Erhvervsudvalget 2020-21
ERU Alm.del Bilag 394
Offentligt
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Sustainability Report
2020
CEO Statement
About this report
EKF & our customers
Climate action
Our efforts displace total global CO
2
e emissions
Engaging in climate finance
Managing climate-related risks
Measuring the climate impact of our portfolio
Safeguarding our projects
Operationalising ESG standards
Business integrity
Responsible organisation
Compliance
Internal environmental and social outcomes
Focus areas for 2021
Consolidated ESG statement for 2020
Reporting practices
Stakeholder information
The Independent Auditor’s Report regarding CO
2
e data
3
5
6
7
8
9
13
14
16
16
27
30
30
31
33
34
36
39
40
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CEO statement
Social responsibility and
sustained growth in a
time of crisis
2020 has been an unpredictable and extraordinary year. Not only
because of the global pandemic, but also in terms of the
globally accelerated focus on the environment, climate and social
issues, which have featured largely in the public debate.
As a small, open economy, Denmark depends on the ability of its companies to do
transnational business. For this reason, EKF took early action in the spring of 2020 to
facilitate cash support, guarantees and advice to enable Danish companies to continue their
investments, production and exports. We are continuing to provide that service, while
still retaining our position of strength in the clean energy transition and supporting the
globalisation of green Danish solutions.
The energy transition and uptake of renewable energy worldwide is a priority area for EKF,
and 2020 was a defining moment for EKF's renewables mission. Our efforts were boosted
by the creation and launch of Denmark's Green Future Fund and a new partnership with
the Danish Energy Agency aimed at global diffusion of the Danish experience of driving the
energy transition. Our green focus has also been at the centre when conducting due
diligence on new projects as well as inspecting and monitoring portfolio projects.
In 2020, EKF generated a surplus of DKK 746 million and issued new guarantees worth DKK
23 billion. This is a result of EKF's ability to sustain the positive moves in recent years
towards supporting exports by Danish businesses even during the pandemic.
As part of the Danish Parliament's relief packages for Danish trade and industry, EKF
exercised social responsibility by extending financial assistance to Danish exporters during a
difficult time. We helped many Danish businesses with liquidity and export credit, and the
extended guarantee limits for private trade credit insurance kept transactions worth more
than DKK 230 billion afloat. EKF pulled out the stops to rapidly give our customers, both
small and large, the peace of mind to do business.
At year-end, we conducted our annual survey of customer satisfaction with EKF, and we are
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proud to see a significant improvement in our performance ratings given the challenges of
2020. This strengthens our conviction that we have achieved our ambition to be there for
our customers whenever they need us.
Crisis must not stand in the way of the clean energy transition
When crisis strikes, suspending all development and innovation to play it safe is the easiest
course of action. But the easiest course is not always the right one, and at EKF, we have
maintained our commitment to advancing clean energy solutions despite the crisis and
travel restrictions. The Danish Government has high ambitions for climate action, which we
support with our knowledge, experience and financial strength in the international markets.
EKF partners with those businesses, banks and investors worldwide who are committed to
engaging in the energy transition but lack the capacity, experience and know-how to do so.
2020 was the year that EKF officially withdrew from offering export credits for thermal coal
fired power plants, thermal coal extraction and thermal coal logistics, when the Danish
government passed a resolution prohibiting this. Even though EKF has not provided any
export credits for these activities for the past decade, this is an important signal of
Denmark's commitment to global phase-out of coal and a natural continuation of its efforts
in support of the clean-energy transition.
Under the 2020 National Budget, EKF was granted up to DKK 14 billion through Denmark’s
Green Future Fund. The Fund's mandate is to promote the energy transition, reduce global
CO
2
e emissions and boost exports of Danish climate technologies. In 2020, in association
with Denmark's Green Future Fund, EKF financed seven new clean energy projects beyond
Denmark's borders worth a total of DKK 8.4 billion, of which Denmark's Green Future Fund
has guaranteed DKK 2.3 billion. Of these projects, the main contributors to substantial
reductions in CO
2
e emissions are those entailing the financing of onshore and, increasingly,
offshore wind farms.
In 2020 we took yet another step in our sustainability journey as the lockdown and travel
restrictions kept us from performing our regular site visits and inspections of our projects.
However, we worked around this by employing digital tools like drone-led inspections and
local consultants who helped us make sure that our projects live up to our high
environmental, social and governance standards. We have learned much from these new
ways of working and will continue to employ them in the future hence reducing our own
travel and CO
2
footprint.
The 2020 Sustainability report
The Report presents our alignment with international standards and principles and
the integration of those into our business. It also serves as our annual Communication
on Progress Report to the UN Global Compact. With this report we reaffirm our
commitment to the UN Global Compact and its principles. With this report I also confirm
EKF’s ongoing commitment to stakeholders to be transparent and open about the way we
continuously improve the integration of social and environmental standards and principles
into our business.
Peder Lundquist
CEO of EKF
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About this report
This report is our Communication on Progress to the UN Global
Compact and presents EKF’s work to promote the environmental and
social sustainability of our transactions during 2020.
Sustainability Report 2020
The EKF Sustainability Report 2020 describes the non-financial performance of EKF,
Denmark’s Export Credit Agency, and is also our 11
th
Communication on Progress to the
United Nations Global Compact. The reporting period is 1 January 2020 to 31 December
2020.
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EKF & our customers
EKF is Denmark’s Export Credit Agency. We help Danish companies make it possible and
attractive for customers abroad to purchase Danish products. We do so by helping raise
financing and by insuring companies and banks against the potential financial and political
risks of trading with other countries.
EKF is an Independent Public Company owned by the Danish State under laws enacted by
the Parliament of Denmark. EKF’s mission is stated in our guiding document and legal basis,
the Act on EKF, Denmark’s Export Credit Agency.
Our customers range from large corporates to small enterprises, and they operate
nationwide in Denmark and in the Danish Realm: from Western Jutland to Bornholm in the
east, and from Nuuk in Greenland to Nakskov, Lolland.
"
EKF's mission is to support large, small
and medium-sized enterprises alike with
their exports and internationalisation.
Our ambition is to serve as the financial
partner to these enterprises and to create
value for them so that they may retain
investmensts, jobs and production for the
benefit of Denmark.
EKF's mission is to support large, small and medium-sized enterprises alike with their
exports and internationalisation. Our ambition is to serve as the financial partner to these
enterprises and to create value for them so that they may retain investments, jobs and
production for the benefit of Denmark. Small and medium-sized enterprises account for
more than eight out of ten EKF customers, and in the wake of the crisis, their need for
expert and credible advice has only increased.
"
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Climate action
During the past year there has been an increasing focus on climate-
related finance as a key enabler to the green transition. As a
government-backed export credit agency (ECA) EKF acknowledges
our role and responsibility in the green transition.
EKF has played a pivotal role in renewable energy export for decades and is a pioneer in the
market. Since the 1990's EKF has been financing a large share of the global wind projects,
and the exposure now accounts for around 70% of our total portfolio. EKF remains
committed to keeping our strong position and the green transition is of crucial importance
to us. We can transfer our deep insight to promote green solutions and change technologies
also in other fields.
Since our first wind transaction in 1998 we have participated in the financing of more than
150 wind farms in more than 35 countries. So far, we secured financing for +25 GW of
installed capacity. 12.8 GW onshore and 12.4 GW offshore.
Sectoral distribution of EKF's portfolio at year-end 2020
5%
2%
4%
15%
Wind
Oil and gas industry
Agriculture and food technology
Infrastructure and utilities
3%
1%
Manufacturing
Cement
70%
Other
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Despite EKF's existing green profile and our significant share of renewables in the portfolio
we continuously work towards further mitigation of climate-related risks and support of
green transitional solutions.
Our work in 2020 was centred around four main initiatives:
•
•
•
•
Displacing global Co
2
e
Engaging in climate finance
Managing climate related risk
Measuring the climate impact of our portfolio
Our efforts displace total global CO
2
e emissions
The renewable energy projects EKF was involved in financing in 2020 are of great
significance. Over their life of service, they are expected to achieve a total CO
2
e
displacement of 71 million tonnes of CO
2
e. Based on EKF's own share of their financing,
this is equivalent to a reduction of 14 million tonnes of CO
2
e. In comparison, Denmark's
total annual emissions sum up to 47 million tonnes of CO
2
e.
EKF's figures stem from a calculation model from the independent economic consultancy
Copenhagen Economics.
