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Concerns over EU’s proposed Taxonomy for sustainable activities

As a part of EU’s Action Plan for financing sustainable growth, the European Commission is working on an EU Taxonomy, a classification system for sustainable activities. The EU requested feedback on the draft of the first set of criteria for the first two environmental objectives, climate change mitigation and climate change adaptation, in November. The deadline for the feedback was 18 December 2020.

Nordic agencies, MuniFin, Kommunalbanken and Kommuninvest, all seasoned green bonds issuers, have worked on a joint response regarding the EU’s proposed Taxonomy. Each institution has based their feedback on the common Nordic position on the issue and presented their view individually to the Commission.

A concern was expressed that the current draft of the Taxonomy delegated act risks considerably slowing down the harmonisation of the sustainable finance market. The feedback states that the administrative burden could grow to be too high, which could lead project owners (MuniFin’s customers) to prefer traditional borrowing requiring less disclosure. This could eventually lead to fewer eligible assets.

“The Taxonomy is an important tool that can drive the real economy towards making greener investments. However, in order for the Taxonomy to be usable, the so called Do No Significant Harm (DNSH) criteria should be simplified to relieve the excessive administrative burden on the project owner. The principle of proportionality should also be considered. Moreover, we feel the requirements and thresholds of the technical screening criteria should take regional contexts into account to reflect actual differences in environmental performance”, says Karoliina Kajova, Funding Manager at MuniFin.

MuniFin’s feedback

Further information

Karoliina Kajova
Funding Manager, MuniFin
Tel. +358 50 576 7707

Green bondMuniFinSustainability

MuniFin wins Best Uridashi Bond Issuer and Best Structured Note Issuer Awards

MuniFin has been an active and valued issuer in the Uridashi market since 1990s. Due to their high credit rating and brand MuniFin has become a household name in the market. The team constantly meets with the Japanese Uridashi dealers.

– Due to active communication with the dealers we are able to better understand market trends. In addition, we have invested in risk modelling in order to accommodate these products. Our target is to remain as an active issuer in the Uridashi market, Funding Manager Karoliina Kajova says.

In 2020 Uridashi volumes for MuniFin reached EUR1.2bn.

According to CMD Portal MuniFin has been recognised as the Best Uridashi and Best Structured Note Issuer, both in terms of number and diversity of deals. MuniFin managed to grow the number of structured notes issued despite the challenging market conditions due to COVID. MuniFin has also been able to maintain its strong presence in the market despite the overall structured market shrinking considerably each year.

CMD Portal connects issuers with dealers and investors of fixed income instruments globally and provides transparency through trade and flow reports to the market.

FundingMuniFin

MuniFin sets the long-term funding target for 2021: EUR 10-11 billion

Our commitment to sustainability will continue to remain strong. We are planning to issue in both social and green format in 2021. Sizes will depend on the underlying asset development, but minimum sizes are EUR 500 million equivalent. In addition, we are closely looking at the developments on EU Taxonomy and Green Bond Standard.

In 2020 MuniFin issued EUR 11.0 billion of new long-term funding. The amount is larger than originally planned, mainly due to the COVID-19 pandemic, which has led to larger-than planned growth in the lending activities. Market access in benchmark markets and private placements remained strong throughout the year. Approximately 52% was issued in strategic public markets in EUR and USD. This included four new EUR benchmarks between 5 and 15 years and one new USD benchmark in 3 years. In terms of sustainable bonds, MuniFin issued the first Nordic SSA Social bond in September and a new Green bond in October.

Top 4 currencies in 2020 have been EUR (64%), USD (16%), JPY (11%) and NOK (4%). These currencies account for 95% of the new funding issued in 2020.

Further information

Antti Kontio
Head of Funding, MuniFin
Tel. +358 500 3700285

FundingMuniFin

The Apuu chat helps primary school children in distress

Finland has many well-established helplines for young people and adults. Primary school children, however, did not have an easy-to-use channel where they could ask for help if they feel unsafe, threatened or in need of support from a reliable adult. The Apuu chat was designed to meet exactly this need. Its stripped-down user interface is compatible with a wide range of devices and internet connections, including modest ones.

