magnolia bostad ab - pub.cicero.oslo.no

Shades of Green: Magnolia Bostad 1

Magnolia Bostad AB Shades of Green assessment1 June 4th, 2021

Executive summary Magnolia Bostad AB (“Magnolia Bostad”), founded in 2009, is an urban developer operating in Sweden's

growth towns and cities. Magnolia Bostad delivers complete offers of rental accommodation, tenant-owned

apartments, community service properties and hotels, as individual projects or as part of larger projects. A growing,

but still relatively small, proportion of the projects are developed for self-management.

Figure 1 Magnolia Bostad revenue and operating costs by Shade of Green2

In 2020, 86% of revenue, 78% of operating expenses and 87 % of

investments came from properties with a Shade of Green. 11% of revenue

came from properties with a Dark Green shading, 62% from Medium Dark

properties, 13% from Light Green properties. 14% of revenue was shaded

Yellow due to lack of data or energy performance not reaching the requirements

for Light Green. The operating costs had a somewhat similar distribution with

6% associated with Dark Green properties, 55% with Medium Green properties,

17% with Light Green properties, and 22% shaded Yellow. The above

assessment allocates a shade based on a combination of energy use relative to

current building regulations and building’s environmental certification level,

considering building materials, resilience, transportation solutions and other

environmental considerations. Investors should note that our shading is based on

projected data, there is always a risk that the actual certification level or energy

use of the project is not met.

Magnolia Bostad is exposed to transition risks and physical risks associated

with climate change and more frequent extreme weather. Currently,

1 CICERO Shades of Green is an approved reviewer to assess alignment with the Nasdaq Green Equity Principles,

Nasdaq.com/Solutions/Nasdaq-Nordic-Green-Designations 2 For the purpose of this assessment, revenue and turnover are used interchangeably, as are operating costs and OPEX,

investments and CAPEX

Sector: Real Estate

Region: Sweden

Nasdaq Green

Designation

Based on this review,

Magnolia Bostad meets the

requirements for Nasdaq

Green Equity Designation

set out in the Nasdaq Green

Equity Principles1.


Magnolia Bostad undertakes limited assessments of climate-related risks to their business but are planning for a

more systematic approach going forward.

Magnolia Bostad's sustainability work is based on the UN Global Compact and 2030 Global Goals for

Sustainable Development. Magnolia Bostad has integrated environmental issues into core business practises and

works strategically to meet environmental targets. The company has been reporting systematically on sustainability

issues for four years. However, they do not report on greenhouse gas emissions or energy use in own operations

or construction activities, neither have they targets for these performance indicators. Magnolia Bostad does not

follow the guidelines from TCFD when it comes to reporting on climate risks.

The company has implemented some best practises in sustainable supply

chain management. Magnolia Bostad is engaged in dialogue with strategic

suppliers to improve environmental performance. The company has a code of

conduct which requires supplier to respect and follow environmental

requirements.

The company’s overarching climate goal is to design and construct all

buildings so that they can be environmentally certified according to

Miljöbyggnad Silver, the Nordic Swan Ecolabel or equivalent. Environmental

certification schemes include many important environmental aspects. However,

these alone do not ensure that energy and resilience aspects are taken into considerations to a high enough degree.

Some of the buildings in the portfolio that are certified have an energy use not much below today’s regulation.

The materials, construction and demolition phase of the building lifecycle constitute additional emissions and are

becoming increasingly important as buildings becomes more energy efficient and the electricity and heat supply

becomes ‘greener’. Magnolia Bostad is aware of the role of materials and emphasis the role of wood and other

environmentally friendly construction materials. Currently, all material use should be according to SundaHus3 or

Byggvarubedömningen4.

The relevant EU Taxonomy criteria is Construction of new buildings5. CICERO Green assess that Magnolia

Bostad had no fully taxonomy-aligned turnover, OPEX or CAPEX in 2020. It is likely that 86% of Magnolia

Bostad’s turnover, 78% of OPEX and 87% of CAPEX would be aligned with the technical energy efficiency

threshold for New Construction. For buildings over 5000m Magnolia Bostad will be fully aligned to additional

mitigation criteria from 2022. The company has some gaps in DNSH requirements for Sustainable use and

protection of water and marine resources criteria. In addition, one property does not meet the requirements under

Protection and restoration of biodiversity and ecosystems. CICERO Green considers that Magnolia Bostad mainly

fulfils the minimum social safeguards of the EU Taxonomy, however, the company should implement a screening

of suppliers that identifies products and sourcing countries that requires extra caution and follow-up.

Table 1 Sector metrics for projects finished by Magnolia Bostad6

Specific sector metrics Energy use finalised projects

(kWh/m2 Atemp)

Environmentally certified

(% of area)

2020 73 90

2019 75 99

2018 69 44

3 SundaHus is a solution for systematizing the work of phasing out hazardous substances in a building's entire life cycle.

https://www.sundahus.se/om-oss/ 4 Byggvarubedömningen consists of a logbook tool and assessments of chemical content and lifecycle aspects.

https://byggvarubedomningen.com 5 Magnolia Bostad has a negligible share of OPEX related to the criteria for Acquisition and ownership of buildings. 6 Other relevant metrics include direct emissions (scope 1 – 2) and construction waste sorted. Magnolia Bostad does not

currently have this data.

Figure 2 CICERO Green assess

Magnolia Bostad’s governance

structure and practice to be Good.

https://www.sundahus.se/om-oss/

https://byggvarubedomningen.com/


Contents

1 Magnolia Bostad’s sustainability management _________________________________________________ 4

Company description .............................................................................................................................................. 4

Governance Assessment ........................................................................................................................................ 4

Sector risk exposure ............................................................................................................................................... 5

Sustainability Management ..................................................................................................................................... 6

Key issues .............................................................................................................................................................. 7

2 Assessment of Magnolia Bostad’s green activities and policies __________________________________ 11

Shading of Magnolia Bostad’s revenue, operating expenses and investments ..................................................... 11

Nasdaq Green Designation ................................................................................................................................... 13

EU Taxonomy ....................................................................................................................................................... 14

3 Terms and methodology __________________________________________________________________ 16

Shading corporate revenue and investments ........................................................................................................ 16

Appendix 1: Referenced Documents List __________________________________________________________ 18

Appendix 2: EU Taxonomy criteria and alignment __________________________________________________ 19

Construction of new buildings ............................................................................................................................... 19

Acquisition and ownership of buildings ................................................................................................................. 23

Appendix 3: Background _______________________________________________________________________ 24

Appendix 4: About CICERO Shades of Green ______________________________________________________ 26


1 Magnolia Bostad’s sustainability

management

Company description

Magnolia Bostad AB (“Magnolia Bostad”) was founded in 2009 as an urban developer operating in Sweden’s

growth towns and cities. Magnolia Bostad’s monitors the market for opportunities, and once attractive land has

been identified, the company carries out feasibility studies including environmental assessments. After completing

the acquisition, Magnolia Bostad often runs a zoning plan at the same time as negotiating with building contractors

for turnkey contracts for the projects. Projects are all planned to be certified in accordance with the Swedish Green

Building Council’s Miljöbyggnad Silver certification or the Nordic Swan Ecolabel. A share of projects is

developed for self-management, often in the form of a joint venture with a financially strong partner. Projects that

are sold are done so at an early stage, generally before a building permit has come into force and before production

has started. Magnolia Bostad manages and runs all projects until completion, a period that normally lasts 2-3 years.

