Best practice example: Project finance

Triodos Bank project finance

“Triodos Bank acts as a catalyst for the transition to a sustainable economy where people, the environment they depend on, and the culture that sustains them are valued,” says Itske Lulof, Director Energy and Climate at Triodos Bank. “To that end Triodos Bank only finances companies that contribute to a sustainable society. This approach includes an active role in sustainable energy where the bank’s policy is not to finance fossil fuels and exclusively to finance renewable energy initiatives in the energy sector.”

Triodos Bank has played this role since the mid-1980s and has financed more renewable energy initiatives in Europe than any other financial institution, for the last three years. Active in the Netherlands, Belgium, France, UK, Spain and Germany this has led to finance for projects like Greensky, the largest onshore wind park in Belgium. The power it produces is directly injected into the rail network and supplies 170 trains daily.

For several years, its finance has also extended to renewable energy projects in emerging markets too, such as hydro projects in Nepal, Ecuador; wind in Kenya and solar in Mongolia.

Assessing the carbon emissions of loans and investments in the sustainable energy sector (the bank itself is both carbon neutral and uses 100% renewable energy in its buildings) can be relatively straightforward compared to other sustainable sectors it finances, because these projects report on the energy they generate. However, in practice, delivering good quality data can be challenging. To date Triodos Bank has used a contribution approach, accounting for the entire carbon emissions of a project regardless of its stake in it.

 In 2018 Triodos Bank and its investment funds financed renewable energy projects and energy saving projects that avoided over 985 ktonne of CO2 eq. emissions compared to fossil-fuel power generation, equal to the avoidance of emissions of over 5.4 billion kilometres travelled by car. (Triodos Bank Annual Report 2018)

“Triodos Bank calculated the following carbon footprint applying the PCAF methodology to our covered portfolio. We also applied an attribution approach. This means that we calculated the emissions as they relate to the proportion of our finance in a project or customers’ balance sheet. The following graph shows the greenhouse gas emissions that can be attributed to Triodos’ loans and investments, using the PCAF methodology, in 2018. Although these are our first and early results, they already clearly indicate that financing a sustainable economy for many years has resulted in substantial avoided emissions relative to our generated and sequestered emissions”. (Triodos Bank Annual Report 2018)