Green Bond IMPACT REPORT

June 2016

City of Gothenburg Green Bond Impact Report 2016 2

The City of Gothenburg’s Green Bond eligible projects promote the transition to a low-carbon

and climate resilient society. Some project examples include:

Sustainable housing – Förvaltnings AB Framtiden In 2015 four new construction projects were completed. Three of these buildings are certified with the eco label Svanen, which means stringent requirements are placed on construction process, materials and energy use. The fourth building has an ambitious goal of an energy consumption not exceeding 60 kWh/m² and year. On average the houses use approximately 33% less energy compared to law requirements (BBR).

Constructed area:

13 800 m²

Energy savings:

33 %

GoBiGas – Göteborg Energi Gothenburg Biomass Gasification (GoBiGas), a concept facility for large scale production of biogas is now in continuous operation. As expected in the startup phase, the result for 2015 is still quite modest. The facility has the capacity to produce 180 GWh/year in the future. In 2016, production is projected to be doubled (60 GWh), resulting in approximately 12 000 tons of avoided CO2 emissions.

GHG emissions avoided

(2015): 5900 tons

Produced (2015):

26 500 MWh

Ultrafilter – Department of Sustainable Waste and Water To increase the purification efficiency of the waterworks in Lackarebäck, ultrafilters have been installed. The purpose of the investment is to assure that clean drinking water of the highest quality is provided for all citizens. The ultrafilter will work in conjunction with the already existing water treatment systems. The effects of the investment can be measured in the amount of sick days avoided for the population in case of a possible waterborne disease outbreak in the future.

Sick days avoided:

39 400/year

Capacity:

100 % of water passing

through processed

City of Gothenburg Green Bond Impact Report 2016 3

Green Bond Issuances Since October 3, 2013, the City of Gothenburg has issued Green Bonds on three occasions raising a total of

SEK 3,36 billion of funding supporting the transition to a low-carbon and climate resilient society. At the

time of publication approximately nine percent of the city’s debt consists of Green Bonds.

The City of Gothenburg’s responsibilities, including its climate and environmental work, spans many

different areas. This diversity is reflected in the city's portfolio of Green Bond eligible projects. In

accordance with the city’s extensive and ambitious Environmental and Climate Programmes the Green

Bonds are issued, aimed at financing projects in fields such as renewable energy, energy efficiency, public

transportation, waste management, water treatment and sustainable housing.

On June 23, 2015, the city issued its third Green Bond and the transaction amounted to SEK 1,05 billion.

The funds from the Green Bonds are earmarked and dedicated to finance green projects defined within

the city's framework for green bonds. The interest from the market has been strong and green bonds as a

phenomenon continues to grow.

Green Bond Issuance by year (SEK bn)

The City of Gothenburg continues to receive high credit ratings:

Aaa, from Moody’s (since 2006) AA+, from Standard and Poor’s (since 2007)

Both ratings have stable outlooks. The City of Gothenburg's strong financial management, strong budgetary flexibility and low contingent liabilities are highlighted in the credit rating reports. Other positive conditions include a very strong local economy, strong liquidity and a predictable and supportive institutional framework.

Approach to impact reporting There are currently no established

standards or models in regards to impact

reporting of projects financed with Green

Bonds. The City of Gothenburg is

continuously working on developing and

improving the methods of reporting the

climate and environmental impacts of its

projects financed with Green Bonds to its

investors. The city is also actively

contributing to harmonization efforts

regarding impact reporting of Green

Bonds.

The following principles and guidelines

have been considered when creating this

impact report:

The Green Bond Principles (March

2015)

Green Bonds Harmonized

Framework for Impact Reporting

(December 2015)

Investor Network on Climate Risk:

Statement of Investor Expectations

for the Green Bond Market

(February 2015)

Conservative estimates are employed to avoid overstatement of the projects financed with Green Bonds climate and environmental benefits. Transparency is of particular importance to the City of Gothenburg in regards to reporting the impacts of the projects. A disclosure of methodologies and key underlying assumptions including calculations, conversions and baselines that have been employed to increase comparability will be provided in the Annex.