At year-end 2020, the company had 22,731 estimated building rights in its portfolio and 9,810 units in production.

The majority of Magnolia Bostad’s projects were sold, while a smaller proportion of the building rights portfolio

were developed for self-management. Property sales amounted to SEK 1,973m in 2020, while other income, such

as rent (SEK 21m), project management (SEK 52m) and invoicing to the projects (SEK 312m), amounted to SEK

385m. As of 31 December 2020, the company had 112 (101) employees.

Magnolia Bostad's shares (MAG) are listed on Nasdaq Stockholm.

Governance Assessment

The overall assessment of Magnolia Bostad’s environmental

governance structure gives it a rating of Good. Magnolia

Bostad has a comprehensive sustainability strategy well

anchored within the management of the company at all levels.

Target wise, Magnolia Bostad has signed up to the vision of a

Fossil Free Sweden in 2045 7 , and has the ambition of

environmentally certify all new projects at a level that secure

more than fulfilling current regulations. This is followed up

with environmental audits during both the project design

phase as well as the construction phase. In addition to securing

construction according to the environmental certification schemes, environmental specifications of Magnolia

Bostad regarding e.g., waste reduction and sorting, reduced risk of pollution of soil and water, reduced noise from

construction, and a good indoor environment during construction, are checked. There are, however, currently no

targets for key performance indicators like energy use or greenhouse gas emissions associated with either own

activities or the sub-contracted construction process. There is ongoing work in Magnolia Bostad to establish such

targets.

7 https://sustainabledevelopment.un.org/partnership/?p=33918


Magnolia Bostad is working on integrating climate risk assessment into their due diligence process. The company

performs a limited environmental screening of its strategic contractors and suppliers based on its Code of Conduct.

The company should consider setting a target for supply chain emission.

Magnolia Bostad’s Code of conduct refers to international human rights conventions, prescribing secure and

orderly labour conditions, and no discrimination. It also emphasizes the importance of reducing the climate impact

of their operations with focus on energy and transport, following or surpassing environmental regulations, and

reducing the use of toxic materials.

Magnolia Bostad does not have any employees in the contracting companies, however, it is important for Magnolia

Bostad to have an open dialogue with the contractors about the work environment and damage reporting. This is

also something that is regulated in the contract agreements. The Code of conduct is also applicable to suppliers

and subcontractors; however, the document reads like the intended audience is an internal one. It could be

beneficial for Magnolia Bostad to consider clarifying the requirements towards suppliers and subcontractors. It is

also unclear if there is a screening of social risks for these suppliers. To further strengthen the work on supply

chain sustainability, Magnolia Bostad should consider a screening of all suppliers that identifies products and

sourcing countries that requires extra caution and follow-up. The Code of conduct, currently only in Swedish, is

attached to all contracts. Magnolia Bostad has informed us that they will release a new Code of conduct this year

for suppliers and this will be both in English and Swedish.

The annual sustainability report is prepared according to the Global Reporting Initiative (GRI) level core, and

contains key indicators, but currently not direct energy use or greenhouse gas emissions from Magnolia Bostad.

Magnolia Bostad does not follow the guidelines from TCFD when it comes to reporting on climate risks.

Sector risk exposure

The below text box highlights some key risks for the real-estate sector, see Appendix 3 for additional background.

Physical climate risks: Magnolia Bostad’s site locations, logistics and supply chain are exposed to physical climate

risks. For operations in Sweden, the most severe physical impacts will likely be increased flooding, snow loads and

urban overflow, as well as increased storms and extreme weather, but detailed location-based analysis should be

conducted. Magnolia Bostad’s supply chain is likely exposed to disruptions from extreme weather – mainly through

transportation routes/links.

Transition risks: Magnolia Bostad is exposed to transition risks from stricter climate policies e.g., mandatory

efficiency upgrades. The company is also exposed to liability risks due to e.g., legal challenges if preventable damages

from climate change increases. In addition, the real estate sector is exposed to changing consumer preference for more

climate smart and energy efficient buildings.

Environmental risks: The construction sector is at risk of polluting the local environment during the erection of the

properties, e.g., from poor waste handling. There are also risks related to impacts on local biodiversity/habitats as well

as the use of un-sustainably sourced material like tropical wood.

Social risks: The social risks related to the real estate and construction sector include risk to the health and safety of

the employees and sub-contractors, risks related to corruption, human rights violations in their supply chains,

including risks for violations of workers’ rights.

!


Sustainability Management

Magnolia Bostad's sustainability work is based on the UN Global Compact’s ten principles regarding human rights,

labour law, the environment and corruption, as well as on the UN’s 2030 Global Goals for Sustainable

Development. The company participates in the Building and Civil Engineering Roadmap for Climate Neutrality

20458 in Sweden, and in Local Road Map Malmö 2030 (LFM309), which is the City of Malmö’s local roadmap

for climate neutrality 2030. Magnolia Bostad is also a member of the Swedish Green Building Council (SGBC),

Sweden's leading organization for community building.

Each of Magnolia Bostad’s projects must have a project book that contains sustainability information about the

project. The project books must be updated every quarter by the responsible project developer so that the company

has an overall picture of the sustainability aspects, including social aspects such as labour conditions for

subcontractors’ employees, in each individual project. In each project, Magnolia Bostad has an independent

consultant perform two environmental audits, one in the design phase and one in the production phase. For further

control, an audit against agreements, code of conduct, expected reporting, etc., of a turnkey project is also

performed every year. The purpose is to ensure that the company’s turnkey contractors meet the company's

requirements and that the planned environmental certification for the project is achieved. During 2019, 18

environmental audits of projects were carried out, two further audits of turnkey contracts and 992 apartments were

environmentally certified in accordance with Miljöbyggnad Silver or the Nordic Swan Ecolabel.

Governance structure

Sustainability issues are addressed and decided at management group meetings. Magnolia Bostad’s Sustainability

Manager reports to the CFO who is part of the management team. Magnolia Bostad’s environmental policy follows

the intentions of ISO 14001 and ISO 9001. This policy was last revised in the autumn of 2019. Strategy and policy

documents are revised by the CEO or by the board once a year. In 2019, the company started a sustainability

council that includes representatives from all regions. The purpose is to spread knowledge at all levels within the

organization. Magnolia Bostad expects employees and business partners to respect and follow both the

environmental policy and other environmental requirements set by Magnolia Bostad. Together with the code of

conduct, the environmental policy is attached to all company's contract agreements.

