– We continue to work together, with the aim of harmonising and advancing impact reporting practices across the Nordic region. The updated version includes a number of improvements and clarifications over the previous version, as well as recommendations regarding the reporting of climate-related physical risk and the Sustainable Development Goals, says Björn Bergstrand, who leads the Nordic cooperation and is Head of Sustainability at Sweden’s Kommuninvest.

Developed with the primary aim of assisting Nordic public sector borrowers, the signatories hope that it will prove useful also for issuers from the private sector and from other countries as well as for the investor community.

– What characterises Nordic public sector issuers of green bonds is that we finance projects across a range of categories and sizes, and that we have a limited number of people available to work with environmental reporting. These guidelines make our reporting efforts easier, while at the same time hopefully making the different reports more harmonised and comparable to the reader, says Torunn Brånå, Head of Green Finance at Norway’s Kommunalbanken and chairperson of the cooperation’s technical/environmental working group.

The paper has been developed by a group comprising public sector green bond issuers from the four Nordic countries: Finland, Denmark, Norway and Sweden. They include the local government funding agencies Kommunalbanken (Norway), Kommuninvest (Sweden) and MuniFin (Finland); the Swedish Export Credit Corporation (SEK); and seven Swedish municipal or regional issuers including City of Gothenburg, the municipalities of Lund, Norrköping, Västerås and Örebro, Region Skåne and Region Stockholm.

With initiatives such as the EU Sustainable Finance Action Plan making headlines recently, the Nordic issuers expect even stronger interest in green bonds impact reporting. The group aims to contribute to develop the methodology in this field.

– Through this harmonisation initiative, we ensure transparency and consistency in reporting from the Nordic public sector green bond market. Developing sound and harmonised methodology for climate finance reporting is of importance to all stakeholders in the market, says Antti Kontio, Head of Funding and Corporate Responsibility at MuniFin and the Finnish spokesperson for the cooperation.

About the Nordic Public Sector Issuers: Position Paper on Green Bonds Impact Reporting

The paper proposes an outline for reporting environmental benefits of green bond investments.  It provides guidance on general matters such as to distinguish between reduced and avoided emissions and to report impact in relation to disbursed green bond allocations.

The paper also provides suggestions for metrics and indicators relevant to eight different project categories. This effort builds upon reporting approaches suggested by the Green Bond Principles and multilateral development banks.

The paper has benefited from input from CICERO Center for International Climate Research, the Nordic Investment Bank, SEB, and Crédit Agricole CIB as well as several investors throughout the process.

Comment from Harald Francke Lund, Chief Executive Officer, CICERO Shades of Green:

– Through this update, the Nordic Position Paper continues to set the benchmark for high-quality reporting in the green bond market. In particular, we appreciate that issuers are encouraged to report on physical climate risks. We see a growing demand for this type of information from investors, as they increasingly observe the consequences of a changing climate.

Comment from Fransesca Suarez, ESG Analyst, Mirova:

– Transparency and harmonization of data is vital to create a robust and reliable green bond market and to further promote sustainable finance. This initiative by the Nordic issuers will help investors and issuers better understand how we’re moving towards a 1.5°–2° world.

Comment from Christopher Flensborg, Head of Climate & Sustainable Finance, SEB:

– It is initiatives like this which will allow finance to proactively contribute to building sustainable societies. This updated Position Paper provides further guidance on crucial aspects of impact reporting and thereby facilitates harmonization, efficiency and sustainable growth of the green financing market.

Comment from Tanquy Claquin, Head of Sustainable Banking, Crédit Agricole CIB:

– Transparency, reliability and consistency of data are critical to further expand the green bond market and sustainable finance in general. In this respect, this Nordic public sector issuers’ initiative is tremendously helpful. It will serve issuers, well outside of the group signatories, and contribute to better practices and exemplarity in the market in general.

