Using Green Bonds to Finance Green Buildings

Buildings are a major source of greenhouse gas emissions – as much as 40% by some estimates -- so paying attention to how buildings source their energy needs is particularly important in the fight against climate change.

In the U.S., buildings consume about 70% of the electricity load.  In order to meet the climate challenge, new buildings should incorporate emerging technologies and cleaner, more renewable energy sources  to reduce and eventually eliminate their associated carbon emissions; existing buildings should be retrofitted for more efficient energy, water and waste management.  Every building designed and built according to yesterday’s standards locks us in a high carbon emissions environment for decades. For the building sector, the moment of urgency has arrived.

Greenbuild, the annual conference for green building professionals, asked Ceres, Cicero, SEB and Vasakronan to speak about  opportunities to build and renovate sustainably and to finance green buildings using green bonds. The transcript of that far-ranging and in-depth panel discussion is below.

Panel Discussion on Green Bonds in the Real Estate Sector
Using Green Bonds to Finance Green Buildings

GreenBuild Conference: November 2018
Transcript

Speakers:
Peter Ellsworth, Senior Director, Ceres
Anna Denell, Head of Sustainability, Vasakronan 
Christa Clapp, Research Director, Cicero
Ben Powell, Sustainability and Climate Team, SEB

Peter Ellsworth:

Good afternoon and welcome to our session. I'm Peter Ellsworth, Senior Director of the Investor Network at Ceres.  For anybody not familiar with Ceres, we are a Boston based nonprofit organization that has been working for 30 years with companies and investors on an entire range of sustainability issues, including climate and water, in order to build a sustainable capital market. We have a remarkably knowledgeable panel today and a fairly simple objective. 

Our panelists include  Ben Powell, who is on the sustainability and climate team at SEB bank in Sweden.  SEB was involved in the first issuance of a green bond 10 years ago. In fact those of us on the on the stage here are heading to Washington DC at the end of the week to commemorate the 10th anniversary of the green bond market at the World Bank. Anna Denell is the head of sustainability at Vasakronan, a major Swedish real estate company and the first corporate to ever issue a green bond. They are committed to sustainability in all their activities. The third member of our panel is Christa Clapp, who is research director for CICERO, a prominent climate research organization. 

I said we have a simple objective today. We'd like you to be able to walk away from today's session being able to tell somebody what a green bond is.  Just a simple explanation. We'd also like you to get some sense of how and why green bonds are important to your day job, or if not your day job, the day job of somebody in your organization. I know we've attracted a really diverse audience here. Can I have a quick show of hands to find out how many of you are even generally familiar with the bond market as a whole. And of those of you who are familiar with the bond market, who's familiar with the green bond market? 

Because there is so much professional diversity in this room, we may have a secondary agenda here as well. It’s clear you represent different parts of the building industry, from concept development to design to construction to funding. From city planners to consultants to engineers. What we'd like you to do throughout today's session is consider who in your organization should be thinking more about sustainability – and then take some of what you hear today back to him or her. And, if you have projects that benefit the environment or the climate, think about the green bond market as a way to finance those projects. 

Each of you is involved in different ways in the business of planning, constructing, renovating, financing and investing in buildings. You probably don't think about also being in the business of saving the planet, but you are, or you certainly have the capacity to be. 

Recently a major intergovernmental expert panel reported that the atmosphere and our oceans continue to warm – and at an alarming pace – and that we need to stop talking about climate change and start doing something about it, now, not tomorrow. 

So why should this matter to this audience? If you're connected to buildings in any way, about 40% of carbon dioxide emissions in the United States come from buildings, most of it for heating, cooling, lighting, and other power generation. And because buildings consume about 70% of the electricity load in the United States, the attention to reducing energy use in existing buildings is critical. If we consider the entire fifty to one hundred year life cycle of buildings from construction through use and finally to demolition, your ability to help buildings stabilize and then reverse our current climate change trajectory is significant. 

Ben Powell of SEB will now introduce you to green bonds, how they began and the role they can play in financing sustainable projects.

Ben Powell:  

Thanks, Peter. I work on SEB’s climate and sustainable finance team. We have been involved with green bonds since the creation of the green bond market.  It's 10 years almost to the day that we launched the first green bond with the World Bank.  A group of investors from Sweden were very much the driving force behind the creation of this product. They told us: “we want to invest in a bond that makes a difference – a bond that finances projects that will address climate change.”  

We approached the World Bank, which has a history of financing projects with specific criteria around the environment, the climate and building sustainable communities.  As an institution, the World Bank has also been focused on innovation, so it was a perfect fit.