Total expected CO
2
e displacement achieved by EKF-financed
projects
80
70
Million tonnes of CO2e
60
50
40
30
20
10
0
75
71
Projects, total
EKF's share
15
14
2019
2020
To ensure the highest reliability for our CO
2
e displacement figures, these have been
included in a Deloitte auditor's report; see the independent auditors' opinion on CO
2
e data
on page 36.
EKF is the leading export credit agency within wind energy financing. Our many projects
over the years mean that we have the experience and insight to provide the financing which
reassures other investors who then venture to come on board. In this way, we can act as
facilitators for projects that would otherwise have been hard pressed to secure investors
and financing.
Our activities in green ventures demonstrate that company growth and welfare are
inextricably linked in that green solutions improve both growth, the climate and people's
lives. When the use of coal is phased out, in many places the effect on local air quality is felt
directly, and is reflected in public health statistics.
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Engaging in climate finance
Part of our climate change ambition is to support the opportunities that exist within green
exports. This involves financing of large-scale windfarms, support the market maturing of
green exports and business development in upcoming markets like Power-to-X.
In 2020, EKF was a key facilitator of government-backed funds to support green exports.
EKF implemented two initiatives to promote financing of green exports - Denmark’s Green
Future Fund and the Green Accelerator.
Denmark's Green Future Fund
Although 2020 was largely dominated by the effects of the pandemic, it was also the year in
which the debate on Denmark's energy transition was translated into specific action. In
Denmark, the Government seized the opportunity for using the crisis to advance the energy
transition and action on climate change.
One step was the launch in September of Denmark's Green Future Fund with the objective
to finance green solutions and technologies. Of the Fund's DKK 25 billion, DKK 14 billion
was allocated to EKF, DKK 6 billion to the independent state loan fund, Danish Green
Investment Fund, DKK 4 billion to Vaekstfonden, the Danish investment fund, and DKK 1
billion to IFU - Investment Fund for Developing Countries.
EKF is an obvious choice of governmental partner because we are capable of assisting with
the immense task of bringing Danish climate technology solutions beyond Denmark's
borders. Each time EKF participates in a renewable energy venture, the renewable energy
displaces the more pollutant energy sources in a national grid. In this way, EKF and the
Danish companies are helping drive the global energy transition.
In 2020, EKF allocated DKK 2.3 billion of the DKK 14 billion to green projects, and by early
2021, an additional DKK 1 billion had been drawn from the fund.
One example is the Changhua 1 offshore wind farm in Taiwan which is virtually "made in
Denmark". The wind farm was designed by the Denmark-based multinational renewable
energy company Ørsted A/S, while Siemens Gamesa is supplying the turbines and EKF and
Denmark's Green Future Fund are responsible for financing worth a total of DKK 3.5 billion.
This project is part of Taiwan's transition from coal to clean energy, where the ambition is
for 20 percent of the country's electricity to be generated by renewable energy sources
by 2025.
In 2020, in association with Denmark’s Green Future Fund, EKF financed six new clean
energy projects beyond Denmark’s borders worth a total of DKK 8.4 billion, of which
Denmark’s Green Future Fund has guaranteed DKK 2.3 billion. Of these projects, the main
contributors to substantial reductions in CO
2
e emissions are those entailing the financing of
onshore and, increasingly, offshore wind farms.
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EKF within Denmark's Green Future Fund
Denmark's Green Future Fund was created in 2020 by the Danish Government. The purpose
of the Fund is to advance the national and global energy transition, including technology
development and diffusion, conversion of energy systems to renewable energy, storage and
efficient use of energy, etc. and the promotion of global exports of clean tech, especially
within the wind energy segment. At the same time, the Fund was established to solve the
challenges posed by climate change and a growing global population such as food shortages
and water scarcity. Investments by the Fund will comply with the UN guiding principles on
business and human rights to ensure that the funded projects, for example, respect the
rights of workers, and that the companies invested in meet their tax obligations under
international agreements and national regulation.
The chart shows EKF's total commitment in projects under Denmark's Green Future Fund, and is
based on figures from 2020 and early 2021 up to the publication of the Annual Report.
Displaced CO
2
e emissions from renewable energy projects
Project
CFXD - Changfang and Xidao
Seagreen
Uriel
Zeewolde
Thanh Hai 1
Bella
Country
Taiwan
UK
Poland
Netherlands
Vietnam
Italy
Energy production
Offshore wind
Offshore wind
Onshore wind
Onshore wind
Offshore wind
Onshore wind
CO
2
e-displacement
(million tonnes of CO
2
e)
34.5
16.9
6.6
9.3
1.6
2.2
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Increased risk appetite to reboot Danish exports
In autumn 2020, EKF was on two occasions allocated additional funds earmarked for
enabling EKF to increase its risk appetite and support for green Danish companies with
international potential. The first instalment was in October, which allocated DKK 125 million
to EKF in equity with the purpose to increase EKF's risk appetite and DKK 60 million for a
dedicated market accelerator programme.
This meant that by December we launched the market accelerator programme designed to
lower barriers to green export ventures by means of advice and expert assistance, and in
January 2021, we increased our risk exposure capacity in a number of countries where we
had formerly been more risk averse.
Under the second part of the agreement, EKF will receive a capital injection of DKK 620
million over the period 2021-2023, which is earmarked to finance additional DKK 3.5 billion
for green Danish export projects. These funds come with a requirement for increased risk
exposure capacity and new financing solutions for green projects that are potentially
scalable for application in solving climate challenges anywhere in the world.
Power-to-X business development
In December 2020 the Board of Directors decided that Power-to-X should be a strategic
venture for EKF. In addition to promoting climate finance, EKF sees a unique opportunity in
the Danish business development of new renewable energy markets such as Power-to-X, a
collective name for a range of technologies converting renewable energy to what are known
as e-fuels with the ability to substitute fossil fuels in industries where direct electrification is
difficult, e.g. heavy transportation, shipping and aviation.
Backing these trail-blazing projects calls for risk appetite and means that in future we will be
prioritising ventures posing a higher risk in that they involve more recent, non-mature
technologies. Some may prove to be too demanding and cost-intensive to be profitable,
while others may take far longer to develop than projected. However, it is vital that we back
these projects with both financing and expertise in order to ensure that Danish companies
are in the race to bring these technologies to market.
As in the case of wind ventures, it is not only a question of countering the challenge of
Danish energy consumption, but of developing solutions that are scalable and exportable
and capable of solving energy and climate challenges in those parts of the world where the
challenges are far greater than in Denmark.
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The production of e-fuels is a developing market, but EKF believes that Danish companies
possess the competences and technologies needed to play a key role in the global Power-
to-X market, both in its nascent form and in the long run. Since EKF has substantial
expertise in the financing of renewable energy projects, the primary input in e-fuel
production, our knowledge is well applied.
To that end, in the coming years, we will be increasing our risk exposure capacity in this
field, and doing our bit to ensure that Denmark's clean energy export boom continues for
many years to come with new and innovative solutions. For the benefit of the climate,
Denmark's competitiveness and post-pandemic economic recovery.
Managing climate-related risks
EKF is committed to following international standards regarding sustainability and climate.
Climate change is addressed at different levels across the standards we follow, including the
Performance Standards of the International Finance Corporation (IFC), the OECD and the
Equator Principles. However, there is no specific performance standard for climate change.
The OECD Common Approaches require projects emitting more than 25,000 tonnes of CO
2
equivalents to report their emissions and set targets for mitigation annually. EKF monitors
performance in attaining the targets. Nevertheless, the latest revision of the Equator
Principles, which took effect in 2020, includes a guideline Climate Change Risk Assessment
of projects aligned with the recommendation of the Task Force on Climate-related Financial
Disclosures (TCFD). EKF has initiated a review of the existing method for calculating the
climate footprint of large-scale projects to ensure that the method is both robust and up to
date. These activities are set to continue in 2021.
Carbon footprint
EKF limits the identification of climate risks to projects with a significant impact on the
portfolio. In this regard, only projects classified as A or B according to the OECD Common
Approaches are evaluated in terms of greenhouse gas emissions (GHG). Historically these
projects account for around 90% of the annual portfolio in nominal terms. Before signing,
the projects are obliged to estimate the annual scope 1 and 2 GHG emissions of operation.
The total GHG emissions for the projects are attributed to EKF according to our share of
financing.
GHG accounting is evolving rapidly, and we are continuously working on improving our GHG
evaluations to follow the best practices available.
Equator Principles climate change framework
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Risk evaluation and exclusion
In September 2020, the Danish Government passed a resolution prohibiting the use of
Danish export credits for coal-fired power plants, thermal coal extraction and thermal coal
logistics.