Further information:

MuniFin:
Antti Kontio, Head of Funding and Corporate Responsibility, + 358 9 6803 5634, antti.kontio(at)munifin.fi

Kommuninvest (Secretariat for Position Paper and main contact for questions & comments):
Björn Bergstrand, Head of Sustainability and Senior Investor Relations Manager, +46 708 86 94 76, bjorn.bergstrand(at)kommuninvest.se

Kommunalbanken:
Torunn Brånå, Head of Green Finance, +47 911 58 528, tob(at)kbn.org

The purpose of the framework is to define eligible project categories for green finance. MuniFin’s framework promotes renewables, energy efficiency, sustainable buildings, sustainable transportation, waste management, water and waste water management, as well as environmental management.

MuniFin’s Green Bond Framework originates from February 2016 and has been updated once before, in August 2017. In the latest update MuniFin has adjusted the project category requirements related to sustainable buildings, due to the recent updates in the Finnish energy efficiency regulations.

The Second Opinion gives MuniFin’s governance structure a good overall assessment rating. Based on the overall assessment of the project types that will be financed by the green bond and governance and transparency considerations, MuniFin’s Green Bond Framework gets a Medium Green shading.

MuniFin’s Green Bond Framework and the Second Opinion can be found on MuniFin’s green bonds web page > 

More information:

Antti Kontio
Head of Funding and Corporate Responsibility
tel. +358 9 6803 5634

It was all happening in Nepenmäki School in August, just before the start of the school year. The newly completed school building had to be kitted out before the big day. The school’s brand-new library was also a hive of activity, as staff scrambled to stack the shelves with books. The City of Joensuu’s Head of Facilities Management Timo Korhonen dealt out high-fives and cheered the staff on.

“The opening of the new school was an exhilarating moment for both teachers and pupils. It was also exciting for me personally, as my son goes to Nepenmäki School”, Korhonen says.

However, Korhonen knew that everything would go as it should. Nepenmäki School is an example of the City of Joensuu’s new ecological building policy in action. The teachers were invited to co-design the new school with the construction company.

The aim was to make the building as environmentally friendly as possible, and this meant, among other things, installing solar panels on the roof, using high-quality materials and equipping the school with dozens of sensors that monitor everything from indoor air quality to water consumption.

Ambitious ecological goals

Green construction is nothing new in Joensuu. The city, which is the capital of the heavily forested region of North Karelia, is known as the Forest Capital of Europe. As much as 80% of the area of the City of Joensuu is forest. Forestry research has been an integral part of the curriculum of the University of Joensuu – or the Joensuu campus of the University of Eastern Finland, as the institution is now known – since the beginning. Joensuu is also home to the headquarters of the European Forest Institute (EFI) and a wide range of forestry, wood and bioeconomy businesses.

“People in Joensuu have always had a close relationship with nature. The world is changing rapidly, and environmental issues are becoming more and more important to everyone. The City of Joensuu wants to stay on trend”, Korhonen says.

The city has adopted a new strategy that aims to incorporate environmentalism into every aspect of Joensuu’s development. The city’s ambitious goals include becoming the most carbon-neutral city in Europe and cutting greenhouse gas emissions by 60% from 2017 levels by 2025. The city is also planning to completely eradicate oil-based heating from public buildings by 2030.

“Ecological construction plays a big role in meeting these targets”, Korhonen says. Joensuu’s green approach has also received international recognition. The city was among the five finalists of the 2019 European Green Leaf Award competition. The award recognises cities that demonstrate a good record in mitigating climate change and promoting energy efficiency, waste management and circular economies.

“We did not win, but just being shortlisted for the award was an important boost to Joensuu’s image. I believe that a green image will help us to attract both new businesses and residents to the city”, Korhonen says.

Reining in the maintenance backlog

Korhonen has an MSc (Technology) degree and an MSc (Economics and Business Administration) degree from the University of Oulu, and his previous employers include Jaakko Pöyry and the Parliament of Finland. He took over as Head of the City of Joensuu’s Facilities Management a decade ago.

“Public buildings in Joensuu at the time were, to put it bluntly, in a deplorable condition. By 2010, the city’s maintenance backlog amounted to EUR 53 million. We had to do something. The city’s maintenance backlog currently stands at EUR 37 million, and we are hoping to reduce it to EUR 25 million by 2020”, Korhonen explains.

