STOCKHOLM COUNTY COUNCIL GREEN BOND IMPACT REPORT 2018

STOCKHOLM COUNTY COUNCIL GREEN BOND IMPACT REPORT 2018 1 TABLE OF CONTENTS

3 GREEN BOND IMPACT REPORT, MARCH 2018

4 EXECUTIVE SUMMARY

6 COUNTY COUNCIL’S ENVIRONMENTAL PROGRAMME 2017–2021

6 STOCKHOLM COUNTY COUNCIL’S GREEN BONDS

7 STOCKHOLM COUNTY COUNCIL’S FRAMEWORK FOR GREEN BONDS

7 IMPROVED FUTURE REPORTING ON GREEN BONDS

8 FEEDBACK ON THE GREEN BONDS AND GREEN FINANCE

9 INVESTOR MEETINGS

10 STOCKHOLM COUNTY COUNCIL’S PROJECTS FOR GREEN INVESTMENTS GREEN BOND IMPACT REPORT, MARCH 2018

“Stockholm is experiencing rapid growth and Stockholm County Council is now making historic and necessary investments in healthcare and public transport. Green bonds are a good fit for our environmental efforts. As a major actor, we need to be conscious of making investments that are of a sustainable nature.” Malin Frenning, CEO Stockholm County Council

“The County Council’s investments must be made with the smallest environmental impact possible. The investments are well suited to green bonds where we turn to investors who value our environmental efforts. Through clear and transparent reporting for green projects, we hope to provide investors more reasons to choose green investments.” Frida Korneliusson, CEO Stockholm County Council Treasury

“Actors like the Stockholm County Council are essential for leading the way and demon- strating it is possible for the world to reduce climate emissions sufficiently to remain below a global warming of 1.5–2 degrees, set by the Paris Agreement.” Charlotta Brask, Head of Sustainability at Stockholm County Council

STOCKHOLM COUNTY COUNCIL GREEN BOND IMPACT REPORT 2018 3 EXECUTIVE SUMMARY

Stockholm County Council reports it’s Green Bonds impact in accordance

with the Nordic Public Sector Issuers: Position Paper on Green Bonds Impact Nordic Public Sector Issuers: Position Paper Reporting, published in October 2017 by a group of Nordic public sector green on Green Bonds Impact bond issuers. Any deviations from the Position Paper recommendations will Reporting

October be indicated in our reports. 2017

For more information: sll.se > Choose language > English > investor relations > funding programmes > Nordic issuers release guide on green bonds impact reporting

GREEN BONDS ISSUANCE AND GREEN PROJECT PORTFOLIO

7 000

6 000

5 000

4 000 SEK million 3 000

2 000

1 000

0 2014 2015 2016 2017 Disbursed to projects/total amounts approved to projects SEK 1.1 bn green bond (2014) SEK 1.8 bn green bond (2015) SEK 1.5 bn green bond (2016) SEK 2.0 bn green bond (2017)

All green bonds are fully invested.

GHG IMPACT AND GREEN INDICATORS, DIVIDED BY DISBURSED AMOUNTS FOR GREEN BONDS

GHG emissions Disbursed

reduced/avoided amounts to Impact CO2e 1 Project category CO2e /year (tonnes) Other result projects, SEK mn (tonnes)/SEK mn Green Buildings 13 600 3 353 4

Renewable energy (own production) 4 400

Clean transportation 6 100 1 5522 4 (excluding Roslagsbanan) Waste management n/a See individual reports Total 19 700 4 9052 n/a (Reduced emissions from Renewable energy are excluded from this total as it is already partly included in Green buildings)

Disbursed amounts w. GHG impact 4 9052 4 SEK mn Annual renewable energy 30 000 MWh generation, MWh Annual energy savings, MWh 6 900 MWh (compared to national building requirements)

1 Calculations have been made on CO2 emissions, with a GWP warming potential of 1. Thus the value in CO2 equals the value in CO2e (Carbon dioxide equivalents). 2 Due to new impact report guidelines, there is no updated information at the moment about GHG emissions reduced/avoided for issued bond 2014, 2015 (Roslagsbanan). Hence, the disbursed amount for Roslagsbanan is not part of 1 552 mn and not part of 4905 mn. Also due to very low amount disbursed to New depot Högdalen, it is not part of the impact figures.

