‘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.
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.”