The ESG project
The market for green finance is growing. Indeed, banks and investors are increasingly adding criteria to their financing conditions to incentivize a certain outcome that is considered sustainable.
Many banks now offer loans linked to achieving specific and measurable ESG goals or criteria. However, banks are not the only investors interested in financing projects that are considered sustainable or green. Companies are responding to investor demand by offering green bonds designed to finance assets such as renewable energy facilities or solar farms, projects that help accelerate decarbonization or impact other sustainable projects, whether social or environmental.
Green and sustainable finance
If a company would like to use both bonds and loans as financing instruments, they can create a finance framework. In a sustainability-linked framework there are specific metrics or KPIs that must be achieved. This type of framework is based on sustainability performance against pre-identified targets.
A green finance framework, on the other hand, describes the methodology classifying eligible projects or assets as ‘green’. As any investment carries some sort of risk, investors often look to minimize the risk of investing in green technologies they may not understand by reviewing a second party opinion. A second party opinion from an independent partner with relevant technical expertise can add trust and transparency for potential investors.
Bringing ESG to life
DNV was asked to assess a green finance framework created by Lerøy Seafood Group. DNV performed a comprehensive assessment of Lerøy Seefood’s green finance framework, drawing on our expertise within aquaculture, energy systems, maritime and circular economy to assess the robustness of the framework.
The assessment was conducted against the International Capital Market Association (ICMA) and Loan Market Association (LMA) green bond and green loan principles. Eligible projects in the green finance framework for Lerøy include environmentally sustainable seafood production, renewable energy, energy efficiency, clean transportation, water and wastewater management, pollution prevention and control, and circular economy adapted products, production technologies and processes, and certified eco-efficient products.
After the framework was assessed, Lerøy Seafood Group ASA was able to issue new senior unsecured green bonds worth 1.5 billion NOK. The green bond issuance attracted considerable investor attention and was significantly oversubscribed.