‘Second Opinion’ on Balder ’s Green Financing Framework 10 o Nordic Swan Ecolabel o DGNB “Silver” Renovation of existing buildings 8 : • Renovation of an existing building that either leads to a reduction of Primary Energy Demand (PED) of at least 30%, or where the building meets the applicable requirements for “major renovations” 9 . Acquisition and ownership of buildings: Existing buildings (built before 31 December 2020) : • Existing buildings have an Energy Performance Certificate (EPC) demonstrating class A or the building is within the top 15% of the national or reg ional building stock, expressed as Primary Energy Demand (PED) 10 , and • Existing buildings have, or will receive environmental certification in any of the following building certification schemes at the define d threshold or better: o Miljöbyggnad “Silver” o LEE D “Gold” o BREEAM “Very Good” or BREEAM in - use “Very Good” o DGNB “Silver” o Nordic Swan Ecolabel ü As long - lived assets, greening buildings are important for securing a low carbon future. However, we note that a substantial part of the life cycle footprint of a building resides with the embedded emissions in t he materials used. Balder aims to halve emissions in its own operations by 2030, with 2022 as base year, and also to achieve net zero emissions throughout the value chain (Scope 1, 2 and 3 11 ) by 2045. Balder states that to achieve these goals, a roadmap wi ll be produced during 2023 to specify which measures are required for the business to achieve its climate goals. The goals will then be submitted to the Science Based Targets Initiative for approval. They then plan to concretize their climate ambitions in construction, renovation and property development. ü The issuer informs us that it will be assets in Sweden and Denmark that will provide the largest share of the net proceeds. Most of the proceeds will be for new construction and renovation of existing buil dings. Buildings with fossil fuel heating are excluded from green financing and i n the Nordic countries all direct fossil fuel heating will be replaced by district heating or heat pumps . ü Balder informs us that in Sweden Miljöbyggnad Silver will be used (version 4.0 going forward) , in Denmark DGNB Silver will be used and in Finland LEED Gold and BREEAM Very Good will be used. ü From a climate perspective, it is better to renovate existing buildings rather than build new ones, therefore refurbishments with a 30% reduction of energy consumption could qualify for a M edium to D ark shade. 8 A renovated building that fulfils the criteria for e xisting buildings in th e f ramework can be classified as an e ligible g reen a sset as a whole. If the building does not fulfil the criteria for an e xisting building in this Framework but succeeds in a reduction of PED of at least 30% only the cost of the renovation can be financed. 9 According to Directive 2010/31/EU : Nordic, zone 5: Annual use of energy below i) offices 55 - 70 kWh/m 2 of net primary energy with typically, 85 - 100 kWh/m 2 of primary energy use covered by 30 kWh/m 2 of on - site renewable sources and ii) new single - family houses 40 - 65 kWh/m 2 of net primary energy with, typical ly, 65 - 90 kWh/m 2 of primary energy use covered by 25 kWh/m 2 of on - site renewable sources. 10 The top 15% PED applicable under th e f ramework will be updated continuously. Balder will reference an external benchmark when determining the top 15%. Such a bench m ark could be e.g., guidance by national governments or a specialist study , e.g., Fastighetsägarna in Sweden. 11 Scope 3 will include embodied emissions in buildings , according to Balder .