2020 green bond impact report - swedbank

2020 Green Bond Impact Report

S P A R B A N K E N S K Å N E A B ( P U B L ) C O M P A N Y R E G . N O . 5 1 6 4 0 1 - 0 0 9 1 - 2 0 2 0 G R E E N B O N D I M P A C T R E P O R T

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Kristianstad

Hässleholm

Osby

Östra Göinge

Simrishamn

Ystad

Tomelilla

Sjöbo

Hörby

Höör

Eslöv

Svalöv

Kävlinge

Staffanstorp

Lund

Full-service bank with over 300,000 private and corporate customers

Open over the phone and internet every day of the week

Branches in 15 municipalities in Skåne – decisions are made close to customers

480 active employees

Lund headquarters – administrative centre in Kristianstad

Sustainability perspective linked to the Agenda 2030 Global Goals

Credit rating A with a stable outlook (Standard & Poor’s)

Strong local ownership – large share of profit reinvested in Skåne Sparbanksstiftelsen Färs & Frosta, headquarters in Sjöbo 26%

Sparbanksstiftelsen Finn, headquarters in Lund 26%

Sparbanksstiftelsen 1826, headquarters in Kristianstad 26%

Swedbank, partner for products, services and IT 22%

Sparbanken Skåne at a glance


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We have a great responsibility – and a great opportunity

Empathy and social engagement were key driving forces when the savings bank concept was born over 200 years ago. Sparbanken Skåne’s business is still based on this concept to this very day, and we believe that it's possible for us to both do good business and do good in society by promoting sustainable development.

The single greatest environmental and social impact of the bank is

indirect in nature via the loans it provides. Therefore, responsible

lending plays a key role in Sparbanken Skåne’s sustainability efforts.

This includes both assessing the risks of the customer's long-term

financial situation and engaging in discussions on sustainability risks

from a broad perspective.

To accelerate the green transition in society, Sparbanken Skåne

decided in 2019 to become the first savings bank in Sweden to issue

green bonds. The purpose of these bonds is to increase our focus on

sustainable lending that supports initiatives with clear benefits for

the future in areas such as renewable energy production, organic

farming and climate-smart properties.

This way, the bank and its customers together can contribute to a

more resilient society.

Link to the Agenda 2030 Global GoalsSparbanken Skåne follows the Principles for Responsible Banking

from the UNEP Finance Initiative. These principles ensure the bank’s

strategy and operations contribute to the vision of the global

Sustainable Development Goals (SDGs) and implementation of the

Paris Agreement.

In 2020, the bank’s sustainability efforts were directly linked to

the Agenda 2030 Global Goals by setting 15 specific goals to track

centred around the bank’s role in the sustainable development of

society. More about this and Sparbanken Skåne’s sustainability

efforts can be found in the 2020 Annual and Sustainability Report.

About this reportThis report provides an overview of Sparbanken Skåne’s green bonds

and the bank's green loan portfolio. We also go over the external

impact the bank’s green bond programme has had since its inception

in 2019.

The Green Bond Framework is based on the International Capital

Market Association (ICMA)’s principles and is also linked to the Agenda

2030 global SDGs.


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We aim to help people understand and improve their finances. We

provide effective payment solutions, guide customers into the digital

world, explain the value of regular savings and are there to lend a

hand during life’s big moments, such as investing in a home or car. We

also support businesses, both large and small. This is all a part of how

we empower our customers to make their ideas and dreams come

true in a sustainable manner.

In addition to our banking services, we are significantly involved

in the local community. We get involved because we care and because

we have the foresight to see that what’s good for the people and the

region in which our customers live is good for the bank, too. This way,

we can continue working with thousands of people and organisations

to make the Skåne of tomorrow even brighter.

In collaboration with our local foundation owners –

Sparbanksstiftelsen Färs & Frosta, Sparbanksstiftelsen Finn and

Sparbanksstiftelsen 1826 – profit from banking activities that is not

needed to secure the bank's future can be reinvested in various grants

and projects to benefit society. This creates many opportunities for

clubs and associations.

We are very proud of this tradition because, even though our

priority is healthy and secure finances for our customers, we also

want to play a part in the continuing development of Skåne and

making Skåne a good place to live. Ultimately, all our customers play

a part in the development of society. This is at the very heart of the

savings bank concept.

