Project assessment
Once you have decided to seek financing from NIB, we will ask you to provide us a detailed project description. Our owner countries have given us a mandate to finance projects that result in productivity gains and environmental benefits for the Nordic and Baltic countries.
To improve productivity, NIB-financed projects focus on:
- technical progress and innovation;
- human capital and equal economic opportunities;
- improvements in infrastructure;
- market efficiency and business environment.
To benefit the environment, NIB targets projects that foster:
- pollution prevention;
- preventive measures;
- resource efficiency;
- development of clean technology;
- climate change mitigation.
All projects undergo NIB’s Mandate Assessment according to its Mandate Rating Framework.
A parallel process, as described in these Guidelines, is the Environmental, Social and Governance (ESG) assessment that focuses on ensuring compliance with NIB’s Sustainability Policy, including the Exclusion List, and provides guidance on ESG factors on both the project and counterparty level.
Projects and investments financed by a financial institution through our loan programme shall also fulfil at least one of NIB’s mandates.
Your participation is critical
At this stage of your journey with NIB, we will ask you to share with us a detailed project description and relevant environmental information about your project, such as an environmental impact assessment and applicable permits and licenses. The scope of the review and information required depends on the nature and scale of the project.
What we assess
We assess to what extent your project is in line with both pillars of the Bank’s mandate—promoting productivity gains and environmental benefits for the Nordic and Baltic countries. For this purpose, we use NIB’s mandate rating framework.
Productivity gains
Investments in new physical capital and innovations increase production output; and R&D activities that turn ideas into products or new manufacturing techniques improve productivity levels. When financing innovation projects, it is important for us that benefits are not limited just to the borrowers, but that they often induce spill-over of expertise across companies and industries.
The quality of labour inputs and accumulation of knowledge is another driver of long-term productivity growth. A large part of our lending is targeted at improving the quality of research, education, and healthcare in the Nordic–Baltic region. Advancing equal opportunities for individuals in the member country economies is an important factor in our financing.
Quality infrastructure shapes the business environment and can increase productivity directly by reducing friction in operations. Indirectly, high-quality infrastructure services improve the efficiency of labour and product markets.
Although few investments directly affect market efficiency and the business environment, the impacts tend to be realised indirectly through other channels. Investments that streamline business processes may result in efficiency and expansion possibilities for one company, for others, they can cause competitive pressure, and force them adopt new operating models. Competition and creation of new businesses are among the most critical factors boosting productivity growth, therefore, we finance projects that promote these attributes in member countries.
Environmental benefits
Pollution reduction is imperative in our member countries. Increased efficiency in emission control technologies, new types of pollution, and stricter environmental requirements are driving the investments. At the same time, our financing focuses on renewable energy generation, electrified transport, green buildings and energy-efficient solutions for industry to continuously reduce greenhouse gas emissions.
Although our region’s infrastructure is well developed, it is necessary to replace and upgrade systems that are close to surpass their technical lifetime, as well as to adapt the existing systems to the changes in climate. Our typical projects in this area include strengthened electricity grids, sewage networks and storm water control.
Improving resource efficiency and utilisation of secondary raw materials alleviate the pressure on natural resources and vulnerable ecosystems. These actions also help to maintain the value of resources and materials longer in the economy, and are important areas for our lending.
We assess the environmental benefits of projects qualitatively and quantitatively. The qualitative assessment is based on the sector of the project. The quantitative impact of the project is calculated on selected indicators to describe direct and indirect changes.
Project review
All projects considered for NIB’s financing are evaluated for their potential risks, impacts and economic quality.
Sustainability review
In accordance with NIB’s Sustainability Policy and Guidelines, we review the potential impact as well as the environmental and social risks of a project. We also analyse the borrower’s commitment and capacity to manage those.
The Bank’s environmental analysts review the relevant information provided by borrowers, such as an environmental impact assessment and applicable permits and licenses.
The quality of information is assured through site visits and interviews with project staff. We benchmark projects’ social and environmental performance against acceptable standards to ensure compliance and assess their resilience e.g. towards the effects of climate change.
The scope of the review depends on the scale and extent of a project’s potential negative impacts. Projects with potential significant adverse environmental or social impacts are categorised as Category A projects. Information on Category A projects is made publicly available on NIB’s website for commenting by all interested stakeholder groups before the Bank makes a decision on financing. NIB’s Sustainability Policy and Guidelines provide more information about the project categories and the type of projects belonging to different categories.
If we conclude that the project is estimated to provide significant environmental benefits, and has low environmental and social risks and a high likelihood of succeeding, it is eligible for funding with the proceeds from NIB Environmental Bonds.
Analysis
Besides the sustainability aspects, we analyse the projects’ technical and economic quality. An analysis includes quantitative and a qualitative assessment, own estimates and projections, sensitivity checks and peer-group comparisons. It also includes an assessment of non-quantifiable elements, such as industry characteristics, market position, management, institutional conditions, regulatory framework and corporate governance. When required, we also conduct a project risk assessment.
Ex-post assessment
The implementation of NIB-financed projects is monitored on an ongoing basis. When a project has reached operating maturity (which is normally three years after project completion), it receives an ex-post evaluation to assess if NIB’s mandate criteria have been fulfilled. Ex-post evaluation is based on impact indicators that are determined during the ex-ante assessment of a project prior to loan approval and aims to identify lessons learnt and aspects that can serve as recommendations for improvement.
Financed projects
See the list of loans signed since 2007. Read their project summaries to learn more about the financed investments and their impact on productivity and the environment.
Our impact
We disclose estimated impact on all our signed loans, and report on the aggregated impact for different project categories. NIB’s investment portfolio is built on sound ESG performance. We also manage our own footprint to ensure low carbon operations.
