Sustainalytics has reviewed the Service Finance Company Sustainable and Energy Efficient Home Improvement Loans Framework (the “Framework”) and is of the opinion that the components of the Framework are credible and that Service Finance’s program for financing eligible projects under the framework (the “Financing Program”) will fund impactful environmental projects. Sustainalytics is of the opinion that the principles of impact and transparency that underlie the sustainable investment industry, as well as many of its norms and standards, are applicable to the Financing Program, and that the use of funds in eligible projects aligns with those principles, while noting one substantial limitation. This opinion is based on the following:
IMPACT
Service Finance will invest in projects across the environmental theme of Energy Efficiency. The geographic focus of the investments will be primarily in the U.S. Energy efficiency projects have accounted for 70 to 80% of the loans originated by Service Finance since 2017. Majority of the home improvement equipment used within eligible projects is produced using ENERGY STAR rated components. Sustainalytics considers these investments to deliver overall social and environmental benefits. The remaining portfolio could include other projects such as home remodeling where the Company has communicated that identifying directly attributable efficiency gains is difficult. Sustainalytics considers financing of such projects to be a substantial limitation to the Framework.
TRANSPARENCY
ECN demonstrates the principle of transparency through both its process for management of proceeds and commitment to ongoing reporting. The Company intends to facilitate financing for energy efficient home improvements across the U.S. The Company has adequate processes in place to ensure sound management of the Financing Program and to mitigate key social and environmental risks associated with projects. Furthermore, the Company intends to report annually on the Financing Program which will include the breakdown of loans originated and number of energy efficient projects financed by type and geography, and the distribution of originations volume by consumer FICO scores. The reporting will be made available on ECN’s website within 60 days of the end of each calendar year. Sustainalytics considers this as aligned