How we create sustainable value to society
Kommuninvest operations serve to secure long-term, stable financing for members’ investments. Our view of sustainability originates in the values of the Swedish municipal sector. It is therefore consistent with the international framework of the ILO Fundamental Conventions, the OECD Guidelines for Multinational Enterprises, the UN Guiding Principles on Business and Human Rights, and the UN Global Compact.
1 Kommuninvest’s conditions
Kommuninvest i Sverige AB only lends money to the Swedish local government sector and its operations are guaranteed by the municipalities and county councils/regions that are members of the Kommuninvest Cooperative Society. The guarantee undertaking means that all members of the Cooperative Society guarantee all commitments to maturity. The members’ joint and several guarantee undertaking represents the precondition for the Company’s strong position in the capital markets.
The Company has the highest credit rating from both S&P Global Ratings
- At the end of 2017, 96 percent of Sweden’s municipalities and 55 percent of the county councils/regions were members of the Society.
- Every day, Kommuninvest employees help ensure that all parts of our operations are conducted as efficiently as possible.
- Well-established processes support us in our work.
2 Kommuninvest’s operations
Kommuninvest principal task is to finance the investments made within the Swedish local government sector – in manner that is sustainable in the long term and on as favourable terms as possible. We borrow money on the Swedish and international capital markets in order, in the next stage, to offer members stable and cost-efficient financing. To safeguard good capacity to meet payment commitments, the Company maintains a liquidity reserve of highly liquid fixed-income securities with exceptional credit quality.
- In 2017, Kommuninvest borrowed SEK 76 (104) billion. Total borrowing amounted to SEK 339 (344) billion.
- At the end of 2017, SEK 38 (60) billion was managed by Kommuninvest within the liquidity reserve, which corresponded to 12 (22) percent of the lending volume.
- At the end of the year, lending totalled SEK 310 (277) billion.
3 Kommuninvest’s direct impact
From a sustainability perspective, Kommuninvest’s main direct impact primarily involves how our operations affect the Company’s stakeholders and society through our loan financing, our responsibility for our employees, our local collaboration efforts and our direct environmental impact. Over the year, we focused in particular on reaching out to members with so-called “Green Loans”. In addition to lending, Kommuninvest also offers assistance and support to its members – this takes the form of, for example, advice and support during the credit provision process and through a web-based debt management system that markedly facilitates follow-up, analysis and reporting.
- Kommuninvest continued to be the local government player borrowing at the lowest cost in the capital market, and market share among members strengthened. In addition to being able to offer our members very attractive financing, our good results have enabled the distribution of a surplus of SEK 445 (501) million from the Society to the members.
- All members of the Society have access to KI Finans, the tool for more efficient debt management that Kommuninvest has developed. 66 (57) percent of members use the full-scale version.
- Kommuninvest’s reputation among employees and investors remained at a high level in the surveys conducted.
4 Kommuninvest’s indirect impact
Kommuninvest makes it possible for municipalities and county councils/ regions to implement their social investments as efficiently as possible. Accordingly, Kommuninvest contributes to the general development of welfare and to Sweden as a nation being able to achieve long-term social objectives, including environmental and climate objectives.
- At the end of 2017, Kommuninvest accounted for 50 (48) percent of total local government borrowing in Sweden.
- The volume of approved Green loans rose to SEK 27 (18) billion. During 2017, 65 (72) investment projects obtained financing with Green Loans, which are provided to environmental and climate-related initiatives.
- Kommuninvest received the UN’s Momentum for Change Climate Solutions Award and led a Nordic harmonisation initiative on impact reporting for Green Bonds.
- Kommuninvest’s operational model contributes to increased stability and security for members. The Company’s securities have a broad distribution among institutional investors around the world and considered safe investments in troubled times. If necessary, the liquidity reserve can be converted into cash on short notice.
- Kommuninvest contributes to the local community, for example, through its partnership with Örebro University and several initiatives to reduce exclusion, help young people and boost business ventures led by women.
- Kommuninvest’s international commitment contributes to increased awareness on sustainable local government debt management even outside Sweden.