4 STOCKHOLM COUNTY COUNCIL GREEN BOND IMPACT REPORT 2018 Key procedural aspects • Each project is selected according to the Stockholm County Council Green Bonds Framework available on sll.se > Choose language > English > investor relations > funding programmes > green bond > framework for green bonds • Stockholm County Council reports on a project basis, and in Swedish kronor (SEK). • For this document, the reporting period ends on 31 December 2017.

Key reporting methodology • Stockholm County Council reports on the basis of the share of the project’s total investment cost financed with green bonds (net of redemptions). • Impacts are based on outstanding disbursed amounts to projects in Stockholm County Council Green Bonds 2014– 2017 with exception of Roslagsbanan (2014 and 2015). Our ambition is to include this impact parameter in next report. • Impact is principally reported on expected impact (ex ante), unless clearly stated as ex post.

5 STOCKHOLM COUNTY COUNCIL’S ENVIRONMENTAL PROGRAMME 2017–2021

Stockholm County is a dynamic and rapidly takes national and global responsibility for the growing region requiring major investments in production of goods and services that are procured. public transport and healthcare to facilitate successful development. The County Council aims The County Council’s environmental programme to contribute to sustainable development in the covers five areas: region, by way of limited environmental impact. • Sustainable procurement • Climate commitment The County Council is taking a comprehensive • Healthcare approach to reducing environmental impact from • Public transport and other transports properties and installations, pharmaceuticals, • Properties and installations textiles, food and travel. The County Council also

STOCKHOLM COUNTY COUNCIL’S GREEN BONDS

In May 2014, Stockholm County Council was the Any financing raised by the County Council within first county council in Sweden to issue a green bond. the green bond framework is earmarked for A green bond has been issued each year since. environmental projects and is held in a separate tra- ceable account that is allocated for investments that Green bonds are a way of financing investment meet specific environmental criteria. projects with a particular environmental focus. They are a tool for raising awareness of climate-­ The Eligible Projects are selected jointly by the related challenges and solutions while safeguarding Stockholm County Council Treasury and the green development projects in the county. In terms Sustainability Department. They are then approved of risk, return, legislation and documentation, green by a Steering Group for Green Bonds consisting of bonds have the same characteristics as other invest- executive managers from the the County Council’s ments. They currently account for only a small per- local bodies, strictly following the following four centage of the overall bond market, however interest steps: and demand for green bonds is growing rapidly. • Stockholm County Council Treasury initiates the screening process and a project group is formed. • The project group for green bonds determines the ISSUED GREEN BONDS portfolio of green projects to be financed by a Year Loan amount Issued green bonds potential green bond issuance. 2014 SEK 1.1 billion 6 years • The Stockholm County Council Sustainability Department evaluates all the proposed projects 2015 SEK 1.8 billion 6 years to ensure compliance with laws and regulations, 2016 SEK 1.5 billion 5 years and 4 months Stockholm County Council environmental and 2017 SEK 2.0 billion 5 years social policies as well as the Stockholm County Council Green Bond Framework. • The Steering Group for green bonds has final authority in determining the final list of eligible green projects, to be financed by green bonds.

6 STOCKHOLM COUNTY COUNCIL GREEN BOND IMPACT REPORT 2018 STOCKHOLM COUNTY COUNCIL’S FRAMEWORK FOR GREEN BONDS

The county council’s green financing complies with a framework for green bonds. The framework stipu- sll.se > Choose language > English > investor lates how the selection process of green projects is relations > funding programmes > green to be conducted, how the money is to be managed in bond > framework for green bonds separate accounts and how the communication and reporting on the projects will ensure transparency for investors.

IMPROVED REPORTING ON GREEN BONDS

In 2016, Stockholm County Council began, in Signatories are: City of Göteborg (Sweden), cooperation with other Nordic public issuers of Kommunalbanken (Norway), Kommuninvest green bonds, an effort to formulate a common (Sweden), Municipality Finance (Finland), approach to feedback reporting. The cooperation Norrköping Municipality (Sweden), Örebro Munici- is founded on the conviction that a common Nordic pality (Sweden), Svensk Exportkredit (Sweden), position will offer valuable insight for other green Municipality of Lund (Sweden), Region Skåne bond issuers as well as the investor market in gene- (Sweden) and Stockholm County Council (Sweden). ral. There is also a value in sharing experiences and expertise.