Although projects of this nature have not been part of EKF's portfolio for the past decade,
this is an important sign of Denmark's commitment to the global phase-out of coal and a
natural continuation of its efforts in support of the clean energy transition. While the new
agreement introduces a ban on export credits for coal-fired power plants, thermal coal
extraction, and thermal coal logistics, EKF will continue to participate in projects with
energy-intensive companies. We will be supporting them in achieving a clean energy
transition process, for instance, by providing financial incentives for opting for the best
technologies and reducing the use of fossil fuels.
EKF also operates within two OECD Sector Understandings: a climate sector understanding
aimed at creating financial incentives for opting for clean energy technologies and solutions,
and a coal sector understanding, which limits officially supported export credits for coal-
fired power plants.
Measuring the climate impact of our portfolio
Around the globe, EKF is involved in co-financing many renewable energy projects which
achieve CO
2
e displacement by displacing the more pollutant technologies from national
power grids.
However, EKF also co-finances projects that emit CO
2
e. For all A and B projects emitting in
excess of 25,000 tonnes of CO
2
e per annum, a report must be compiled to account for the
CO
2
e emissions and reductions measures implemented by the projects. In 2020, EKF
provided two guarantees for projects with emissions of that magnitude. For years, EKF has
calculated the greenhouse gases on large, carbon intensive projects in alignment with the
OECD Common Approaches Environmental and Social Due Diligence framework. However,
as climate finance is developing quickly, we need to get a better grasp of the climate impact
on a portfolio level. 2020 was the year when we started analysing the climate impact of our
portfolio. EKF has a significant share of renewables in the portfolio but needed to get a
better understanding of the climate risk and carbon footprint of the portfolio as a whole.
Over the years EKF has consistently applied the OECD reporting requirements for carbon
reporting both for carbon intensive project emissions and the emissions avoided by the
large proportion of renewable energy projects that defines our portfolio.
Climate Change/CO
2
impacts from carbon intensive projects
Annual GHG emissions associated with EKF financed projects
Total emissions in tonnes, one year
Total emissions in tonnes, one year, EKF %
Displaced CO
2
e in tonnes, one year
Displaced CO
2
e in tonnes, one year in tonnes, one year, EKF %
Relative reduction as % of Denmark’s annual emissions
2020
494,900
76,200
2,840,000
560,000
1.2%
2019
70,000
17,500
3,000,000
600,000
0.5%
2018
370,000
351,500
4,340,000
1,044,000
2.1%
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CASE: CHANGHUA 1
New offshore wind farm
is "made in Denmark"
Over the next two years, a large new offshore wind farm will be installed off
the Taiwanese coast, made possible by Danish expertise in both wind energy technology
and wind-venture financing.
Ørsted designed the wind farm, while Siemens Gamesa will be supplying 75 of their
SG 8.0-167 DD offshore wind turbines, each of which has a capacity of 8 MW and a rotor
diameter of 167 metres.
"
The offshore wind farm is expected
to displace CO
2
e emissions by 38
million tonnes over the full span of
the project's useful life.
More than 90 percent of Taiwan's energy requirement is currently met by imported coal,
oil and natural gas, but the country has an ambitious target for going green and reducing
its reliance on imported fuel. The plan is for 20 percent of Taiwanese electricity to
be generated by renewable energy sources by 2025. For comparison, just over 68 percent
of Denmark's electricity was sourced from renewables in 2019.
To reach the target, Taiwan is consequently investing heavily in wind energy, which
makes Danish offshore wind know-how invaluable. The plan is to install an array of offshore
wind farms which by 2025 should be able to achieve 5.5 GW electricity capacity and
an additional 10 GW by 2035.
EKF estimates indicate that the offshore wind
farm can be expected to displace CO
2
e emissions by 38 million tonnes over the full span of
the project's useful life. And with a total capacity of 605 MW, the wind farm will support
Taiwan's plans to reduce its reliance on imported fuel.
The owners are Ørsted, Canadian pension fund CDPQ and local Taiwanese investors,
while EKF and Denmark's Green Future Fund will be providing DKK 3.5 billion of the
financing. With DKK 14 billion, EKF has been allocated more than half of the funds held in
Denmark's Green Future Fund, a share of which will cover EKF's risk in the project. This
transaction retains jobs in Denmark and supports the clean energy transition.
"
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Safeguarding our
projects
We consider the management of environmental and social risks with
the same care and rigor as any other risk and undertake a robust
due diligence process to take the environmental and social
impacts of our projects into consideration in our business decisions.
Operationalising Environmental, Social and
Governance (ESG) standards
Our sustainability efforts are guided by international guidelines, primarily the various
frameworks from the OECD and the UN as well as the Equator Principles.
Respect for human rights and the environment has been integral to EKF's strategy and
business processes for decades. The organisation is proactive in developing the ESG domain
in the context of the international frameworks to which EKF has signed up.
Our commitment to responsible transactions is laid out in our ESG Policy, which states that
we must create value for our business partners and local communities through our business.
As a state-owned enterprise, EKF is obliged to work in accordance with the OECD Common
Approaches, the OECD Guidelines for Multinational Enterprises and the UN Guiding
Principles on Business and Human Rights. EKF is also a signatory to the UN Global Compact
and the Equator Principles, a risk management framework adopted by financial institutions
when supporting export credits, and we expect our business partners to live up to the
international standards for environmental and social sustainability. These frameworks guide
our overall approach to environmental and social risk management.
At an international level, we collaborate with several institutions on continued
reinforcement of ESG standards. Most importantly, EKF works with likeminded ECAs in
several OECD forums. In respect of ESG matters, these are addressed both on a political
level in the policy group and in a specialist ESG OECD practitioners' forum. In this way EKF
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ensures ESG progress in connection with international agreements, so that Danish
companies are ensured a level playing field while moving forward on important
environmental and social topics.
However, ECAs are not our only important corporate partners. There would be no
transactions without banks and exporters, and consequently EKF is a signatory to the
Equator Principles, where we, in alliance with international banks, establish common policy
and principles enshrining human rights and climate protection in project finance and credits.
The Equator Principles derive from the International Finance Corporation, the private sector
arm of the World Bank. The standards are now utilised by 118 private sector project finance
institutions, but also seven ECAs around the world. The principles cover nine different
categories of issues: most importantly labour standards, pollution control, resettlement
issues, indigenous peoples, stakeholder engagement and biodiversity issues. They provide
the thematic areas by which any project will be looked at.
Transaction overview – Equator Principle (EP) transactions
Project and Country
Windpark Zeewolde B.V.,
Netherlands
Bialy Bor Farma Wiatrowa sp.
zo.o., Poland
Seagreen Wind Energy Limited,
United Kingdom
Changfang & Xidao Wind Power
Co. Ltd., Taiwan
Tanzania Railways Corporation,
Tanzania
Ares S.r.l.,
Italy
EP Category
B
Reporting period
18
Independent review
Yes
B
18
Yes
B
18
Yes
B
18
Yes
A
12
Yes
B
18
Yes
In 2020, integration of the new standards from the Equator Principles IV, which provide a
framework for due diligence within human rights, biodiversity and climate, has been an
important part of our commitment to ESG standards. EKF's cooperation with the
international Equator banks has been greatly strengthened by the updated framework,
which ensures a consistent sustainability approach for financial institutions and export
credit agencies in relation to international projects.
Finally, EKF participates in the IFC’s Community of Learning and shares experience in
applying the standards as a framework for the environmental and social performance of
international projects. The IFC Performance Standards provide the operational framework
of international standards against which EKF projects are benchmarked and covers eight
areas.
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EKF has been working to improve internal tools for use in more probing analysis of projects
with potential human rights risks and, not least, addressing these vis-à-vis the projects in
alliance with the international financial institutions with which EKF cooperates.
In 2020, EKF also focused on further integrating ESG standards in our business procedures,
to ensure that ESG standards are addressed at an earlier stage of any given project. All EKF
projects are screened for ESG issues, and with the exception of the smallest-scale projects,
all projects are thoroughly vetted for any ESG issues. Any risk of ESG issues is identified and
presented within the EKF internal credit committee together with precautionary measures
to avert potential risks.
UN and OECD principles and recommendations on responsible
business practices
Principles aimed at companies
The UN Guiding Principles on Business and Human Rights; OECD Guidelines for Multinational
Enterprises; and the UN Global Compact are based on internationally recognized norms.
These frameworks set out expectations on companies to prevent and manage sustainability
risks in their global value chains, i.e. including customer relations in the sales of goods and
services. EKF conducts its business in accordance with these principles.
