Kommuninvest updates its Green Bond framework

Kommuninvest, the Swedish local government debt office, has published an updated framework regarding Green Bonds issuance and green lending. The updated framework has been adopted by the Kommuninvest Green Bonds Environmental Committee, which mainly consist of independent environmental and energy specialists from the municipal sector.

Kommuninvest’s updated framework primarily reflects the new building regulations which have come into force since the framework was last updated in January 2016.

The 2018 framework sets the requirements for energy performance for the project category Green buildings and energy efficiency in relation to the Swedish Building Regulations BBR 25, instead of previously in relation to BBR 21. Furthermore, Kommuninvest has adjusted the requirement levels for superior energy performance of Green buildings relative to the building regulations. Kommuninvest has also adjusted the requirements for the sub-categories Major renovations and Energy efficiency measures in subsystems.

Overall, Kommuninvest estimates that the energy performance requirements for Green buildings in the new framework, in nominal terms and expressed in energy use per sq.m., on average are similar to the previous framework. Local requirements may however differ due to a changed geographical zone division introduced into BBR 25 compared with BBR 21.

The table below summarizes the new requirements for the project category Green buildings and energy efficiency.

 

Green buildings and energy efficiency – Requirements for energy performance in new resp. previous framework for green bonds  
Framework dated 7 March 2018 Framework dated 12 January 2016
Residential multi-family buildings 15% better than BBR 25 25% lower than BBR 21
Non-residential buildings 20% better than BBR 25 25% lower than BBR 21
Major renovations At least 30% lower energy use, or reaching BBR 25 requirements. At least 35% lower energy use, or reaching BBR 21 requirements..
Energy efficiency measures in partial systems At least 30% lower energy use At least 25% lower energy use

Among other changes is a clarification about the maximum proportion of fossil energy allowed in certain project categories (Kommuninvest does not approve investment projects that lead to a lock-in of fossil energy-based infrastructure).

The maximum share of fossil fuels in district heating projects is 10 percent (peat is treated as a fossil energy source). If fossil waste fractions are used for energy extraction the share of fossil energy is a maximum 20 percent. The maximum fossil energy component for public transportation is 20 percent.

In the framework, Kommuninvest has clarified its commitment to impact reporting for financed projects. Kommuninvest undertakes to report in accordance with the principles for impact reporting developed in 2017 by a group of Nordic public sector issuers of green bonds, led by Kommuninvest: Nordic Public Sector Issuers: Position Paper on Green Bonds Impact Reporting.

The updated framework has received a second opinion from the Norwegian environmental research institute Cicero and, similar to the 2016 framework, has received a “Medium green” shading. The Kommuninvest Green Bond Framework, as well as Cicero’s second opinion, can be found here.

As of March 27, 2018, Kommuninvest had granted more than SEK 27 billion in Green Loans to over 150 green investment projects in some 80 municipalities and county councils/regions. More information about the projects can be found here.

 

About Kommuninvest

Kommuninvest is a municipal cooperation for efficient and sustainable financing of housing, infrastructure, schools, hospitals etc. Together, we get better loan terms than each one individually. Since its inception in 1986, the Kommuninvest collaboration has helped lower the local government sector’s borrowing costs by many billion kronor. Currently, 288 municipalities and county councils/regions are members of this voluntary cooperation, out of a total of 310 Swedish local governments. With total assets of around SEK 360 billion (USD ~41 billion), Kommuninvest is the largest lender to the local government sector and the sixth largest credit institution in Sweden. The head office is located in Örebro.

 

Contact information

Björn Bergstrand, Head of Sustainability/Senior Investor Relations Manager,  tel: +46 (0) 708-86 94 76, e-mail: bjorn.bergstrand@kommuninvest.se