Green FinanceWe wish to encourage our customers to carry out climate-friendly and environment-friendly investment projects.
We seek to do this through our green lending program, which involves us borrowing money by issuing green bonds in the Norwegian and international capital markets, which we then lend out in the form of green loans to Norwegian municipalities wishing to invest in future-oriented projects. The green loans provided by KBN have a slightly lower interest rate than our ordinary loans. Together with other aspects of public policy, this reduced interest rate is intended to encourage a greater focus on ambitious green projects. KBN has offered green loans since 2010. KBN started issuing green bonds aimed at Japanese retail investors in 2010, and in 2013 KBN became the first financial institution in the Nordic region and one of the first in the world to issue a public green bond. In November 2017, we issued two green bonds in the Norwegian market: an NOK 750 million bond with a maturity of 10 years and an NOK 600 million bond with a maturity of 15 years. These bonds were the first time KBN had issued NOK-denominated green bonds.
We follow the International Capital Market Association’s (ICMA’s) Green Bond Principles. This is reflected in the new version of the KBN Green Bond Framework, which we adopted in 2016. In 2017 we established a Green Lending Committee with both internal and external members. This committee acts as an advisory body for KBN in relation to its work on developing the green financing market and green financing products. We also produce annual reports on the impact of the projects we finance from issuing green bonds, the impact report.
Our framework has been awarded the “Dark Green” rating by the independent climate research centre CICERO. This means that investors and other stakeholders can be certain that KBN’s green bonds finance investment in projects in line with Norway’s national target for the country to become a low-carbon society by 2050.
Performance in 2017
Measures implemented in 2017
Issue a Norwegian green bond
KBN issued an NOK-denominated green bond in November 2017. The bond was issued in two tranches, with one transaction raising NOK 750 million with a maturity of ten years, and the other NOK 600 million with a maturity of 15 years. This was the first time KBN had issued NOK-denominated green bonds.
Increase green bonds as a proportion of total funding
KBN is keen for all its green lending to be financed in time through green bonds. Green bonds represented 1.2% of KBN’s total borrowings in 2017. As a consequence of growth in KBN’s green lending, there was scope at the end of 2017 for KBN to increase its green funding further.
Membership of the ICMA/GBP
In the summer of 2017 KBN was elected to the Green Bond Principles (GBP) Executive Committee for a period of two years. The GBP Executive Committee is the governing body of the Green Bond Principles, and as such is the highest “authority” in the market for green bonds. The Committee’s work involves revising the principles for issuing green bonds on an annual basis. In 2017 KBN also became a member of the GBP Impact Reporting Working Group, which is a technical working group that works to develop climate and environment impact reporting.
KBN has two overriding objectives for its work in the area of green finance in 2018:
- We shall contribute to the achievement of national targets regarding the transition to a low-carbon society by increasing the proportion of lending that we provide to projects with clear climate ambitions.
- We shall contribute to the development of the market for green finance by issuing green bonds and assisting with the development of international standards.