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We have doubled our Impact Investments!

Published September 29th, 2020

Together with you, we are driving forward positive change. And will be doing so with even greater force from now on! This is because we have expanded our Impact Investments with an additional green bond and a social bond. Read on to find out exactly what this means and which projects will be financed.

Money can be part of the solution. Which is why we are financing – together with you – renewable energies, forest conservation and social projects in the Global South and offsetting massive amounts of CO2. Part of the positive impact comes from investments in a green bond issued by Förderbank NRW and through microloans for small farmers that are financed through customer deposits. In this way, we have already achieved very much together with you, which is fantastic!

But we have now gone one step further and almost doubled our Impact Investments. In concrete terms, this means: in addition to the €9,800,000 invested in Förderbank NRW’s green bond and the €50,000 for microloans, another €3,600,000 will be invested in the Nordic Investment Bank’s green bond and a further €6,000,000 in a social bond issued by Nederlandse Waterschapsbank N.V. This means that our Impact Investments now amount to just under €20 million, which can now be used to finance renewable energies, climate-friendly transport, affordable housing and sustainable communities.

Okay, but what exactly is a bond?

Bonds are securities that are traded on the stock exchange. They can be acquired by private investors (like you) or institutional investors (like Tomorrow or our partner Solarisbank). Financial institutions (in this case Förderbank Nordrhein-Westfalen, the Nordic Investment Bank and Nederlandse Waterschapsbank N.V., which issue the green and social bonds) raise capital in this way to refinance loans. Here, they must pay back the capital to the creditor (in this case Tomorrow/Solarisbank) after a specific term, together with interest.

Details on the Nordic Investment Bank’s Environmental Bond

The Environmental Bond is a green bond issued by the Nordic Investment Bank, which is geared towards expanding renewable energies and promoting energy efficiency in buildings. These investments will help to create new energy plants but also to reinforce existing infrastructure. The investments are concentrated above all on Sweden, Norway and Finland. One exciting pilot project that is funded by the bond in which we are investing is centred on electric ferries in Norway. All financed projects are geared explicitly towards the United Nations Sustainable Development Goals (SDGs).

How is the money invested?

NIB’s green bonds portfolio is divided up into six different areas. The largest of these – accounting for 27 percent of total bonds – is invested in expanding renewable energies, especially electricity generated from wind, solar, tidal and wave power plants (SDG 7). However, part of the funds is also invested, for example, in developing, designing and producing new technologies for renewable energies (SDG 13).

25 percent of funds are invested in measures for increasing the energy efficiency of buildings. This is done by rehabilitating existing buildings, including making improvements to heating systems, insulation, lighting or electrical devices. Another 25 percent of funds is invested in water conservation and protection, which includes wastewater treatment and flood protection (SDG 6). However, freshwater and marine ecosystems are also being protected and restored by means of projects for expanding nature reserves and preserving biodiversity (SDG 13; SDG 14).

Clean transport solutions are another area supported by the bonds, accounting for 12 percent of invested funds. These are based mainly on electricity or sustainable biofuels and corresponding transport infrastructure (e.g. rails, charging stations, fuel distribution systems, bicycle and pedestrian infrastructure). One pilot project in this area involves electric ferries, which are already being used in Norway (SDG 11). We are investing €3,600,000 in the Nordic Investment Bank’s Environmental Bond.

Details on Nederlandse Waterschapsbank N.V.’s “Housing Bond”

The SDG Housing Bond is a social bond issued by Nederlandse Waterschapsbank N.V. that is geared towards creating social housing in the Netherlands. The apartments and rents are adapted to income levels and are capped with a maximum rent of €710.68 per month. 80 percent of this new housing will be allocated exclusively to households and families with a maximum income of €36,798 per year (2018). 10 percent of the guaranteed benefits will go to people with special needs (e.g. due to health-related conditions).

However, the investment also takes into account other areas such as sustainable communities, diversity, integration, energy efficiency, quality of life and resident satisfaction and is geared explicitly towards the United Nations Sustainable Development Goals (SDGs).

How is the money invested?

More than 50 percent of investments go towards modernising existing houses, particularly with regard to improving energy efficiency. This involved equipping houses with solar panels and replacing old heating systems with more efficient ones. In addition, windows, roofs and walls were insulated more effectively (SDG 7; SDG 11). For instance, 56 percent of the residential area is rented as social housing. 11 percent of the apartments are available for single parents, predominantly women (SDG 1; SDG 5; SDG 10).

A further part of the funds is invested in improving the district and providing facilities for the community as a whole. For example, a Social Management Label is assigned for individual neighbourhoods based both on quantitative survey findings and on qualitative insights from talks with the residents. Following this, suitable measures are then undertaken on location based on the outcome in each case (SDG 3; SDG 11; SDG 16). We are investing €6,000,000 in Nederlandse Waterschapsbank N.V.’s housing bond.

Anyone who wants to find out more about Förderbank NRW’s green bond and about microloans should read on here.