KBN launches updated Green Bond Framework
With its third Green Bond Framework, KBN keeps raising the bar for the Nordic finance sector’s funding of green investments.
The 2021 Framework includes important updates to KBN’s governance structure for green finance. It furthermore maps eligible project categories against the UN Sustainable Development Goals (SDGs) and lays out a commitment to carry out annual assessments of eligible projects against the EU Taxonomy for sustainable economic activities. The framework strengthens KBN’s accountability as a green bond issuer through committing to annual third-party reviews of both the asset selection process and the allocation of proceeds.
“Green finance is a strategic priority for KBN, which we believe is reflected in the updated framework. With this document in place, we are confident that we are equipped to meet the most recent market developments and investor expectations”, says Sigbjørn Birkeland, Chief Capital Markets Officer at KBN.
Project eligibility determined by updated selection criteria
As in the previous KBN Green Bond Framework, the 2021 Framework refers to the project eligibility criteria defined in KBN’s unique Criteria Document for Green Loans. The Criteria Document is subject to annual revision by a committee of external experts. Due to this mechanism the selection criteria for new green assets are reviewed annually, even if the green bond framework itself has not been updated. All proceeds from bonds and taps dated after the framework update will be allocated to projects in line with the 2021 version of the Criteria Document.
Excellent governance score and Medium Green shading
CICERO has provided a Second Opinion on KBN’s 2021 Green Bond Framework. The second opinion concludes that “Sustainability work is comprehensively integrated in KBN and the selection of eligibility criteria is based on independent expert advice. (…) Management of proceeds is well aligned with the Green Bond Principles and reporting is excellent.”
The framework receives a governance score of Excellent. While most project categories received a Medium to Dark Green shading in CICERO’s review, the main category, Green Buildings, and hence the overall shading arrives at Medium Green.
The 2021 Green Bond Framework is KBN’s third in line and replaces the 2016 Framework. KBN published its first Green Bond Framework in 2013, as one the first financial institutions in the Nordics to enter the public green bond market.