Risk assessment

During the summer of 2020, Magnolia Bostad conducted a comprehensive stakeholder dialogue and materiality

analysis. After performing the analysis, the company state that Magnolia Bostad has six significant sustainability

aspects: i) Health and safety for Magnolia Bostad’s employees, ii) Anti-corruption, iii) Reduced climate impact,

iv) Sustainable profitable growth, v) Security, and vi) Sustainable purchasing and evaluation of suppliers. The

result has been discussed and approved by the management and board of Magnolia Bostad. The company has

strategies and measures in in place for all issues except reduced climate impact where they develop measures and

strategies right now and will disclose during the year. This will include issues such as energy consumption,

sustainable buildings materials and waste since Magnolia Bostad see that these as important issues that they need

to handle to reduce the climate impact.

Magnolia Bostad performs climate risk analyses for projects in locations close to the sea as well as other

environmental and climate risks associated with the purchase of land. In 2021, Magnolia Bostad intends to develop

8 The road map stipulates that actors in the building and construction sector should measure their greenhouse gas (GHG)

emissions and decide on climate targets by 2022, have reduced their GHG emissions by 50% by 2030 relative to 2015, and

further reduced them by 75% by 2040. The road map was developed by the Swedish Construction Federation, industry

representatives, researchers and the organization the Fossil Free Sweden Initiative. 9 LFM30 is an industry initiative and rallying of forces for a climate neutral construction and civil engineering sector in Malmö

by 2030. https://lfm30.se

https://lfm30.se/


this analysis and develop a climate risk program for all projects that the company develops. This program will be

included as part of the company’s due diligence process.

Reporting

Magnolia Bostad has comprehensive integrated sustainability and financial reporting. Magnolia Bostad is a

Nasdaq ESG Transparency Partner, which means that the company reports key figures linked to the environment,

social factors and governance to Nasdaq’s ESG database to contribute to increased transparency in the financial

market. The annual sustainability report is prepared according to the Global Reporting Initiative (GRI) level core.

The report includes an overview of the latest materially process and identified significant sustainability aspects.

The reporting will be published at the company’s homepage and will include the below information for the total

property portfolio:

• Type of certification and level of certification

• Energy use per m2

and/or

• Estimated annual CO2 emissions reduced or avoided for buildings (tCO2e)10.

The company will also report the percentage of revenue, operating costs and investments related to green buildings

as defined by Magnolia Bostad 11. According to the company they will strive to report consistently with the

definitions of sustainable activities available in the EU Taxonomy.

We note that Magnolia Bostad has not committed to independent verification of these reports as of now and will

evaluate this at a later stage.

Key issues

GHG Emissions

Magnolia Bostad, as a mainly project development company, has not recently reported on emission of greenhouse

gases as these have been seen as insignificant compared to e.g., emissions from construction and use of the

buildings. Magnolia Bostad has informed us that they are now working on estimating their scope 1 and 2 CO2

emissions with the intention to set climate goals in 2021 and to disclose this in the next years reporting. The

company conducted life cycle assessments of three properties in 2018 and have used the results to guide strategy

towards more sustainable material use.

Energy

Magnolia Bostad’s sustainability work is focused on building certifications and they do not have separate energy

efficiency targets. However, the certifications chosen by Magnolia Bostad place higher demands than existing

legal requirements on energy consumption.

Building Certifications

The company’s overarching climate goal and requirements are to design and construct all buildings so that they

can be environmentally certified according to at least Miljöbyggnad Silver, the Nordic Swan Ecolabel or an

10 If not actual numbers are used as grid factors, Magnolia Bostad will use IVL:s factors according to the recommendations in

LFM30. 11 Magnolia Bostad has defined the minimum requirements for green buildings as buildings which are planned to at least reach

the environmental standard of either Miljöbyggnad Silver (or higher) or Nordic Swan Ecolabel or buildings with an energy

consumption ≧ 10% below the applicable national building regulation, such as Boverket’s Building Regulations (“BBR”)


equivalent certification scheme. These certifications place higher demands than existing legal requirements on

indicators such as energy consumption12, the share of renewable energy and the climate impact of the structure

and foundation of the buildings. There is always a risk that buildings will not reach the intended environmental

certification, particularly as the final certification procedure is often after the property has changed hands and

therefore outside of Magnolia Bostad’s direct control. By working with dialogue, clear requirements, and policies

as well as environmental audits, Magnolia Bostad aims to reduce the risk that contractors do not fulfil their

commitments and that the end product does not meet Magnolia Bostad's high environmental requirements. Thus,

every project goes through two audits by external consultants, one in the design phase and one in the production

phase. In the design phase the consultant walks through all documentation to ensure that they are according to the

planned certification for the projects. This is followed up with one more audit in the production phase where

Magnolia Bostad go through the first audit and also look at the order at the construction phase. If there are remarks

from the audits, the project leader follows up with the constructor.

During 2020, 13 projects totalling 2,901 residential

units were completed. Of these, 10 projects were

environmentally certified: one according to the

Nordic Swan Ecolabel and nine according to

Miljöbyggnad Silver13. All rental and tenant-owner

projects were environmentally certified or built

according to the Swedish Green Building Council’s

Miljöbyggnad Silver certification or the Nordic

Swan Ecolabel. In 2019, 4 projects were certified

according to Miljöbyggnad Silver and two projects

were certified according to the Nordic Swan

Ecolabel. One project was not certified. A total of

16 environmental audits were carried out in 2020,

all with good results.

Material use and waste

Magnolia Bostad has been a co-financier and member in the reference group for a supported research study by

SBUF (Swedish Construction Industry Development Fund). The purpose of the project was to supplement previous

SBUF studies by performing LCA calculations of climate impact on one and the same type of house, to which

different design solutions are theoretically applied. The purpose of the calculations is to show the construction

solutions’ different climate impact over the building's life cycle. The project has been completed and during the

year, Magnolia Bostad had an internal review for all employees where the results from the research study were

communicated. The LCA analyses carried out by Magnolia Bostad on three projects in 2018 showed that the

climate impact is greatest in the production phase and that concrete accounts for the largest impact. To reduce the

company's climate impact, the company during the year developed the collaboration with Derome on sustainable

wooden cities. Together with Derome, the company develops properties with a wooden frame which significantly

12 Miljöbyggnad Silver has the following requirements for energy use: Housing: ≤ 80% of BBR's energy requirements verified

with measured energy use. Premises: ≤ 70% BBR's energy requirements verified with measured energy use. Nordic Swan

Ecoloabel has similarly the following requirement for small houses, apartment buildings and buildings for schools and pre-

schools: ≤85% of BBR 24 or ≤90% of BBR 29 for apartment buildings and buildings for pre-schools and schools. ≤80% of

BBR 24 or ≤85% of BBR 29 for small houses. 13 Of the three projects not certified, two are homes for the elderly and in one case the customer did not want certification

(although the building was constructed in accordance with it).

Figure 3 Magnolia Bostad's portfolio by certificated area


reduces the property's climate impact compared to concrete. During the year, Magnolia Bostad began production

of 4 wooden buildings with 232 wooden frame apartments.