0,5

1,81

1,05

0

0,5

1

1,5

2

2013 2014 2015

City of Gothenburg’s Green Bonds

SEK bn Emitted Maturity ISIN

0,25 13-10-03 19-10-03 XS0976165828

0,25 13-10-03 19-10-03 XS0976166719

1,5 14-06-03 20-06-03 XS1073521988

0,31 14-06-03 20-06-03 XS1073488675

1,05 15-06-30 21-06-03 XS1253847815

BByy ddrriivviinngg aann eelleeccttrriicc ccaarr iinnsstteeaadd ooff aa

nneeww ggaassoolliinnee//ddiieesseell ccaarr,, aapppprrooxxiimmaatteellyy

775500 kkgg ooff CCOO22 eemmiissssiioonnss ccaann bbee

aavvooiiddeedd aannnnuuaallllyy..

City of Gothenburg Green Bond Impact Report 2016 4

Green Bond eligible projects The proceeds from Green Bonds are used to finance projects defined within the city's framework for Green Bonds. Eligible Projects may include projects that target:

Mitigation Adaption Environment

Mitigation of climate change, including investments in low-carbon and clean technologies, such as energy efficiency and renewable energy programs and projects.

Adaptation to climate change, including investments in climate-resilient growth

To a smaller extent (max 20%), projects which are related to a sustainable environment rather than directly climate related can be included.

The framework established by the City of Gothenburg constitutes the basis for the city’s work with Green Bonds. In 2015, the requirements for projects financed within the framework for Green Bonds were specified even further. This was done in order to assure that there are clear and concrete requirements placed upon the projects. Projects within the sectors included in the table below are eligible for financing under the framework. If a project covers multiple sectors, the project is only included in the main sector, but target results will include all components of the project.

Sectors eligible for financing under the framework

Renewable energy (solar, wind, wave, bio, waste and hydro)

Energy efficiency

Waste management

Water management

Biofuel

Smart grids

Sustainable transportation (e.g. public transport, cycle and shipping infrastructure)

Sustainable housing (e.g. infrastructure and construction)

Environmental (max 20%) Biodiversity Water clearing facilities Air pollution Chemicals

On March 12, 2015, CICERO, an independent research institute at the University of Oslo, issued a second opinion regarding the city's framework for Green Bonds. In the evaluation published by CICERO it is concluded that the City of Gothenburg is taking important steps to reduce the city's carbon and environmental footprint. The city's framework and supporting environmental policies are described as transparent, comprehensive, long-term and robust. CICERO's previous evaluation of the city's work with Green Bonds was published in July 2013 and is publicly available on the City of Gothenburg website.

Adaption

19,20%

Mitigation

75,51%

Environment

5,29%

Energy

efficiency

2%

Water

management

19%

Biofuel

31%

Sustainable

transportation

6%

Sustainable

housing

36%

Environmental

6%

Distribution of projects by sector 2013-2015 Distribution of projects by category 2013-2015

City of Gothenburg Green Bond Impact Report 2016 5

Selection process In order to identify Green Bond eligible projects a rigorous review and approval process is in place to

ensure that the projects are in line with the city's framework for Green Bonds and thus targeting

mitigation of and adaption to the effects of climate change and other important environmental aspects. A

working group with expertise on climate change, the environment, financial markets and financial

instruments are involved in the selection process ensuring both green and secure investments.

Following dialogue with administrations and municipal companies within the city, the City Executive

Office (Stadsledningskontoret) selects projects in accordance with the city's Environmental and Climate

Programmes and the city's framework for Green Bonds. The Environmental Administration

(Miljöförvaltningen) provides expertise and verifies the selections made by the City Executive Office. The

City Executive Office then presents the final selection of projects eligible for financing with Green Bonds to

the City Executive Board (Kommunstyrelsen) for approval.