The investors we were speaking to wanted a bond that was simple and scalable – something they could immediately use in the kind of low risk portfolios they had. The risk needed to be the same and the basic financial structure of the bond needed to be the same. They didn’t want to learn a new financial instrument. The only thing that would be different was how the proceeds were to be used.

Before the first green bond, all bond documentation had a simple standard phrase indicating that the proceeds would be used for general corporate purposes.  Investors had no idea how their investment capital was going to be used. Every green bond replaces that phrase about using the proceeds for general corporate purposes with a clear designation that the proceeds are to be used to finance green projects or green eligible assets – projects that somehow benefit the environment. 

In 10 years the market has grown significantly.  When I issued my first green bond in 2010, I was in Norway working for a local government funding agency.  That year there were $4 billion of green bonds outstanding. This year (November of 2018) we've hit a cumulative issuance of $525 billion.  The market has grown rapidly, and also diversified. Where once this was very much a government and municipal market, we now have participation by corporates, financials, and asset-backed and mortgage-backed issuers.  We also have sovereigns issuing green bonds, including France, Belgium, Poland, Fiji and Ireland.  

You may be asking yourself: what makes a bond green? The first place to look is a set of guidelines called the Green Bond Principles, which are administered by the International Capital Markets Association, known as ICMA. These principles, which were first developed in 2014 by a group of banks, issuers and investors and have been updated every year as the market has matured, lists the project categories that are eligible to receive a green label and describes the additional information issuers of green bonds need to provide to investors.  Remember – green bonds can only be used to finance a green asset. Investors want to know why the issuer believes the project should have a green label and what they expect the environmental impact will be. Investors also want to know how the issuer of a green bond plans to evaluate and report on the actual impact. This story telling is new to the bond market. Think about what I said a few minutes ago about bond proceeds being used for general corporate purposes. Green bonds are creating a new kind of dialogue between issuers and investors that’s building transparency and trust.  

It’s built on simple questions that any issuer of debt should be able to answer: What is the process for selecting this particular project?  How are you managing and tracking the use of proceeds? How will investors know that the money you’re raising is going to the projects you said it was going to? How do you plan to evaluate success? How will you periodically communicate with investors what you’ve done with their capital and the impact the bond proceeds have had?  

Where buildings are concerned, the questions might be: What are the energy efficiency gains? How are you measuring them? How much less carbon dioxide is being emitted? How many gallons of water have been saved from improved water management?  

Investor demand created the green bond market, and investors continue to drive its growth. More than 1,700 investors have committed to incorporating environmental, social and governance factors into their investment decisions by being signatories to the Principles of Responsible Investing backed by the United Nations. The assets managed by these pension funds, insurance companies, foundations, endowments, sovereign wealth funds and investment managers total more than 90 Trillion dollars. There’s a great deal of capital to be put to work to support environmental, social and green investments by investors who see environmental and climate risk as credit risk and financial risk. Thank you and back to Peter.

Peter Ellsworth:

Ben gave us a great introduction. At the risk of keeping things overly simple, I’d like to emphasize two important takeaways. One is that green bonds are not a niche finance or investment strategy. They're just a bond whose proceeds are designated for a specific purpose – to benefit the environment. The second thing is that this market, which is about to celebrate its 10th anniversary, has really been transformative because investors really want to talk to issuers. They want to hear about the projects and what you plan to do with their money.  This is a conversation that never took place in fixed income until the green bond market. Even those of you who aren't on the financing side – for example if you're a civil engineer, investors are interested in bringing you into the conversation. 

I recently hosted a round table discussion in San Francisco on municipal infrastructure, and one of the participants was from the Los Angeles Metropolitan Transit Authority. He's a civil engineer. He told the group that the U.S. Society of Civil Engineers is actively working to create a set of standards to help guide those engineers involved in developing infrastructure projects. You have engineers in most of the organizations that are represented here today that are integrally involved in how buildings get constructed, or renovated and retrofitted. 

Anna: my question to you is probably the one I'd want to have answered if I were in the audience. Why did you do something that nobody asked you to do and that in fact you simply didn't have to do? Why did Vasakronan decide to issue a green bond? 

