MuniFin started to offer green finance – loans and leasing – for the environmentally friendly projects of its customers in the beginning of 2016. Green finance is offered to selected projects that promote the transition to low-carbon and climate resilient growth. These projects seek to mitigate or adapt to climate change.
All green projects are financed and located in Finland. In addition to marketing benefits and improved profiling advantage for its customers, MuniFin offers a margin discount for all green projects. The amount of discount is based on the project categorisation provided by Cicero in its Second Opinion (dark/medium green). The greener the project, the bigger the discount.
Green finance projects are selected using MuniFin’s Green Framework and finally approved by the Green Evaluation Team, which consists of two or more members from environmental functions of MuniFin’s customers or other environmental public sector entities or organisations. Every project is analysed independently and only approved if there is a high likelihood of achieving long-term positive environmental effects.
MuniFin’s Green Framework divides projects into seven categories
- Renewable energy
- Energy efficiency
- Sustainable public transportation
- Waste management
- Water and waste water management
- Sustainable buildings
- Environmental management incl. nature conservation
The majority of the eligible projects are long-term projects with maturities varying from 5 to 41 years.
The Second Opinion for MuniFin’s Green Framework has been provided by Cicero.
Green finance is funded by Green Bonds
MuniFin’s inaugural Green Bond was issued in September 2016. The transaction was USD 500 million and has a maturity of 5 years. The second Green Bond, sized at EUR 500 million, was issued in September 2017.
In the future MuniFin aims to issue one benchmark sized Green Bond per year in EUR or USD. This represents approximately 15 per cent of the annual gross lending volume.
To provide investors with more detailed information about the financed projects and their impacts, MuniFin published its first Green Bond investor letter in March, 2017.