Deciding upon the “Green Bond of the Year for financial institutions”, “Social Bond of the Year for Financial Institutions”, and “Green Bond use of proceeds Innovation of the Year”, the panel praised NatWest Group for providing an “important standard” on additionality for its sustainable bond issuances in 2021. These included a €1 billion social bond in February to finance affordable housing loans to housing associations, and a £600 million green bond in November to support NatWest’s newly launched green residential mortgage lending programme.
The judges welcomed the incorporation of clear limits on how much of the bonds’ proceeds could be used to refinance existing lending, looking to address rising concern from investors that sustainable bonds demonstrate clear “additionality”. The social bond committed at least 25% of proceeds to finance future loans, with the green bond committed to using at least 50% of proceeds for new loans.
The panel also praised NatWest Group for publishing an initial allocation report at the point of issuance, rather than waiting the usual 12 months to publish that information in the first annual post-issuance report; and in doing so, providing additional transparency for the investors.
Furthermore, the judges recognised the “strong alignment” of the use of proceeds for both bonds with NatWest Group’s overall business strategy. The green bond will support the roll-out of cheaper ‘green mortgages’ for residential properties with an Energy Performance Certificate (EPC) score of ‘A’ or ‘B’ as it looks to achieve a 50% EPC ‘C’ or higher mortgage book by 2030. The social bond, meanwhile, was the first UK issuance by a financial institution focused on housing association funding, building on the Group’s commitment to funding for the sector.