buildings Proportion of Norwegian commercial buildings complying with the Norwegian building code of 2007 (TEK07) or later codes: Retail Buildings: 5.1% Office Buildings: 5.1% Industry Warehouses: 13.9% Hotels: 6.8% Development in calculated specific net energy demand based on building code and building tradition Office Buildings % 5.1% Older TEK49 TEK69 TEK87 TEK97 TEK07 TEK10 TEK Industry/warehouses Older TEK49 TEK69 TEK87 TEK97 TEK07 TEK10 TEK Hotels % 6.8% Older TEK49TEK69TEK87TEK97TEK07TEK10TEK17 20 Note: All figures have been validated by Multiconsult ASA

21 Statistics on Norwegian commercial real estate (2/2) Share of energy demand compared to building year 21 Note: All figures have been validated by Multiconsult ASA