The objective is to develop a transparent, harmoni- sed and relevant approach to reporting the effects of green bonds. The group’s ambition is to continue to develop the guide for Nordic issuers of green bonds published in the second half of 2017.

STOCKHOLM COUNTY COUNCIL GREEN BOND IMPACT REPORT 2018 7 FEEDBACK ON GREEN BONDS AND GREEN FINANCE

The first green bond issued by Stockholm County In June 2017, the County Council’s fourth green Council in 2014, funded two investment projects bond was issued in the amount of SEK 2.0 billion with a particular environmental focus: the Roslags- and pertains to three projects: the construction of banan expansion programme and the new construc- New Karolinska Solna, the upgrade of the Metro’s tion and renovation of Södertälje Hospital. The Red Line and the establishment of a depot in proceeds from the first green bond, SEK 1.1 billion, Högdalen as part of the expansion of the entire has been fully invested as of 31 March 2015. subway network.

The second green bond, in the amount of SEK 1.8 The table below is continuously uppdated, on sll.se, billion, was issued in May 2015 and was intended for with Stockholm County Council’s green investment three projects: the Roslagsbanan expansion pro- expenditures. gramme, the construction of New Karolinska Solna, and the new construction and reconstruction of All projects are reported according to the guide for Södertälje Hospital. Nordic issuers of green bonds except the new Metro, a new depot in Högdalen, as it only represents a The third green bond, in the amount of SEK 1.5 small portion of the proceeds. billion was issued in May 2016 and pertains to three projects: the construction of New Karolinska Solna, the upgrade of the Metro’s Red Line and new construction and renovations of Södertälje Hospital.

Green bond Green bond Green bond Green bond Total green 2014 (SEK 1.1 2015 (SEK 1.8 2016 (SEK 1.5 2017 (SEK 2.0 financing billion) Fully billion) Fully billion) Fully billion) Fully Projects Total (where of invested 31/3 invested 31/3 invested 30/6 invested 31/12 MSEK investment green bond) 2015 2016 2017 2017 Expansion of 8 455 1 495 915 580 Not part of Not part of Roslagsbanan (1 495) this bond this bond New- and 1 200 785 185 375 225 Not part of reconstrution (785) this bond of Södertälje Hospital New Karolinska 18 500 6 323 Not part of 845 723 1 000 Solna (2 568) this bond Red line 13 200 7409 Not part of Not part of 552 957 programme (1509) this bond this bond The new Metro, 1 600 43 Not part of Not part of Not part of 43 a new depot (43) this bond this bond this bond in Högdalen

8 STOCKHOLM COUNTY COUNCIL GREEN BOND IMPACT REPORT 2018 INVESTOR MEETINGS

The County Council works actively to provide transparency for investors. An example of this is the investor meetings that the County Council holds regularly. The projects financed with green bonds have been of particular interest to investors and the meetings have been well attended. Examples of meeting venues include the NKS, Södertälje Hospital, ambulance care services and the electric boat serving Saltsjön.

9 STOCKHOLM COUNTY COUNCIL’S PROJECTS FOR GREEN INVESTMENTS

New construction and renovation of Södertälje Hospital

Södertälje Hospital is being expanded and moder­ A key goal of the project is to meet the requirements nised to create more modern and efficient premises. of the Sweden Green Building Council’s Gold level The project is intended to meet the anticipated of certification and to support achieving the County increased need of care capacity in the immediate Council’s environmental goals including having an area by 2020. An important starting point for the energy consumption that is at least 30 per cent lower project is that the hospital should enable greater than that specified in Boverket’s regulations for new flexibility for the future. The technical systems are buildings. The regulations for new building specify duplicated, providing a back-up system to cope with 125 kWh/m2 per year, whereas the forecast for the outages in more than one section. new Södertälje Hospital is 76 kWh/m2 per year.

One of the major challenges is to implement the project on a relatively small property while ensuring the hospital remains fully operational.