OECD Recommendations aimed at export credit agencies
The OECD Recommendation of the Council on Bribery and Officially Supported Export
Credits; the OECD Recommendation of the Council on Common Approaches for Officially
Supported Export Credits and Environmental and Social Due Diligence (the so-called
"Common Approaches"); and the OECD Recommendation on Sustainable Lending Practices
and Officially Supported Export Credits are all specifically targeting how sustainability issues
shall be managed by export credit agencies. These recommendations and principles are
negotiated within the OECD, hence Denmark and EKF can influence their development
together with other export credit agencies. EKF actively participates in the furtherance of
best practice and highest standards within these sets of recommendations.
Compliance with ESG standards is a requirement
EKF is involved in approximately 1,100 export transactions in more than 100 countries,
which often have different traditions and regulations relating to environmental,
occupational, and social conditions compared with those that prevail in Denmark. Each
export transaction must therefore fulfil ESG criteria if we are to be involved in the financing
plan.
Ensuring that each export project complies with the standards is a comprehensive and
time-consuming task. In many cases, EKF also steps in to provide advice and ESG
performance capacity building within individual projects. EKF works continually to establish
a transparent and tangible process in support of efforts to achieve ESG standards
compliance to create value for the projects and our business partners. To that end, in 2020,
we have worked to digitise some of the contact points we use for meeting customers.
Finally, projects have the potential for both positive and negative impacts. While the
negative impacts are mitigated, the positive impacts are enhanced. Local employment
creation is the one of the most important KPIs that we measure.
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Estimated local employment impact
Employment generated 1 year of
construction, man-years, EKF proportion
Employment generated average annual
during operation, man-years, EKF
proportion
Total employment
generated
2020
6,830
2019
1,300
2018
12,100
2017
1,100
2016
1,000
180
200
1,400
500
200
7,010
1,500
13,500
1,600
1,200
ESG risk
Alongside credit, financial and political risks, the nature of EKF's business activities means
that EKF is exposed to a wide range of ESG risks related to climate change impacts,
environmental and social management practices, working and safety conditions, respect for
human rights, anti-bribery and anti-corruption practices, and compliance with relevant laws
and regulations.
EKF takes a risk-based ESG approach to all transactions meaning that EKF’s ESG risk
exposure and leverage on transactions differ widely depending on the size of the
transaction, the financial product and the context of a transaction. All these parameters are
included in our risk screening and due diligence work. For compliance objectives, we have
introduced enhanced disclosures and risk mitigation action plans that address threats
before they happen. Medium and long-term transactions above 10 MSDR approx. DKK 75
million are subjected to an assessment in accordance with the OECD Common Approaches
and benchmarked against the IFC Performance Standards through a full due diligence
process.
The first thing that EKF does to all projects is to screen the project for environmental and
human rights issues. Projects with environmental or social risk or projects above DKK 25.
million are classified according to the OECD risk categories of high risk (CAT A), medium risk
(CAT B) or low risk (CAT C). (The outcome will determine the type of due diligence that
follows.)
OECD Common Approaches categorisation of potential impact on the environment
and people
•
Category A:
the project has the potential to have adverse environmental and/or
social impacts that are irreversible and may affect environment and people beyond
the immediate location of the project. EKF discloses all Category A projects on our
website 30 days before Financial Close.
•
•
Category B:
the potential impact on environment and people are few, site specific and
easily mitigated.
Category C:
projects have insignificant or no potentially adverse impacts on the
environment and people.
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OECD Common Approaches categorisation of potential impact on
the environment and people
•
•
A transaction above DKK 25 is categorized separately for environmental and
social impacts.
The categorization is used for traceability and quality assurance, i.e. to ascertain that
reviews of both areas (environment and social impacts) have been carried out and
considered in the categorization.
The categorization provides an opportunity to understand the risk level in EKF's
portfolio.
Environmental and social information for Category A Projects > 10 mio. SDR and>
2-year repayment term is published on EKF's website at least 30 days prior to decision.
•
•
Category A and B transactions
Project Sector
Onshore wind power
Offshore wind power
Agricultural and food
technology
Offshore wind power
Industrial production
Onshore wind power
Infrastructure and supply
Agricultural and food
technology
Onshore wind power
Onshore wind power
Onshore wind power
Country
Poland
Taiwan
Buyer
Bialy Bor Farma Wiatrowa sp. zo.o.
Changfang & Xidao Wind Power Co.
Ltd.
Cocam Cia de Cafe Soluvel e
Derivados
Seagreen Wind Energy Limited
Shchekinoazot JSC
Tan Hoan Cau Ben Tre Joint Stock
Corporation
Tanzania Railways Corporation
UMEX SA
Windpark Zeewolde B.V.
Berrybank 2
Bella
E&S
Category
(OECD)
A
A
EP Category
B
B
Value of EKF
involvement
(million DKK)
658
2,812
Brazil
United Kingdom
Russia
Vietnam
Tanzania
Rumania
Netherlands
Australia
Italy
B
B
A
A
A
B
B
B
B
n/a
B
n/a
n/a
A
n/a
B
n/a
B
133
2,829
102
129
7,800
85
2,151
347
210
17,256
Total
CAT A high-risk projects need more due diligence and would also commission two sets of
consultants who respectively do the environmental and social impact studies as well as a
full environmental and social due diligence. Based on this work an Environmental and Social
Action Plan (ESAP) is developed by the lenders and the consultants.
Although, the above applies to category A projects, we have in the past year observed an
increased need for comprehensive due diligence work on category B projects. This is mainly
explained by the increased focus of biodiversity and the updated Equator Principles EPIV
as well as the newly updated EU-directive for wind farms.
Projects that cannot be screened and classified according to the OECD Common
Approaches or Equator Principles are benchmarked against EKF’s own ESG criteria and the
exporter is subjected to a corporate ESG assessment. SME guarantees less than DKK 25
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million are screened against an issues list. If risk is low, the exporter will sign an ESG and
KYC declaration. In 2020 only 5% of EKF commitment fell into this category. If any issues
are triggered in the benchmarking the case is send for evaluation in the ESG department
regardless of the size of the transaction.
An application is denied when environmental and social risks or impacts are unacceptable
and EKF cannot use its leverage to prevent or mitigate the potential impact. An application
is also denied when EKF does not receive necessary environmental and social
documentation or the project or exporter is non-responsive. In 2020 three transactions
were denied.
The following model illustrates the different screening, assessment and due diligence
requirements as balanced with the weighting on the EKF portfolio.
EKF's ESG assessment for projects
Classifications in steps
100
90
% commitment of EKF’s total portfolio
80
70
60
50
40
30
20
10
0
89 mio. (10 mio. SDR)
- OECD classified & full due diligence
25 mio. – 89 mio.
- ESG-screening & assessment
0 – 25 mio.
- Screening & ESG declaration
6
7
5
7
EKF commitment 2020
EKF commitment 2019
89
85
ESG in the loan documentation and guarantee
The financing partners set a joint requirement for the buyer to manage and monitor all the
identified sustainability issues. All these issues and requirements are stipulated in the
financing contract, meaning that EKF and partners have legal leverage in the project for
enforcing compliance. Some critical issues are set as condition precedents for EKF to sign
and others are captured in an environmental and social action plan (ESAP), a detailed
working plan for environmental and social actions that commits the project throughout its
construction period and the first critical years of operation at a minimum. The entire
lenders group agrees on the plan and commits the project to comply legally and work
progressively according to the plan. In this way the lenders group keep leverage over the
project.
During 2020 EKF conducted a full due diligence process on 11 transactions and carried out
corporate assessments of environmental and social management systems and human rights
for 13 transactions. The remaining part of the portfolio was screened and assessed for
environmental and social risks. Transactions less than DKK 25. mio. and without any
apparent issues signed an environmental and social compliance declaration.
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CASE: TANZANIA
Large-scale rail project
on track for
sustainability
Modern infrastructure is crucial for developing economies, and electrified railways are often
favoured for sustainability reasons. In Tanzania, the government is focused on upgrading and
enlarging the national rail network funded by the largest foreign currency financing the
country has raised to date. One of the government's priority infrastructure projects is a
mega-scale Standard Gauge Railway (SGR), which will ultimately connect landlocked
countries the likes of Uganda, Rwanda and Burundi with Tanzania and via the port in Dar-
Es-Salaam facilitate access to the Indian Ocean for increased trade and transportation.
