City of Gothenburg Green Bond Framework 2019
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CITY OF GOTHENBURG GREEN BOND FRAMEWORK SEPTEMBER 2019 “It is a city that has sustainability in its DNA and is always eager to share best practice” - GDS-Index Leadership Award 2018 Table of Contents 03. Background 04. City of Gothenburg Green Bonds 05. Use of Proceeds 06. Green Project Categories 06. Renewable Energy 07. Green Buildings 08. Energy Efficiency 09. Clean Transportation 10. Waste Management 11. Water & Wastewater management 12. Sustainable Land Use & Environmental Management 13. Climate Change Adaptation 14. Green Project Evaluation & Selection 14. Management of Proceeds 15. Reporting & Transparency 17. External Review 2 BACKGROUND Who we are As for economic sustainability, anti-corruption is a key priority for the City. We work actively to combat The City of Gothenburg (”the City”) is a municipality corruption and irregularities by continuously on the west coast of Sweden, strategically located strengthening governance, control and transparency between Oslo and Copenhagen. With a population of across all operations. As to social sustainability, our just over half a million, Gothenburg is Sweden’s long-term goal is to reduce gaps in living conditions second largest city and home to Scandinavia’s largest and health, and to ensure that the city develops in port and a variety of strong industries. a way that is equal and socially sustainable. Swedish municipalities enjoy extensive fiscal The ecological dimension of the sustainable autonomy and can issue bonds to fund the delivery of development of Gothenburg is presented in our public services. The City is responsible for providing environmental programme. The programme includes services such as education, social care, planning and 12 environmental goals with the overall aim to create building, health and environmental protection, waste a good living environment both now and in the future. collection, water supply and purification, energy These goals form the basis of our environmental work supply and public transport. The City also builds and and they also have several sub-targets that we follow manages rental apartments to provide affordable up on annually. A revision of the programme based on housing. According to EU directive, the City always the goal of limiting global warming to 1.5 C was carry out environmental assessments in relation to recently initiated. The revision will include the target of larger investments, and Environmental Impact a fossil-free local transport by 2030, and for the City to Assessments if necessary. have a fossil-free vehicle fleet by 2023, at the latest. Sustainability to us We are determined to be one of the world's most progressive cities when it comes to tackling Gothenburg is governed based on three sustainability environmental issues and climate change. dimensions: social, environmental and economic Gothenburg was the first city in the world to issue a sustainability - all of which are mutually dependent on green bond back in 2013 and the instrument has one another. Collaboration for achieving our become an important tool to reach the City’s climate sustainability objectives spans the entire organisation and environmental goals. In 2014, the City adopted and include both the municipal and the municipality ‘Sustainable city – Open to the world’ as our official owned companies. communication strategy. Our environmental efforts have been recognized several times over the years. In 2015, Gothenburg was named the National Earth Hour Capital by the World Wildlife Fund (WWF) and in 2016, the City won the United Nation’s climate award Momentum for Change. Other credits include a number one ranking in the Global Destination Sustainability Index 2018. In 2019, the City won an award from the Swedish Environmental Protection Agency for our perseverance and long-term perspective related to waste prevention across different sectors of the City. The City of Gothenburg Green Bond Framework 3 CITY OF GOTHENBURG GREEN BONDS We issued our inaugural green bond in 2013 as towards a low-carbon, climate change-resilient and the first city in the world and strive to continue ecologically sustainable society. contributing to the market’s development. We were This Framework defines the projects and investments one of the founders of the Nordic Public Sector eligible for financing by green bonds issued by the Issuers’ Position Paper on Green Bond Impact City of Gothenburg (“Green Bonds”). In addition, the Reporting, first published in 2017- aiming to provide Framework outlines the process used to identify, guidance on impact reporting for Nordic public sector evaluate, select and report on eligible projects and issuers. the set-up for managing the Green Bond proceeds. The green bond market