Benefitting from sustainable financing
By Pasi Kyckling, SVP and Group Treasurer of Stora Enso a Member of the European CFO Leadership Network.
What are green bonds and why is Stora Enso integrating its sustainability agenda into funding and financial services? We asked Pasi Kyckling, our SVP, Group Treasurer for his views on sustainable finance and Stora Enso’s approach to the world of green bonds.
“Green bonds are basically loans that are earmarked for investments in sustainable projects. The green bonds we issue give investors an opportunity to invest in projects that are controlled and managed by Stora Enso in order to provide sustainable solutions for the climate and environment,” explains Kyckling.
Stora Enso has the long-term aim to secure funding partners that have sustainability as a fundamental part of their agenda. We have published a Green Bond framework that is based on and aligned with the international Green Bond Principles (GBP) formulated by the International Capital Market Association. The framework lists the possibilities and limitations of the project categories that Stora Enso has defined as eligible for green funding.
“These frameworks are company-specific, so they are not easily comparable from an investor point of view,” Kyckling says. “Nevertheless, the entire green bond field is fairly new and will become more standardised over time.”
Growing interest in green investment
Interest in ESG (environmental, social, and governmental) issues and general awareness of sustainability topics is growing among all investors. Taking sustainability into account when deciding on investments is becoming mainstream, creating major potential for corporate green bonds and other sustainable investment targets.
“We want to respond to investor demand and participate in developing the financial markets,” Kyckling says. “With our framework, we can make our ambition visible. We were actually one of the first industrial companies in the Nordics to issue a green bond.”
But sustainable funding is more than responding to trends for Stora Enso. “Green bonds fit in perfectly with our strategy as sustainability is already integrated into everything we do within the company,” states Kyckling. “Our Sustainability Agenda covers the social, environmental and economic aspects of our operations throughout the value chain, turning sustainability into a competitive advantage.”
Stora Enso issued its first green bonds in February 2019 collecting SEK 6 billion. The proceeds are solely intended for financing Stora Enso’s ongoing acquisition of forest assets in Bergvik Skog. “Each project is given careful consideration to ensure they are in line with our framework and internal governance. The Bergvik Skog acquisition is fully in line with our Green Bond Framework because its forest lands are 100% certified for sustainable forestry,” adds Kyckling.
Seeing the impact of the investment
Do green bonds increase Stora Enso’s credibility as a sustainable company? “I believe that green bonds are further evidence of a company’s commitment to sustainability,” says Kyckling. “And because of global trends and tightening environmental regulations, companies with green bonds are more likely to be profitable investments in a portfolio in the long run rather than a coal mining company, for example.”
Another key aspect of Stora Enso’s strategy for sustainable finance is to be even more transparent about the environmental impacts of our business and related investments. In accordance with the framework, Stora Enso will provide an annual update on activities related to our Green Bonds issuance and use of proceeds. This information will form part of our annual disclosure and be public to anyone interested.
Stora Enso’s green bond framework is aligned with the international standards called Green Bond Principles (GBP), formulated by the International Capital Market Association, it has a second-party opinion from Sustainalytics.
This article was originally published by Stora Enso.