What are green loans?

Short explanation: 

Green loans are loans meant for sustainable, environmentally friendly purposes, such as reducing CO2 emissions, or purposes contributing to the green transition in society such as developing new environmentally friendly technology.

Some examples of green loans to personal customers:

• A loan for an electric car
• A loan for installing solar cells on the roof of a house
• A loan for improving the thermal insulation of a house so that less energy is spent on heating 

Some examples of green loans to companies:

• A loan to build a solar park
• A loan to build zero emission buildings
• A loan to ensure growth of a company working with water cleaning technology

Read more about how to make a sustainable choice here.

What is the definition of a green loan from Nordea?

Green loans are loans that fulfil the criteria in Nordea’s Green Bond Framework. The criteria are based on internationally recognised green bond standards. By creating a green loan, Nordea essentially gives the loan a quality label. In doing so, Nordea sets strict criteria for how to use the proceeds from the loan and how to report its environmental impact.

Read more about the green bond standards: The Green Bond Principles issued by the International Capital Market Association, ICMA

What is the connection between green loans and green bonds?

When a bank lends money to businesses or consumers, it needs to find the money somewhere – to fund the loans. This can be done by issuing bonds. Green bonds are bonds where the money from the bonds is earmarked for sustainable purposes such as funding green loans to consumers or businesses. This is also known as green financing.

Green bonds are popular investment objects for large institutional investors such as pension funds wanting to support the transition to a sustainable future. To ensure that the loans funded by our green bonds truly are sustainable, Nordea has developed a green bond framework.

Read more about green bonds and Nordea’s Green Bond Framework.