10 Other goals in the project are to: • use the building materials assessment systems to • achieve greater interactivity and process ensure approved materials are incorporated in the orientation for cohesive outpatient care and buildings sterile technology • reduce energy consumption over time • achieve better logical links between inpatient • dispose of waste in an eco-friendly way care, emergency department and treatment • ensure that transports are efficient and environ- functions mentally friendly • create generally designed wards for greater • avoid substances with a detrimental impact on flexibility health and the environment • ensure that the working environment for staff meets current demands without reducing the available range of care

SÖDERTÄLJE HOSPITAL

Category Project Indicators Unit Baseline /benchmark Renewable Geothermal energy Capacity of renewable 170 MWh2 energy (cooling) energy plant Actual production of 170 MWh2 renewable energy Annual GHG emissions 30 tonnes 2 reduced/ avoided CO2e Green New building Annual energy avoided, 900 MWh3 National building Buildings1 standard exceeding compared to national buil- code BBR19 building standard ding requirements requirements Annual GHG emissions 300 tonnes 4 reduced/avoided CO2e

Green energy Percentage renewable 99 % 54 % Swedish average, being used energy sources Swedish Board of Energy Annual GHG emissions 450 tonnes (Energimyndigheten)­ 2016 4 reduced/avoided using CO2e green energy

Environmentally Percentage of materials 92 % friendly materials being used acecpted in being used Byggvarubedömningen Waste Resource preserving Improvement in material 97.5 % National benchmark not management waste treatment recovery rate compared to recovery available.6 (construction national references incl. materials) energy5

1 Theoretical values for electricity, heating and cooling from energycalculations in the report Energiberäkning Nya Södertälje

Sjukhus Byggnad 19–20 dated 2016-03-15. In some cases actual values has been used as reference for quality check. CO2eq./kWh for electricity comes from Vattenfall, EPD waterpower. https://www.vattenfall.se/globalassets/foretag/miljo/miljovarudeklaration- epd-vattenkraft.pdf. CO2eq./kWh for district heating and cooling comes from Svensk fjärrvärme: https://www.energiforetagen. se/statistik/fjarrvarmestatistik/miljovardering-av-fjarrvarme/ 2018-03-09. Assumption on distribution between district heating and electricity in accordance with BBR19. 2 Energy avoided is calculated on 168 MWh and baseline emissions for district heating according to Position Paper Appendix E.

An alternative calculation would be that 16 tonnes of CO2e has been avoided, assuming a large heat pump run on electricity with a COP factor 4 would be used (42 MWh), since district cooling may not be an option. Assumption that energy coming from the boreholes are ” free energy” i.e. no energy needed to produce it. 3 Rounded per 100 MWH 4 Calculated using baseline emissions from Appendix D (combined margin applied by nordic issuers) and Appendix E (the same baseline emission factor has been applied for district cooling as for district heating) compared with actual electricity mix and local mix of district heating and district cooling. Rounded per 100 tonnes. 5 Values for the whole construction phase. Material reuse 16 %, material recovery 29 %, energy recovery 52 %, landfill 2.5 %. 6 EU recycling target for construction waste is 70 % by weight by 2020 but little data exists on current recycling level and it is estimated to be significantly below target.

STOCKHOLM COUNTY COUNCIL GREEN BOND IMPACT REPORT 2018 11 New Karolinska Solna Hospital

The construction of New Karolinska Solna (NKS) are being used for NKS: the Sweden Green Building was initiated in the summer of 2010. In order to Council and the international system LEED. safeguard the very high environmental and sustai- nability goals that have been set, the entire project The aim is to achieve the Gold level in both systems. was being carried out from a sustainability perspec- In September, the fourth and final construction tive. One of the tools used is environmental certifi- phase was approved for Gold level certification in cation of the buildings. Two systems of certification accordance with the Green Building Council.

