Kommuninvest introduces new terms for Green loans and an updated Green Bonds Framework

Kommuninvest launched its first green bond framework in 2015 and the following year the inaugural green bond was issued. Since then, Kommuninvest's green financing program has grown to become one of the largest in the Nordics, with more than SEK 115 billion in committed Green Loans and 12 outstanding green bonds with a total value of over 85 billion kroner. More than 650 investment projects in nearly 200 Swedish municipalities and regions are financed with Green Loans from Kommuninvest. In 2021, the program received the Environmental Protection Agency's Environmental Objective Award in the category "Courage and pace".

The 2024 Framework update, the fourth since its inception, is the most extensive yet. Given developments, including the advent of the EU taxonomy and a European Green Bonds Standard, Kommuninvest has decided on a gradual taxonomy alignment as a reasonable way forward. All project categories where it is deemed feasible and reasonable should comply with the EU Taxonomy substantial contribution criteria.

- Through its green financing program, Kommuninvest wants to support Sweden's municipalities and regions in their transition work. We are now raising our ambitions in order to keep pace with EU regulatory developments and better be able to support the higher environmental and climate ambitions of our members and customers, says Björn Bergstrand, Head of Sustainability at Kommuninvest.

Green Loan terms for all eight project categories in the framework have been reviewed. For the project categories Green buildings, Renewable energy and Water management, which correspond to over 90 percent of the Green Loan portfolio, the new terms comply with the EU taxonomy technical screening criteria on significant contribution to at least one EU environmental goal. For other project categories, the criteria are adapted to work in a Swedish municipal context. A summary of the changes category by category can be downloaded below.

- Extensive environmental and climate investments have driven the strong development so far for our green financing. Looking at both regulations and market development, it is natural that ambitions are raised over time. At the same time, it is important with loan criteria that work for our customers. We trust that the design of the updated framework will promote continued high use of green financing and good quality in the transition work, says David Ljung, Head of Lending and Advisory at Kommuninvest.

The new terms will come into effect this autumn
In order to give Kommuninvest's customers time to prepare for the new loan terms, they will be applied from 1 December 2024. The last day to submit applications for Green Loans according to the terms of the 2021 framework is 29 November 2024.

Regarding Kommuninvest's issuance of green bonds, the Framework is applicable from 27 June 2024. Funds raised from green bonds issued thereafter will be allocated towards investment projects and Green loans that comply with the terms of the new framework.

FACTS: External review

S&P Global (S&P) has reviewed the updated framework for compliance with the ICMA Green Bond Principles, the international guidelines that Kommuninvest follows in the green financing program. S&P's overall assessment of the framework is Medium Green, which is in accordance with Kommuninvest's objectives. The framework is considered to fund activities that represent significant steps towards a climate-resilient, low-carbon future but where further improvements are required.

FACTS: About the development of the new Framework

In 2022, Kommuninvest began development work regarding new terms for Green Loans, to be introduced in an updated Green Bonds Framework. Extensive preparation has subsequently taken place in Kommuninvest's Environmental Committee for green financing ( the Environmental Committee ), which consists of expert officials from Kommuninvest's members as well as other relevant organizations in the public sector and/or academia. During the process, loan term proposals have been anchored with representatives of members and customers in the form of industry organizations and public actors, in addition, a public consultation with a larger number of respondents was carried out in autumn 2023.

Comments have been taken into account and influenced the design of the new Green Loan terms. This applies, for example, to the criteria for reduced climate impact from concrete. For all project categories except Green buildings, where there are already concrete requirements, this is for the time being designed as a disclosure requirement instead of a strict requirement in accordance with the consultation proposal. Kommuninvest's ambition is to introduce, in 2025, specific requirements for reduced climate impact from concrete for all project categories, including thresholds for embodied climate impact from new construction.

Danske Bank and BNP Paribas have been advisers to Kommuninvest in connection with the framework update.

For download

New Green Loan terms – the changes in summary

New Green Loan terms – criteria document

Kommuninvest Green Bonds Framework 2024

Second Party Opinion, Kommuninvest Green Bonds Framework (S&P Global)

Contact information

Björn Bergstrand, Head of Sustainability, phone: +46 (0) 70-886 94 76
e-mail: bjorn.bergstrand@kommuninvest.se

David Ljung, Head of Lending and Advisory tel: +46 (0) 73-068 45 45
e-mail: david.ljung@kommuninvest.se

Victoria Preger, Head of Communications, tel: +46 (0) 702 66 87 26

e-mail: victoria.preger@kommuninvest.se