The company places demand on its contractors regarding waste management. The requirement is that all waste

should be sorted (but no requirements on shares incinerated, recycled or re-used). These demands are followed up

in environmental audits. No Key Performance Indicators related to waste are reported. Magnolia Bostad aims to

perform an audit of one turnkey contractor per year and did so in 2020. Magnolia Bostad is currently working with

sub-contractors to identify stricter measures regarding materials used and waste handling in constructions.

Currently, all material use should be according to SundaHus or Byggvarubedömningen.

Climate Resilience

Magnolia Bostad performs climate risk analyses for projects in locations close to the sea as well as other

environmental and climate risks associated with the purchase of land. In 2021, Magnolia Bostad intends to develop

this analysis and develop a climate risk program for all projects that the company develops. This program will be

included as part of the company’s due diligence process. Currently, no Key Performance Indicators are reported.

Transportation solutions

Magnolia Bostad has informed us that they consider the possibilities for public transportations in every project.

They install charges for vehicles on electricity, and also build storages for bikes in their projects, and for some

projects, a garage where the user can fix their bikes if its broken.

Key social issues

Magnolia Bostad has a code of conduct that is applicable to all suppliers, and is attached, along with the

environmental policy, to all contract agreements. The code of conduct covers busines ethics, human rights and

labour rights, and environmental aspects.

Magnolia Bostad has a whistler bowler policy that specifies a process for third-party management of complaints.

Table 2 CICERO Green assessment of Magnolia Bostad’s management of key environmental issues

Key issue CICERO Green comments

GHG emissions ✓ Magnolia Bostad is in the process of mapping emissions, which is the first step to

emission management. Quantitative climate targets in terms of emission levels, is to be

established this year. As a real estate developer, Magnolia Bostad should have an

overview and a plan for managing emissions from the construction site, as well as their

own direct impacts.

Energy ✓ Magnolia Bostad has no energy efficiency targets for their own operations, however they

do have a goal to certify all their projects at the level of Miljöbyggnad Silver, Nordic Swan

Ecolabel or equivalent. Miljöbyggnad Silver typically requires a 20% better energy

intensity then regulations and the Nordic Swan Ecolabel an energy intensity 10-15% better

than regulations.


Building

Certifications ✓ Magnolia Bostad’s commitment to environmentally certify all properties will secure a

reduction in climate footprint and other environmental impacts over time.

✓ Environmental certification schemes include many important environmental aspects.

However, these certifications alone do not necessarily ensure that energy, resilience and

transport aspects are taken into considerations to a high enough degree. Some of the

buildings in the portfolio have a good environmental rating (through certification levels)

while not showing energy use very much below today’s regulation.

Materials and waste ✓ Magnolia Bostad requires that all materials meet a level deemed to not have a negative

impact on health or environment by SundaHus or Byggvarubedömningen. CICERO Green

views it as positive that this is extended to subcontractors and followed up on in audits.

✓ Magnolia Bostad requires that all construction waste is sorted, but do not have a target for

e.g., recycling rate.

✓ The company is also emphasizing the role of wood and other environmentally friendly

construction materials in their projects.

Climate Resilience ✓ Magnolia Bostad will use publicly available data to screen for areas with elevated risks. If

they see higher climate risks in one area, they will contact a consultant for further review

that will go through the risk. There will be no ‘audit’ of the risks.

Transportation

solutions ✓ Magnolia Bostad considers low carbon transportation for each project, but CICERO

Green encourages a taking a more strategic approach to transportation solution for

example by including targets for EV chargers installed and a fossil free construction fleet.


2 Assessment of Magnolia Bostad’s green

activities and policies14

Shading of Magnolia Bostad’s revenue, operating expenses and investments

Magnolia Bostad, as a mainly project management company, has small investments related to a handful of

properties. For this reason, we have chosen to highlight operational expenses in the graph below. The figures are

aligned with Magnolia Bostad’s financial reporting; however, some small discrepancies may occur as our analysis

requires allocating revenue, operating expenses, and investments to specific projects.

Figure 4 Magnolia Bostad’s revenue and operating costs by Shade of Green

The Shade of Green assigned to a property reflects its overall climate risk and environmental impact. We have

assessed and allocated a shade of green to each property in the portfolio. Magnolia Bostad does not itself have

large directly controlled emissions and other environmental direct impacts. However, selection of sites, design of

buildings and management of the construction process are all controlling activities of indirect and future emission

levels. Our analysis of the properties is influenced by our assessment of Magnolia Bostad’s Governance Score of

Good, we have also taken into account the company’s management of key environmental concerns, as summarized

in table 2. In assigning a shade of green to Magnolia Bostad’s revenue and production cost streams, we have used

the relevant properties energy design values (measured against the applicable building regulation) and the

building’s environmental certification level, taking into account building materials, resilience, transportation

solutions and other environmental considerations, to assign a shading.

Dark Green is allocated to projects and solutions that correspond to the long-term vision of a low carbon and

climate resilient future. These projects should be Paris aligned or have zero emissions around mid-century. This

shade has been assigned to exceptionally energy efficient properties with an energy use below 50% of current

regulation. Borderline cases with wood as primary building material will also be assigned a Dark Green shade.

14 For the purpose of this assessment, revenue and turnover are used interchangeably, as are operating costs and OPEX,

investments and CAPEX


Medium Green is allocated to projects and solutions that represent steps towards the long-term vision but are not

quite there yet. This shade is assigned to highly energy efficient properties with an energy use 20% below current

regulations. Borderline properties with environmental certificate of Miljöbyggnad Silver or Nordic Swan Ecolabel

can also achieve a Medium Green shading.

Light Green is allocated to transition activities. These projects and solutions could have lower emissions, but do

not by themselves represent or contribute to the long-term vision. It is therefore important to continuously work

on improving the impacts of these buildings. This shade is assigned to energy efficient properties with an energy

efficiency 10% or more below current regulations. Again, environmental certification or other environmentally

sound features can “bump” borderline cases into this class although the strict energy requirement is not fulfilled.

For properties not fulfilling any of the above criteria, a shade of yellow or red is allocated based on actual energy

use and year of construction or last major renovation. The yellow category is assets where data is lacking or

classified as land with no information on the current or intended usage of the plots.

The criteria above must be seen in context of Magnolia Bostad’s overall governance structure and ambitious

sustainability targets that guide all company operations. E.g., Magnolia Bostad works systematically to improve

energy efficiency and all buildings have energy management through the building management systems (BMS),

there is a thoughtful approach to transportation systems around the buildings, no buildings are directly heated with

fossil fuels, and the company is working on developing a strategic approach to climate resilience. Magnolia Bostad

would need to continue to improve the performance of the assets in order to maintain the same level of green

shadings in the future.

With these provisions, we find that 11% of revenue came from assets considered Dark Green, 62% from assets

shaded Medium Green, 13% from assets shaded Light Green, and 14% from assets with not enough data to shade,

see Figure 4. Thus, 86% of the revenue came from assets with some shade of green.

