1STOCKHOLM COUNTY COUNCIL GREEN BOND IMPACT REPORT 2018

STOCKHOLM COUNTY COUNCIL

GREEN BONDIMPACT REPORT 2018

TABLE OF CONTENTS

3 GREEN BOND IMPACT REPORT, MARCH 2018

4 EXECUTIVE SUMMARY

6 COUNTY COUNCIL’S ENVIRONMENTAL PROGRAMME 2017–2021

6 STOCKHOLM COUNTY COUNCIL’S GREEN BONDS

7 STOCKHOLM COUNTY COUNCIL’S FRAMEWORK FOR GREEN BONDS

7 IMPROVED FUTURE REPORTING ON GREEN BONDS

8 FEEDBACK ON THE GREEN BONDS AND GREEN FINANCE

9 INVESTOR MEETINGS

10 STOCKHOLM COUNTY COUNCIL’S PROJECTS FOR GREEN INVESTMENTS

3STOCKHOLM COUNTY COUNCIL GREEN BOND IMPACT REPORT 2018

GREEN BOND IMPACT REPORT, MARCH 2018

“Stockholm is experiencing rapid growth and Stockholm County Council is now making historic and necessary investments in healthcare and public transport. Green bonds are a good fit for our environmental efforts. As a major actor, we need to be conscious of making investments that are of a sustainable nature.”Malin Frenning, CEO Stockholm County Council

“Actors like the Stockholm County Council are essential for leading the way and demon-strating it is possible for the world to reduce climate emissions sufficiently to remain below a global warming of 1.5–2 degrees, set by the Paris Agreement.” Charlotta Brask, Head of Sustainability at Stockholm County Council

“The County Council’s investments must be made with the smallest environmental impact possible. The investments are well suited to green bonds where we turn to investors who value our environmental efforts. Through clear and transparent reporting for green projects, we hope to provide investors more reasons to choose green investments.” Frida Korneliusson, CEO Stockholm County Council Treasury

4 STOCKHOLM COUNTY COUNCIL GREEN BOND IMPACT REPORT 2018

EXECUTIVE SUMMARY

Stockholm County Council reports it’s Green Bonds impact in accordance with the Nordic Public Sector Issuers: Position Paper on Green Bonds Impact Reporting, published in October 2017 by a group of Nordic public sector green bond issuers. Any deviations from the Position Paper recommendations will be indicated in our reports.

For more information: sll.se > Choose language > English > investor relations > funding programmes > Nordic issuers release guide on green bonds impact reporting

Nordic Public Sector Issuers:Position Paper on Green Bonds Impact Reporting October

2017

0

1 000

2 000

3 000

4 000

5 000

6 000

7 000

2014

Disbursed to projects/total amounts approved to projects

GREEN BONDS ISSUANCE AND GREEN PROJECT PORTFOLIO

2015 2016 2017

SEK 1.1 bn green bond (2014)

SEK 1.8 bn green bond (2015)

SEK

mill

ion

SEK 1.5 bn green bond (2016) SEK 2.0 bn green bond (2017)

GHG IMPACT AND GREEN INDICATORS, DIVIDED BY DISBURSED AMOUNTS FOR GREEN BONDS

Project category

GHG emissions reduced/avoided CO2e1/year (tonnes) Other result

Disbursed amounts to projects, SEK mn

Impact CO2e (tonnes)/SEK mn

Green Buildings 13 600 3 353 4

Renewable energy (own production) 4 400

Clean transportation (excluding Roslagsbanan)

6 100 1 5522 4

Waste management n/a See individual reports

Total (Reduced emissions from Renewable energy are excluded from this total as it is already partly included in Green buildings)

19 700 4 9052 n/a

Disbursed amounts w. GHG impact SEK mn

4 9052 4

Annual renewable energy generation, MWh

30 000 MWh

Annual energy savings, MWh (compared to national building requirements)

6 900 MWh

1 Calculations have been made on CO2 emissions, with a GWP warming potential of 1. Thus the value in CO2 equals the value in CO2e (Carbon dioxide equivalents).2 Due to new impact report guidelines, there is no updated information at the moment about GHG emissions reduced/avoided for issued bond 2014, 2015 (Roslagsbanan). Hence, the disbursed amount for Roslagsbanan is not part of 1 552 mn and not part of 4905 mn. Also due to very low amount disbursed to New depot Högdalen, it is not part of the impact figures.