NEW KAROLINSKA SOLNA

Category Project Indicators Unit Baseline /benchmark

Renewable Geothermal energy Capacity of renewable 30 000 MWh1 energy energy plant Actual production 2017 21 000 MWh1/2 Annual GHG emissions 4 300 tonnes 3 reduced/avoided CO2e Green Buildings New building Annual energy avoided, 21 000 MWh4 National building code standard exceeding compared to national (52 % BBR16 building standard building requirements reduction) requirements Annual GHG emissions redu- 6 600 tonnes 5 ced/avoided compared to CO2e national building standards Green energy Percentage renewable 99 % 54% Swedish average, being used energy sources Swedish Board of Energy (Energi­myndigheten) 2016 Annual GHG emissions 6 200 tonnes 5 reduced/avoided using CO2e green energy

Environmentally Percentage of materials 89 % friendly materials being used acecpted in being used Byggvarubedömningen Clean Infrastructure for Percentage of parking spaces 10 % 0 % (no local/ transportation electric vehicles reserved for electric vehicles national demands)

Estimated savings in GHG 30 tonnes 6 emissions CO2e

Waste Resource- Improvement in material 95 % National benchmark not management preserving waste recovery rate compared to recovery available.8 SITA supplier treatment national references incl. energy.7 average for Sweden is 92 % incl. energy.

1 Capacity is based on total production 2017 (36 000 MWh) minus ingoing electricity. Capacity will increase when the hospital is in full use. Energy produced by geothermal energy is part of the energy avoided. The facility also recycles energy from the buildings. Rounded per 1 000 MWh. 2 Actual production is defined as the total production that has been used in the facilities. The total production could not be used 2017 as the hospital is not yet in full use. Rounded per 1 000 MWh. 3 Energy produced by geothermal energy is part of the energy avoided. Calculated using baseline emission values from Appendix D (combined margin applied by nordic issuers) and Appendix E (the same baseline emission factor has been applied for district cooling as for district heating) compared with actual electricity mix and local mix of district heating and district cooling. Rounded per 100 tonnes. 4 Theoretical value as the hospital is not yet in full use. Rounded per 100 tonnes. 5 Calculated using baseline emssions from Position Paper Appendix D (combined margin applied by nordic issuers) and Appendix E (the same baseline emission factor has been applied for district cooling as for district heating) compared with actual electricity mix and local mix of district heating and district cooling. Rounded per 100 tonnes. 6 Year 2017 7 95 % material recovery incl. energy and 5 % landfill are the figures for the whole construction phase. Figures from 2016 show material recovery 43 %, energy recovery 54.2 %,landfill 2.7 %. Mixed materials have been calculated as 100 % energy recovery, but part of it may have been sent to material recovery 8 EU recycling target for construction waste is 70 % by weight by 2020 but little data exists on current recycling level and it is estimated to be significantly below target.

12 STOCKHOLM COUNTY COUNCIL GREEN BOND IMPACT REPORT 2018 A preliminary certificate can thus be issued for the choice of flooring material, the use of softeners with entire installation after an extensive third party an adverse impact on health (phthalates containing inspection has been carried out by the certification allergy- causing and hormone-disruptive properties) body Sweden Green Building Council. has been reduced by at least 70,000 kg compared with conventional construction – and this is only One aspect of the Green Building Council system is one of all the materials used in the construction. the aim to reduce the energy needs from the heating, cooling and maintenance of the installation. The NKS The Green Building Council is constructed for reduced energy consumption, The Green Building Council is a Swedish certifica- satisfying and exceeding the requirements set by tion system for building installations where the Boverket’s Building Regulations. focus lies on energy, the indoor environment and construction material. Clear follow-up of supplier This means substantial savings, both financial deliveries and reduced maintenance costs is one of and environmental, since the annual reduction in the issues for which the Green Building Council is energy consumption is the rough equivalent of the known. total amount of energy used in 1,200 private homes. By switching to renewable energy, a large portion A building can achieve the Bronze, Silver or Gold also stemming from own production, 99% per cent level. On completion of the construction planning a renewable energy will be used. This means minimi- preliminary certificate is awarded. In order to be zing the emissions of Green house gases. awarded a final certificate, the preliminary certifi- cate must be verified no later than two years after Another focus area is to reduce the use of chemicals the commissioning of the installation. and hazardous substances. Thanks to the deliberate

13 Metro Red Line programme

Creating the possibility for more people to travel by • a new service command centre and new service public transport leads to a considerable reduction of command system

carbon dioxide emissions (CO2) in the atmosphere, • an increase in the number of depots which is one of the County Council’s main efforts • new quieter vehicles that are more energy efficient in reducing negative environmental impact in the than older models County. The upgrade of the Metro’s Red Line aims to develop and strengthen capacity and thereby Throughout the construction phase, sustainability contribute to sustainable public transport. To will be monitored and measures will be applied on achieve this goal, investments are being made in continual basis, such as material optimisation and reducing the amount of material transports.