In 2020, 6% of operational costs are related to properties shaded as Dark Green, 55% related to Medium Green

properties and 17% related to Light Green properties. 22% of the costs was not assessable. Thus, 78% of the costs

were associated with properties with some shade of green.

Magnolia Bostad has limited investments related to six properties, and a small share of other investments which

were allocated the Medium Green shading, based on our assessment of the project portfolio, governance and

management of key issues. In total, 87% of Magnolia Bostad’s investments were a Shade of Green, 86% Medium

Green, 1% Light Green and 13% Yellow. The sum of investments and operating costs allocated a Shade of Green

is 79%.


Another way to present this is to look at the share each shade of green has in different vintages of building projects

based on the realised or estimated time of completion. This is presented in Figure 5. The figure illustrates how

these parameters have become darker green over time, when we disregard the yellow fraction associated with

buildings not shaded due to lack of data.

Magnolia Bostad has a current order stock of over 50 projects that they are planning to certify to either

Miljöbyggnad Silver or Nordic Swan Ecolabel. If the projects also achieve a high level of energy efficiency, it is

possible that all future projects could be assigned a Shade of Green. Investors should note that there is not sufficient

data at present to allocate a Shade of Green to the order stock.

Investors should note that our shading is based on projected data. There is always a risk that the actual certification

level or energy use of the finished building, given e.g., the varying energy management of end users of buildings.

In addition, our assessment is based on data reported or estimated by the company and has not always been verified

by a third party. We analyse revenue, operating costs and investments, however there is typically not an explicit

link between sustainability and financial data15. Our shading often requires allocating line items in financial

statements to projects or products, for this we rely on the company’s internal allocation methods. In addition, there

are numerous ways to estimate, measure, verify and report e.g. data on emissions, which may make direct

comparisons between companies or regulatory criteria difficult and somewhat uncertain.

Nasdaq Green Designation

CICERO Green confirms that Magnolia Bostad meets the requirements for Nasdaq Green Equity Designation set

out in the Nasdaq Green Equity Principles.

In 2020, 86% of Magnolia Bostad’s turnover came from assets with some Shade of Green, exceeding the 50%

threshold for green activities for company turnover. The sum of OPEX and CAPEX allocated a Shade of Green is

79 %. Exceeding the 50 % threshold for investments, defined as the sum of CAPEX and OPEX. In 2020, Magnolia

Bostad had no turnover assessed shaded Red, meeting the threshold of less than 5% of the company’s turnover

being derived from fossil fuel activities.

In addition, this report provides transparency on alignment of the company’s activities with the EU Taxonomy and

transparency on the company’s environmental targets and KPIs is provided.

15 Most accounting systems do typically not provide a break-down of revenue and investments by environmental impact, and

the analysis may therefore include imprecisions and may not be directly comparable with figures in the annual reporting

Figure 5 Revenue and costs in 2020 from different building vintages.


EU Taxonomy

The mitigation criteria in the EU taxonomy includes specific thresholds for the Construction of new buildings and

Acquisition and ownership of buildings. Comments on alignment are given below, and detailed thresholds, NACE-

codes and likely alignment with DNSH criteria are given in Appendix 2.

CICERO Green assess that Magnolia Bostad had no fully taxonomy-aligned turnover, OPEX or CAPEX in 2020.

It is likely that 86% of Magnolia Bostad’s turnover, 78% of OPEX and 87% of CAPEX would be aligned with the

technical energy efficiency threshold for New Construction. For buildings over 5000m Magnolia Bostad will be

fully aligned to additional mitigation criteria from 2022. The company has some gaps in DNSH requirements for

Climate change adaptation, Sustainable use and protection of water and marine resources criteria. In addition, one

property does not meet the requirements under Protection and restoration of biodiversity and ecosystems. Magnolia

Bostad has a negligible share of OPEX related to the criteria for Acquisition and ownership of buildings. CICERO

Green considers that Magnolia Bostad mainly fulfils the minimum social safeguards of the EU Taxonomy,

however, the company should implement a screening of suppliers that identifies products and sourcing countries

that requires extra caution and follow-up.

For construction of new buildings, the taxonomy requires that Primary Energy Demand is at least 10% lower than

the threshold set for the nearly zero-energy building (NZEB) requirements in national regulation16. The energy

efficiency threshold for Light Green (10% below BBR) could likely be viewed as a proxy for the above technical

threshold, though the use of BBR as a proxy for NZEB in Sweden should be clarified by Swedish authorities.

The taxonomy further requires that buildings larger than 5000 m2 must undergo testing for airtightness and thermal

integrity, and that the life cycle Global Warming Potential (GWP) must be calculated. The company has not yet

conducted LCAs of these buildings. In Sweden, climate calculations establishing the GWP for the construction

phase are a regulatory requirement from 1. January 2022.

For Acquisition and ownership of buildings, the taxonomy requires that buildings built before 31 December 2020,

have an Energy Performance Certificate (EPC) class A or that the building is within the top 15% of the national

or regional building stock. Newer buildings must meet the above criteria for construction of new buildings. Where

the building is a large non-residential building, it should be efficiently operated through energy performance

monitoring and assessment.

We note that Magnolia Bostad has only a very limited number of properties under own management. In 2020, of

the order of 5-10% of revenues and costs was associated with own managed buildings. This share will, however,

increase going forward, according to the company. In 2020, most of Magnolia Bostad’s properties designated for

own management are under construction and are covered by the criteria under new construction. One property was

finalized in 2020 and is also covered under the new construction criteria. One property was built prior to 2020.

The property, which is a retirement home, is energy efficient with a performance of 76% of BBR. However, there

is no EPC label. In 2020, this property stood for 0 % of turnover, less then 0.1% of operating costs and 0 % of

investments.

DNSH key gaps:

• Relevant for all properties: Magnolia Bostad has a limited climate risk assessment in place that does not

meet the Climate change adaptation requirements. The company is working with an external consultant

to further develop this analysis and integrate it into their due diligence process. They have informed us

that it is their intention that the assessment covers the criteria specified under the EU Taxonomy.

16 The Nordic countries has not yet established the NZEB, and the existing national building codes are being used.


• Relevant for new construction of non-residential units only: Magnolia Bostad does not currently have any

policies specifying water usage in non-residential units 17 and does not meet the requirement on

Sustainable use and protection of water and marine resources. Some projects have a focus on water

efficiency based on requirements from the client, in Magnolia Bostad’s experience these are typically

technology specific (e.g., gravity-based toilets).

• Relevant for new construction only: Magnolia Bostad has one property built on arable land and this

property does not meet the requirements under Protection and restoration of biodiversity and ecosystems.

CICERO Green considers that Magnolia Bostad mainly fulfils the minimum social safeguards of the EU

Taxonomy, however, the company should implement a screening of suppliers that identifies products and sourcing

countries that requires extra caution and follow-up. Magnolia Bostad’s Code of conduct refers to international

human rights conventions, prescribing secure and orderly labour conditions, and no discrimination. The Code of

Conduct is included in contracts with suppliers and sub-contractors, and compliance against these criteria is

included in audits turnkey projects.