The statuses of the Green Bond eligible projects are monitored and the City Executive Office reports

results back to investors annually.

More information about the City of Gothenburg’s Green Bond issuances and its environmental and climate

work, both on a domestic and international level can be found in the annual Green Bond Investor Report

and the city’s Environmental and Climate Programmes on the City of Gothenburg website.

Project evaluation and selection

• City of Gothenburg's Environmental and Climate Programme

• Rigorous review and approval process

Management of proceeds

• Green Bond special account holding proceeds from Green Bonds

• Annual Investor Report show preliminary allocation to each project for the coming year

• Proceeds are allocated annually once the final numbers allocated to each project are verified

Impact measurement and reporting

• Estimates of significant reductions in GHG emissions from projects

• Reporting of other significant indicators where possible

• Active contribution to the harmonization efforts regarding impact reporting of Green Bonds

Eligibility criteria and use of proceeds

• Framework targeting sectors and projects with positive effects on climate and environment

• Framework reviewed by a second party (CICERO)

• Framework specified in 2015

City of Gothenburg Green Bond Impact Report 2016 6

Methodology and how to interpret the results

The purpose of this impact report is to illustrate the positive climate and environmental impacts that have

resulted or are projected to result from projects financed within the City of Gothenburg's framework for

Green Bonds. The City of Gothenburg is committed to transparent reporting and conservative assessments

when reporting these results. A variety of key result indicators including four core indicators targeting

energy savings, the production of energy, increased capacity of energy production and reduced/avoided

GHG emissions have been selected and where possible quantified. However, it is important to consider the

following aspects in order to adequately interpret the reported results:

Uncertainty and comparability: Estimations of impact indicators and projections of impacts are

based on certain assumptions. The City of Gothenburg aims to make sound, conservative and

reasonable assumptions based on current information. However, it is important to note that actual

results may diverge from initial projections as a result of changes in law requirements, baseline

conditions, behavior and slow start-up periods.

Qualitative results: The projects listed within this report may have impacts across a much wider

range of indicators than those included in this report. It is therefore advisable to not only focus on the

reported quantitative indicators since other important impacts may be left out. Where quantitative

data is unavailable, qualitative data, to the extent possible have been included to illustrate the type

and direction of other beneficial impacts. To provide the best possible understanding of each project

and its impacts, project descriptions which include some of the most important aspects of each project

are available in the annual Investor Report.

Ex-ante and ex-post: Both impact analysis (ex-ante) and impact reporting (ex-post) will be used to

report the impacts of a project. The aim is to report actual results where possible as well as providing

an assessment of the results that can be expected from financed projects in the future. The impact

analysis is an integral part of the selection process when determining if a project is eligible for

financing with a Green Bond.

The impact indicators summarized in this report focus on results considered by the City Executive Office

and Environmental Department to be of interest to Green Bond investors, based on a dialogue with both

investors and project operations. The indicators are intended to illustrate the type and scale of expected

results in a variety of projects. It is important to note that, because of the wide range of project areas,

comparability between projects (and other project portfolios) may be limited. An aggregation of the GHG

emission reductions from different projects will not be provided until there are more harmonized and

developed methods for GHG accounting in regards to Green Bond eligible projects.

The City of Gothenburg's Green Bond eligible projects are presented in two different tables. Table 1

includes projects mainly focused on energy efficiency, renewable energy and reduction of GHG emissions.

In Table 2 other projects are presented, accompanied with suitable quantitative and/or qualitative

indicators. A disclosure of methodologies and key underlying assumptions including calculations,

conversions and baselines that have been employed to increase comparability is provided in the Annex.

