Vastuullinen rahoittaminen

Sustainable corporate financing

OP's extensive range of products and services enables providing loan applicants with comprehensive and safe financing solutions at reasonable cost.

Long-term financing with an understanding of the customer's risks

At OP, we always assess our lending customers on a holistic basis. With corporate customers, it is essential to identify the financial risks as well as broader environmental, social and governance (ESG) risks related to the company’s operations or project to be financed.

We are indirectly responsible for how companies operate

We take our acknowledged responsibility as one of Finland’s largest financiers seriously. We want to support our customers in the transition to a sustainable economy. We take social responsibility and environmental aspects into consideration in our financing decisions. It is crucial for the evaluation to recognise potential risks in major projects and risky sectors.

From a bank’s perspective, sustainable finance means taking corporate responsibility into account and incorporating it into all financing decisions as well as prioritising investments that are sustainable from the perspective of the environment and climate. In addition to good securities trading, banking and insurance practices, this also requires compliance with the principles of sustainable development.

ESG analysis

ESG analysis provides OP with an overview of the business operations of corporate customers and allows us to identify our customers’ business risks and offer strategic support for business development. In addition, ESG analysis helps OP Corporate Bank recommend suitable sustainable corporate finance for its customers.

OP Corporate Bank uses ESG analysis to assess the environmental, social and governance risks of customer companies and funded projects. ESG analysis examines businesses through ESG factors relevant to their industry. ESG analysis is part of the assessment of a company’s creditworthiness. It is also used to assess companies’ ability to mitigate critical ESG risks identified for the industry.

For example, in terms of environmental factors, companies can be assessed on the basis of climate change, marine environments and land use. In social factors, the assessment can look at companies’ occupational safety, data protection, product safety and supply chain sustainability, for example.

Sustainable corporate finance solutions

Sustainable corporate finance solutions can be divided into two categories: the financing of sustainable activities and finance related to a company’s sustainability. These categories can be applied to several different financial instruments.

 

Financing of sustainable activities

Finance related to the company's sustainability

Use of proceeds and targets

The use of proceeds is limited to activities with a positive environmental impact. The activity being financed is a specific type of business operation or project. 

The activity is identified before-hand and its impacts are tracked anually.

These funds are used for general corporate purposes. Suitable for all industries.

The terms of the loan are tied to the company's general sustainability targets. 

Reporting and frameworks

The company reports on operational data (such as renewable energy production) annually.

LMA Green loan principles, ICMA Green bond principles.

The company reports on set targets annually to the bank or investors.

LMA Sustainability linked-loan principles, ICMA Sustainability linked-bond principles.

Finance solutions

Green loans, green/social bonds, green leasing and investment financing.

Sustainability-linked loan and bond, sustainable leasing and investment financing.

 

OP Corporate Bank offers green loans and leasing solutions. In principle, the use of these funds must be in line with OP Corporate Bank’s green financing framework. Green financing may be used for activities such as renewable energy production, energy-efficient or otherwise environmentally friendly buildings, or electric mobility.

The Equator Principles framework in project financing

The Equator Principles (EP) is a risk management framework used in the financial services industry for determining, assessing and managing environmental and social risk in projects. OP Financial Group adopted the EP framework in its project financing in 2016. OP's personnel have been trained in the internal EP process in project financing.

OP Financial Group applies the ten EP principles in seven different process stages:

  1. The business unit identifies the project as project financing
  2. Initial project identification
  3. Assessment of the project
  4. Project negotiations
  5. Decision-making
  6. Monitoring
  7. External reporting

OP's experts evaluate the borrower’s ability to sufficiently identify, prevent, mitigate and manage the project’s key environmental and social risks and impacts based on documentation provided by the borrower, environmental and social risk consultations and, in some cases, visits to the project site. Initial project identification and assessment is done by ESG experts or ESG analysts. If necessary, the experts who carry out the assessment will propose conditions on the loan documents related to the management of environmental or social risks. The experts cooperate with the contract team to determine the necessary terms and conditions related to the management of environmental and social risks.

Together with the EP review, OP's contract team presents the project to the decision-making body consisting of senior management of relevant business functions and representatives of credit and risk management.

OP monitors the performance of active EP transactions and, if the performance does not meet requirements, decides on the appropriate course of action together with other creditors.

OP reports on signed EP transactions to Equator Principles on an annual basis.