17 The majority of Magnolia’s properties are residential units and not covered by criteria for water appliances.


3 Terms and methodology

The aim of this analysis is to be a practical tool for investors, lenders and public authorities for understanding

climate risk. CICERO Green encourages the client to make this assessment publicly available. If any part of the

assessment is quoted, the full report must be made available. Our assessment, including on governance, is relevant

for the reporting year covered by the analysis. This assessment is based on a review of documentation of the

client’s policies and processes, as well as information provided to us by the client during meetings, teleconferences

and email correspondence. In our review we have relied on the correctness and completeness of the information

made available to us by the company.

Shading corporate revenue and investments

Our view is that the green transformation must be financially sustainable to be lasting at the corporate level. We

have therefore shaded the company’s current revenue generating activities, as well as investments and operating

expenses.

The approach is an adaptation of the CICERO Shades of Green methodology for the green bond market. The Shade

of Green allocated to a green bond framework reflects how aligned the likely implementation of the framework is

to a low carbon and climate resilient future, and we have rated investments and revenue streams in this assessment

similarly. We allocate a shade of green to the revenue stream and investments according to how these streams

reflect alignment of the underlying activities to a low carbon and climate resilient future and taking into account

governance issues.

In addition to shading from dark green to red, CICERO Shades of Green also includes a governance score to show

the robustness of the environmental governance structure. When assessing the governance of the company,

CICERO Green looks at five elements: 1) strategy, policies and governance structure; 2) lifecycle considerations

including supply chain policies and environmental considerations towards customers; 3) the integration of climate

considerations into their business and the handling of resilience issues; 4) the awareness of social risks and the

management of these; and 5) reporting. Based on these aspects, an overall grading is given on governance strength


falling into one of three classes: Fair, Good or Excellent. Please note this is not a substitute for a full evaluation of

the governance of the issuing institution, and does not cover, e.g., corruption.

CICERO Green has also assessed potential alignment with the EU taxonomy of Nov. 2020. In March 2020, a

technical expert group (TEG) proposed an EU taxonomy for sustainable finance that included a number of

principles including “do-no-significant-harm (DNSH)-criteria” and safety thresholds for various types of

activities18. In April 2021, EU published its delegated act to outline proposed criteria for climate mitigation and

adaptation, which it was tasked to develop after the EU Taxonomy Regulation it entered into law in July 202019.

The mitigation criteria in the EU taxonomy includes specific thresholds for real estate sector activities relevant for

the company (construction of new buildings)20.

Do-No-Significant-Harm (DNSH) criteria include measures such as ensuring resistance and resilience to extreme

weather events, preventing excessive water consumption from inefficient water appliances, ensuring recycling and

reuse of construction and demolition waste and limiting pollution and chemical contamination of the local

environment, as well as restriction on the type of land used for construction (no arable or forested land).

In order to qualify as a sustainable activity under the EU regulation 2020/852 certain minimum safeguards must

be complied with. The safeguards entail alignment with the OECD Guidelines for Multinational Enterprises and

UN Guiding Principles on Business and Human Rights, including the International Labour Organisation’s (‘ILO’)

declaration on Fundamental Rights and Principles at Work, the eight ILO core conventions and the International

Bill of Human Rights. CICERO Green has completed a light touch assessment of the above social safeguards with

a focus on human rights and labour rights21. We take the sectoral, regional and judicial context into account and

focus on the risks likely to be the most material social risk.

18 Taxonomy: Final report of the Technical Expert Group on Sustainable Finance, March 2020. TEG final report on the EU

taxonomy (europa.eu) 19Sustainable finance taxonomy - Regulation (EU) 2020/852 | European Commission (europa.eu) 20 taxonomy-regulation-delegated-act-2021-2800-annex-1_en.pdf (europa.eu) 21 CICERO Green is in the process of further developing its assessment method to ensure that it encompasses the object and

purpose of the minimum safeguards.

https://ec.europa.eu/info/sites/default/files/business_economy_euro/banking_and_finance/documents/200309-sustainable-finance-teg-final-report-taxonomy_en.pdf

https://ec.europa.eu/info/sites/default/files/business_economy_euro/banking_and_finance/documents/200309-sustainable-finance-teg-final-report-taxonomy_en.pdf

https://ec.europa.eu/info/law/sustainable-finance-taxonomy-regulation-eu-2020-852_en

https://ec.europa.eu/finance/docs/level-2-measures/taxonomy-regulation-delegated-act-2021-2800-annex-1_en.pdf


Appendix 1: Referenced Documents List

Document

Number

Document Name Description

1 Magnolia Bostad Green Equity Framework

May 2021

Green equity framework dated May 2021

2 202103311765-1 Magnolia Bostad’s Annual Report 2020 (in

Swedish), including sustainability report.

3 Sustainability_Report_2018 Magnolia Bostad’s Sustainability report 2018

4 Magnolia_Bostad_hallbarhetsrapport_2019-_0 Magnolia Bostad’s Sustainability report 2019

5 202102237810-1 Magnolia Bostad Year-end Report

1 January – 31 December 2020

6 Uppförandekod_190219 Code of conduct covering ethical, social, and

environmental issues. Applicable to sub-

contractors as well.

7 Magnolia Bostad Visselblasarfunktion VD

20200601

Whistle blower guidelines.

8 Miljöpolicy Magnolia Bostad antagen av VD

(20200701)

Environmental policy document containing a

general description of environmental goals.

9 Magnolia Bostad Information miljörevision Information on Magnolia Bostad’s

environmental audit routines.

10 Utklipp ramavtal Samples of specific requirements of sub-

contractors.


Appendix 2: EU Taxonomy criteria and alignment

Complete details of the EU taxonomy criteria are given in https://ec.europa.eu/finance/docs/level-2-measures/taxonomy-regulation-da-2020-annex-1_en.pdf.

Construction of new buildings Framework

activity

Green buildings

Taxonomy

activity

Construction of new buildings (NACE Code F41.1, F41.2)

EU Technical mitigation criteria Comments on alignment Alignment

Mitigation

criteria • Substantial contribution to climate change mitigation

Constructions of new building, eligible if:

• The Primary Energy Demand is at least 10% lower than

the threshold set for the nearly zero-energy building

(NZEB) requirements in national regulation. The energy

performance is certified using an Energy Performance

Certificate (EPC).

• For buildings larger than 5000 m2, upon completion, the

building resulting from the construction undergoes testing

for air-tightness and thermal integrity, and any deviation

in the levels of performance set at the design stage or

defects in the building envelope are disclosed to investors

and clients.

• For buildings larger than 5000 m2, the life cycle Global

Warming Potential of the building resulting from the

construction has been calculated for each stage in the life

cycle and is disclosed to investors and clients on demand.

The use of BBR as a proxy for NZEB for the Swedish market should

be clarified by the Swedish authorities.

CICERO Green has assessed the Primary Energy Demand criteria on

a property by property basis, see section 3.

Magnolia Bostad has buildings in their portfolio that are over 5000m2.