The helpline chat serves 7–12-year-old children every day from 9 am to 10 pm. Through the chat, children can reach SOS Children’s Villages child welfare professionals as well as trained volunteers who listen to the children and help them reach local services when necessary.

Children most commonly use the chat to discuss anxiety, bullying, relationships with their friends and concerns about their parents. However, the number of contacts for serious reasons are growing at an alarming rate. On a weekly basis, children use the chat to discuss matters that the helpline adult reports to the police or child welfare services or that requires emergency social services.

The chat team leader is Johanna Virtanen, who is project manager at SOS Children’s Villages Finland and also works with support families.

“Children contact us for very different reasons. Many children come from perfectly ordinary families, but they want to discuss and go over day-to-day matters with an adult. They may need an adult to encourage them to bring the matters up with their own parents. Children also talk about their relationships with their friends and about entering puberty”, says Virtanen.

Johanna Virtanen

“The other group of children who contact us are children who are facing an emergency or who have experienced threatening situations for a long time. We will tell them what kind of help is available in their situation.”

“We file about three child welfare reports a week. The number would be higher if children only agreed to provide enough information about themselves. But we must remember that children use the service anonymously, and they must be able to trust that they themselves can choose how to proceed in their situation. Children’s rights safeguard children’s ability to influence matters that pertain themselves. We must respect this.”

In every discussion, the helpline adult makes a plan together with the child as to how the matter in hand might be solved.

“We thought that it would take a long time for children to learn to trust us, but children are able to share their thoughts and feelings amazingly directly and honestly. For them, the chat interaction is genuine and valuable. Based on the feedback we have received, it is important that children are heard and that someone pauses to really consider their situation”, says Virtanen.

For the chat team, working on the chat is both energising and taxing.

“The children who contact us are so smart and lovely. Unfortunately, many of them have to bear more responsibility than any child should.”

Children have contacted the Apuu chat more than 11,000 times in just a few months. The chat is intended to become a permanent helpline for young children who need help. The chat runs on donations.

This year, MuniFin donates its EUR 10,000 Christmas card fund to support the work of the Apuu chat, which is run by the SOS Children’s Villages Finland.Information about the Apuu chat has been distributed in schools, through social media influencers and as part of outreach youth work done online to actively reach children in need of help. The chat is available at apuu.fi.

MuniFinSustainability

MuniFin renews its organisation and operational model to improve customer experience

The actions are especially aimed to establish an even better base for a further improved customer experience. Furthermore, the aim is to improve quality and make MuniFin’s operations more fluent. The aim is also to improve the employee experience. To achieve these targets, the new organisation is based, more stronger than previously, around the core business processes of the company, namely customer financing solutions and capital markets processes. Changes to the organisation will come into force on 1 January 2021.

The management of development operations will be moved closer to the business operations by establishing new roles that support development in the business functions. In order to manage the entire development portfolio, a new Development and HR Services division will be established. Besides managing the development portfolio, the aim of this division is to support change management of MuniFin group.  MuniFin’s current HR director Minna Mäkeläinen has been appointed, as of 1 Jan 2021, to lead this division and she will also be a member of the Executive Management Team.

Composition of the Executive Management team as of 1 January 2021 is as follows:

  • Esa Kallio, President and CEO
  • Mari Tyster, Legal and Communications, deputy to the CEO
  • Aku Dunderfelt, Customer Solutions
  • Toni Heikkilä, Risk Management and Compliance
  • Joakim Holmström, Capital Markets and Corporate Responsibility
  • Rainer Holm, IT and Technology
  • Harri Luhtala, Finance
  • Minna Mäkeläinen, Development and HR Services

– With this renewal, we aim to have a flexible and fluent operational model, which ensures a client-centric approach also in the long-term, and consequently a constant ability to adapt to changes in the business environment. The new organisation emphasises the employee experience, which we aim to enhance by lowering organisational levels and by developing our processes. With these changes we will move from a partially IT system oriented development to a model that better takes into account our processes and comprehensive development needs, describes MuniFin’s CEO Esa Kallio.

The renewal of the organisation and the operational model included co-operational negotiations with the personnel and these negotiations have now been completed. The renewal of the organisation will lead to a termination of 10 positions in the company.