Key Result Indicators

Table 1 Annual energy savings in MWh

Annual GHG emissions reduced/avoided in tons of CO2 equivalent

Annual renewable energy generation in MWh

Capacity of renewable energy plant(s) constructed or rehabilitated (MW)

Other significant results and aspects

Table 2 Projects categorized in other sectors are more heterogeneous. The impact report provides project specific indicators based on available information that provides an indication of the type and scale of the results.

City of Gothenburg Green Bond Impact Report 2016 7

1. Renewable energy, energy efficiency, GHG reduction focused projects

Impacts and allocated amounts

Project Administration/

Municipal

company

Project

start

Adaption/

Mitigation/

Environment

Sector Annual

energy

savings

MWh

(%)

Annual

energy

produced

MWh

Renewable

capacity

added MW

Annual

GHG

emissions

avoided

tons of

CO2 eq.

Other results Allocated

(MSEK)

GoBiGas

Göteborg Energi AB

2013 M Biofuel na 26 500 na 5900 Capacity: 180 GWh Energy production projected to be doubled

in 2016 (~60 GWh with 12 000 tons of CO2 emissions avoided).

920

Electric cars

Gatubolaget AB 2013 M Sustainable transportation (Energy efficiency)

na na na 148 Approximately 200 new electric cars, 51 electric bikes and several small electric vehicles have been purchased since project start. Benefits from bikes/small vehicles are not included.

59,9

Celsius

Göteborg Energi AB

2014 M Energy efficiency (Renewable energy)

- na na 500* Project promotes the use and optimization of district heating technology in Europe.

Power requirements for heating can be reduced by up to 90 % with this technology.

5

Traffic lights energy efficiency

Road Traffic Administration

2015 M Energy efficiency

1232 (51%)

na na 424 Replacements of ineffective fittings have resulted in energy savings of 51%.

48,9

Sustainable housing

City Premises Administration

2014 M Sustainable housing

- (34%)

na na - A total of 17 buildings constructed. They use green electricity (~100 % reduction in CO2 emissions from electricity use).

Estimated energy use ~34 % lower than baseline. Estimations show 50-60 tons of CO2 emissions will be avoided annually.

695,5

Sustainable housing

Förvaltnings AB Framtiden

2015 M Sustainable housing

410 (33%)

na na 106 Three constructions with the eco label Svanen constructed and one low-energy house. The buildings use electricity certified with the eco label Bra Miljöval (Wind and hydro). Energy use 33 % lower than baseline.

388,1

Total allocated 2117,4

na = Not applicable

- = Not reported for this project

*Projected

City of Gothenburg Green Bond Impact Report 2016 8

2. Other categories

Impacts and allocated amounts

Project Administration/

Municipal company

Project

start

Adaption/

Mitigation/

Environment

Sector Results Allocated

(MSEK)

Ultrafilter

Department of Sustainable Waste and Water

2013 A Water management

Investment guarantees drinking water of the highest quality 39 400 sick days prevented on average per year.* Prevented sick days also entails lower social costs. 100 % of water passing through can be processed.*

570

Denitrification

Gryaab 2014 E Environment Expansion of a water treatment plant in order to reach a denitrification rate of 80% (from 60-65%).*

157

Tree planting

Parks and Landscape Administration

2014 M (A/E) Environment Trees are planted annually. 1710 trees have been planted since project start. The project improves biodiversity, promotes ecologically functional networks of

habitats, promotes a green cityscape and has positive effects on urban air quality and the temperature of nearby buildings.

14

The Pedestrian City

Road Traffic Administration

2015 M Sustainable transportation

Improved conditions for pedestrians traveling in urban areas. Examples include: improved traffic security and accessibility for pedestrians traveling

in the city.

50,3

The Bicycle City

Road Traffic Administration

2015 M Sustainable transportation

Project includes several improvements to the city’s bicycle infrastructure. Examples include: biking roads and 300 bike racks.