In 2019, when EKF became involved in the
financing of the SGR, the design and
construction had already commenced. The
first analysis, however, clearly indicated
that the project was fraught by many
environmental and social challenges.
The railway line ran through densely
populated urban and rural areas, many of
which are habitats for indigenous peoples
and unique fauna. In large towns and
cities, the challenges concerned
expropriation and restoring livelihoods for
local residents. EKF became the main
driving force in a team of environmental
and human rights experts from all the
financial institutions involved, and
established a partnership to ensure that all
sustainability aspects were addressed by
the project and that international
standards were complied with.
The financing partners made joint requirements for the buyer to manage and monitor all
the identified sustainability issues. All of these issues and requirements are stipulated in the
financing contract, meaning that EKF and partners have legal leverage in the project for
enforcing compliance.
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As with any construction project, the new railway impacts people and ecosystems in many
ways; some may potentially be adverse impacts; others beneficial.
The indigenous people, who subsist on traditional cattle herding will, for example, need to
be able to cross the railway via tunnels or overpasses in order to gain access to grazing land
and water for their herds, while villagers, whose livelihoods are impaired must be
compensated for loss of land or income and supported in establishing a new life for
themselves. Risks and impacts for wildlife and habitats must be mitigated by a multipronged
programme for protection and stewardship of forest and wetland biodiversity.
"
"
The SGR extends 550 km across urban,
rural and natural environments, where
communities and natural ecosystems co-
exist. It is therefore crucial to put in place
robust environmental and social
protection measures.
- KRISTIN PARELLO-PLESNER, Director, Environmental & Social Sustainability within EKF
"
From the outset, EKF stipulated that the project must be carried out in conformity with the
International Finance Corporation (IFC) Performance Standards – the international
benchmark for environmental and social risk management. Our efforts to tackle
sustainability issues at an early stage and ensure proactive stakeholder management aim to
reduce the risk of conflict and problems at a later date during construction and operation of
the railway.
The project is financed by a large circle of
lenders. This reflects the fact that lenders
appetite is keen for well-planned, well-
executed projects that respect
international environmental and social
performance standards.
- KRISTIN PARELLO-PLESNER, Director, Environmental & Social Sustainability within EKF
The anomalies identified early on between national regulation and international standards
and the unique partnering among the involved financial parties have resulted in the
development of a plan and recruitment of the key resources capable of ensuring the
project's compliance with sustainability requirements.
The course of the project and learnings from it will platform further ventures in the African
continent and have served to set a best practice standard for cooperation among different
financial institutions on ESG standards.
"
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Project monitoring
Continuous monitoring helps to ensure that we know the portfolio and the overall ESG risk
profile of a project and its development. Moreover, it enables us to implement prevention
measures and corrective action plans when required. All category A and B projects are
required to provide EKF with regular monitoring reports throughout the construction phase
and for the first few years of operation. The monitoring follows the environmental and
social action plan that the project and lender group agreed on prior to signing the loan
documentation. In this way we ensure that all project parties agree on what is required to
mitigate any negative impacts and secure positive impact for stakeholders. The monitoring
falls into several phases.
During the construction period of a project, reporting obligations are often quarterly or
biannual depending on the complexity of the mitigation measures required. For large-scale
transactions the project’s technical advisors and independent environmental and social
consultants assist the project in creating progress and reporting to lenders. Smaller projects
with less impact report directly to EKF and our environmental and social specialists review
and assess developments and support projects in creating further progress.
Before the operational phase starts, a close-out report on the environmental and social
action plan for construction is provided and environmental and social management plans
and systems take over. Depending on the project and industry, further actions are defined
and monitored for the operational phase. For most of the projects the reporting obligations
to EKF expire after some years of operation with full close-out of all environmental and
social action items. However, EKF continues to monitor and follow the projects as long as
they remain in our portfolio. Projects that have no further environmental and social
reporting obligations are placed on a watch list in our risk database. There are
approximately 250 projects currently on the watch list, and above 100 of projects and
corporates are on our ESG monitoring list annually. These are regularly reviewed and rated
in relation to their ESG compliance and performance.
Maintaining oversight – creating a positive impact
Monitoring a project is not just a matter of rating the potential negative impacts,
performance and progress, but rather of maintaining oversight of the project and helping it
stay on a positive course that benefits all stakeholders of a project. Among other things,
this involves supporting the project in early critical identification of issues, giving advice in
terms of organisational resources required, and in some cases support capacity building of
the projects. EKF uses the information that we gain from project monitoring to identify
when projects need extra support to avoid one or more incidents turning into a long-term
or permanent negative trend.
Most of EKF’s projects involve construction, which is potentially dangerous work. Health and
safety for workers is key priority. In 2020 EKF invited project managers contractors and
agent banks to Copenhagen to participate in a workshop about how to develop and
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implement a zero fatalities policy. The workshop included presentations from other major
construction projects that successfully worked with implementing a zero fatalities strategy
in challenging countries and work environments. This provided all participants with an
opportunity to acquire knowledge and tools as to how senior management could work on
developing and operationalising such policies and how to tackle dilemmas and pitfalls. By
the end of the workshop, all participants developed an HSE framework for their company.
Our approach is that fatalities in construction should be prevented and risk mitigated.
Consequently, we use our position as financial partner to support projects in their efforts to
improve and also extend their commitments to contractors and sub-contractors. Workers’
health and safety in developing economies are less protected than in Europe, and so holding
projects up to international frameworks such as the IFC Performance Standards is a way to
build capacity and experience that improves conditions, not only for the project in question,
but also for future projects on which local contractors and sub-contractors will be working.
Human rights
Each project is assessed according to low risk, medium and high risk level in relation to a
variety of different human rights topics such as stakeholder engagement, core labour
standards, non-discrimination, freedom of association, no harmful child labour and no
forced labour as well as physical and economic resettlement. EKF requires projects and
sponsors to implement these human rights standards to avoid actual and potential negative
impacts on stakeholders such as workers, consumers and local communities.
In 2020, EKF undertook several measures to safeguard the projects we participated in from
potential and actual negative human rights impacts. Human rights concerns were primarily
related to land acquisition and involuntary resettlement in the large-scale infrastructure
projects in developing economies. EKF screens for impacts in these projects and, where
appropriate, requires the sponsor to develop separate humans rights impact assessments,
resettlement action and livelihood restoration plans, resource and budget allocations and
rigid monitoring and reporting of progress.
In one case from 2020, EKF found that the project was subject to legacy issues related to
human rights. Construction had already started, and the expropriation processes had been
conducted in compliance with local law, but not international standards. In this case EKF
proactively negotiated for international standards to be applied retrospectively, and for IFC
Performance Standards to be implemented across the entire project to reinstate
appropriate resettlement and livelihood restoration.
EKF also ensured that special attention was paid to the avoidance of potential negative
impacts on vulnerable or marginalised groups such as indigenous peoples. It was essential
to establish their status in order to capture their rights in the project governance plans and
in the development of an indigenous peoples severance management plan. In practice this
resulted in an elaborate stakeholder engagement effort with consultation and
participation.
In 2020, two projects had potential significant impacts resulting in physical and/or economic
resettlement.
•
•
Tanzania: 30,883 people impacted in regard to economic and physical resettlement
Taiwan: 670 vessel owners temporarily impacted in regard to economic resettlement
Estimated physical
and/or economic
displacement of
people in EKF projects
Number of persons
affected by resettlement
and/or economic
displacement
2020
2019
2018
2017
2016
33,883
5,000
29 structures &
423 agricultural plots
21,600
300
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In 2020 EKF also initiated the development of a tool for initial identification and
prioritisation of human rights impacts on high and medium risk projects. The framework is
based on the Guidance Note on Implementation of Human Rights Assessments under the
Equator Principles. The depth and level of detail of each assessment will be determined by
the scope of project risks. The tool will be tested and discussed with external stakeholders
such human rights NGOs and other ECAs. EKF will test the tool throughout 2021, and it is
expected to be fully operational by the end of 2021.
Transaction overview – relevant IFC Performance Standards
No. Projects
PS1 E&S risk management
PS2 Labour
PS3 Environment
PS4 Community
PS5 Ressetlement
PS6 Biodiversity
PS7 Indigenous peoples
PS8 Cultural heritage
A-projects: 5
5
4
4
4
4
4
1
4
B-projects: 6
6
5
5
4
2
3
0
3
Total: 11
11
9
9
8
6
7
1
7
In 2020 all category A projects triggered performance standard 1 and four out of five trigger
the other standards. Only one project in 2020 triggered performance standard seven
regarding indigenous peoples. The objective of this standard is to ensure full respect for the
human rights, dignity, livelihoods, cultural knowledge and practices of indigenous peoples.
