INVESTOR REPORT GREEN BONDS / VOLVOFINANS BANK AB 2018
Investr reprt - Green Bnds In May 2017, Vlvfinans Bank issued its first, and t date, nly green bnd, being nly the secnd such green issue ever in Eurpe linked t the passenger car sectr 1. Green bnds are issued under Vlvfinans Bank's MTN prgram, where green bnd funding is used t refinance the bank's prtfli f green lans. As such, Vlvfinans Bank has the verall bjective f reducing the impact f climate change and the issuing f green bnds is ne way f cntributing t this bjective. Mrever, thrugh this initiative, the Bank can benefit frm bth risk differentiatin and cmpetitive advantage. Vlvfinans Bank ("Vlvfinans") issued a green bnd f SEK 700,000,000 n May 9, 2017 with a maturity f 5 years. Liquidity frm this and future bnds is allcated t investments cvered by the bank's green bnd framewrk. These investments cnsist f lan and leasing cntracts entered int by a custmer fr the use f a green car that has n r lw CO 2 emissins - which tgether cnstitute Vlvfinan's green lan prtfli. The Green Bnds Framewrk has been reviewed by the climate and research institute CICERO (The Center fr Internatinal Climate and Envirnmental Research Osl), and has been awarded a "Light Green" rating. The wrk invlved in green bnds and the green lan prtfli is carried ut in cperatin with the Bank's Sustainability Officer and Treasury. In March, the green lan prtfli amunted t 1,598 millin SEK (-) while utstanding bnd vlume amunted t 700 millin SEK (-). Fr infrmatin n Vlvfinans Bank's sustainability wrk, see the Sustainability Reprt and Sustainability Plicy at vlvfinans.se/m vlvfinans bank/hållbarhet. New cntracts are cntinuusly allcated t the green lan prtfli, which is then amrtized ver the cntract s duratin. The duratin f new cntracts is up t 84 mnths with the average remaining cntract term being 23 mnths as at March 31, 2018. Of the riginal value f the financing bject, 87% was financed by Vlvfinans. As such, Vlvfinans' ambitin is that the green lan prtfli shuld always be greater than the utstanding vlume f green bnds. 2018-03-31 millin SEK Apprved Green Lan Prtfli 1,598 Outstanding vlume f Green Bnds 700 Remaining apprved investment amunt 898 Framewrk fr Green Bnds A framewrk, based n ICMA's "Green Bnd Principles", has been established, setting ut the cnditins fr issuing Vlvfinans green bnds and refinancing. The framewrk has been reviewed by CICERO, and can be fund in its entirety, tgether with CICERO's statement, at vlvfinans.se. Bnd liquidity is used t refinance Vlvfinans green lan prtfli f lan and leasing cntracts. Each individual cntract has a passenger car as its financing bject, whereupn the vehicle is whlly r partly driven by fssil-free fuel. As such and accrding t Vlvfinans, the vehicles prmte a transitin t lw carbn dixide emissins and climate-resistant grwth. The vehicles shall be cnsidered as sustainable transprt and shall be defined as passenger vehicles prviding they: 2018-03-31 Vehicles (number) Balance (mnkr) Electric/petrl hybrid vehicles 2,875 947 Electric/diesel hybrid vehicles 1,380 347 Ethanl/petrl hybrid vehicles 4,551 155 Electric vehicles 1,092 149 Bigas/natural gas/petrl vehicles 1 0 Ttal 9,899 1,598 Meet the criteria as specified in Paragraph 11a f Chapter 2 f the Swedish Rad Traffic Act (Sw. Vägtrafikskattelag (2006:227) ( Envirnmentally Friendly Cars ) (Sw. Miljöbilar) and Can be pwered entirely r partially by nn-fssil fuels i.e.: electric vehicles fuel-cell vehicles electric/petrl hybrid vehicles electric/diesel hybrid vehicles ethanl/petrl hybrid vehicles bigas/natural gas vehicles bigas/natural gas/petrl vehicles 1 Surce: GlbalCapital Investr Reprt - Green Bnds 2018 2
CO2-reductin When estimating the climate benefit, the fllwing standardized reasning fcuses n CO 2 emissins. There are a number f uncertainties when attempting t calculate CO 2 emissins where in principle, the technical specificatins supplied by the car manufacturers give each car's expected emissins. Hwever, there are several variables that deviate frm the nrm. Amng ther things, it cannt be said with certainty which fuel a hybrid engine custmer chses t drive n and it cannt be determined with certainty whether the car is being used in the city r n the pen rad. Vlvfinans is als aware that cars have envirnmental impact in ways ther than CO 2 emissins, fr example, a