Anna Denell:

Great question, that I am happy to answer, but first, a very short introduction about Vasakronan, which is Sweden's largest real estate company and also one of the largest real estate companies in Europe. We have a portfolio of 180 existing buildings and also a large development portfolio valued in total at 15 billion US dollars. And we want to run our business in a sustainable way, not only because we think it's good for our profit but also because it's an important thing for us to do. And since we are dealing with real estate, energy consumption is a high priority. Since 2009 we have reduced the energy consumption in our buildings by more than 50%. Our long term target is to reduce it by 50% once again. And, by reducing the energy consumption and by shifting to renewable energy sources throughout the portfolio, we have also reduced our carbon emissions by 97%. We also have another target, which is to have a 100% certified portfolio. 

And as Peter asked, how did we come up with the idea of issuing a green bond? Well, actually it was not our idea. It was Ben's colleagues at SEB who approached us a little more than five years ago. They told us: we think you have projects that you could fund with green bonds.  At that time, no one at Vasakronan knew what a green bond was. We were an existing issuer in the ordinary bond market, but we’d never heard of green bonds before. SEB explained the concept and told us that if we work very fast, Vasakronan has the possibility to be the first company in the world to issue a green bond.  It was a really tempting idea for us, so we worked day and night and a few weeks later we did issue the world's first corporate green bond. 

Actually it was five years ago yesterday. So what has happened since then? Well, we have updated our green bond framework two times – the first time because we wanted to include our existing buildings as an eligible asset to be funded by green bonds. And we actually had some pushback because quite a few people in the green bond market like these bonds to finance additional projects. This can make sense when you talk about renewable energy projects, but when it comes to buildings, improving existing buildings is arguably the most important thing we can do. Of course we can, and should, construct new highly energy efficient buildings, but most of the buildings already exists and they are not energy efficient. So we were quite confident that updating our framework was the right thing to do. 

Just a few months ago we updated the framework once again in order to include other types of financing instruments.  Once again we were the world's first company to do this. This time it was to allow us to issue green commercial papers, which is almost the same thing as a bond but with a shorter maturity – less than a year.   

What did we discover? The first thing that we noticed was that we attracted a whole new spectrum of investors that had never bought our bonds before. That increase in demand resulted in a better price for us, so we have lowered our funding costs quite dramatically since we started to issue green bonds. 

Secondly, our contact with investors is much better now. Before we issued that green bond we were quite anonymous and investors weren’t interested in talking to us as long as we were paying back the money, (which we of course did). Now we actually have them climbing on roofs because they want to see our solar panels, and they want to see the heat pumps in the basement and so on. So we really get the possibility to speak with them because they want to see what their money is being used for – where their money is going.   Our green bonds also paved the way to other kinds of green funding so that we have been able to get funding from the European Investment Bank and the Nordic Investment Bank at very attractive rates.

Finally, I would like to add that by issuing green bonds we changed the company’s culture toward greater attention to sustainability in all our projects. Before, only a small group of us was involved in the  LEED certification processes, and we treated it more like an informal internal target. Nowadays the whole development team has bought into our sustainability goals. Everyone wants to be part of the process and they know that there is not an option not to achieve the LEED platinum certification once all the construction is done. That's all I want to share with you. 

Peter Ellsworth:

I'd hate to have you overlook one of the things that Anna just said. Vasakronan has cut its energy use in its properties by half and it's cut its carbon dioxide emissions by 97%. If Vasakronan can do it, you can do it too. 

It took them a few years, but they put a strategy in place that was the right thing for their business.  Investors are looking for property developers, property managers and property owners to make their buildings more sustainable and energy efficient – so are tenants, whether residential or commercial.  I know we have some people in the room who could give us case studies about how they've discovered that by increasing their energy efficiency and reducing energy costs, the value of their properties as an investment has increased. 

You’ve heard Vasakronan’s story and its track record over five years as a credible issuer of green bonds. Not every issuer has that track record, and human nature is to be a little skeptical about whether somebody is actually doing what they say they're doing. So I'm going to ask Christa Clapp from Cicero to give us an overview of how she provides the connecting tissue between investors and issuers in the green bond market, and how she helps investors know that a bond is actually green. 

Christa Clapp:

Thank you. I work at a climate change research organization and, and our role in green bonds is to facilitate the communication between the investor and the issuer. So, as Peter mentioned we're trying to be the communication vehicle between the issuer and the investor so that investors can more easily identify what is green. We can help steer financing towards what’s right for the environment and the climate, as Vasakronan is doing, and away from  investments in buildings that are not green, even though they may claim to be. 

Using Vasakronan as an example, what they’re doing is not only the right thing from the climate change perspective, it's also the financially prudent thing to do. Real assets, like buildings, are especially vulnerable to climate change.  Coastal properties may become unlivable due to sea level rise or have limited accessibility because of tidal surge. We’re also seeing the physical impact of climate change from floods, hurricanes and typhoons, droughts, wildfires and other extreme weather patterns that can disrupt business.  