Further potential negative impacts are mitigated and sustainable and culturally appropriate
development benefits and opportunities are taken into account.
12
Performance standards triggered
10
8
6
4
2
0
PS1
PS2
PS3
PS4
PS5
PS6
5
4
4
4
4
4
0
1
PS7
PS8
4
6
5
5
4
2
B projects
3
3
A projects
Site visits: Environmental and social performance during the
global pandemic
One step in EKF's due diligence procedure and monitoring of ongoing projects is to conduct
site visits for Category A projects. The visits take place with co-lenders as a step in the ESG
risk assessment of a project before EKF commits to the transaction, and subsequently to
maintain relations with project management and supervise progress in respect of agreed
sustainability measures.
Follow-up on compliance with environmental and social sustainability requirements is just as
important as follow-up on financial arrangements. Accordingly, we prioritise both internal
resources and consultancy services to ensure project compliance with international
standards.
In 2020, EKF's due diligence investigations and inspections of projects were challenged by
the global pandemic. EKF only managed to conduct two physical site visits in 2020, to
Ethiopia and Brazil, before the global pandemic prevented international travel. The global
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health crisis saw site visits deferred and, in some cases, transferred to digital platforms.
In our day-to-day work, EKF followed the guidelines for implementation of the Equator
Principles during the pandemic. We realised that it was more efficient to convene
international partners for online meetings, and visual documentation of environmental and
social factors in our projects have become a natural part of our work.
In the second half of 2020, this meant that we were able to conduct several virtual site
visits using drone-borne cameras in Indonesia and Taiwan, for example. We also increased
our use of local consultants. The new methods will remain part of our future, although they
do have their limitations when it comes to understanding more complex situations and
conducting difficult negotiations with projects. Going forward, much of the preliminary work
will be aided by the virtual process, but this will in no way replace physical presence on site.
But it is not only EKF that has been impacted by the situation. A few projects under
construction needed to be suspended for brief or extended periods, consultants have been
in lockdown and projects have been deferred. In most cases, the situation has not had all-
encompassing or severe adverse impacts, but it has caused delays. With reference to the
Equator Principles' recommendations on COVID-19 and health and safety, EKF has placed
due emphasis on integration of COVID-19 health and safety requirements for project staff in
the health and safety management plans.
Business integrity
In addition to environmental and social due diligence and risk management procedures, EKF
performs anti-money laundering (AML) and counter terrorist financing (CTF) assessments of
our customers to ensure that we are not complicit in any form of money laundering or
financing of terrorism. EKF is subject to the Danish AML/CFT regulations and has
implemented the OECD Recommendation on Bribery and Export Credits. These regulations
provide the background for the extensive know-your-customer (KYC) procedures that EKF
carries out on all its customers – and in the case of anti-bribery procedures – other major
counterparts. EKF also has a risk-based framework for sanctions screening and has internal
guidelines in place for assessing potential tax evasion or tax avoidance in the transactions in
which it participates.
Business integrity guidelines and procedures
•
•
•
•
•
•
•
•
•
Processing of personal data
KYC and anti-money laundering
Anti-corruption and non-bribery
Sanctions
Procurement
Conflicts of interest
Confidentiality
Prevention of market abuse
Whistleblowing procedures
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Procedures
EKF subjects all its guarantee beneficiaries and borrowers to extensive KYC procedures:
•
•
We examine the ownership and control structure and identify and verify the identities
of the beneficial owners.
The assessment is performed based on an overarching risk assessment in which, on a
yearly basis, EKF reviews and assesses its business model for the inherent risk of it
being exploited for money laundering and/or terrorist financing.
An enhanced customer due diligence process is performed when we consider that
there is an increased risk of money laundering or terrorist financing.
•
Furthermore, we perform ongoing monitoring of the business relationship and we use the
risk category and additional information regarding the customer’s activities to ensure that
we identify and act upon any suspicious activities.
Screening procedures are also in place to register any risk of bribery in connection with the
transactions in which EKF participates, and these make use of some of the same data
points collected in the KYC procedures.
We also screen on a systematic and structured basis for sanction risks and assess whether
there is a risk of potential tax evasion or tax avoidance in the transactions.
In 2020 we revised our KYC procedures and internal guidelines to reflect the additional
requirements set out in the Danish implementation of the European Union’s AML V
Directive.
EKF works actively on risk management before, during and after the granting of export
credits and loans. The organisation is aligned to adhere to the risk management principles
and operates in a stringent control environment. The Board of Directors approves the
general rules of a number of policies. Management is responsible for implementing the risk
exposure framework in the business and for ongoing risk management. In close cooperation
with the Heads of Department, who make up the first line of defence, Management
assesses and handles the risks associated with individual business activities. EKF also makes
use of cross-organisational risk coordination units. The risk management and compliance
functions at EKF serve as a second line of defence, are independent of EKF’s three business
columns and report directly to EKF’s Management.
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CASE: GEA PROCESS ENGINEERING A/S
Enhanced ESG processes
secure orders
for Denmark
In autumn 2019, EKF was contacted by GEA Process Engineering A/S, a Danish exporter
looking to sell a new freeze drying plant to Cocam, the Brazilian instant coffee
manufacturer.
Cocam was looking to replace old equipment with a state-of-the-art plant.
As a result of the standards for Environmental, Social & Corporate Governance (ESG), EKF
had a number of requirements and proposals for improving Cocam's safety and
management processes. Including the management of the subcontractors.
EKF consequently partnered with Cocam on improving those processes.
"
EKF contacting us became an opportunity
to raise our corporate standards of
sustainability and social responsibility.
– MARCOS MURARI, CEO of Cocam
"
Cocam took EKF's ESG advice seriously and ensured that it was integrated in its
organisation, and as a result, in 2020, EKF was able to issue a guarantee for financing of the
new plant. 20 percent of the guarantee is covered by Denmark's Green Future Fund.
The financing meant that the order was awarded to GEA rather than to their foreign
competitor.
Marcos Murari, CEO of Cocam comments as follows on their interaction with EKF:
"We started the process because we were looking to expand our business, but EKF
contacting us also made it an opportunity to raise our standards of corporate sustainability
and social responsibility. We are expecting to cultivate long-term cooperation between
Cocam and EKF."
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Responsible
organisation
EKF strives to be a responsible workplace with regard to our
employees, our office buildings and the materials that we use. Each
year, we assess the performance of key parameters regarding our
staff and the resource efficiency of our buildings and transportation
needs. EKF publishes data on gender balance and corporate
governance in our annual report.
Compliance
EKF’s compliance function oversees EKF’s compliance with external and related internal
regulations, and EKF’s Head of Compliance is the Data Protection Officer (DPO) for EKF and
oversees EKF’s information security framework.
Operational risk, including compliance risk, is managed across the organisation through
internal guidelines and procedures drawn up to ensure an efficient control environment at
EKF. Compliance risks are also managed by continuous implementation and maintenance of
efficient processes to ensure that EKF meets its obligations in accordance with relevant
national and international regulations and relevant standards. To ensure that EKF meets
these obligations, the compliance function monitors EKF’s compliance with relevant
external and internal regulations regularly. The compliance department also contributes to
the implementation of new regulations in EKF via relevant guidance or analysis.
Furthermore, compliance introduces new employees to EKF’s catalogue of internal
procedures and how it works. Compliance gives new employees an introduction to the
GDPR rules and how to comply with the rules in their daily work.
EKF nurtures a culture of openness and transparency, where employees are encouraged to
address concerns with their manager. For extraordinary cases we have a whistleblower
portal, where concerns can be submitted to the hotline anonymously and are handled by an
external partner who cannot be influenced by any employee of EKF. The use of an external
partner guarantees impartiality and prevents identification of the individual who reported
the concern.
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Highlights
In 2020 EKF worked towards strengthening the organisational anchoring of the compliance
function with an extended focus on monitoring EKF’s compliance with relevant external and
internal regulations. The compliance and risk functions also developed a new framework for
risk assessments and advanced the digitisation of compliance activities and controls via
EKF’s GRC platform.
Internal environmental and social outcomes
Waste management
The EKF organisation's environmental footprint is moderate. The most significant impact is
from energy and water consumption. Both waste volume and resource consumption levels
were normal and relatively constant compared with previous years. In 2020, consumption is
presumed to have decreased at EKF's own premises, since the majority of EKF staff were
working from home for extended periods following the outbreak of COVID-19 in Denmark
and the ensuing lockdowns. In 2020 EKF generated 13 tonnes of solid waste, which is less
than in previous years. Due to the COVID-19 crisis most employees have been working from
home throughout the year and consequently consumption levels dropped on all KPIs.