life-cycle analysis fr the car has nt been established nr have particle emissins been included. Frm a green perspective, we d nt imply any scial benefits assciated with being a financier f scial transprtatin nr any negative effects such as scietal csts fr rad accidents. The estimated cnsumptin f each individual car is the basis fr the calculatins. Fr electric cars 0 is used and fr electric hybrids (electricity in cmbinatin with gasline r diesel), the manufacturer's declared cnsumptin figure (accrding t NEDC) is used, the same reasning applies t gas hybrid and ethanl cars. Fr ethanl vehicles, the value is reduced by a CO 2 cnversin factr 1 t cmpare fuel types, ethanl with bilgical rigin des nt cntribute t fssil CO 2 emissins. Vlvfinans uses the statutry definitin fr envirnmental cars, the calculatins being based n the abve assumptins and where the expected CO 2 reductin is calculated by the difference between the emissins f cars financed by Vlvfinans and the average emissin f new cars in Sweden. In 2017, accrding t the Swedish Transprt Administratin 2, the average emissin was 123g CO 2 /km fr newly registered cars during the year. By cmparing the envirnmentally-rated cars as per 2018-03-31 with average emissins fr new cars f 123g CO 2 /km, ne can assume an annual reductin f ver 8,600 tnnes f CO 2 fr the vehicles thrughut the entire green lan prtfli, see table belw. The CO 2 reductin is calculated n an average annual basis n mileage f 12,000 km/year 3. Outstanding vlume f green bnds crrespnds t an annual CO 2 reductin f 3,700 tnnes f CO 2. 2018-03-31 Green Lan prtfli CO 2 -reductin ttal prtfli CO 2 -reductin Green Bnds Grams CO 2 per km 50 73 Vehicles (number) 9 899 9 899 Balance (MSEK) 1 598 700 CO 2 emissins tnnes/year 5 946 8 664 3 794 Review perfrmed by cmpliance functin Vlvfinans' regulatry cmpliance functin has reviewed this investr reprt, as well as the use, management and traceability f green bnd issues. This review has nt resulted in any remarks. 1 http://spbi.se/blg/faktadatabas/artiklar/berakningsmdeller/ 2 https://www.trafikverket.se/cntentassets/07f80f01d92144eebf1a01fcb60ac923/ pm_vagtrafikens_utslapp_180225.pdf 3 http://www.trafa.se/vagtrafik/krstrackr/ Investr Reprt - Green Bnds 2018 3
Vlv Cars Vlv Cars is taking a bld lead with electrificatin in the aut industry. The cmpany is already a leader in hybrid technlgy and the latest generatin f cars has been designed frm the utset fr electrificatin. Vlv Cars has cmmitted itself t putting ne millin electrified cars n the rad by 2025 and 50% f Vlv Cars sales vlume will be fully electric by 2025. Vlv Cars will intrduce a range f electrified cars ver the cming years, where there will be smething fr everyne. The chices will include plug-in hybrid mdels that build n the success f Vlv Cars existing Twin Engine technlgy. There will als be new mild-hybrid mdels that prvide zer-emissins electric pwer when the internal cmbustin engine is least efficient. Further infrmatin can be fund at https://grup.vlvcars.cm/cmpany/innvatin/electrificatin Renault Grupe Renault cnsiders electric vehicles the best glbal slutin t the challenges f the envirnment and sustainable mbility fr all. Already a pineer and leader in electric vehicle sales in Eurpe, with the best supply in price and autnmy, Renault is nt stpping there. Its new gal: t increase supply and accelerate the cnstructin f a dedicated ecsystem. Frm 2010 t 2016, Grupe Renault has reduced its carbn ftprint every year by 3.3% n average, exceeding its initial target f 3%. By 2022, the cmpany expects t reduce its carbn ftprint by as much as 25% cmpared with its 2010 levels. Further infrmatin can be fund at https://grup.renault.cm/en/ur-cmmitments/ respect-fr-the-envirnment/ Other car brands Vlvfinans takes respnsibility fr its cnversin t a fssil-free fleet f vehicles by ffering financing fr vehicles pwered by fssil-free fuels. Thrugh Svensk Vagnparksfinans, the bank can ffer larger cmpanies new car financing that cvers all car brands n the market as well newer trade-in vehicles f all brands at the Vlv Dealers. Whilst, all car manufacturers are wrking t reduce their carbn ftprint, the technical slutins fr fssil-free peratins vary. Investr Reprt - Green Bnds 2018 4
Vlvfinans Bank AB (publ) Org nr 556069-0967 Bhusgatan 15 Bx 198 401 23 Götebrg Tel: 031-83 88 00 vlvfinans.se