Sustainable financing with green bonds: the story of NN Bank and CFP Green Buildings
How are green bonds, sustainable homes, and CO2 reduction connected? Sander Roling, Funding Manager at NN Bank, shares how the bank links green financing to a greener future. By issuing green bonds and conducting thorough green bond reporting with the help of CFP Green Buildings, NN Bank demonstrates the impact of sustainable financing. Curious about how this collaboration came about and what benefits it offers? Read on.
The path to sustainable financing: methodology and impact reports
NN Bank’s sustainability strategy focuses on greening its mortgage portfolio and reporting progress. One key action was establishing a Green Bond Framework to align its financing strategy with the bank’s ESG strategy. Since publishing the Green Bond Framework in 2021, NN Bank has issued nearly EUR 1.8 billion in green bonds. These green bonds support the bank in further greening its mortgage portfolio and increase commitment to transparency in its goals and progress. Additionally, it expands NN Bank’s investor base by attracting green investors alongside traditional ones.
The first step in issuing green bonds was determining what assets must meet to be classified as ‘green’ and ‘eligible’. Sander Roling explains: “For mortgages, a considerable standard has fortunately already been developed with the EU Taxonomy, a European classification system for sustainability activities. However, certain aspects of it still require further clarification. CFP Green Buildings (CFP) has therefore prepared a methodology report for NN Bank and many others in the Dutch banking sector. CFP is the most used party for this, and their methodology describes exactly what qualifies as sustainable collateral under the EU Taxonomy.”
Next, it is essential to report on the climate impact of these green bonds, particularly the reduction of CO2 emissions. Sander continues: “To comply with the ICMA Green Bond Principles, the standard on which the NN Bank Green Bond Framework is based, we must prepare impact reports showing the avoided CO2 emissions of our green mortgage portfolio compared to an average Dutch mortgage portfolio.” This transparency is not only mandatory but also crucial for NN Bank’s green bond investors so they can see the tangible climate benefits of their investments.
The role of CFP Green Buildings
CFP plays a crucial role in this process, conducting analyses for NN Bank by verifying whether the selected mortgages meet the EU Taxonomy requirements using energy labels and land registry data.
NN Bank provides CFP with a portfolio of Dutch homes that may qualify as green assets. These homes are then analysed using the Green Buildings Tool, which assesses CO2 emissions and energy and gas consumption per building. This enables CFP to indicate the total emissions of the portfolio and how it compares to an average home in the Netherlands.
“CFP helps us understand which buildings meet the EU Taxonomy by looking at energy labels, primary energy needs of homes, and whether they belong to the top 15% of the most sustainable homes in the Netherlands. Additionally, CFP provides insight into the climate impact and the annual progress in greening,” says Sander.
Transparency and reliability in sustainability
Each year, NN Bank reports on its green mortgage portfolio, as it is dynamic with repayments and the issuance of new mortgages. “CFP’s checks, combined with a review from our accountant, ensure that the green bond reports are accurate and reliable,” says Sander. This allows NN Bank to provide a reliable annual overview of the climate impact of its green mortgage portfolio.
“The reports on green bonds ensure external transparency about our ESG objectives and monitor progress on them. They also meet the ESG information needs of our green investors, who in turn must report on the climate impact to their clients.”
– Sander Roling, Funding Manager at NN Bank
The power of collaboration
Collaboration is essential to elevate reporting standards. In the Netherlands, several collaborations are ensuring more uniformity. Sander states: “A good example is the Energy Efficient Mortgages NL Hub, where interbank discussions take place about the interpretation of the EU Taxonomy. This allows us to present a joint vision as the Dutch market and publish on it, ensuring a consistent approach among all banks.” Such initiatives are valuable for standardising and harmonising reports in the Netherlands. This helps banks produce uniform and comparable reports, which is crucial for both national and international investors.
A green path forward
The collaboration between NN Bank and CFP has established a solid foundation for impact reports and the issuance of green bonds. By focusing on transparency and sustainability, NN Bank contributes to a greener future and inspires other financial institutions to follow the same path.
Interested in green bonds or other sustainability reports? Contact us for tailored advice.