Korhonen spent his first years in Joensuu renovating old listed buildings. After a while, a new approach began to take shape. Korhonen realised that, instead of trying to fix many of the old buildings, such as schools and nurseries with indoor air quality issues, it would make a lot more sense financially, operationally and in terms of risks to replace them completely.

Korhonen believes that, in the choice between renovation and new development, a long-term perspective is crucial. Old buildings often have multiple issues, and fixing just one is rarely enough. In such cases, starting from scratch can be a much better option, as the new building can be designed to be both energy-efficient in terms of materials and ideal in terms of the use of space. The same cannot always be said for old buildings.

“The initial investment may be a little bigger, but the savings that can be achieved with green construction over the life-cycle of a building are considerable. The biggest beneficiaries are local residents, who ultimately pay for the buildings through tax”, Korhonen says.

Shorter life-cycles?

Korhonen does not want to entertain hindsight when it comes to the problems with Joensuu’s old buildings. He sees the city’s old buildings as products of their time and believes that they were built according to the best know-how available at the time. Our understanding of construction technology and materials has come a long way since then. Today, buildings are designed to last for between 30 and 35 years. That is the period that they should be able to serve their users without problems.

“The city sets the course for public-sector construction. I have actually wondered whether we should be designing buildings with a life-cycle of just 20 years, considering how fast the world is changing. What makes sense today might become redundant in the future. This can already be seen in office work, which is no longer tied to a specific workstation or room. Will we even need large offices in the future?” Korhonen ponders.

Adopting a more environmentally friendly construction policy has ultimately been easy in Joensuu, as the financial benefits are undeniable.

“The city’s administrators and decision-makers now understand that it makes sense to look at the entire life-cycle of an investment and not just how much it costs to build.

Expertly pitched and well-reasoned plans are obviously important. The City of Joensuu now recognises that new development is often the smartest option and that it is not worth renovating buildings dating back to the 1960s and 1970s. There is no going back to the old way of thinking”, Korhonen says.

Breaking boundaries

Modern schools no longer go by the dogma that teachers talk and the pupils listen. Today, the focus is on teamwork between teachers and on pupils working in groups and learning through their own curiosity. These principles are set out in the Finnish National Agency for Education’s new national core curriculum for basic education, which was introduced in 2014.

“Old school buildings are ill-suited to the new methods of teaching and learning. Schools today need flexible facilities. Our new building, which we have now been using for two years, was designed to meet the challenges of the new national curriculum”, explains Karhunmäki School’s Head Teacher Timo Nykänen.

Nykänen is visibly pleased with how well the new building serves its users.

“The teachers were involved in the design process from the start, which turned out to be a good solution”, Nykänen says.

The City of Joensuu built Karhunmäki School using the so-called turnkey contract model, which involves choosing the contractor on the basis of points awarded to each bidder’s proposal. Nykänen represented the users of the school in a project planning group charged with the planning process. According to Nykänen, the aim was not to follow the hottest pedagogical trends of the moment but to look for solutions that would also work in the future.

“That meant, for example, introducing what we call “learning hubs”, which are four separate teaching areas that can also be combined simply by moving partition walls to make one big space. It is important for the building not to dictate how we teach. For us, the building is an enabler.”, Nykänen explains.

Karhunmäki School is one of the City of Joensuu’s green bond investments in which environmental friendliness is key. The performance of the building is monitored by means of a multitude of sensors. The data are also used in teaching.

“Designing a user interface that is simple enough for teachers to be able to incorporate all the data into their lessons has been challenging. We still have a way to go in that respect. Most of the building’s technical systems are automated, which is another challenge. It is difficult to motivate teachers and pupils to make environmentally friendly choices if they cannot, for example, control the temperature in the classroom themselves and experiment with different options”, Nykänen says.

Nykänen feels that the design of Karhunmäki School is a triumph.

“Everyone agrees that our school is a calm and peaceful place to work and study. It is great that the building itself can contribute to a relaxed atmosphere and promote learning”, Nykänen says.

Text: Mika Remes
Photos: Miska Korpelainen