All green bonds are fully invested.

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Key procedural aspects

• Each project is selected according to the Stockholm County Council Green Bonds Framework available on sll.se > Choose language > English > investor relations > funding programmes > green bond > framework for green bonds

• Stockholm County Council reports on a project basis, and in Swedish kronor (SEK).

• For this document, the reporting period ends on 31 December 2017.

Key reporting methodology

• Stockholm County Council reports on the basis of the share of the project’s total investment cost financed with green bonds (net of redemptions).

• Impacts are based on outstanding disbursed amounts to projects in Stockholm County Council Green Bonds 2014–2017 with exception of Roslagsbanan (2014 and 2015). Our ambition is to include this impact parameter in next report.

• Impact is principally reported on expected impact (ex ante), unless clearly stated as ex post.

6 STOCKHOLM COUNTY COUNCIL GREEN BOND IMPACT REPORT 2018

STOCKHOLM COUNTY COUNCIL’S ENVIRONMENTAL PROGRAMME 2017–2021

STOCKHOLM COUNTY COUNCIL’S GREEN BONDS

Stockholm County is a dynamic and rapidly growing region requiring major investments in public transport and healthcare to facilitate successful development. The County Council aims to contribute to sustainable development in the region, by way of limited environmental impact.

The County Council is taking a comprehensive approach to reducing environmental impact from properties and installations, pharmaceuticals, textiles, food and travel. The County Council also

takes national and global responsibility for the production of goods and services that are procured.

The County Council’s environmental programme covers five areas:• Sustainable procurement• Climate commitment• Healthcare• Public transport and other transports• Properties and installations

In May 2014, Stockholm County Council was the first county council in Sweden to issue a green bond. A green bond has been issued each year since.

Green bonds are a way of financing investment projects with a particular environmental focus. They are a tool for raising awareness of climate- related challenges and solutions while safeguarding green development projects in the county. In terms of risk, return, legislation and documentation, green bonds have the same characteristics as other invest-ments. They currently account for only a small per-centage of the overall bond market, however interest and demand for green bonds is growing rapidly.

Any financing raised by the County Council within the green bond framework is earmarked for environmental projects and is held in a separate tra-ceable account that is allocated for investments that meet specific environmental criteria.

The Eligible Projects are selected jointly by the Stockholm County Council Treasury and the Sustainability Department. They are then approved by a Steering Group for Green Bonds consisting of executive managers from the the County Council’s local bodies, strictly following the following four steps:• Stockholm County Council Treasury initiates the

screening process and a project group is formed.• The project group for green bonds determines the

portfolio of green projects to be financed by a potential green bond issuance.

• The Stockholm County Council Sustainability Department evaluates all the proposed projects to ensure compliance with laws and regulations, Stockholm County Council environmental and social policies as well as the Stockholm County Council Green Bond Framework.

• The Steering Group for green bonds has final authority in determining the final list of eligible green projects, to be financed by green bonds.

ISSUED GREEN BONDS

Year Loan amount Issued green bonds

2014 SEK 1.1 billion 6 years

2015 SEK 1.8 billion 6 years

2016 SEK 1.5 billion 5 years and 4 months

2017 SEK 2.0 billion 5 years

7STOCKHOLM COUNTY COUNCIL GREEN BOND IMPACT REPORT 2018

STOCKHOLM COUNTY COUNCIL’S FRAMEWORK FOR GREEN BONDS

IMPROVED REPORTING ON GREEN BONDS

The county council’s green financing complies with a framework for green bonds. The framework stipu-lates how the selection process of green projects is to be conducted, how the money is to be managed in separate accounts and how the communication and reporting on the projects will ensure transparency for investors.

In 2016, Stockholm County Council began, in cooperation with other Nordic public issuers of green bonds, an effort to formulate a common approach to feedback reporting. The cooperation is founded on the conviction that a common Nordic position will offer valuable insight for other green bond issuers as well as the investor market in gene-ral. There is also a value in sharing experiences and expertise.

The objective is to develop a transparent, harmoni-sed and relevant approach to reporting the effects of green bonds. The group’s ambition is to continue to develop the guide for Nordic issuers of green bonds published in the second half of 2017.