The company has not yet conducted LCAs of these buildings. In

Sweden, climate calculations establishing the GWP for the

construction phase are a regulatory requirement from 1. January

202222.

Magnolia Bostad conducts inspections of all buildings for air-

tightness and thermal integrity.

Likely partly

aligned (86%

turnover, 78%

of OPEX and

87% of

CAPEX)

Not aligned to

GWP-

requirement

for current

projects

Likely aligned

to

requirements

on airtightness

and thermal

integrity

EU Taxonomy DNSH-criteria Comments on alignment Alignment

22 https://www.boverket.se/en/start/building-in-sweden/contractor/tendering-process/climate-declaration/

https://ec.europa.eu/finance/docs/level-2-measures/taxonomy-regulation-da-2020-annex-1_en.pdf


Climate change

adaptation • Physical climate risks material to the activity should be

identified (chronic and acute, related to temperature,

wind, water, and soil) by performing a robust climate

risk and vulnerability assessment.

• The assessment should be proportionate to the scale of

the activity and its expected lifespan, such that:

a) for investments into activities with an expected

lifespan of less than 10 years, the assessment is

performed, at least by using downscaling of climate

projections;

b) for all other activities, the assessment is performed

using high resolution, state-of-the-art climate

projections across a range of future scenarios

consistent with the expected lifetime of the activity,

including, at least, 10 to 30 years climate

projections scenarios for major investments.

• The economic operator has developed a plan to

implement adaptation solutions to reduce material

physical climate risks to the activity. The adaptation

solutions identified need to be implemented within five

years from the start of the activity. These adaptation

solutions do not adversely affect the adaptation efforts

or the level of resilience to physical climate risks of

other people, of nature, of assets and of other economic

activities and are consistent with local, sectoral, regional

or national adaptation efforts.

Magnolia Bostad performs climate risk analyses for projects in

locations close to the sea as well as other environmental and climate

risks associated with the purchase of land.

Magnolia Bostad is working with an external consultant to develop

this analysis and develop a climate risk program for all projects that

the company develops. The company has informed us that it is their

intention that the assessment covers the criteria specified under the

EU Taxonomy. This program will be included as part of the

company’s due diligence process.

Likely partly

aligned

Sustainable use

and protection

of water and

marine

resources

• Where installed, except for installations in residential

building units, the specified water use for the following

water appliances are attested by product datasheets, a

building certification or an existing product label in the

Union, in accordance with the technical specifications

laid down in Appendix E to this Annex:

o (a) wash hand basin taps and kitchen taps have

a maximum water flow of 6 litres/min;

o (b) showers have a maximum water flow of 8

litres/min;

o (c) WCs, including suites, bowls and flushing

cisterns, have a full flush volume of a

maximum of 6 litres and a maximum average

flush volume of 3,5 litres;

o (d) urinals use a maximum of 2

litres/bowl/hour. Flushing urinals have a

maximum full flush volume of 1 litre.

The majority of Magnolia Bostad’s properties are residential units and

not covered by criteria for water appliances.

Magnolia Bostad does not currently have any policies specifying

water usage in non-residential units. Some projects have a focus on

water efficiency based on requirements from the client, in Magnolia Bostad’s experience these are typically technology specific (e.g.

gravity based toilets).

A large share of Magnolia Bostad’s properties is certified according to

the Nordic Swan Ecolabel or Miljöbyggnad, where there are

requirements related to monitoring of hot water consumption and low

water use taps and toilets. It is currently unclear to what extent the

criteria in green building standards overlap with the taxonomy

requirements. Most green building standards are made up of a mix of

mandatory and voluntary criteria (points), and a specific certification

Likely not

aligned


Environmental degradation risks related to preserving water

quality and avoiding water stress are identified and addressed

with the aim of achieving good water status and good

ecological potential as defined in Article 2, points (22) and

(23), of Regulation (EU) 2020/852, in accordance with

Directive 2000/60/EC of the European Parliament and of the

Council and a water use and protection management plan,

developed thereunder for the potentially affected water body

or bodies, in consultation with relevant stakeholders.

Where an Environmental Impact Assessment is carried out in

accordance with Directive 2011/92/EU of the European

Parliament and of the Council328 and includes an assessment

of the impact on water in accordance with Directive

2000/60/EC, no additional assessment of impact on water is

required, provided the risks identified have been addressed.

level does therefore not quarantine a level of water efficiency

performance across all certified buildings.

According to Magnolia Bostad, general planning is the responsibility

of the municipality and EIAs will be carried out on municipality level

where required by national law. This includes a plan for impacts on

water sources.

Transition to a

circular

economy

(circular

economy)

• At least 70% (by weight) of the non-hazardous

construction and demolition waste (excluding naturally

occurring material23) generated on the construction site is

prepared for re-use, recycling and other material

recovery, including backfilling operations using waste to

substitute other materials.

• Building designs and construction techniques support

circularity and in particular demonstrate how they are

designed to be more resource efficient, adaptable, flexible

and dismantlable to enable reuse and recycling.

According to Magnolia Bostad’s policies, all waste from construction

sites should be sorted. This is an area that is followed up on in project

audits. The company has informed us that no discrepancies in this area

has been identified.

Magnolia Bostad has begun working on circular design and the

company has informed us that this is a focus area going forward. The

company has four lighthouse projects built mainly in wood, which are

designed for easy disassembling.

Likely aligned

Pollution

prevention and

control

• Building components and materials used in the

construction do not contain asbestos nor substances of

very high concern24.

• For building components and materials used in the

construction that may come into contact with occupiers

formaldehyde emissions are within relevant limits25.

Magnolia Bostad requires that either SundaHus or

Byggvarubedömmningen, Basta is used to screen all materials used,

and that only materials receiving the A or B score in SundaHus can be

used without approval. According to the company, no contractor has

sought approval to use a non-authorized material in 2020.

Magnolia Bostad has some projects build on brownfield sites, and

always conducts a geometric investigation of these sites prior to

development.

Likely aligned

23 Refer to the European List of Waste established by Commission Decision 2000/532/EC 24 As identified on the basis of the list of substances subject to authorisation set out in Annex XIV to Regulation (EC) No 1907/2006 of the European Parliament and of the Council. 25 Emit less than 0,06 mg of formaldehyde per m³ of material or component and less than 0,001 mg of categories 1A and 1B carcinogenic volatile organic compounds per m³ of material or component, upon testing

in accordance with CEN/TS 16516522 and ISO 16000-3 523 or other comparable standardised test conditions and determination method.


• Where the new construction is located on a potentially

contaminated site (brownfield site), the site has been

subject to an investigation for potential contaminants26.

• Measures are taken to reduce noise, dust and pollutant

emissions during construction or maintenance works.

Magnolia Bostad has environmental specifications that include

measure to reduce noise, dust and pollutant emissions during

construction.

Protection and

restoration of

biodiversity

and ecosystems

• An Environmental Impact Assessment (EIA) or screening

should be completed in accordance with national

provisions.