The fundamental savings bank concept was to help those less fortunate in society. When the first savings banks were started in the early 19th century, the main purpose was setting aside funds to get through the rigours of everyday life. Today, the mission of savings banks is more complex.

Sustainability in our DNA

Sparbanken Skåne shall conduct its business in such a way that opportunities and risks are considered from a sustainability perspective, including financial, social and environmental considerations

Sparbanken Skåne shall closely engage with customers on sustainability issues, especially with respect to capital investment and lending

Sparbanken Skåne shall set environmental, labour law and sustainability requirements for suppliers and partners as well

Sparbanken Skåne shall be a company at which employees feel they are developing and take pride in their workplace

Sparbanken Skåne shall support activities that promote the environment, sustainable social development, a healthy labour market and integration in Skåne

Sparbanken Skåne shall work to prevent the bank from being exploited for money laundering and terrorism financing

Sustainability policy at a glance


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The Framework is applicable to all issues of green bonds, including senior and covered bonds. The link to

the global SDGs ensures that our efforts are in line with Agenda 2030.

Green Bond Framework

Sparbanken Skåne’s Green Bond Framework was adopted in autumn 2019 and is used to fully or partially finance or refinance qualified green loans with a clearly positive environmental impact. The Framework defines six categories in which the bank is estimated to potentially have the greatest external impact by issuing green bonds.


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CriteriaFossil-free vehicles running on electricity or biofuels and

environmentally friendly transport infrastructure, including charging

stations, and infrastructure for rail transport, bicycle transport and

pedestrians.

Metrics

• Number of people who have access to sustainable

transport systems

• Number of fossil-free vehicles in use

• Number of electric charging stations installed

CriteriaOrganic farming according to national or EU definition

Metrics

• Hectares of cropland managed sustainably

• Sustainable agriculture certification

CriteriaWind power and solar energy

Metrics

• Capacity (MWh) or expected annual production

(MWh)

CriteriaEnergy efficiency projects including infrastructure projects, technology,

energy storage, smart power grid solutions, district heating that

leads to reduced energy consumption or reduced energy losses of

25 percent.

Metrics

• Reduced annual consumption

(MWh); distribution capacity

(MWh)

Energy efficiency

Waste management

CriteriaInfrastructure for better waste management and reduced littering,

and energy-efficient recycling that conserves resources.

Metrics

• Decrease in waste (tonnes)

• Recycled materials (tonnes)

• Decrease in hazardous waste (tonnes)

Sustainable transport

Green buildings

CriteriaGreen buildings, both residential and commercial properties, including

new, renovated, acquired or existing buildings that meet at least one

of the following criteria:

• BREEAM Very Good or equivalent for BREEAM SE classification,

LEED Gold, SGBC Silver or Gold, Green Building, Nordic Swan

Ecolabel or “Passive House” certification

• Buildings with energy performance certificate class A or B issued by

Boverket

• Buildings that have been or will be renovated in a way that reduces

energy consumption by at least 25 percent. National requirements

at the time of construction are applicable as a basis for comparison.

Metrics

• Type of certification and level (LEED/BREEAM/

SGBC Silver etc.)

• Energy performance certificate class (A or B)

• Energy consumption kWh/m2/year

Sustainable agriculture

Renewable energy


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Our green bond – the impact

Sparbanken Skåne issued its first green bond in autumn 2019. The bond finances and refinances loans with clear sustainability benefits under a framework based on the ICMA’s Green Bond Principles (the Green Bond Framework).

Sparbanken Skåne’s green bondLoan amount SEK 1,000,000,000

Settlement date 21 October 2019

Maturity date 21 October 2024

Type of security MREL instrument

ISIN SE0013103744

Distribution of green portfolio

5%

37%

38%

20%

• Energy efficiency • Renewable energy

• Green buildings • Sustainable agriculture

The bank’s loans are continuously checked against the Framework,

with ultimate responsibility held by the Green Committee, which

decides on new green loans following an application from our

advisors that has been approved by the bank’s Lending Staff. The

Framework has been evaluated by independent analysis firm CICERO

Shades of Green, which gave it a rating of Medium Green.

Sparbanken Skåne’s first green bond totalled SEK 1 billion in

capital with a five-year maturity. No new bonds were issued in 2020.

