A new green financing tool for real estate

Real estate companies now have a new effective tool to help finance their green initiatives – green securities financing from Nordea.

Companies have long used securities financing as a convenient way to obtain competitive, flexible financing. Clients with a portfolio of liquid assets, such as stocks, bonds or other listed securities, can use those assets in exchange for short-term capital. The financing tool has been especially relevant in the real estate sector, where owners often have investment companies with shares to use as collateral for other investments.

Now, Nordea is one of the first known banks to add a green angle to securities financing, bolstering its already leading position within green financing. If a company needs funding for a green project or investment, it can use the securities financing framework to obtain financing that is specifically labelled green.

Peter Dalmalm, head of Nordea Business Banking Sweden, sees the offering as a welcome addition to Nordea’s toolbox for supporting clients on their sustainability journeys.

“Green financing options feature in most customer dialogues these days. Sustainability really is on top of everyone’s agenda. It’s great to have an offering that helps advance both Nordea’s and our clients’ transition to a more sustainable future,” he says.

‘A flexible, lightweight option’

The real estate sector has long been a frontrunner in sustainable finance. With environmental and energy performance certificates for buildings, real estate companies have had a convenient way of defining what is green. Sustainability has also become a business driver for real estate, given the potential for income gains in meeting customer demands as well as cost reductions in energy and materials.

“In the real estate sector, everyone is building green,” says Patrik Svensson, Nordea’s Head of Business Banking Region West and Business Banking Real Estate Sweden. “That makes the industry a natural fit for green financing structures.”

Sina Kazemi on Nordea’s Securities Finance Sales team in Sweden adds that green securities financing is a convenient complement for other green financing products, such as green and sustainability-linked bonds. For companies that don’t have the administrative machinery to issue a green bond, green securities financing loans can help fill the gap.

“It’s a flexible, lightweight option for green financing, and a great way to utilize an investment portfolio to benefit other parts of the business,” Kazemi says.

Shared goals

The green securities financing framework is tied into Nordea’s own green bond framework. A company seeking financing for a green project or investment provides Nordea with documentation for the project. Then Securities Finance, together with Group Sustainability, determines if the project falls under one of the six categories laid out in the Nordea framework, which includes, for example, renewable energy, green buildings and green transportation.

The financing structure provides clients with a pure green financing product, while also adding value by contributing to the growth of Nordea’s green bond asset pool.

Nordea is on its own climate journey, committed to net-zero emissions by 2050. As the largest financial services group in the Nordic region, the bank also has an important opportunity and responsibility to accelerate the transition with impact through our customers. Part of that is supporting our customers’ transition through financing.

“We’re all aiming at the same target of carbon neutrality,” says Svensson. “So we need to be fully equipped as a bank with all the product types that support this journey. Green securities finance is a great example.”