Additional information:

MuniFin President and CEO Esa Kallio, tel. +358 50 3377953

MuniFin

The world’s first zero-energy ice hockey arena built in Äänekoski

The first puck dropped in the new hockey arena on 28 August. The opening practice match between JYP and Pelicans was sold out in a couple of hours.

“The construction was completed in the planned schedule, and the opening was a success despite the coronavirus situation. The top league match also put the quality of ice to a real test right away”, says Antti Virmanen, CEO at Proavera Ltd.

The Suolahti arena is an eagerly anticipated investment in Äänekoski’s sports scene. The arena replaces a decades-old tarpaulin hall and brings high-quality sports facilities within reach of everyone. The arena in itself is not an unusual structure, as Finns are used to having a hockey venue in every town. Its design, construction and operation are exceptional, however, earning it the nickname of “zero-energy hall”.

“The arena is actually a provider rather than just a consumer of energy. An indoor ice rink is basically a massive refrigerator, which takes an enormous amount of energy to keep cold. But in doing so, it also creates condensing heat similarly to regular fridges. Usually this heat is simply expelled outside, but we store it and make use of it instead”, Virmanen explains.

The idea is as straightforward as it sounds. All of the required technology already existed, although the arena can be described as a pioneering project. “Green” is still not the default standard in new construction projects. The decisive part of the progress made in Äänekoski was a shift in thinking.

”We decided to do things differently. The investment had to be made anyway, so why not make it in a sustainable way? If we look at the obvious solutions critically, and look for ways to improve them, I think that puts us in the right track”, Virmanen notes.

Income from selling energy

Energy efficiency as a cornerstone of the project may initially sound expensive. An indoor ice rink is a large undertaking for any Finnish municipality even without the new design and construction methods. Virmanen admits that the initial investment was larger compared to a “regular” hall, but only by a relatively small amount – and the finances should be considered far beyond the initial costs.

For a large, long-term project like this, the overall energy economy and operating costs are more significant than the initial design and construction costs. The Suolahti arena creates enough energy for all its own thermal needs with excess to share with others.

”We have aimed to control our energy balance and run the venue with minimal operational economy. We are therefore more than self-sufficient: not just using but also selling our energy. Our waste heat turns into usable heat for the nearby school and swimming hall”, Virmanen says.

Green financing

The project is financed by a green loan from MuniFin. Green loans can be sought for projects that create substantial and measurable benefits for the environment. The Suolahti arena uses less than half of the energy required for other similar halls. Attention has been given to details as well: the ice resurfacers are electricity-powered, electricity is bought only from renewable sources, and the refrigerant used is carbon dioxide, which is more friendly for the environment than other options. The project has already gone a long way, but new ideas keep appearing in Virmanen’s planner.

”Projects like this require attention to both small and large details. Our next goal is to increase our degree of self-sufficiency. We’ll reduce the amount of purchased electricity by installing solar panels on the roof of the arena”, Virmanen envisions.

The Suolahti Arena measures everything possible. Approximately 1,500 measuring points produce data on things like heat and energy production and transmission. Incoming energy is also measured in many ways so that it can be monitored in the long term.

More ice rinks following the example

The Suolahti Arena is the first concrete example of a green ice rink in Finland, and as far as we know, the first one in the world, too. But Äänekoski is by no means the only municipality thinking about energy-efficient ice rinks. Green projects are rapidly gaining popularity.

“I have a feeling that green energy will soon be used all over the country. Almost every time I’m on a hockey trip someone tugs at my sleeve and asks for advice, and I think that’s a great thing. I tell everyone to feel free to copy this design, and improve on it too”, Virmanen notes happily.

Text: Heidi Penttinen
Photo: Jiri Halttunen / JYP

CaseGreen financeMuniFinSustainability

MuniFin joins United Nations Global Compact

Global Compact is the world’s largest corporate responsibility initiative. The Compact’s ten principles of corporate responsibility bind companies to obligations related to human rights, working conditions, the environment, and anti-corruption. 