60,4

Total allocated 851,7

*Projected

City of Gothenburg Green Bond Impact Report 2016 9

Annex The values for avoided/reduced GHG emissions are based on comparisons between the projects and likely baseline scenarios. The

following conversions and calculations have been employed in order to increase comparability and provide a more detailed

understanding of the climate and environmental impacts that have resulted or can be expected to result from the Green Bond

eligible projects. Unless otherwise stated, calculations regarding GHG emissions from electricity use are based on the Nordic

residual electricity mix. GHG emission levels for the Nordic residual electricity mix in 2014 were 344,47g CO2eq/kWh (Swedish

Energy Markets Inspectorate). CO2 emissions generated from green electricity (Bra miljöval) are usually reported within 0-10 g/kWh,

for these calculations the value 5 g/kWh has been used. For comparative reasons the European attribute electricity mix has been

included, the value for 2014 was 572,89g/kWh (RE-DISS). Numbers presented may not add up due to rounding.

Information in italic is only intended to illustrate the relative size of the results by presenting alternative project scenarios where

other electricity mixes are used.

Electric cars Baseline Project Green electricity European attribute mix

GHG emissions (g CO2eq/km) 143 69 1 115

GHG emissions (g CO2eq/kWh) - 345 5 573

kWh/km - 0,2 0,2 0,2

km/year 10 000 10 000 10 000 10 000

Amount of cars 200 200 200 200

Total GHG emissions (tons CO2eq/year) 285 138 2 230

GHG emissions reduced/avoided (tons CO2eq/year) 148 283 56

The baseline value is based on EU requirements on new cars sold in the EU in 2015 (130g CO2eq/km). The value is adjusted with

GHG emissions from production, distribution and bio components. The distribution of diesel and gasoline cars is based on statistics

for the Swedish car fleet in 2014. Statistics are provided by the Swedish Transport Administration. Both project and baseline

numbers can be considered “well-to-wheels”. Avoided/reduced GHG emissions from the electric bikes and smaller vehicles are not

included which means the positive effects are even greater than stated in this report. (The table also includes green electricity and

the European attribute mix for comparisons).

GoBiGas Project

Energy delivered for transports (GWh) 26,5

Reduction in GHG emissions from transports (%) 74

GHG emissions from fossil fuel in the transport sector (g CO2eq/MJ) 83,6

Avoided GHG emissions at 100% reduction (Optimal efficiency) 7975

Avoided GHG emissions at 74 % reduction (Current efficiency) 5902

Reduced/avoided GHG emissions are calculated with the biogas calculation tool HBK.

Sustainable housing Baseline Project Nordic residual mix European attrbiute mix

Area constructed (m²) 13 800 13 800 13 800 13 800

Heating use (kWh/year) 977 300 686 100 686 100 686 100

Heating GHG emissions (g CO2eq/kWh) 53 53 53 53

GHG emissions from heating (tons CO2eq) 52 36 36 36

Electricity use (kWh/year) 265 300 146 400 146 400 146 400

Electricity GHG emissions (g CO2eq/kWh) 345 5 345 573

GHG emissions from electricity (tons CO2eq) 91 0,73 50 83

Annual energy savings (MWh) 410 410 410

Total GHG emissions avoided(tons CO2eq/year) 106 56 23

The baseline is based on the law requirements that were in effect the year construction started (BBR21). Calculations are based on

energy use for each individual building. Energy use is approximately 33% lower than baseline. The buildings use electricity certified

by the eco label Bra Miljöval (Wind and hydro): 5g CO2eq/kWh. Nordic residual electricity mix has been used for baseline values.

GHG emission levels used for district heating in 2015 were 53g CO2eq/kWh (Göteborg Energi AB). Energy use may decrease even

further over time since energy use is higher during the first year in a newly constructed building. (The table also includes the Nordic

residual mix and European attribute mix for comparisons).

Traffic lights energy efficiency Project Green electricity European attribute mix

GHG emissions (g CO2eq/kWh) 345 5 572,89

Energy use (MWh) 2416 2416 2416

GHG emissions (tons/year) 832 12 1384

Annual energy savings (MWh) 1232 1232 1232

GHG emissions reduced/avoided (tons CO2eq/year) 424 6 678

System effect decreased by approximately 308 000 W (51%). Nordic residual electricity mix has been used for project calculations.