As EKF leases its premises and also shares these with other firms, our main efforts are
focused on working towards a transparent system, where shared influence enables a
responsible waste management and recycling system. Over the past couple of years, our
waste generation has increased partly due to waste from other tenants in our shared area
and the fact that we have increased our workforce. We are working towards having a more
transparent perspective on this to categorise the different types of waste.
Evaluating EKF’s direct climate impact
Resource consumption
Generated waste (tonnes)
Per employee (kg)
Recycled paper (tonnes)
Electricity consumption (MWh)
Heat consumption (MWh)
Water consumption (m
3
)
Scope 2 CO
2
emissions (Heat and electricity)
(tonnes CO2-eq)
Scope 3 CO
2
emissions (Aircraft, taxi, car,
courier) (tonnes CO
2
-eq)
2020
13
80
4
225
133
129
69
2019
18
130
5
245
202
1,215
75
254
960
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Electricity, heat and water
In 2020 EKF consumed 225 MWh electricity, 133 MWh heat, and 129 m3 water, which is
less than in previous years.
Resource consumption
Electricity consumption
total (MWh)
per employee (KWh)
per area (kWh/m2)
Heat consumption
total (MWh)
per employee (KWh)
per area (kWh/m2)
Water consumption
total (m3)
per employee (m3)
per area (m3)
2020
2019
2018
225
1,583
22
245
1,727
24
242
1,870
24
133
0,911
13
202
1,426
30
213
1,614
31
129
0,87
0,01
1215
8.56
0.12
1079
8.17
0.16
GHG emissions associated with EKF’s resource consumption and
transportation
In 2020, EKF’s own GHG footprint was 254 tonnes CO
2
e, a decrease from 960 tonnes in
the previous year. Flights are the largest single contributor to EKF’s GHG footprint
originating from our own activities and use of resources. The indirect emissions from flights
have decreased by 378% from 2019 to 2020 due to the travel restrictions resulting from
the pandemic.
Diversity and work-life balance
The share of women in EKF's management have increased to 44% in 2020.
In terms of work-life balance, EKF values the need for a balanced distribution of time and
resources between work and other activities our employees wish to pursue. Achieving a
satisfactory work-life balance can be challenging and we believe that the values and policies
set by our organisation help our employees to make the necessary choices to achieve that.
We offer flexibility to our employees in terms of home office, flexible working hours and the
option of part-time working schedules. Part-time employment can be either temporary or
permanent. This year EKF has 10 part-time employees.
2020
Women on maternity leave
Men on paternity leave
Men part-time
Women part-time
Total women employed
Women employed in senior management
2
6
3
7
42%
44%
2019
2
7
1
6
42%
36%
2018
No data available
in 2018 and 2017
2
8
44%
36%
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Focus areas for 2021
The COVID-19 crisis heavily underlined the importance of taking responsibility for people
and the environment. At the start of the COVID-19 pandemic, EKF took early action to
facilitate cash support, guarantees and advice to enable Danish companies to continue their
investments, production and exports. We will continue to provide that service in 2021, while
retaining our position of strength in the clean energy transition and supporting the
globalisation of green Danish solutions. This is our socially responsible pledge. Going
forward these two parameters will also define our efforts in 2021.
With COP26 scheduled for November 2021, EKF has renewed its purpose to support a just
and green energy transition globally by engaging with stakeholders and partners to create
innovation and new opportunities, supporting the need for maturing green technologies for
export and, not least, supporting carbon intensive sectors on their journey to
decarbonization. Financing new technology and innovation is essential to advancing climate
goals, but brings with it challenges which are often unique to the specific sector in question.
The shift to net zero is not instantaneous. There is a need to look at different strategies for
transitioning to no/low carbon emissions and how we can pragmatically continue to support
clients and industry as they go through this process. In 2021 we will work on our own
climate governance and strategy, on the further development of goals and metrics and not
least transparency of climate data. EKF will also continue its leadership position in the
international negotiations on climate and export financing and actively continue to support
government initiatives that are compatible with EKF's business by managing and
implementing funds.
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Consolidated ESG statement for 2020
Unit
EKF corporation environmental data
CO
2
-e scope 2
CO
2
-e scope 3
Waste production
Water consumption
2
Tonnes
Tonnes
Tonnes
m
3
69
254
13
129
75
960
18
1,215
n/a
720
20
1,079
2020
2019
2018
Transactions CO
2
data
CO
2
-e emissions from transactions, total
1
CO
2
-e emissions reductions from transactions,
total
Tonnes/year
Tonnes/lifetime
381,000
71,000,000
70,000
75,100,000
370,000
318,300,000
EKF corporation social data
Number of employees, end of year
Percentage of women in workforce
Percentage of women in management
Women working part-time
Men working part-time
Employees on paid maternity leave during the
year
Employees on paid paternity leave during the year
Days spent on training and education per
employee
People
%
%
People
People
People
People
No.
148
42
44
7
3
2
6
3
142
42
36
6
1
2
7
3
136
44
36
8
2
3
10
3,2
Transaction social data
Danish jobs secured
Local jobs during 1 year of construction, EKF
share
3
Local jobs during 1 years of operation, EKF share
3
Involuntary displacement
3
FTE
FTE
People
8,900
6,830
180
33,883
7,200
1,300
200
5,000
12,000
12,100
1,400
29 structures & 423
agricultural plots
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Governance data
Transactions with a full E&S Due Diligence
Corporate assessments
Equator Principles
E&S transactions visits
KYC: Anti-corruption and money laundering
screening
E&S monitoring cases
Transactions
Transactions
Transactions
Trips
Transactions
Transactions
11
13
5
2
125
4
115
13
8
8
15
160
103
33
5
15
11
N/A
N/A
1
The
figure only includes projects with emissions over 25,000 tonnes per year
partly based on 2019 data
based on available information at the time of reporting
2
Estimated
3
Estimated
4
During
2020 EKF changed screening practice from screening client transactions to client relations. Since this happened midyear the number covers both
practices.
For definitions and methodology please see 'Reporting Practices'.
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Reporting practices
Responsible transactions
Time period: This ESG Report covers the period 1 January 2020 to 31 December 2020.
Reporting scope
The report includes indicators for selected transactions which have:
•
•
been closed within the period under review;
are classified as either Category A or B in terms of potential environmental and social
impacts. Transactions classified as Category C are included in the overview indicators.
The process used for classification adheres to the OECD Common Approaches.
EKF scope
Where an indicator refers to EKF’s scope, or part of a transaction, this refers to either:
•
•
the commercial/political risk that EKF covers for the transaction; or
when the transaction is project financing, this covers EKF’s proportion of the full
project financing
Annual greenhouse gas emissions
In accordance with IFC Performance Standard 3, all transactions which will result in, or emit
more than, 25,000 tonnes of CO
2
during one year of operation are required to annually
report their GHG emissions to EKF. These emissions include (i) direct emissions from
facilities owned by the company, and (ii) indirect emissions from off-site production of
energy used by the project. EKF compiles this information for all transactions above the
above-mentioned threshold. The indicator is based on the data available at the time of
reporting.
Greenhouse gas reduction
How we quantify CO
2
emissions reductions:
The independent economic consultancy Copenhagen Economics has developed a model
capable of calculating carbon dioxide emissions reductions for the renewable energy
projects EKF helps to finance, such as wind farms, solar power arrays and other energy
sources that displace climate-pollutant CO
2
based energy sources from the electricity grids
in various countries.
CO
2
displacement is quantified as the marginally reduced emissions in a country's power
system achieved from the project over the full span of the project's useful life. This means
that the CO
2
displacement depends on the volume of energy supplied by the given energy
technology and the project country's/region's power generation mix and demand.
The figure for marginally reduced emissions is obtained by comparing expected supply and
for electricity in a given country. The marginally most cost-intensive energy technology is
displaced by the introduction of increased capacity from new renewable energy sources.
Since electricity generation from wind and solar is variable over any year and 24-hour
period, the most accurate figure is obtained from an estimated hourly capacity at country
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level in the wind and solar model. The forecasted demand is then correspondingly
determined per hour per country. In any country, wind, solar and other renewable energy
sources will thus displace CO
2
equivalents at differing intensities per MWh supplied.
The calculations are also based on the projects' predicted capacity in MWh, the projects'
useful life (e.g. 25 years for a wind turbine) and geographical siting. The results show how
many tonnes of CO
2
equivalents these projects will avoid during their useful life.