Sparbanken Skåne reports the impact of green bonds at the

portfolio level with outcomes at 31 December 2020. In total, the bank

has SEK 1.9 billion in its green register of loans that have financed or

refinanced projects clearly linked to sustainability (Green Register).

The majority of the portfolio comprises agricultural projects and

funding for green buildings. The remainder of the portfolio is linked to

projects in renewable energy and energy efficiency.

Around 75 percent of the total volume in the Green Register goes

to refinancing and the rest to new financing.

Sparbanken Skåne’s Green Bond Framework defines a total of

six categories in which the bank’s green bonds are estimated to

potentially have the greatest external impact. The metrics for the

impact of the four categories to which loans were mapped in 2019

and 2020 are reported as follows.

Sparbanken Skåne estimates that the COVID-19 pandemic has had

a relatively small impact on the industries in its Green Register. For

industries such as agriculture, the pandemic was in fact more likely to

strengthen the competitiveness of local businesses.

Loans in Green Register SEK 1,967 million


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Production capacity for district heating plants

in Green Register

45,000 MWh

The district heating plants in the Green Register are

100% fossil-free

Energy efficiencyDecreasing fossil fuels is decisive for achieving the climate change

goal of the Paris Agreement. Improving energy efficiency with a wide

variety of climate-smart solutions is key for decreasing the carbon

footprint. Sparbanken Skåne finances district heating plants that

replace oil and coal with renewable raw materials such as locally

produced wood chips, which reduces CO2 emissions in relation to the

heat generated. All district heating plants in the Green Register have

become 100% fossil-free in 2020 by transitioning to vegetable oil

for their production. The vegetable oil used is Rapeseed Methyl Ester

(RME) oil.

Sparbanken Skåne’s green bond also finances a project for a

property owner estimated to reduce input energy by approximately

80 percent. Innovation and development are crucial for creating a

sustainable planet.

Affordable and clean energy

Target 7.3 Double the increase in energy efficiencyBy 2030, double the global rate of improvement in energy efficiency.

Industry, innovation and infrastructure

Target 9.4 Upgrade all industry and infrastructure for increased sustainabilityBy 2030, upgrade infrastructure and retrofit industries to make

them sustainable, with increased resource use efficiency and greater

adoption of clean and environmentally sound technologies and

industrial processes, all countries taking action in accordance with

their respective capabilities.

This category supports the following Agenda 2030 goals


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Renewable energyMuch of the Earth’s greenhouse gas emissions come from burning

fossil fuels. By changing how we produce and consume energy on

Earth, we can achieve the goal of energy services doing no harm to

our planet. Increasing the use of renewable energy is a key part of the

global goal to reduce CO2 emissions under the Paris Agreement.

Sparbanken Skåne finances wind turbines and a solar park with its

green bond, which promotes the use of clean and renewable energy

that contributes to decreasing the negative carbon footprint. In

addition to reducing the negative carbon footprint, wind is a reliable

resource that is highly useful in Skåne given our region’s great wind

resources. Wind turbines reduce greenhouse gas emissions because

the energy generation process is fossil-free.

Likewise, solar panels contribute to reducing greenhouse gas

emissions and increasing the rate of self-sufficient electricity

generation in Skåne. This is not only a matter of a sustainable

environment but also continuing growth and development in our

region. Locally produced electricity will be increasingly important

going forward, and with its green bond, Sparbanken Skåne is

contributing to securing access to sustainable energy here in Skåne.

Affordable and clean energy

Target 7.2 Increase share of renewable energy globallyIncrease substantially the share of renewable energy in the global

energy mix by 2030.

Target 7.A Facilitate access to research and technologies and invest in clean energyBy 2030, enhance international cooperation to facilitate access to

clean energy research and technologies, including renewable energy,

energy efficiency, and advanced and cleaner fossil fuel technologies,

and promote investment in energy infrastructure and clean energy

technologies.


Distribution of loans in renewable energy

87%

13%

• Solar park • Wind turbines


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Green buildingsThe development of sustainable cities plays a key role in global efforts

to reduce the negative carbon footprint. Sparbanken Skåne advocates

for the continued development of sustainable cities in Skåne and we

want to play a part in driving this development.

