Project Details
Project
Aareal Green Finance Framework– Liabilities Second-Party Opinion (2023)
Client
Aareal Bank AG
Project Type
Green Bond/Loan
Industry Group
Banks
Use of Proceeds
Green buildings; Energy efficiency;
Location
Germany
Evaluation Date
Oct 2023
Evaluation Summary
Sustainalytics is of the opinion that the Aareal Green Finance Framework is credible and impactful and aligns with the four core components of the Green Bond Principles 2021. This assessment is based on the following:
USE OF PROCEEDS
The eligible categories for the use of proceeds –Green Properties and Energy Efficiency Upgrade – are aligned with those recognized by the Green Bond Principles. Sustainalytics considers that investments in the eligible category are expected to reduce the environmental footprint of buildings in Europe, North America and Asia Pacific and advance the UN Sustainable Development Goals, specifically SDGs 7 and 11.
PROJECT EVALUATION AND SELECTION
Aareal Bank’s credit management function and Credit Management team are responsible for assessing and documenting the eligibility of assets. The ESG-Expert Group and the Green Finance Committee, comprising experts in credit, valuation, portfolio management, treasury, legal and sustainability provide guidance on the sustainability criteria for financing and manage the green asset pool respectively. Aareal Bank has in place an environmental and social risk assessment as a part of its evaluation and due diligence processes that are applicable to all financing decisions. Sustainalytics considers the risk management systems and the project selection process to be in line with market practice.
MANAGEMENT OF PROCEEDS
The Green Finance Committee will manage the net proceeds on a portfolio basis. Proceeds will be deposited in a general account and earmarked in internal IT systems for allocation to eligible assets. Aareal Bank intends to achieve full allocation within 24 months of the respective issuance date. Pending full allocation, net proceeds will be held in cash, cash equivalents or other liquid marketable instruments. Sustainalytics considers this process to be in line with market practice.
REPORTING
Aareal Bank intends to report annually on the allocation and impact of proceeds on its website, on an annual basis until full allocation. Allocation reporting will include the total amount of outstanding Green Financing Instruments, the share of proceeds used for financing and refinancing purposes, the size of the eligible asset pool, a split by eligible asset categories, any shortfall or amount of assets unallocated, amount of covered bonds (Pfandbriefe) outstanding and the size of the respective part within the eligible asset pool (if any), and illustrative examples describing green eligible assets to which Green Financing Instruments’ net proceeds have been allocated, subject to confidentiality commitments to clients. Sustainalytics views Aareal Bank’s allocation and impact reporting commitments as aligned with market practice.