In determining fossil fuel displacements in the renewable energy projects, CO
2
includes both
CO
2
and CO
2
-e methane.
How we quantify economic impact
EKF calculates the economic impact of our solutions and products on the Danish economy.
Our calculations show how EKF makes a difference for Danish companies and for Denmark.
The independent economic consultancy Copenhagen Economics devised a calculation
model for EKF. The model contains figures from EKF's transactions and data from sources
such as Statistics Denmark. The results show our economic impact in the form of jobs, for
example. Both the data and figures are validated by Copenhagen Economics.
Focus areas for EKF’s due diligence
The focus areas are derived from the 8 IFC Performance Standards (IFC PS) for
Environmental and Social Sustainability. Use of the focus areas approach reflects that a
transaction has been assessed and benchmarked according to a specific IFC PS during EKF’s
due diligence process. It does not necessarily indicate that there is a residual negative
impact with reference to that IFC PS.
Estimated local employment
The number of jobs created is determined per transaction based on the information
available at the time of reporting. The number of jobs created locally is reported for
construction and operation, both for one year. This means that if the construction phase is
longer than one year only the number of jobs corresponding to one year of construction is
included in the indicator.
Estimated involuntary displacement
In line with the IFC PS, involuntary displacement covers both people who have to move
away from their house, and people who are economically displaced. The indicator is based
on the data available at the time of reporting. When the information is only available at
household level, the number of impacted people is calculated using recent estimates of
average household size for the specific country from publicly available sources, such as the
World Bank.
Internal resource consumption
Heat, water, electricity, and solid waste consumption figures are derived for EKF’s office
building, factoring in EKF’s share of the consumption, as we share our office building with
other entities.
CO
2
emissions from resource consumption:
Electricity:
CO
2
emissions from electricity are derived from EKF’s consumption figures and
incorporate the annual environmental declaration from the Danish TSO Energinet.dk.
Heating:
CO
2
emissions from space heating are derived from EKF’s consumption figures and
the annual environmental declaration from the district heating supplier, HOFOR.
Flights and courier:
are derived from information from our suppliers. The flight emissions are
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based on emissions factors for CO
2
from the annually published figures from the UK
Department for Environment, Food and Rural Affairs
.
Taxis and personal car use:
CO
2
emissions are based on data from the taxicab service
provider, which is aggregated at vehicle level. For all trips undertaken by employees in their
own vehicles when the journey is official business (i.e. not including trips to and from work),
we take an average emission factor per driven km. EKF does not own any company cars.
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Stakeholder information
The UN Global Compact Principles on human rights, labour rights, environment and anti-
corruption as well as the UN Guiding Principles on Business and Human Rights form the
basis for EKF’s corporate environmental and social responsibility work. Furthermore, we
work in accordance with the Equator Principles and the corporate responsibility principles
outlined by the Danish government and the OECD.
This report contains information on the environmental and social impacts related to EKF’s
transactions as well as EKF’s internal footprint. Furthermore, the report also includes our
policy commitment, ESG achievements and challenges.
At the same time, the report constitutes our Communication on Progress under the UN
Global Compact regarding human and labour rights, environment and anticorruption. EKF
reports annually, and this report contains information pertaining to activities that took
place in the fiscal year 1 January 2020 to 31 December 2020.
We acknowledge the diverse nature of our stakeholders and the fact that not all
information is equally relevant to all readers of this report, who are therefore invited to
select their areas of interest from this publication. In addition, this report can be generated
as one entire report.
The purpose of this report is to provide stakeholders with information on EKF’s ESG
performance during 2020, integrating external and internal ESG efforts. The report is aimed
at a wide range of EKF’s stakeholders, including exporters, buyers, financial institutions such
as banks and pension providers, the OECD, our peer export credit agencies and Danish and
international ministries, civil society, trade and industry organisations as well as EKF’s
employees, Management and Board of Directors.
This ESG report is published in English and is available online at www.ekf.dk. EKF’s executive
management has approved this report. For further information, please contact our ESG
Department:
[email protected]
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The Independent
Auditor’s Report
regarding CO
2
data
TO THE MANAGEMENT AND STAKEHOLDERS OF EKF DENMARK'S EXPORT CREDIT
AGENCY
We have audited EKF's data on CO
2
e displacement from renewable energy projects,
as presented in the table 'Total expected CO
2
e displacement achieved by EKF-
financed projects' in EKF's Annual Report 2020 ('the report') with a view to arriving at a
high degree of certainty. Data concern CO
2
e displacement from all projects financed by EKF
(71 million tonnes of CO
2
e) and EKF's share of the total (14 million tonnes of CO
2
e) in
2020.
Our audit was conducted to determine whether the reported data were obtained
in compliance with EKF's method for calculating the aggregate CO
2
e displacement from all
the renewable energy projects co-financed by EKF. The method is described in general
terms in the report.
We express an opinion with a high degree of certainty.
Management’s responsibility
The Management of EKF is responsible for collecting, calculating and presenting the data in
the report. Management is also responsible for such internal controls as it determines is
necessary to ensure that the reporting is free from material misstatement, whether due to
fraud or error.
Auditor’s responsibility
Our responsibility is based on our undertaking to express an opinion with a high degree
of certainty concerning the data on CO
2
e displacement from renewable energy projects,
as presented in the figure 'Total expected CO
2
e displacement achieved by EKF-
financed projects' in the report. We have organised and performed our undertaking in
compliance with ISAE 3000, other statements with certainty other than audit or review of
historical financial data, and additional requirements ensuing from Danish auditing
legislation with a view to obtaining a high level of certainty for our opinion. We have
assessed the data based on the criteria of completeness, reliability, relevance, neutrality and
understandability in accordance with ISAE 3000.
A high degree of certainty is a high level of certainty, but is not a guarantee that an audit
performed in accordance with International Standards on Auditing and the
additional requirements applying in Denmark and in accordance with good public auditing
practice will always disclose material misstatements, if any. Misstatements may occur as a
result of fraud or error and can be deemed to be material if it can reasonably be expected
that they will, individually or jointly, have an impact on the financial decisions made by any
party on the basis of the reported data.
Deloitte Statsautoriseret Revisionspartnerselskab is subject to the International Standard
on Quality Control (ISQC) 1 and thus employs a comprehensive system for quality
assurance, including documented policies and procedures pertaining to compliance with
ethical requirements, professional standards and applicable requirements in law and
other legislation.
We have complied with the requirements for impartiality and other ethical requirements in
FSR - Danish Auditor's Code of Ethics for Auditors, which is founded on the
fundamental principles of integrity, objectivity, professional competence and due care,
confidentiality and professional conduct.
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We have performed our undertaking with a view to arriving at a high degree of
certainty that EKF's data on CO
2
e displacement from renewable energy projects are
presented fairly, in all material respects. Based on an assessment of the risk of material
misstatement, we have planned and performed our undertaking with a view to obtaining
every information and explanation necessary for supporting our opinion.
We carried out our work activities in February and March 2020. Our work involved
auditing the fundamental procedures, calculations and input data in the calculation model
for Marginal Emission Factors, which covers 39 specific countries and a generic country.
We have random sampled Marginal Emission Factor values based on energy emission
factors, energy requirements and capacity data. We have performed analytical tests,
including validation of calculations by means of random samples, and have audited the
internal checks of collection and calculation of the data concerned. We have conducted
interviews and sampled data on demand and supply of electricity per country from source
data and have validated assumptions concerning the growth of same from 2040 to 2050.
We have conducted online interviews with process and data owners within EKF and have
reviewed documentation for project data pertinent to the calculations, such as the projects'
MW, dates for credit draw-down and credit facility amount and the country in which the
project is sited. We have verified that all relevant projects have been included in the
calculation and that the CO
2
e displacement has been accurately calculated.
We have not audited project data extracts from EKF's accounting system, which
have already been audited by EKF's financial auditor.
Opinion
Based on our audit, it is our opinion that EKF's data on CO
2
e displacement from
all renewable energy projects financed by EKF (71 million tonnes of CO
2
e) and EKF's share
of that total (14 million tonnes of CO
2
e) in EKF's Annual Report 2020 are presented fairly,
in all material respects.
Copenhagen, 15
th
March 2021
Deloitte
Statsautoriseret Revisionspartnerselskab
CVR No. (MNE) 33 96 35 56
Morten Egelund
Identification No. (MNE): 21411
State-authorised public accountant
Helena Barton
Lead Reviewer
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