“In our business we have strived to prove that finance can really steer societal development in a positive direction. Global Compact is our way to show that we are committed to continuous development of corporate and environmental responsibility. The networking opportunities it provides will also help us gain further knowledge in this field”, says Esa Kallio, president and CEO at MuniFin. 

MuniFin has been a forerunner of sustainable finance in Finland by introducing the first green and social finance products in the country. This has also been noticed internationally. For example, MuniFin ranked 28th in the ESG risk assessment of nearly a thousand banks by Sustainalytics, the world’s largest independent provider of ESG research and ratings. 

“Responsible business is long-term work, and stakeholders’ expectations on corporate responsibility are always growing. That is why we will keep self-evaluating and seeking the most important targets for development for our customers”, Kallio states. 

Lenita Toivakka, executive director at Global Compact Network Finland, welcomes MuniFin to the network. “We’re happy to have an experienced and significant promoter of reponsibility such as MuniFin onboard. Our network gives them access to initiatives and programs to drive responsibility and sustainable growth even further”, she comments.  

Global Compact Network Finland now includes more than a hundred companies. 

MuniFin is also a member of the Finnishcorporate responsibilty network FIBS and Finland’s Sustainable Investment Forum Finsif. It is also a Climate Bonds Initiative partner and a WWF certicified Green Office.

MuniFinSustainability

MuniFin returned to Green bond market with a record 55% allocation to Green investors

Mandate of the transaction was released on Monday afternoon 5 October and books were opened on Tuesday morning 6 October at 10:00 am Helsinki time. The first update of the transaction was sent at 11:30am, when the orderbook had grown to a record EUR 2.9 billion and at the same time the spread was set at mid-swaps +2 basis points, 3 basis points tighter from starting level. The final orderbook grew to EUR 3.4 billion, which is one of the largest benchmark orderbooks MuniFin has seen and the largest for MuniFin’s Green bonds. Coupon of the new Green bond is 0%, yield -0.197% and joint lead managers were Danske Bank, NatWest Markets, Nomura and Nordea.

104 investors participated in the transaction and the majority was sold to European institutional investors. Germany, Austria and Switzerland was the largest geographical area with 33% of allocations followed by Nordics 21%, Benelux 10%, Southern Europe 10%, France 9%, Americas 8% and other 10%. Central banks and official institutions bought 33% of the transaction, asset managers 30%, bank treasuries 28% and insurance/pension funds 9%.The amount of ESG focused investors grew to 55%, which is the highest allocation to this investor group seen in MuniFin’s Green bonds.

MuniFin’s Green bonds Framework divides Green finance into seven categories, sustainable buildings and public transportation being the most important ones.

“We are extremely pleased with the outcome. Almost 7 times oversubscribed orderbook and a meaningful greenium of around 2 basis points shows that going green really pays off. 2020 has been a very exceptional year – but we are very happy that we’ve been able to continue our presence in the Green bond market together with our inaugural Social bond just a few weeks ago”, says Antti Kontio, Head of Funding at MuniFin.

Issuer:Municipality Finance Plc (MuniFin)
Rating:Aa1 / AA+ (Moody’s/S&P – both stable)
Issue size:EUR 500mn (no-grow)
Payment date:14th October 2020 (T+6)
Maturity date:14th October 2030
Coupon:0.0%
Re-offer price:101.992%
Re-offer yield:-0.1970%
Re-offer vs. mid swaps:+2bps
Re-offer vs. benchmark:DBR 0% 08/2030 + 30.7bps
Lead managers:Danske Bank, NatWest Markets, Nomura, Nordea
Press Release MuniFin 10/6/2020: EUR 500 million 0% Green Bond due 14th October 2030Download

Further information:

Antti Kontio
Head of Funding, MuniFin
Tel. +358 500 3700285

FundingGreen bondMuniFinSustainability

MuniFin plans to renew its operational model and organisation

– A key target for the preliminary planned changes is a flexible operational model, which secures MuniFin Group’s customer-centric operational model also in the long term, describes MuniFin President and CEO Esa Kallio.

MuniFin commences cooperation negotiations with the personnel to discuss these plans. The cooperation negotiation process concerns the entire personnel of Municipality Finance Plc and its subsidiary Financial Advisory Services Inspira Ltd. The preliminary planned actions may result in job description changes and a termination of maximum 15 employments.

