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23/09/2021 Banking Innovation

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First loan product fully aligned with the technical screening criteria and minimum safeguards of the EU Taxonomy on climate change mitigation in the Nordics.

Innovation presentation

The EU Taxonomy determines the technical screening criteria economic activities will be assessed against to determine whether they substantially contribute to a specific environmental objective, while ensuring they cause no significant harm to the other environmental objectives. The criteria are adopted through a regulation, meaning that each jurisdiction will need to develop practices on how to evidence fulfillment of all relevant criteria for a specific economic activity. After extensive discussions with clients, governmental bodies and specialists the determination of relevant evidence to ensure fulfillment of the Taxonomy criteria has been developed for the construction and real estate activities category in accordance to the climate change mitigation criteria and subsequently allowed for the launch of the green EU Taxonomy loan product and also the first green loan aligned with the proposed EU Taxonomy criteria in the Nordic market.

Uniqueness of the project

The product is one of the first (if not the first) full adaptation to the new regulation expected to enter into force on 1 January 2022. The product demonstrates how to adhere to, and which evidence to collect, to ensure full alignment with the proposed technical screening criteria and minimum safeguards. The first loan was unique from a market perspective, as it was the first in the Nordics to demonstrate full alignment with the proposed regulation, but perhaps even the first in Europe. It will be a catalyst for taxonomy compliant financing going forward. In particular we find that the do-no-significant-harm criteria for climate change adaptation to screen the specific activity for physical climate risk to ensure full alignment to the proposed taxonomy is very challenging to many clients due to its granular and activity based approach.

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