We can slow down and reverse the adverse impacts of climate change, and green bonds can help. The climate scientists tell us that we need to keep the atmosphere from warming more than two degrees Celsius from its level at the beginning of the industrial age. Beyond that we begin to trigger catastrophic consequences that will affect billions of people and the places they live. Right now we’re on track to keep global warming at about three degrees, but there is a fair amount of uncertainty. We don't know if at the end of the century we will be at two, three, four degrees, maybe even five degrees. What we do know is that we need to make dramatic emission cuts. And we know that the building sector is a key component of that.  

The good news is that nearly 200 countries have committed to achieving the two degree target, but success requires that every project aligns to a two degree world – and every project requires some form of capital.

What does this have to do with green bonds? Well, the bond market is the biggest part of the global capital markets – representing more than $100 trillion.  If we could direct that money towards doing the right and prudent thing on climate change, then we could finance everyone to be like Vasakronan. The bond market right now is is doing what it normally does – it funds whatever issuers need and investors will buy.  But only about 1% of that is green labeled bonds. So the potential for growth is quite dramatic. 

Ben talked about investor demand for green bonds and the scale of that, and how issuance is increasing. If green bonds that mitigate climate change can become a bigger piece of the overall pie, we have a chance of limiting emissions and keeping atmospheric warming to something around two degrees. That's what we would like to see. And the green bond is simply a tool, a communication tool, to show investors where their money is going and how the environment or climate is being positively impacted. 

Cicero, as an institution, reviews and labels, green bonds. We’re one of many  different actors that are involved in external reviews of bonds. We happen to be the global leader in that, we're proud to say, and we follow the Green Bond Principles, which Ben mentioned. These are the voluntary principles followed in North American and Europe and throughout the market that act as a guide for best practice.   We're governed by these principles that say we need to look at where the money's going to be spent, on what types of buildings, what are those certifications, as well as some other qualifications that I'll talk more about. 

A bit more about Cicero and what we do: we had the opportunity to review the first green bond 10 years ago instigated by SEB and issued by the World Bank and reviewed Vasakronan as the first corporate issuer. Also, we recently reviewed Fannie Mae, and in terms of issuers that are relevant for the building sector, we've reviewed commercial banks that sometimes fund projects in the building sector and municipalities that include public buildings.  

The way we go about rating bonds is through a method called shades of green. We label a bond as light, medium or dark green depending on how well it contributes to a low carbon climate resilient future. Some of the projects Vasakronan has are really moving buildings towards almost passive housing in the future. And if we're really trying to reach this two degree target that we've set internationally on climate change, we need buildings to be at nearly passive housing by mid-century.  So when we look at what a bond is going to invest in, we want to see really deep emission cuts in existing buildings and also new buildings that are set up to be as near passive as possible. 

Lastly, I'll talk a bit more about what we look at. We've reviewed 46 bonds during the last 10 years that include some type of building investments, and most of those we rated medium green. Very few are the dark green. Vasakronan was one of those. There were a few light greens as well.  What we look for first and foremost are whether the buildings are using an environmental certification system, like LEED. But, as many of you know, just to have a certification doesn't necessarily guarantee you're reducing greenhouse gas emissions.  And it doesn't guarantee that you're resilient to climate change – in increased flooding, for example. So we also look at what your targets are, and Vasakronan is a nice example of this. They have a target they have already achieved – reduced emissions – and they  have a target going forward about how they're going to continue to address residual emissions. 

In addition to reviewing targets and certification levels, we also look at how new buildings are associated with public transport – the kind of urban planning considerations that some of you might be familiar with.  A building is not just a building in isolation in terms of environmental impacts. We need to consider how it relates to patterns in vehicle transport and associated emissions. We also look at the construction phase and the impacts from the material used. This is a newer focus that we're trying to pay more attention to. And finally, we look at overall resiliency planning – how the building will handle an increase in extreme weather, flooding, heat waves, etc., even how new buildings are being built to protect against the sun – and whether those extremes matter for a particular building. 

Peter:

Thanks. Christa. One of the investors that Ceres speaks to characterizes green bonds as a no brainer because they provide additional benefits with no additional financial risk. Another no brainer to consider is that lately there have been a few studies that strongly suggest that there is a four to six basis point advantage to issuers issuing green bonds. One report that came out of Harvard recently raises this interesting proposition: What do you have to lose? If you need to go to the debt market to fund a green eligible project, why not issue a green bond? What's the worst thing that will happen? The worst thing is that you’re going to issue your bond at the same rate you always do. But you also might be able to issue your bond at a more favorable rate and achieve a cost of capital benefit. 