Additional information:

Esa Kallio, President and CEO
Tel. +358 50 3377953

MuniFin

The corona crisis solidified MuniFin’s position as the most trusted partner

The coronavirus crisis caused an upheaval in the municipal economy. In a challenging position to start with, municipalities suddenly had to adjust to a situation where income plummeted and expenditure grew radically. The uncertainty caused by the economic crisis was also reflected in the MuniFin customer experience survey, which was conducted in May–June and drew responses from 340 people who manage the finances of municipalities and state-subsidised housing companies.

“The initial shock created almost palpable uncertainty and caused people to crave information. When one commercial bank after another started to withdraw lending from the municipal sector, municipalities became concerned about the availability of funding, which resulted in a sudden spike in the demand for both long and short term funding”, says Aku Dunderfelt, head of customer finance at MuniFin.

The survey is conducted every six months to gauge customer experience and assess the position of lenders in the market. MuniFin’s customer satisfaction rating has improved significantly over the past couple of years and the most recent results confirm that this trend has continued. On a scale of 1 to 7, MuniFin scored an average customer satisfaction rate of 6.1, whereas six months earlier the score was 5.7.

Corona crisis put trust to the test

The survey results highlighted that customers place great importance on trust in the financing partner’s ability to handle the coronavirus crisis. MuniFin scored very high on this, reaching a rating of 6.3 on a scale of 1 to 7, when the average trust rate in banks was only 5.4. A total of 86% of respondents also said that reliability is MuniFin’s key strength.

“Our customer satisfaction has increased in leaps and bounds in recent years. These exceptional circumstances just go to show that the true test of customer value propositions happens in a time of crisis. We were able to quickly provide our customers both financing and information, offering them the tools to survive this situation. This shows as a clear spike in our customer engagement. Our customer satisfaction is built on successful funding and proactive customer service, even during a crisis”, says Dunderfelt.

Customers appreciate convenience and competitive prices – most are willing to recommend MuniFin

MuniFin’s positive customer experience is also reflected in how willing customers are to recommend the organisation. The Net Promoter Score (NPS) groups customers into ‘promoters’, ‘passives’ and ‘detractors’ based on how willing they are to recommend a company to a friend or a colleague. MuniFin’s NPS rating has been increasing steadily over the past few years, but in the latest survey, it shot up to 71. In comparison, the average NPS in the banking industry is 22. According to the survey, seven out of ten customers are willing to recommend MuniFin in both the municipal and housing sectors.

“Ensuring a first-class customer experience and excellent customer service has been very difficult in the financial sector this year. It is extraordinary how well MuniFin has been able to continue to consolidate its position, especially in terms of reliability. The gap between MuniFin and last year’s highest ranking banking sector company is considerable, as this company only reached a NPS rating of 54”, explains Heidi Laitinen, country manager at EPSI Rating Group, the company that conducted the survey.

In addition to customers’ willingness to recommend a company, the survey also looked at what customers most value in a financing partner. The key qualities reported were competitive pricing, services that are easy to use, suitable financing solutions and responsibility, all factors that customers considered as MuniFin’s strong points.

Increasing need for a comprehensive financial review

The survey results show that online services are an integral part of a smooth customer experience. According to the results, it is easy to do business with MuniFin, and MuniFin’s online services and tools are heading in the right direction: 47% of respondents see MuniFin’s digital services as a strong point and 49% consider them to be in line with the industry standard. Compared to the previous survey, there was a 15% increase in the number of respondents who saw MuniFin’s digital services as a strong point.

These days, customers also expect more of digital tools. They value the ease of online services and the broader outlook that new financial modelling tools can offer the municipal economy. Customers also expect their financing partners to take a more consulting approach in financial planning.

MuniFin’s customer experience survey was conducted as an email survey between 29 May and 26 June 2020, with 340 participants who manage the finances of municipalities and state-subsidised housing companies. The survey is conducted every six months in collaboration with EPSI Rating Group.


Written by Heidi Penttinen

Photo by George Atanassov

MuniFin