Finland’s first ever green bond, i.e. a bond earmarked for environmental investments, was launched at the end of September. The bond attracted a great deal of interest already in advance and was oversubscribed within a few hours.
On the bond’s value date – Tuesday, 4 October 2016 – the London Stock Exchange celebrated Finland’s first green bond in a market opening ceremony, which was attended by representatives from Finnish municipal customers, the Ministry of the Environment, the Finnish embassy, joint lead manager banks and MuniFin. The bond is quoted on the London Stock Exchange.
– MuniFin’s lending portfolio largely focuses on investments that can be described as socially or environmentally responsible. However, for the first time we can now earmark the activities funded by investors and tell them what is being achieved with their investments, says Pekka Averio, President and CEO of MuniFin, describing the significance of the Green Bond.
– The new financial instrument encourages municipalities to make sustainable decisions. The public sector makes a significant share of all purchases. Municipalities can encourage clean and energy efficient investments and boost the circular economy with their decisions, emphasises Hannele Pokka, Permanent Secretary at the Ministry of the Environment.
– The Finnish municipal sector is quickly becoming aware that environmental investments should be increased, and when initiatives are planned, broader account should be taken of their climate impact. To help the municipal sector absorb the change faster, we are offering more affordable funding for pioneering projects, Averio says.
Wide range of environmental initiatives: from Länsimetro to school buildings
MuniFin’s framework for green financing specifies the sectors of environmental investment that are eligible for the more affordable green funding. The categories included are renewable energy, public transport, sustainable buildings, water and waste water management, energy efficiency, waste treatment, and environmental management and conservation.
When we look at the projects funded so far, Länsimetro has received the most funding. Looking at the number of projects, most of them are related to sustainable construction and energy efficiency.
A lion’s share of sustainable building investments are related to school buildings. One such project is Tuupala’s wooden school in Kuhmo.
– Tuupala’s new wooden school is a national pilot project, which is also expected to become an international reference case. The completely wooden school building is energy efficient, and its district heating solution is based on bioenergy. Kuhmo is also a genuine bioeconomy success story in other respects: almost 70 per cent of energy used in the town is renewable primary energy, which is among the highest rates in the world, says Eila Valtanen, Mayor of Kuhmo.
The new Tyrnävä primary school will also be built with green funding.
– The school at Rantarousti is a wonderful example of our strategy – which is based on bioeconomy, circular economy and lifecycle efficiency – being put into practice. The new Rantarousti school will be heated with geothermal energy, and solar panels will generate some of the electricity used. The lifecycle efficiency imperative shows in the innovative space arrangements and choice of materials. Tyrnävä has decided to become a HINKU municipality, meaning that it aims at a major reduction in its carbon footprint within the next few years. The choices made for the new school support this aim, says Marjukka Manninen, Mayor of Tyrnävä.
An internationally rare feature in the assessment of MuniFin’s green funding is the fact that the projects’ suitability for the green funding framework is assessed by a group of external specialists. The total value of the green projects funded so far is approximately 400 million euros; in addition, several other investments are being considered for funding.
Pekka Averio, President and CEO, MuniFin
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