We've spent the better part of 30 minutes  talking about green bonds but I’d like spend a minute thinking about them in a different context. If this were a cooking show, the green bond is what you take out of the oven at the end of the show. A lot of you in this audience are part of the process that puts the recipe together, buys the ingredients, decides what the consistency is going to be – and the temperature and time it needs to be in the oven. So the green bond is really the end game of a longer process.  Almost all of you are  connected to that process one way or another.

Questions from the Audience 

Question:  What kind of new frameworks do you see developing for green bonds in the future?  

Ben:

I would say that the market will continue to build off the Green Bond Principles I mentioned earlier. We’re already seeing that happening for bonds that finance social projects and sustainability projects that aren’t specifically environmental. That original framework is being transferred, or adapted, to other parts of the market.  But I think the big change we expect is regulatory. Europe and the European Commission is leading the way, and they seem to be much further advanced than other jurisdictions. 

Sometime in the next year the European Commission will come up with a framework around a definition of what is green. It will build on the work that has been done by the Green Bond Principles in terms of general project categories that are eligible to be considered green. The European Commission has explicitly mentioned the Green Bond Principles as a way of approaching and basically describing the framework for sustainable finance. In a copy and paste manner, good models and frameworks are being adapted in other jurisdictions. We’ve seen it in places like Canada, China, and Japan. The European Commission’s recommendations will likely become a standard many others adopt.  

Peter:

Before I ask Anna to comment, I’d like to point out that Fannie Mae grew a very small pilot project into one of the biggest green bond programs anywhere. These are collateralized mortgage bond securities that incorporate energy efficiency and renewable energy. Securitization is one of the big areas of growth. We’re also seeing REITs, such as Alexandria Real Estate, taking an interest in green bonds.  I said before that this is not a niche product.You would not see the likes of Bank of America and Morgan Stanley and Apple issuing 500 million to $1 billion in green bonds if this were a niche strategy.  

Anna:

I want to comment on something that Krista mentioned about a stronger focus on the materials being used for new construction. Concrete, for instance, is very heavy on carbon emissions.  I think more real estate corporations will be paying attention to building materials and that more will be coming to the market with highly energy efficient existing buildings.  

Question:  What is the performance of green bonds compared to regular bonds?

Ben:

We’re lacking good data to make any grand pronouncements on that. We do, however, see a trend developing if we compare the MSCI all bond index versus the performance of the MSCI green bond index, with the green bond index outperforming the all bond index. That's one example. 

Another example is where you have a frequent issuer, and this is more pronounced in the Euro market because you just have more issuance there and the market’s been going longer with respect to euro denominated issuance. For example, take a regular issuer like KFW, the Development Bank of Germany, which issues about $100 billion worth of debt every year. About 25% of their issuance is green.  By now they have a very established cost of capital curve for both the conventional bond issues and the green bond issues, and the green bond issues are giving them a pricing benefit in the range of 5-6 basis points, which is line with the number Peter mentioned earlier.  That may sound like a small number but for a frequent issuer of debt it’s not. The more data we have, the more we can talk about this in other credit spectrums.  KFW is an example of a high grade repeat issuer. As different types of issuers along the credit curve come to market, I believe you'll see this more pronounced over time. 

Question:  What kind of accountability is there for projects after they’re funded to keep that green status? 

Anna:

In our case for new construction and major renovation projects there is an eligibility criteria that it needs to be LEED platinum, but it also needs to be 25% below the national building code in Sweden. If the project is in Sweden, and if it's a major renovation product, the energy consumption needs to be 25% lower. We report the full data to the investors every year in an investment report or impact report. For existing buildings, it's more ongoing, it needs to be LEED certified on the gold level and it also needs to be below 100 kilowatt hours per square meter. We also report back on that. In the unlikely event that a building would not qualify any longer, we will remove that asset from our green pool and either put the money back into the account or into another eligible asset for the green pool. We track the green pool on a monthly basis since with existing buildings it's the current energy performance. We try to make sure disqualifications will not happen. 