has evolved since we The terms and conditions of the underlying launched our previous green bond framework in 2015, documentation for each Green Bond shall provide with new market constructs such as the Green Bond a reference to this Framework. Principles updated in June 2018 by the International The City of Gothenburg has worked with Danske Bank Capital Market Association. It is the City of to develop the Framework and CICERO Shades of Gothenburg’s intention to follow best practices as new Green has provided a second party opinion. market standards develop. By setting up this updated The City of Gothenburg will assign an external auditor green bond framework (“Green Bond Framework” or to annually provide a limited assurance of the “Framework”), the City of Gothenburg offers investors management of proceeds. the opportunity to further support the transition The City of Gothenburg Green Bond Framework 4 USE OF PROCEEDS Allocation of net proceeds Exclusions An amount equal to the net proceeds of the Green Green Bond net proceeds will not be allocated to Bonds will finance or refinance, in whole or in part, projects for which the purpose of the project investments undertaken by the City of Gothenburg is fossil energy production, nuclear energy generation, that promote the transition towards a low-carbon, weapons and defense, potentially environmentally climate change-resilient and ecologically sustainable harmful resource extraction (such as rare-earth society (“Green Projects”), in each case as elements or fossil fuels), gambling or tobacco. determined by the City of Gothenburg in accordance with the Green Project categories defined on the next Sustainable Development Goals page. All Green Projects will take place in the City of All the 17 UN Sustainable Development Goals (SDGs) Gothenburg or the nearby municipalities. Green are relevant to the City of Gothenburg, but not all the Projects form a portfolio of assets eligible for financing 169 targets. The City has local goals and strategic and refinancing by Green Bonds. documents that address the most important areas in the relevant targets. In this Framework, each Green Financing and refinancing Project category has been mapped to the SDGs in accordance with the Position Paper on Green Bonds Net proceeds can finance both existing and new Impact Reporting 2019 for Nordic Public Sector Green Projects. New financing is defined as ongoing Issuers. Green Projects or Green Projects completed less than 12 months prior to the approval by the City of Gothenburg’s Green Bond Committee. Refinancing is defined as financing for Green Projects completed more than 12 months prior to the Green Bond Committee’s approval. The distribution between new financing and refinancing will be reported on in the City of Gothenburg’s annual Green Bond reporting. The City of Gothenburg Green Bond Framework 5 GREEN PROJECT CATEGORIES Renewable Energy The financing or refinancing of the production, appliances, establishment, acquisition, expansions, upgrades/modifications and products of renewable energy, as well as related Research and Development programmes and/or the associated infrastructure. Bioenergy Transmission • Facilities producing biofuel, biochar and/or biomass • Transmission of electricity produced out of such as biofuel preparation, pre-treatment, renewable sources from its production site to the biorefinery and pyrolysis facilities. electricity grid. • Facilities for electricity generation or district • Infrastructure related to distribution of biofuels heating/cooling, as well as the combination (CHP), (in particular biogas). that use biofuel or biomass as fuel.1 Facilities often use a mix of different sustainable energy sources Wind energy such as biomass/fuel, waste2, water-thermal and Onshore and offshore wind energy generation recovered energy. facilities and other emerging technologies, such as Rail and shipping related infrastructure needed for • wind tunnels and cubes. the transport, loading, off-loading and storage of biomass to production plants. Solar energy In the evaluation of all bioenergy projects, the Solar energy technologies, such as Photovoltaic (PV) environmental and social impact of supply chain systems, Concentrated Solar Power (CSP) and solar elements are taken into account. Biomass/fuel thermal facilities. deriving from sources of high biodiversity that competes with food sources is excluded.3 Sustainability of the supply chain is preferably proven Thermal energy by a certification like the Roundtable on Sustainable Water-thermal heating/cooling systems, including Biomass (RSB), Forest Stewardship Council (FSC) or storage facilities in e.g. caverns, and geothermal Programme for the Endorsement of Forest heating/cooling systems.4 Certification (PEFC). Reaching net-zero GHG emissions by 2050 is necessary in