RED LINE

Category Project Indicators Unit Baseline /benchmark Clean Expansion of Net avoided emissions from cars 6 100 tonnes 17.5 km car kilometers/ 1 transportation Metro Red Line and other vehicles CO2/year person/week day. 260 days a year. Number of people in new means 6 800 people/ of transportation weekday2

1 Estimated reduction in car kilo­ 30 752 000 km 6 100 tonnes CO2e/year meters the project will replace

1 Aggregated value in number of people for 5 years, divided per year. 17.5 km car kilometers/person/week day. 260 days a year.

Estimated car emissions of 0.2 kg CO2/km. 2 Estimated increase in number of people, aprox 1.7% per year during 5 years.

Extension of the Metro in Stockholm

The extension of Stockholm’s Metro is the largest climate-smart travel alternative to fossil-fuelled investment in the subway system in modern times. means of transport. During the project, environ­ 19 kilometres of new track and 11 new stations divi- mental and sustainability aspects have been taken ded into four sections are being built and, around into account in every area. The Metro extension will 2025, Metro service will operate between Nacka C, have a large climate impact during its construction Barkarby station and Arenastaden. More vehicles phase, but from a life-cycle perspective, the Metro and garaging points with greater capacity for will have a clearly positive effect with reduced servicing these vehicles are needed for the Metro resource consumption and reduced climate burden extension. Today, the number of vehicles and depot for the county’s residents. Multiple measures are capacity fall short of the requirements necessary for planned to reduce the climate impact in the the successful extension of the planned Metro.The construction phase, such as optimisation of mate- extended Metro will be a resource-efficient and rial selection and resource consumption, reduction

14 STOCKHOLM COUNTY COUNCIL GREEN BOND IMPACT REPORT 2018 of the number of transports, etc. The climate burden right from the design stage. The project’s sustaina- from the extended Metro will be reduced by at least bility coordinator provides support and monitors 25% during the project’s implementation and no sustainability issues in every project. The certifica- serious work environment accidents will occur. tion system CEEQUAL1 will be used to ensure that the County Council’s strategic environment work is The County Council’s Extended Metro Administra- integrated into the planning and project engine- tion is environmentally certified according to ISO ering of all sub-projects. The objective is to achieve 14 001. Through climate calculations, the County the rating of Very Good as a minimum2. Council monitors the climate impact of stations

Depot for extended Metro in Högdalen

The Depot-Vehicle project has the task of reinforcing Multiple measures are planned to reduce the climate the capacity at the existing Högdalen depot by several impact in the construction phase of the depot. An measures, promoting the resilience and capacity of above-ground garage, with a timber frame is planned, the overall Metro system. The Högdalen maintenance which will provide an estimated climate improve- facilities “garaging points” will be expanded and the ment of around 165 tonnes of carbon dioxide equiva- connection possibilities to the depot will be exten- lents compared with a steel frame. It has also been ded to be accessible to both the Green and the Blue engineered to enable the installation of solar cells on Lines. All of these measures will make it possible to buildings above ground and placing the entrances to increase the number of vehicles which is much the garage below ground, cutting the heating costs. needed. The project is vital for ensuring that the Constant optimisations are made to reduce resource finished Metro lines will be fully operational for the consumption, especially the amount of concrete that scheduled launch of service. At the same time, an is used. The use of light concrete is an important aid upgrade is being performed on the vehicle fleet and for reducing the number of heavy transports in the the transport systems. Reinforcing sustainable construction phase. transport systems reduces the level of carbon dioxide emissions in Stockholm County. The project has the objective of achieving the rating of Very Good as a minimum.

1 CEEQUAL is a sustainability assessment, rating and awards scheme for civil engineering, infrastructure, landscaping and public realm projects. CEQUAL was developed by the British industrial association Institution of Civil Engineers (ICE) and was launched in 2003 in the UK and Ireland. 2 The rating “Very Good” is the second highest rating on the scale and means that the project received more than 60%, but less than 75 % of the total points.

STOCKHOLM COUNTY COUNCIL GREEN BOND IMPACT REPORT 2018 15 www.sll.se