A group of the largest Nordic public sector issuers have published updated green bonds reporting guidance, introducing revisions to critical metrics for quantifying impact and new recommendations to reflect recent market developments. The Nordic Position Paper on Green Bonds Impact Reporting, now in its fourth edition, was first introduced in 2017.
– For sustainable bonds to retain and strengthen their credibility as useful tools to finance the transition, it is of importance that market participants undertake issuance and reporting in a diligent and transparent manner, says Björn Bergstrand, Head of Sustainability at Sweden’s Kommuninvest and coordinator of the Nordic cooperation.
The Nordic public sector cooperation on harmonizing and advancing green bond reporting practices date back to the nascent days of green bonds issuance in the Nordic countries. Developed as a practical user guide and “first-point-of-entry” for issuers, the paper was first launched in 2017 and subsequently updated in 2019 and 2020.
The material changes in the 2024 update include revised emission factors for electricity and district heating, as well as recommendations for vintage reporting, look-back/allocation periods, regulatory referencing and ESG strategy and risk management.
Mikko Noronen, Sustainability Manager at Finland’s MuniFin, says the emission factor for electricity is a key assumption when calculating the environmental impact of projects financed.
– Deciding on a joint approach for estimating the impact of electricity used, reduced, avoided, or produced has been one of the important tasks of the group. In this update, the group revised the emission factor downwards to reflect the development in the energy sector and adding clarity on possible alternative reporting methodologies.
The new emission factor for electricity has been set at 191 g CO2e/kWh, compared with 315 g CO2e/kWh in the 2020 update. This reflects mainly the continuing and expected future decarbonization of the European energy system. The Nordic group has also aligned itself one step further with the calculation methodology adopted by the multilateral development banks.
The Nordic group has settled on a consequential approach (“project method”), with an emission factor based on the European grid, however excluding Cyprus which is not connected to the EU grid while including the UK and Norway who are connected. The rationale is the Nordic energy system’s interconnectedness with Europe.
In essence, a green project that reduces the use of electricity or adds new capacity from renewable energy sources will increase the net export of clean electricity from the Nordic energy system to continental Europe. Issuers may choose to calculate impact also on the basis of an attributional/accounting method but are in such cases encouraged to include information to facilitate comparisons.
Developed with the primary aim of assisting Nordic public sector issuers in reporting on the environmental impacts from their investments, as well as to harmonize reporting methodologies to the benefit of green bond investors, signatories welcome that the Position Paper is used by issuers also in the private sector.
– The objective here is to foster robust, transparent and pragmatic reporting practices for green bonds, addressing a multitude of perspectives including both allocation and impact reporting. Considering the importance afforded to green bonds by investors and policymakers, providing credible transparency is of the essence, says Venil Sælebakke, Climate and Green Finance Advisor at Norway’s Kommunalbanken (KBN).
About the Nordic Position Paper on Green Bonds Impact Reporting
The Nordic Position Paper proposes an outline for reporting environmental benefits of green bond investments. It also provides guidance on general matters such as to distinguish between reduced and avoided emissions, as well as to report impact in relation to disbursed green bond allocations.
The Paper has been developed by a group comprising public sector green bond issuers from the four Nordic countries Denmark, Finland, Norway and Sweden. They include the local government funding agencies Kommunalbanken (KBN, Norway), KommuneKredit (Denmark), Kommuninvest (Sweden) and MuniFin (Finland); the Swedish Export Credit Corporation (SEK); and a number of Swedish municipal or regional issuers including City of Gothenburg, the municipalities of Linköping, Lund, Norrköping and Örebro, as well as Region Skåne and Region Stockholm.
Crédit Agricole CIB, the Nordic Investment Bank and SEB are advising the group of issuers.
The Paper is available for download from the signatories’ web pages such as munifin.fi, kbn.com, kommuninvest.se, kommunekredit.dkand also from the ICMA Resource Centre for Green, Social and Sustainability Bonds, icmagroup.org.
Contact information
Secretariat for the Position Paper and main contact for questions & comments
Kommuninvest
Björn Bergstrand, Head of Sustainability, +46 708 86 94 76, e-mail: bjorn.bergstrand@kommuninvest.se
Spokesperson for Denmark
KommuneKredit
Guri Weihe, Head of Sustainable Finance, +45 3369 7643, e-mail: gwe@kommunekredit.dk
Spokesperson for Finland
MuniFin
Mikko Noronen, Sustainability Manager, +358 (0)9 6803 5666, email: mikko.noronen@munifin.fi
Spokesperson for Norway
Kommunalbanken (KBN)
Venil B. Sælebakke, Climate and green finance advisor, +47 977 47829, vens@kbn.com