Signatories are: City of Göteborg (Sweden), Kommunalbanken (Norway), Kommuninvest (Sweden), Municipality Finance (Finland), Norrköping Municipality (Sweden), Örebro Munici-pality (Sweden), Svensk Exportkredit (Sweden), Municipality of Lund (Sweden), Region Skåne (Sweden) and Stockholm County Council (Sweden).

sll.se > Choose language > English > investor relations > funding programmes > green bond > framework for green bonds

8 STOCKHOLM COUNTY COUNCIL GREEN BOND IMPACT REPORT 2018

FEEDBACK ON GREEN BONDS AND GREEN FINANCE

The first green bond issued by Stockholm County Council in 2014, funded two investment projects with a particular environmental focus: the Roslags-banan expansion programme and the new construc-tion and renovation of Södertälje Hospital. The proceeds from the first green bond, SEK 1.1 billion, has been fully invested as of 31 March 2015.

The second green bond, in the amount of SEK 1.8 billion, was issued in May 2015 and was intended for three projects: the Roslagsbanan expansion pro-gramme, the construction of New Karolinska Solna, and the new construction and reconstruction of Södertälje Hospital.

The third green bond, in the amount of SEK 1.5 billion was issued in May 2016 and pertains to three projects: the construction of New Karolinska Solna, the upgrade of the Metro’s Red Line and new construction and renovations of Södertälje Hospital.

In June 2017, the County Council’s fourth green bond was issued in the amount of SEK 2.0 billion and pertains to three projects: the construction of New Karolinska Solna, the upgrade of the Metro’s Red Line and the establishment of a depot in Högdalen as part of the expansion of the entire subway network.

The table below is continuously uppdated, on sll.se, with Stockholm County Council’s green investment expenditures.

All projects are reported according to the guide for Nordic issuers of green bonds except the new Metro, a new depot in Högdalen, as it only represents a small portion of the proceeds.

Projects MSEK

Total investment

Total green financing (where of green bond)

Green bond 2014 (SEK 1.1 billion) Fully invested 31/3 2015

Green bond 2015 (SEK 1.8 billion) Fully invested 31/3 2016

Green bond 2016 (SEK 1.5 billion) Fully invested 30/6 2017

Green bond 2017 (SEK 2.0 billion) Fully invested 31/12 2017

Expansion of Roslagsbanan

8 455 1 495 (1 495)

915 580 Not part of this bond

Not part of this bond

New- and reconstrution of Södertälje Hospital

1 200 785 (785)

185 375 225 Not part of this bond

New Karolinska Solna

18 500 6 323 (2 568)

Not part of this bond

845 723 1 000

Red line programme

13 200 7409 (1509)

Not part of this bond

Not part of this bond

552 957

The new Metro, a new depot in Högdalen

1 600 43 (43)

Not part of this bond

Not part of this bond

Not part of this bond

43

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INVESTOR MEETINGS

The County Council works actively to provide transparency for investors. An example of this is the investor meetings that the County Council holds regularly. The projects financed with green bonds have been of particular interest to investors and the meetings have been well attended. Examples of meeting venues include the NKS, Södertälje Hospital, ambulance care services and the electric boat serving Saltsjön.

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STOCKHOLM COUNTY COUNCIL’S PROJECTS FOR GREEN INVESTMENTS

New construction and renovation of Södertälje Hospital

Södertälje Hospital is being expanded and moder-nised to create more modern and efficient premises. The project is intended to meet the anticipated increased need of care capacity in the immediate area by 2020. An important starting point for the project is that the hospital should enable greater flexibility for the future. The technical systems are duplicated, providing a back-up system to cope with outages in more than one section.

One of the major challenges is to implement the project on a relatively small property while ensuring the hospital remains fully operational.

A key goal of the project is to meet the requirementsof the Sweden Green Building Council’s Gold levelof certification and to support achieving the County Council’s environmental goals including having an energy consumption that is at least 30 per cent lower than that specified in Boverket’s regulations for new buildings. The regulations for new building specify 125 kWh/m2 per year, whereas the forecast for the new Södertälje Hospital is 76 kWh/m2 per year.