In addition to the buildings in the Green Register that contribute

to decreasing the negative climate footprint and increasing energy

savings, Sparbanken Skåne finances buildings with Gold or Silver

certification from the Sweden Green Building Council (SGBC). This

means that the properties are environmentally certified and have less

of a negative impact on the environment as a result of measures such

as sourcing electricity and heat from green alternatives, ensuring

high air quality and effective ventilation, and keeping the amount of

radon within permitted values. Other factors that impact the well-

being of the people living in the properties are checked and assessed,

including the amount of daylight and other factors that affect the

interior environment.

Sparbanken Skåne also finances properties that are ranked in

the Swedish National Board of Housing, Building and Planning

(Boverket)’s energy performance class A or B, which indicates a high

level of energy efficiency.

36,000 m² green buildings in

Green Register

The green buildings either have energy performance

class A or B or are environmentally certified

by SGBC

Sustainable cities and communities

Target 11.6 Reduce environmental impact of citiesBy 2030, reduce the adverse per capita environmental impact of

cities, including by paying special attention to air quality, municipal

and other waste management.



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Distribution of loans in sustainable agriculture

30%

19%

51%

• Milk production • Meat production • Crop production

Sustainable agricultureSustainable development in the agriculture industry is essential for

the industry to successfully meet emission reduction targets and

operate sustainably in the long term. By promoting organic and/or

KRAV-certified farming, we can help ensure sustainable development

for the agriculture industry. Given that there is much agriculture in

our area of operation, it's important that we support the continued

growth of sustainable agriculture in Skåne. Agriculture financed by

Sparbanken Skåne’s green bond is KRAV-certified and/or organic

as defined by the KRAV label and the Swedish Board of Agriculture

(Jordbruksverket). KRAV certification sets the bar high for factors

such as limited climate impact and good animal welfare. In organic

farming, the use of artificial chemical pesticides or fertilizers is not

permitted, which in turn contributes to increased biological diversity.

Total area of sustainable agriculture in Green Register

6,000 ha

Zero hunger

Target 2.4 Sustainable food production and resilient agricultural practicesBy 2030, ensure sustainable food production systems and implement

resilient agricultural practices that increase productivity and

production, that help maintain ecosystems, that strengthen capacity

for adaptation to climate change, extreme weather, drought, flooding

and other disasters, and that progressively improve land and soil

quality.



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More about the Framework

Evaluating and selecting qualified green loans is a key process for

ensuring that the issue proceeds are allocated to assets and projects

that meet the criteria of the Green Bond Framework. All loans,

including green loans, are subject to a credit rating that includes a

Know Your Customer (KYC) process and a review of other policies

to ensure compliance with all external regulations. Only collateral

that has passed the customary loan process can be used for green

borrowing.

The Green Committee established by Sparbanken Skåne is a

crucial cornerstone of the evaluation process. The Green Committee

approves green loan applications and is responsible for the pool of

loans included in the bonds. The Green Committee also manages

updates to the Framework and the annual reporting process.

The Green Committee comprises business and sustainability

representatives along with representatives from the finance and

credit units.

The process for identifying a new green loan is as follows

• The corporate advisor fills in a special green application to

the credit unit

• The credit unit evaluates the loan based on the Framework criteria

• The loan is presented to the Green Committee

• The Green Committee approves the loan and it is added to the

Green Register

Selection processThe process for identifying an existing loan as a green loan is as follows

• Loans estimated to be eligible for qualification as green are

identified by the credit unit, where relevant, in discussion with

the responsible corporate advisor

• The loan is presented to the Green Committee

• The Green Committee approves the loan and it is added to the

Green Register

The evaluation process for new and existing private green loans

is developed at a rate largely determined by the capabilities of the

bank’s IT systems. It should be noted that the Green Committee

determines which private loans can be added to the Green Register in

the same manner as for corporate loans.

The Accounting Department is responsible for the Green Register,

and the CFO has ultimate responsibility for it being up to date. The

Green Register is monitored regularly to ensure that the green bonds

issued have sufficient green collateral.

All green bonds issued by Sparbanken Skåne are managed as one

portfolio. As a result, a green bond is not directly linked to a specific

green loan. The bank regularly checks that the portfolio is large

enough. When needed, assets can be moved or added to the portfolio

with green loans.

Any unallocated revenue retained temporarily by Sparbanken

Skåne will be invested in line with the internal liquidity reserve

requirements.

