ESG ‘interwoven’ into OP, says funding head pre-debut

OP Corporate Bank will begin roadshowing a debut green bond from Finland’s OP Financial Group today (Monday), a senior unsecured euro benchmark, and its head of group funding and IR told Sustainabonds that, with OP being a cooperative, ESG is interwoven into the fabric of the group.

The Finnish issuer on Wednesday announced that it has mandated Crédit Agricole and itself to arrange a series of investor meetings across Europe to present its green bond framework, which was released last Friday (26 October). Subject to market conditions, a fixed rate senior unsecured green bond will follow the roadshow, which finishes on Wednesday of the following week (14 November).

Speaking to Sustainabonds after the group exited its silent period and announced its results on Wednesday, Lauri Iloniemi, head of group funding and investor relations at OP, said that the green bond concept fits extremely well with the group’s mission.

“We are a cooperative banking group so ESG is interwoven into the fabric of the group,” he said. “If you look at ESG, on the social side we have been really prominent in Finland for a long time.

“On the environmental side, this may be our first green bond, but we have been around for quite a long time as a green investor, and now we are just widening our green footprint.”

OP Financial Group has a score of 71/100 from Sustainalytics, 52/100 from Vigeo, C- from ISS-oekom, and B from CDP, while OP Corporate Bank has Neutral CCC from imug for its bonds and MSCI is reviewing its BB rating to update it to the group level.

OP has included six categories for its framework: renewable energy, including hydro and wind power; energy efficiency; green buildings; pollution prevention and control; sustainable land use, through sustainable forestry; and clean transportation.

According to Iloniemi, all of the categories except clean transportation will be included in the use of proceeds of the first green bond. He said that the breadth of assets eligible under the framework meant that more works was necessary than for a more project-based green bond.

“Obviously the data-side is where a lot of work was involved,” he added. “We of course have very advanced normal loan-granting processes, and ESG is part of that, but here we did need to go a bit deeper into the assets.”

OP is the first Finnish bank to issue a green bond. Nordea, which is now domiciled in Finland, previously issued out of Sweden.

ABN AMRO