11STOCKHOLM COUNTY COUNCIL GREEN BOND IMPACT REPORT 2018

Other goals in the project are to:• achieve greater interactivity and process

orientation for cohesive outpatient care and sterile technology

• achieve better logical links between inpatient care, emergency department and treatment functions

• create generally designed wards for greater flexibility

• ensure that the working environment for staff meets current demands without reducing the available range of care

• use the building materials assessment systems to ensure approved materials are incorporated in the buildings

• reduce energy consumption over time• dispose of waste in an eco-friendly way• ensure that transports are efficient and environ-

mentally friendly• avoid substances with a detrimental impact on

health and the environment

1 Theoretical values for electricity, heating and cooling from energycalculations in the report Energiberäkning Nya Södertälje Sjukhus Byggnad 19–20 dated 2016-03-15. In some cases actual values has been used as reference for quality check. CO2eq./kWh for electricity comes from Vattenfall, EPD waterpower. https://www.vattenfall.se/globalassets/foretag/miljo/miljovarudeklaration- epd-vattenkraft.pdf. CO2eq./kWh for district heating and cooling comes from Svensk fjärrvärme: https://www.energiforetagen. se/statistik/fjarrvarmestatistik/miljovardering-av-fjarrvarme/ 2018-03-09. Assumption on distribution between district heating and electricity in accordance with BBR19. 2 Energy avoided is calculated on 168 MWh and baseline emissions for district heating according to Position Paper Appendix E. An alternative calculation would be that 16 tonnes of CO2e has been avoided, assuming a large heat pump run on electricity with a COP factor 4 would be used (42 MWh), since district cooling may not be an option. Assumption that energy coming from the boreholes are ” free energy” i.e. no energy needed to produce it. 3 Rounded per 100 MWH 4 Calculated using baseline emissions from Appendix D (combined margin applied by nordic issuers) and Appendix E (the same baseline emission factor has been applied for district cooling as for district heating) compared with actual electricity mix and local mix of district heating and district cooling. Rounded per 100 tonnes. 5 Values for the whole construction phase. Material reuse 16 %, material recovery 29 %, energy recovery 52 %, landfill 2.5 %. 6 EU recycling target for construction waste is 70 % by weight by 2020 but little data exists on current recycling level and it is estimated to be significantly below target.

SÖDERTÄLJE HOSPITAL

Category Project Indicators Unit Baseline /benchmark

Renewable energy

Geothermal energy (cooling)

Capacity of renewable energy plant

170 MWh2

Actual production of renewable energy

170 MWh2

Annual GHG emissions reduced/ avoided

30 tonnes CO2e2

Green Buildings1

New building standard exceeding building standard requirements

Annual energy avoided, compared to national buil-ding requirements

Annual GHG emissions reduced/avoided

900 MWh3

300 tonnes CO2e4

National building code BBR19

Green energy being used

Percentage renewable energy sources

Annual GHG emissions reduced/avoided using green energy

99 %

450 tonnes CO2e4

54 % Swedish average, Swedish Board of Energy (Energi myndigheten) 2016

Environmentally friendly materials being used

Percentage of materials being used acecpted in Byggvarubedömningen

92 %

Waste management

Resource preserving waste treatment (construction materials)

Improvement in material recovery rate compared to national references

97.5 % recovery incl. energy5

National benchmark not available.6

12 STOCKHOLM COUNTY COUNCIL GREEN BOND IMPACT REPORT 2018

New Karolinska Solna Hospital

The construction of New Karolinska Solna (NKS) was initiated in the summer of 2010. In order to safeguard the very high environmental and sustai-nability goals that have been set, the entire project was being carried out from a sustainability perspec-tive. One of the tools used is environmental certifi-cation of the buildings. Two systems of certification

are being used for NKS: the Sweden Green Building Council and the international system LEED.

The aim is to achieve the Gold level in both systems. In September, the fourth and final construction phase was approved for Gold level certification in accordance with the Green Building Council.