Asset management

The full Green Bond Framework is available in Swedish at sparbankenskane.se/om-oss/om-verksamheten/

finansiell-information/upplaningsprogram/grona-obligationer


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The green bond market is growing very rapidly at this time. This

growth is being driven by both new players and more stringent

frameworks and principles.

In 2020, Sparbanken Skåne listed its green bonds on the Nasdaq

Sustainable Bond Network, an informational platform designed

to improve investor transparency for green, social and sustainable

bonds. In the future, we also plan to make the adaptations necessary

in our approach to green bonds so that we can contribute to the

vision of Agenda 2030 as best possible.

Future outlook

Our aim is to develop green lending by both increasing the volume

and broadening exposures. The bank will continue to identify green

assets in the balance sheet and will actively work to find new green

projects to finance in line with the Green Bond Framework.

We will focus on maintaining close contact with our customers

to support their aims in the transition to a more sustainable society.

We will provide a carefully devised green framework based on

transparency and dialogue with other stakeholders in the area.

Sparbanken Skåne plans to be a regular issuer on the green bond market. We have a positive view of the learning process required by the green bond programme and will carefully follow developments in the area.


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To Sparbanken Skåne AB (publ), corporate identity number

516401-0091

IntroductionWe have been engaged by Sparbanken Skåne AB (publ) (”Sparbanken

Skåne”) to undertake a limited assurance engagement of Sparbanken

Skåne’s Green Bond Impact Report (“Reporting”) for the year 2020 set

out in this document on pages 1-13.

Responsibilities of ManagementSparbanken Skåne Management is responsible for the preparation

of the Reporting in accordance with the applicable criteria, as

explained in Sparbanken Skåne’s Green Bond Framework September

2019 (available at https://www.sparbankenskane.se/om-oss/om-

verksamheten/finansiell-information/upplaningsprogram/grona-

obligationer.html)as well as the accounting and calculation principles

that the Company has developed. This responsibility also includes the

internal control relevant to the preparation of the Reporting that is

free from material misstatements, whether due to fraud or error.

Responsibilities of the auditorOur responsibility is to express a conclusion on the Reporting

based on the limited assurance procedures we have performed. Our

engagement is limited to historical information presented and does

therefore not cover future-oriented information.

We conducted our limited assurance engagement in accordance

with ISAE 3000 Assurance Engagements Other than Audits or

Reviews of Historical Financial Information. A limited assurance

engagement consists of making inquiries, primarily of persons

responsible for the preparation of the Reporting, and applying

analytical and other limited assurance procedures. The procedures

performed in a limited assurance engagement vary in nature from,

and are less in extent than for, a reasonable assurance engagement

conducted in accordance with International Standards on Auditing

and other generally accepted auditing standards in Sweden.

The firm applies ISQC 1 (International Standard on Quality Control)

and accordingly maintains a comprehensive system of quality control

including documented policies and procedures regarding compliance

with ethical requirements, professional standards and applicable legal

and regulatory requirements. We are independent of Sparbanken

Skåne in accordance with professional ethics for accountants in

Sweden and have otherwise fulfilled our ethical responsibilities in

accordance with these requirements.

The procedures performed consequently do not enable us to

obtain assurance that we would become aware of all significant

matters that might be identified in a reasonable assurance

engagement.

Accordingly, the conclusion of the procedures performed do not

express a reasonable assurance conclusion.

Our procedures are based on the criteria defined by Sparbanken

Skåne Management as described above. We consider these criteria

suitable for the preparation of the Reporting.

We believe that the evidence we have obtained is sufficient and

appropriate to provide a basis for our conclusion below.

Auditor’s Limited Assurance Report on Sparbanken Skåne’s Green Bond Impact Report

ConclusionBased on the limited assurance procedures we have performed,

nothing has come to our attention that causes us to believe that

the Reporting for the year 2020, is not prepared, in all material

respects, in accordance with the applicable criteria, as explained in the

Sparbanken Skåne Green Bond Framework September 2019.

Stockholm, 23 February 2021

Deloitte AB

Patrick Honeth Adrian Fintling

Authorized Public Accountant Expert Member of FAR


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Sparbanken Skåne AB (publ) Box 204 221 00 Lund Phone: +46 (0)771-12 20 00 sparbankenskane.se

Sparbanken Skåne AB (publ) Box 204 221 00 Lund Phone: +46 (0)771-12 20 00 sparbankenskane.se

2020 green bond impact report - swedbank

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