Christa:

I could add that this is very specific to the issuer and there aren't actually any market requirements for this. The current best practices is to get an external review, but when we do review a bond, it’s at the time of issuance – not a year or two later. There are some some means for going back and measuring and verifying through some certification systems, but it's not used market wide. I can say that the investors we have relationships with are more and more asking: what is the follow up and is there a recourse to remove an asset from the portfolio like Anna mentioned. So there's an increased focus on this and I think that's where the market is going. But there's no actual requirements on that right now. 

Question: My question is that getting to LEED Platinum is difficult by any standard, so what  are the market drivers to get cities to issue more green bonds, whether that’s by relaxing standards around what is green or other approaches that could lower the barriers?

Peter:  

I’d begin by saying that nobody has any plans to lower standards. Ben?

Ben:

There’s always going to be a lower common denominator. It's all very well to focus on the very top segment and create these gold standards – the beautiful new buildings. But we also need a strategy that addresses the lesser performers, too. I would love to see that type of approach rolled out in cities. They're starting to do that in the U.K. 

With respect to individual city strategies in the U.S., I think when you're being more prescriptive about energy consumption improvements and water management improvements that are being made, even by the worst performers, that's really when you start to talk about significant change and real scalability. The investors we spoke to, with respect to Fannie Mae’s strategy found that type of approach quite powerful. 

Christa:

I'd like to weigh in here, too, because, we reviewed Fannie Mae and we rated that bond light green. That’s a contrast to Vasakronan, which we rated a dark green. I wanted to highlight that because one of the messages that we like to put out is that we actually need all shades of green. We need every building moving in a green direction – not all buildings can be platinum. We understand that. Not everything is going to be dark green. But we think that something like the Fannie Mae issuance was really important to get a light green example out there to show that they're making a tremendous difference right now, especially in existing buildings. They’re not platinum but it means that they're taking that first step. So in our role as a reviewer, we think it’s important to recognize the steps that are on the way to a platinum level. 

Peter:

Investors are interested in your story – how and why you chose to label your bond green. You might discover that your bond doesn’t meet the investor threshold for a green label. If you’re a city, or a company, engage your investors. Have a conversation.  For example, tell them: “this is what we did – and why; it may not be perfect but it's better than having done nothing: it may not make it into your green bond portfolio, but we're moving in the right direction.” 

This is an important part of that dialogue I talked about earlier between issuers and investors, whether the bond issuer is a city or a company.  

Question: Have you seen issuers in the United States able to secure better interest rates based on their performance.  Are banks willing to incentivize developers like yourselves here in this country? 

Anna:

I'm not sure if I can answer for the U.S. market, but for us it's not only been the banks that I mentioned, the European Investment Bank and Nordic Investment Bank, it's also the large commercial banks in the Nordic region. Also in some other parts of Europe as well. We’re also get an incentive for traditional bank loans so that we get a rebate or a lower interest rate on our traditional bank loans if the loan is used to fund green projects or green existing buildings. SEB is one of those commercial banks.

Question: Is that an incentive for Vasakronan or is this just the right thing to do? 

Anna:  

That's a really good question. I think it's both, to be honest.  But, it actually has a large impact on our funding costs. And of course it's easier to advance your sustainability practice when you have that argument to bring to the table with your board of directors. Definitely. 

Peter:

There are examples in the United States, too. The California Infrastructure Bank is involved in aggregating black, brown and green projects. They provide better loan benefits if it's green. 

Ben:

I don't know enough about the kind of the ecosystem here, but clearly there's a trend towards banks assessing green buildings and green mortgage lending as better credit, so it's not offering a subsidy just because it's the right thing to do. It's a financial decision and it shows a better understanding of climate risk in terms of your mortgage portfolio. At SEB we're offering a better mortgage rate for residential mortgages in Sweden because of this. I think that trend will continue because the rating agencies are talking more about how you manage climate risk and its impact on your credit rating. That's when I think corporate treasurers – and anyone whose cost of funds is related to their credit risk or credit rating – really  start to think about whether they’re doing enough here,  because not only can you get downgraded, you can also get upgraded as a result of managing this more effectively. So I don't think this is just a European or Nordic trend – it’s global. 

Peter:

Thanks, Ben. There’s been a lot to cover and it took us 58 minutes to get to the rating agencies, which we could spend another 58 minutes on.  But one important take-away is that the rating agencies really do underscore the mainstream nature of all we’ve been discussing in this session. They're all incorporating ESG and they're all involved in evaluating climate risk.  

That brings us to the end of our time. Thank you to the panelists and thank you all very much for attending. I hope some of you will become ambassadors about this green bond world and how it's linked to sustainability and your day jobs. How it's not just a product, it's a process.

Thank you.