1 Capacity is based on total production 2017 (36 000 MWh) minus ingoing electricity. Capacity will increase when the hospital is in full use. Energy produced by geothermal energy is part of the energy avoided. The facility also recycles energy from the buildings. Rounded per 1 000 MWh. 2 Actual production is defined as the total production that has been used in the facilities. The total production could not be used 2017 as the hospital is not yet in full use. Rounded per 1 000 MWh. 3 Energy produced by geothermal energy is part of the energy avoided. Calculated using baseline emission values from Appendix D (combined margin applied by nordic issuers) and Appendix E (the same baseline emission factor has been applied for district cooling as for district heating) compared with actual electricity mix and local mix of district heating and district cooling. Rounded per 100 tonnes. 4 Theoretical value as the hospital is not yet in full use. Rounded per 100 tonnes. 5 Calculated using baseline emssions from Position Paper Appendix D (combined margin applied by nordic issuers) and Appendix E (the same baseline emission factor has been applied for district cooling as for district heating) compared with actual electricity mix and local mix of district heating and district cooling. Rounded per 100 tonnes.6 Year 20177 95 % material recovery incl. energy and 5 % landfill are the figures for the whole construction phase. Figures from 2016 show material recovery 43 %, energy recovery 54.2 %,landfill 2.7 %. Mixed materials have been calculated as 100 % energy recovery, but part of it may have been sent to material recovery 8 EU recycling target for construction waste is 70 % by weight by 2020 but little data exists on current recycling level and it is estimated to be significantly below target.

NEW KAROLINSKA SOLNA

Category Project Indicators Unit Baseline /benchmark

Renewable energy

Geothermal energy Capacity of renewable energy plant

30 000 MWh1

Actual production 2017 21 000 MWh1/2

Annual GHG emissions reduced/avoided

4 300 tonnes CO2e3

Green Buildings New building standard exceeding building standard requirements

Annual energy avoided, compared to national building requirements

Annual GHG emissions redu-ced/avoided compared to national building standards

21 000 MWh4 (52 % reduction)

6 600 tonnes CO2e5

National building code BBR16

Green energy being used

Percentage renewable energy sources

99 % 54% Swedish average, Swedish Board of Energy (Energi myndigheten) 2016

Annual GHG emissions reduced/avoided using green energy

6 200 tonnes CO2e5

Environmentally friendly materials being used

Percentage of materials being used acecpted in Byggvarubedömningen

89 %

Clean transportation

Infrastructure for electric vehicles

Percentage of parking spaces reserved for electric vehicles

10 % 0 % (no local/ national demands)

Estimated savings in GHG emissions

30 tonnes CO2e6

Waste management

Resource- preserving waste treatment

Improvement in material recovery rate compared to national references

95 % recovery incl. energy.7

National benchmark not available.8 SITA supplier average for Sweden is 92 % incl. energy.

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A preliminary certificate can thus be issued for the entire installation after an extensive third party inspection has been carried out by the certification body Sweden Green Building Council.

One aspect of the Green Building Council system is the aim to reduce the energy needs from the heating, cooling and maintenance of the installation. The NKS is constructed for reduced energy consumption, satisfying and exceeding the requirements set by Boverket’s Building Regulations.

This means substantial savings, both financial and environmental, since the annual reduction in energy consumption is the rough equivalent of the total amount of energy used in 1,200 private homes. By switching to renewable energy, a large portion also stemming from own production, 99% per cent renewable energy will be used. This means minimi-zing the emissions of Green house gases.

Another focus area is to reduce the use of chemicals and hazardous substances. Thanks to the deliberate

choice of flooring material, the use of softeners with an adverse impact on health (phthalates containing allergy- causing and hormone-disruptive properties) has been reduced by at least 70,000 kg compared with conventional construction – and this is only one of all the materials used in the construction.

The Green Building CouncilThe Green Building Council is a Swedish certifica-tion system for building installations where the focus lies on energy, the indoor environment and construction material. Clear follow-up of supplier deliveries and reduced maintenance costs is one of the issues for which the Green Building Council is known.

A building can achieve the Bronze, Silver or Gold level. On completion of the construction planning a preliminary certificate is awarded. In order to be awarded a final certificate, the preliminary certifi-cate must be verified no later than two years after the commissioning of the installation.

14 STOCKHOLM COUNTY COUNCIL GREEN BOND IMPACT REPORT 2018

Metro Red Line programme

Creating the possibility for more people to travel by public transport leads to a considerable reduction of carbon dioxide emissions (CO2) in the atmosphere, which is one of the County Council’s main efforts in reducing negative environmental impact in the County. The upgrade of the Metro’s Red Line aims to develop and strengthen capacity and thereby contribute to sustainable public transport. To achieve this goal, investments are being made in

• a new service command centre and new service command system

• an increase in the number of depots• new quieter vehicles that are more energy efficient

than older models

Throughout the construction phase, sustainability will be monitored and measures will be applied on continual basis, such as material optimisation and reducing the amount of material transports.

