The Dutch bank De Volksbank secured the award for the green bond of the year (Environmental Finance) by a bank for its inaugural €500 million ($550 million) issue, after judges were impressed by its “innovative carbon profit and loss approach.”
The green bond will fund new or refinance existing loans for green building projects, including refurbishment or construction of new residential properties. The bond forms part of a broader push by the Dutch lender to reduce the environmental impact of its operations.
De Volksbank – which primarily offers mortgage and savings services – has committed to making its balance sheet carbon-neutral by 2030, with an interim target of 45% carbon-neutral by the end of 2020.
To achieve neutrality, de Volksbank has adopted the carbon profit and loss (P&L) account methodology developed in 2015 by its sustainable lending arm, ASN Bank, across its entire balance sheet. The initial work by ASN resulted in the creation of the Partnership for Carbon Accounting Financials.
The P&L account seeks to balance carbon dioxide (CO2) profits with losses. CO2 profits are earned through investments that avoid CO2 production, such as wind farms, solar parks, and thermal storage. Meanwhile, CO2 losses are booked from investments that do produce carbon, such as investments in homes and businesses.
De Volksbank senior associate for funding and ESG relations, Sharon Bloemendal, said the lender plans to issue more green bonds in 2020.
“Our ultimate goal in the future is that all issuances of de Volksbank will qualify as green, social or sustainable, and therefore we will constantly be at the forefront of the evolvement of the green bond market,” she adds.
Deal highlights:
Issuer: De Volksbank
Date of issue: September 2019
Size: €500 million ($550 million)
Maturity: September 2024
Coupon: 0.01%
Use of proceeds: Green buildings
External review: ISS-oekom
Lead managers: ABN Amro, HSBC, ING, SEB
Credit rating: Fitch (A-); Moody’s (A3)
