We always make a comprehensive evaluation of our corporate lending customers. It is important for us to identify the financial risks and also the environmental, social and governance (ESG) risks related to the company’s operations or project to be financed. It is crucial to find potential risk factors in major projects and risky sectors.
We integrate ESG in all our financing decisions and prioritise investments that are sustainable from the perspective of the environment and climate. We observe good stock market, banking and insurance practices and support sustainable development goals.
ESG analysis
We use an ESG analysis to assess companies and their creditworthiness. This helps us identify risks in customers' business, support strategic business development and offer a sustainable financing solution for the customer's need. When making an ESG analysis of a company and projects, we assess the environmental, social and governance risks that are material for the sector.
In the ESG analysis, we assess the companies, schemes or projects seeking financing. We group them into ESG industry categories, based on their exposure to ESG factors typical of their industry. The ESG industry category assigned to the company determines the level of ESG analysis required for new loan decisions.
For example, under environmental factors, we look at the company's impacts on climate change, marine environments and land use. The analysis of social factors includes occupational safety, data protection, product safety and supply chain sustainability and more.
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.
Financing for sustainable activities can only be used to finance a certain business or project. The financed activities' environmental impacts are monitored annually. We provide green loans and leasing solutions based on the criteria of OP Corporate Bank's Green Bond Framework.
Financing of sustainable activities can be granted for:
- Renewable Energy Production
- Transmission of Energy
- Energy Efficiency
- Green Buildings
- Pollution Prevention and Control
- Environmentally Sustainable Management of Living Natural Resources and Land Use
- Clean Transportation.
Finance related to a company’s sustainability means financing for general corporate purposes. The loan terms are tied to the company's general sustainability targets and the company reports annually on set targets.
These two categories can be applied to several financial instruments.
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 specialists evaluate the borrower’s ability to sufficiently identify, prevent, mitigate and manage the project’s key environmental and social risks. We assess the impacts based on documentation provided by the borrower, environmental and social risk consultations and, in some cases, visits to the project site. If necessary, we propose loan terms related to environmental and social risk management.
- OP's contract team presents the project and the EP review to the decision-making body which consists of OP's senior business management and representatives of credit and risk management.
- OP monitors EP transactions in its project financing and annually reports on signed EP transactions to Equator Principles.