18-11-2009

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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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

31-12-2008: € 3,75 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 low 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 %

8

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 €

District heating € 19

Green label greenhouses

€ 2.478

Windenergy € 294

Organic farming € 196

Forests and nature € 169

Sustainable construction

€ 76

Other sustainable energy € 17 Other projects

€ 124

On 31.12.2008 total € 3.373 mio.

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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 € 22,689 Max. € 34 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 30 designated project categories)

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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?

Total Netherlands (6 green banks)

• Green investments: € 6.85 billion• Investors: 233,000

• Green finance: € 6,09 billion• Projects: 3,800

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

Total Rabobank

• Green investments: € 3.75 billion• Investors: 86,000• Market share Rabobank: 55%

• Green finance: € 3.37 billion• Projects: 2,300• Market share Rabobank : 55%

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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

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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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