07-10-2010

Green investments and green finance in the Netherlands

Huub Keulen,Rabo Groen Bank BV

Rabo Groen Bank B.V.

Contents

• Rabobank and Corporate Social Responsibility (CSR)

• Green investments• Green finance• Bottlenecks/opportunities• Conclusion

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Rabobank en CSR (1)

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Sustainability is moving to the core of the policy of an increasing number of companies. These days good companies make money

with ‘Green’.’

‘It is in our gens.’ _

Piet Moerland, Chairman Management Board Rabobank Group

Rabobank and CSR (2)• Together you achieve more then alone• Linked with the environment of the customers• Sustainable development of the society: triple P

People, Planet, Profit

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Rabobank and CSR(3)

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Green Funds Scheme

• 1995: introduction Green Investment Scheme Dutch Govt.• Goal: encouraging green initiatives• Means: tax incentive private individual investors.• Cheap green finance for acknowledged green projects

based on green certificate of the government• Rabobank market leader green investments: invested

capital 31-12-2009: € 4 billion

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Public-private cooperation

ConsumersConsumers

BanksBanksCompaniesCompanies

GovernmentGovernment

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Parties involved

• Government: Green scheme with tax incentive for individual investors• Consumer: green investment yields interest from green bank & tax

incentive from government• Bank:

- acquiring money against lower funding costs- application green certificate for projects with government - supplying low interest loans for certified green projects

• Government: assesment of application green certificate• Companies: low interest loans for green projects

Purpose Green Scheme: encouraging green initiatives

Extra benefits: involvement banks and individual investors (civilians) with green projects (awareness)

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Period 5 year Market rate Rabo Green Bond

Interest 4,0 % 2,0 %

Wealth tax 1,2 % n/a

Subtotal 2,8 % 2,0 %

Discount income tax n/a. 1,3 %

Net result 2,8 % 3,3 %

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Tax incentive

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Benefits Rabo Green Bonds• Tax incentive

(2,5% max. € 50,000 per individual)

• Fixed interest• Guarantee on principal amount• Certainty

But also:• Supporting the environment

and being socially responsible = feeling good

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What does Rabo Green Bank do with this ‘green’ money?

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Rabo Green finance in mio €

On 31.12.2009 total € 3.17 billion

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Green label greenhouses

€ 2,302

Windenergy€ 222

Organic farming€ 211

Forestry and nature€ 175

Sustainable construction

€ 79

District heating

€ 14

Other sustainable energy

€ 18

Other projects€ 147

Green finance process (2 months)

• Projects from Rabobank network• Application for green certificate by Rabo Green Bank • Assesment of application by appointed evaluation organizations

(SenterNovem & Dienst Regelingen)• Issue green certificate by government• Loan proposal Rabo Green Bank• Issue green loan Rabo Green Bank

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General project requirements

• Project situated in:- the Netherlands- Netherlands Antilles- non-OECD country (Asia, Africa, South America)

• Project provides significant and immediate environmental benefit• New project

(application green certificate within 6 months after start up)• Minimum € 25,000 Max. € 35 million• Amount green certificate based on investment in fixed assets• Prove of actual investments: contract supplier/contractor • Different requirements depending on type of project

(about 50 designated project categories)

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Green themes

• Forestry and nature• Organic Farming• Sustainable agriculture (greenhouses, sustainable dairy farms)• Recovery en reuse (innovative recycling) • Renewable energy (wind, solar, water, geothermal)• Energy saving • Sustainable building (new & renovation; houses and officebuildings)

Sustainable mobility (transport)• Sustainable water chains (water treatment, water collection &

retention)• Other innovative projects

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Green Finance

• Amount loan = amount green certificate• Term green loan = term green certificate (mostly 10 years)

interest reduction over same period• Repayment = economic depreciation• Regular loan assesment by Rabobank

(project has to be cost-effective)

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Incentive Green loan

• 1 – 1,5% average interest reduction • Compliment for the entrepeneur

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‘The Green Funds Scheme is unique in the world. Many sustainable project have been stimulated through this scheme. Continuity is more important than flexibility, because banks have long term commitments through green finance.’

—Just van Lidth de Jeude, coördinator Technologie ministerie van VROM

Is the Dutch Green Funds Scheme succesful?

Conclusion:Multiplier effect: Dutch government, bynot-receiving income tax, encouragesalmost € 6 billion green investments by companies

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Total Netherlands(7 greenbanks)

Rabobank Market share 54%

Green investments: € 7.36 billion € 4 billion

Investors 233,000 92,000

Green finance: € 5.86 billion € 3.17 billion

Projects 3,900 2,300

Cases #

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Threads & opportunities

Threads• Economic crisis• Windenergy: “not in my back

yard”• Low return in nature and forestry• Assesment of return on

investment by the governmentBank demands: highGovernment demands: low

• Succes green scheme → upgrade requirements by the government

Opportunities• Grown awareness Green

Scheme• Climate targets government• Subsidies Dutch government• Extension Green Scheme• Know-how local

accountmanagers Rabobank

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Conclusion

• Profit for nature & environment• Profit for the individual investor• Profit for green projects• Profit for the bank

• www.rabobank.com• www.annualreportsrabobank.com

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‘Everything should fit. A GreenLabel Warehouse with it’s advantages is a good example.’

Nic de Jong, Bramani

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‘We contribute to a clean city and a sustainable Amsterdam.’

Roelof Kruize, algemeen directeur Afval Energie Bedrijf

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24 Rabo Groen Bank B.V.

Raymon van den Ende, director Yard Capital

‘Wind in the Netherlands: one of the most promising sources of energy.’

25 Rabo Groen Bank B.V.

‘The cow pays back twice for caring’

Gerard Litjens, Cheese farm:

26 Rabo Groen Bank B.V.

‘Organic products are simply healthier and tastier’

27 Rabo Groen Bank B.V.

Anne-Marie Rakhorst, director Search

‘Sustainable construction is a must’

28 Rabo Groen Bank B.V.

John van der Hulst, adjunct-director WoonInvest

‘Where possible, we renovate and build sustainable’

29 Rabo Groen Bank B.V.

Gerard Groenen, Kalverhouderij Groenen-Wientjens

‘It was great for years. Hardly no extra heating was needed.’

30 Rabo Groen Bank B.V.

Thom de Ruiter, co-owner of Econvert Climate & Energy:

‘It is still difficult, but there are opportunities.’