This article first appeared in the Railway-News magazine, Issue 1 2023.
Josephine Cordero Sapién, Railway-News: We hear a lot these days about decarbonising transport in order for governments to meet their net zero commitments. This also includes rail. For example, the UK government has put forward plans to end the use of diesel-only trains on the British rail network by 2040. Such a shift in policy obviously requires major investment by companies. This is where green loans come in. Could you say a little bit about what a green loan is and what specifically makes a loan a green loan?
Sabine Lehmann, KfW IPEX-Bank: Yes, of course, what makes a loan a green loan? That is indeed a crucial question. Mostly people think the loan should be for an investment in an asset or project defined as green following a specific definition, category or taxonomy.
The purpose of the financing is only one part. And what kind of project or asset can be defined is best described in Appendix 1 of the Green Loan Principles LMA/LSTA/ APLMA, which lists all eligible green categories. Speaking of the core elements of a green loan, the use of proceeds has to be clearly focused on the eligible green asset / project financed. Furthermore, the GLP describe that the borrower has to communicate to its lenders its environmental sustainability objectives and the process by which the borrower determines how its projects fit within the eligible categories. Core element three is that the proceeds of a green loan have to be credited to a dedicated account or tracked by the borrower in an appropriate manner and last but not least, the issue of reporting: borrowers have to keep readily available up to date information on the use of proceeds to be renewed annually until fully drawn.
Use the form opposite to get in touch with KfW IPEX-Bank directly to discuss any requirements you might have.