When an investor buys a green bond, the bond capital is allocated to environmentally friendly investments. The bond issuer commits to executing projects with positive environmental effects and precisely defined criteria. Jussi Pohjanpalo, Fingrid’s Group Treasurer, considers green bonds a good way of financing investments with funding specifically allocated to green investments.
“The investment must meet certain criteria – it must be expected to have a net positive impact on the environment. Examples of such investments at Fingrid may include building a substation to connect an electricity producer’s wind power plant. Green investments may also include modernising old transmission lines to improve energy efficiency by reducing transmission losses.”
Fingrid’s investment programme covers a rolling 10-year period, and the projects facilitated by green financing are carefully screened. In the 2017 screening process, green projects accounted for approximately 15 per cent of the entire programme. This year’s project screening process is still underway, but the proportion of green projects is expected to rise with the increased level of wind power investment.
“As an investor, Fingrid aims to use green financing, as it supports the company’s goal of enabling the transition to a clean power system. Green financing is also compatible with our responsible operating methods, which include environmental impact assessments of projects, corporate responsibility audits of suppliers and service providers, and requiring suppliers to commit to the company’s Supplier Code of Conduct.
There is plenty of green money on offer in Finland and around the world. The energy sector is in a state of transition, and investors are interested in facilitating new forms of renewable energy and climate investments. Green bonds can help issuers to enhance their standards of corporate responsibility in environmental matters and sustainable development financing, and expand the investor base.
“The number of investors in Fingrid also increased when green bond was issued, as they provided the company with new debt investors with a specific focus on green financing.”