(The table also includes green electricity and the European attribute mix for comparisons).

Ultrafilter Baseline (No ultrafilter) Project

Sick days (project lifetime) 2 001 000 108 000

Project life (years) 48 48

Sick days/year 41 690 2251

Sick days avoided/year 39 400

The goal of the investment is to provide drinking water of the highest quality. The project effects are based on a baseline scenario

proposed in a third party report (Samhällsekonomisk analys av installation av ultrafilter vid Lackarebäcks och Alelyckans vattenverk,

WSP) where no ultrafilters are installed and a likely type of waterborne disease outbreak occurs in 2038. The scenario is based on

the period 2009-2057 and includes numbers for both sporadic and outbreak related sick days.

Other indicators are provided directly by project operations.

City of Gothenburg Green Bond Impact Report 2016 10

Disclaimer IMPORTANT: YOU ARE ADVISED TO READ THE FOLLOWING INFORMATION CAREFULLY BEFORE READING, ACCESSING OR

OTHERWISE USING THE PROVIDED MATERIAL.

The content in this document have been prepared and provided by City of Gothenburg (the “Issuer”). The Issuer is not responsible for

that any of the content provided by the Issuer and presented in this document directly or indirectly, may cause any loss or damage to

the user or any other person who has taken part of the content. The issuer cannot be held liable in relation to the user or any third

party for direct or indirect damages, lost profits or revenues, or for any other harm caused by the fact that the content is in any way

incorrect, wrongly displayed or presented or even altogether missing due to errors or other circumstances from the Issuers side or

any supplier to the Issuer. This includes all the cases where the provided information may be delayed, appear incorrectly, appear

with incorrect values or be totally absent due to any technical or other reasons. This also includes any loss in earnings (regardless of

whether direct or indirect), reductions in goodwill or damage to corporate.

The Content that is provided is intended exclusively to inform any reader and does not represent advice on investment or any other

form of recommendation. The content may under no circumstances be seen as any offer or invitation to underwrite, subscribe for or

otherwise acquire or dispose of any debt or other securities of the Issuer (“Securities”) and are not intended to provide to the basis

for any credit or any other third party evaluation of securities. Any and all offers or invitations will be done in separate and distinct

documentation in form of prospectus or other form specifically produced for the purpose therefore. Any decision made pursuant to

such invitation or offer should be made solely on the basis of such documentation. The purpose of these materials is therefore not to

be relied upon for the entering into any transactions. The Issuer refuses any claim in this regard.

Investors are advised to pay special and thorough attention to the information in the prospectus or other form of specifically

produced documentation. Sections describing risk factors should be carefully read by each investor before making any decision in

relation to the offered product. Special attention should be paid to the suitability of any security described in these materials with

respect to a particular investor’s situation independently evaluated by such investor himself. Such evaluation should at least take

into account such aspects as legal and tax issues, regulator and financial issues, credit and any other aspect which may be

considered applicable in such case.

The content in this document may contain some forward-looking statements which key purpose is to indicate some prospective

future scenarios. Taking into consideration all known and unknown risks, uncertainties and other factors which may occur, the Issuer

makes reservations herewith that the material outcome may differ from any information expressed, implied or otherwise indicated

in such forward-looking statements. Any and all such forward-looking information are based on numerous assumptions regarding

the Issuer’s present and future strategies in an attempt to show the environment the Issuer will operate in the future. Such forward-

looking material is issued and is current on a particular publishing date and the Issuer has no obligation to update such material.

The provided content is not intended for distribution to, or use by any person or entity in any jurisdiction or state where such

distribution or use would be against the law or any other regulation.

Any and all information provided is aimed for professionals and sophisticated industry participants only.