SYK has a long track record of emphasising responsibility in its operations. By issuing a green bond, the company has linked its sustainable development goals to its financing.
University Properties of Finland Ltd (SYK) issued an EUR 100 million green bond in October 2018. It was the first green bond in the Finnish property industry and the third overall, which meant that it was not a simple project.
“It took courage, expertise and effort,” says Anssi Koski, Deputy CEO and CFO at SYK.
Nevertheless, the years of assessment and preliminary work paid off. SYK’s green bond was well received by the market. There was interest in the bond issue in Finland and internationally.
“It turned out to be a sensible and worthwhile operation. We can keep moving forward on this path,” Koski says.
Financing as a component of responsibility
According to Koski, the most important reason for the bond issue was SYK’s need for capital to finance investments and the growth of its business. The green bond also helps diversify the company’s financing structure.
The other reason has to do with sustainable development: SYK specifically wanted to issue a green bond.
“Issuing a green bond enabled us to closely link our sustainable development targets to our operations, financing and investments,” Koski explains.
Under the terms of the green bond, SYK invests the proceeds in certified environmentally responsible and energy efficient projects in accordance with a pre-defined framework. The greenness of the framework was assessed by the Norway-based research institute Cicero. Skandinaviska Enskilda Banken AB (SEB) served as the arranger of the transaction and as an advisor in the bond issue.
The most concrete impacts are evident in certain construction projects to which the proceeds have been earmarked.
“With the green bond, we are engaging the commitment of the entire project organisation — from our own employees to our partner networks and the construction firm — to certain targets and criteria that we need to achieve,” Koski explains.
Koski points out that financing is often the responsibility of only a few people and seen as distant by others. In projects financed by the green bond, the significance of financing is felt in a very concrete manner right down to the grassroots level. The impacts are also felt broadly throughout the partner networks with which SYK reviews the company’s values and operating models.
“Everyone talks about sustainable development, but we are taking action. We are now a proven pioneer in this regard. Investors and creditors can trust that the funds will be used on projects that support sustainable development. Of course, there are other operators out there making positive decisions related to building technology, like investing in geothermal heating and solar panels, but we are now a leader in the use of green financing in Finland,” Koski says.
According to Koski, the next green bond issue may be issued as early as 2020.
“Of course, it depends on the development of the market. We will only use these options if they are cost-efficient,” Koski concludes.
TEXT: Susanna Rapp