Extension of the Metro in Stockholm

The extension of Stockholm’s Metro is the largest investment in the subway system in modern times. 19 kilometres of new track and 11 new stations divi-ded into four sections are being built and, around 2025, Metro service will operate between Nacka C, Barkarby station and Arenastaden. More vehicles and garaging points with greater capacity for servicing these vehicles are needed for the Metro extension. Today, the number of vehicles and depot capacity fall short of the requirements necessary for the successful extension of the planned Metro.The extended Metro will be a resource-efficient and

climate-smart travel alternative to fossil-fuelled means of transport. During the project, environ-mental and sustainability aspects have been taken into account in every area. The Metro extension will have a large climate impact during its construction phase, but from a life-cycle perspective, the Metro will have a clearly positive effect with reduced resource consumption and reduced climate burden for the county’s residents. Multiple measures are planned to reduce the climate impact in the construction phase, such as optimisation of mate-rial selection and resource consumption, reduction

RED LINE

Category Project Indicators Unit Baseline /benchmark

Clean transportation

Expansion of Metro Red Line

Net avoided emissions from cars and other vehicles

6 100 tonnes CO2/year1

17.5 km car kilometers/ person/week day. 260 days a year.

Number of people in new means of transportation

6 800 people/ weekday2

Estimated reduction in car kilo-meters the project will replace

30 752 000 km1 6 100 tonnes CO2e/year

1 Aggregated value in number of people for 5 years, divided per year. 17.5 km car kilometers/person/week day. 260 days a year. Estimated car emissions of 0.2 kg CO2/km.2 Estimated increase in number of people, aprox 1.7% per year during 5 years.

15STOCKHOLM COUNTY COUNCIL GREEN BOND IMPACT REPORT 2018

1 CEEQUAL is a sustainability assessment, rating and awards scheme for civil engineering, infrastructure, landscaping and public realm projects. CEQUAL was developed by the British industrial association Institution of Civil Engineers (ICE) and was launched in 2003 in the UK and Ireland. 2 The rating “Very Good” is the second highest rating on the scale and means that the project received more than 60%, but less than 75 % of the total points.

of the number of transports, etc. The climate burden from the extended Metro will be reduced by at least 25% during the project’s implementation and no serious work environment accidents will occur.

The County Council’s Extended Metro Administra-tion is environmentally certified according to ISO 14 001. Through climate calculations, the County Council monitors the climate impact of stations

right from the design stage. The project’s sustaina-bility coordinator provides support and monitors sustainability issues in every project. The certifica-tion system CEEQUAL1 will be used to ensure that the County Council’s strategic environment work is integrated into the planning and project engine-ering of all sub-projects. The objective is to achieve the rating of Very Good as a minimum2.

Depot for extended Metro in Högdalen

The Depot-Vehicle project has the task of reinforcing the capacity at the existing Högdalen depot by several measures, promoting the resilience and capacity of the overall Metro system. The Högdalen maintenance facilities “garaging points” will be expanded and the connection possibilities to the depot will be exten-ded to be accessible to both the Green and the Blue Lines. All of these measures will make it possible to increase the number of vehicles which is much needed. The project is vital for ensuring that the finished Metro lines will be fully operational for the scheduled launch of service. At the same time, an upgrade is being performed on the vehicle fleet and the transport systems. Reinforcing sustainable transport systems reduces the level of carbon dioxide emissions in Stockholm County. The project has the objective of achieving the rating of Very Good as a minimum.

Multiple measures are planned to reduce the climate impact in the construction phase of the depot. An above-ground garage, with a timber frame is planned, which will provide an estimated climate improve-ment of around 165 tonnes of carbon dioxide equiva-lents compared with a steel frame. It has also been engineered to enable the installation of solar cells on buildings above ground and placing the entrances to the garage below ground, cutting the heating costs. Constant optimisations are made to reduce resource consumption, especially the amount of concrete that is used. The use of light concrete is an important aid for reducing the number of heavy transports in the construction phase.

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