• Where an EIA has been carried out, the required

mitigation and compensation measures for protecting the

environment are implemented.

• For sites/operations located in or near biodiversity-

sensitive areas additional requirements apply.

• The new construction should not be built on one of the

following:

a) arable land and crop land;

b) greenfield land of recognised high biodiversity value

and land that serves as habitat of endangered species

(flora and fauna) listed on the European Red List or

the IUCN Red List.

Magnolia Bostad has one property built on arable land.

According to Magnolia Bostad, general planning is the responsibility

of the municipality and EIAs will be carried out on municipality level

where required by national law. This includes ensuring that properties

are not built on areas of high biodiversity value. Magnolia Bostad

currently has one project where development is halted (prior to

construction) due to potential biodiversity concern.

Likely aligned

with EIA-

requirement.

One property is

likely not

aligned, the

rest of the

portfolio is

likely aligned

26 Standard ISO 18400 can be used.


Acquisition and ownership of buildings Framework

activity

Green buildings

Taxonomy

activity

Acquisition and ownership of buildings (NACE Code L68)

EU Technical mitigation criteria Comments on alignment Alignment

Mitigation

criteria • Substantial contribution to climate change mitigation

Acquisition and ownership of buildings, eligible if:

• For buildings built before 31 December 2020, the

building has at least Energy Performance Certificate

(EPC) class A. As an alternative, the building is within

the top 15% of the national or regional building stock

expressed as operational Primary Energy Demand

(PED) and demonstrated by adequate evidence, which

at least compares the performance of the relevant asset

to the performance of the national or regional stock

built before 31 December 2020 and at least

distinguishes between residential and non-residential

buildings.

• For buildings built after 31 December 2020, the

building meets the criteria set out for the activity

‘construction of new buildings’.

• Where the building is a large non-residential building it

is efficiently operated through energy performance

monitoring and assessment.

For buildings built after 31 December 2020, buildings are

eligible if:

• The Primary Energy Demand is at least 20% lower

than the threshold set for the nearly zero-energy

building (NZEB) requirements in national regulation.

The energy performance is certified using an Energy

Performance Certificate (EPC).

Magnolia Bostad has a limited number of properties under own

management. Most of these are under construction and are covered by

the criteria under new construction. One property was finalized in 2020

and is also covered under the new construction criteria. One property

was built prior to 2020. The property, which is a retirement home, is

energy efficient with a performance of 76% of BBR. However, there is

no EPC label.

Magnolia Bostad has buildings in their portfolio that are over 5000 m2.

The company has confirmed that there are energy management systems

in place in projects near finalization and for projected projects going

forward.

Unable to

determine

alignment

Likely aligned

to requirement

related to

efficient

operations of

large

properties

EU Taxonomy DNSH-criteria Comments on alignment Alignment

Climate change

adaptation

Please refer to Construction of buildings. See above

Likely partly

aligned


Appendix 3: Background

According to the International Energy Agency

(IEA), the buildings and buildings

construction sectors combined are responsible

for 36% of global final energy consumption in

2018 and nearly 40% of total direct and

indirect CO2 emissions. Appliances

(excluding heating, cooking and cooling

appliances) are responsible for around 17% of

final electricity use by buildings.

Emissions from heating of buildings in

Sweden have decreased from 9.3 million

tonnes CO2e to 0.8 million tonnes over the

period from 1990 to 2019. In 2019, the sector accounted for less than 2% of Sweden’s total emissions27. Emissions

from production of materials, construction and demolition of the buildings constitute additional emission28. These

(scope 3) emissions become increasingly important as buildings are built more energy efficient and the electricity

and heat supply is converted to ‘greener’ sources, reducing scope 1 and 2 emissions. According to a report from

Asplan Viak29, a little over half of all life cycle greenhouse gas emissions in new buildings comes from heat and

energy use, while approximately 40% comes from use of materials. Emissions associated with construction and

demolition accounts for 2-5%.

The construction and real estate sector have a major impact on our common environment. According to the

National Board of Housing, Building and Planning's environmental indicators, it accounts for 32% of Sweden's

energy use, 31% of waste and 19% of domestic greenhouse gas emissions. Calculations from Sveriges

Byggindustrier indicate that the climate impact of new production of a house is as great as the operation of the

house for 50 years.

As members of the EU, Sweden is subject to the EU’s climate targets of reducing collective EU greenhouse gas

emissions by 40% by 2030 compared to 1990 levels, increasing the share of renewable energy to 32% and

improving energy efficiency by at least 32.5%. 30 The European Green Deal aims for carbon neutrality in

2050.31 Sweden has developed a National Energy and Climate Plan (NECP) in which it outlines the targets and

strategies in all sectors. 32 These strategies include measures such as increasing renewable energy capacity,

improving energy efficiency, facilitating the large scale implementation of clean transportation alternatives, and

implementing carbon sinks through reforestation and the LULUCF sector. Non-ETS emissions, of which public

buildings and households are a part, must decrease by 63% by 2030.

27Naturvårdsverket: https://www.naturvardsverket.se/Sa-mar-miljon/Statistik-A-O/Vaxthusgaser-utslapp-fran-uppvarmning-

av-bostader-och-lokaler/ 28 https://www.miljostatus.no/tema/klima/norske-klimagassutslipp/klimagassutslipp-bygg/ 29 Asplan Viak AS (2018): Utredning av livsløpsbaserte miljøkrav i TEK, https://dibk.no/globalassets/02.-om-oss/rapporter-

og-publikasjoner/utredning_av_livslopsbaserte_miljokrav_i_tek_asplan_viak_2018.pdf 30 https://ec.europa.eu/clima/policies/strategies/2030_en 31 https://ec.europa.eu/info/strategy/priorities-2019-2024/european-green-deal_en 32 https://ec.europa.eu/energy/topics/energy-strategy/national-energy-climate-plans_en

Figure 3 Life cycle and source of emissions. This shows the value

chain of Magnolia Bostad’s operations. Emissions are connected to

the construction, operation, and demolition of buildings.

https://www.naturvardsverket.se/Sa-mar-miljon/Statistik-A-O/Vaxthusgaser-utslapp-fran-uppvarmning-av-bostader-och-lokaler/

https://www.naturvardsverket.se/Sa-mar-miljon/Statistik-A-O/Vaxthusgaser-utslapp-fran-uppvarmning-av-bostader-och-lokaler/

https://www.miljostatus.no/tema/klima/norske-klimagassutslipp/klimagassutslipp-bygg/

https://eur02.safelinks.protection.outlook.com/?url=https%3A%2F%2Fdibk.no%2Fglobalassets%2F02.-om-oss%2Frapporter-og-publikasjoner%2Futredning_av_livslopsbaserte_miljokrav_i_tek_asplan_viak_2018.pdf&data=02%7C01%7Cknut.alfsen%40cicero.oslo.no%7C41372734339a4aa773b308d7a9bb812a%7C87ea3ab60d34424ea0c4cda82a2494bc%7C0%7C1%7C637164495120869283&sdata=utFk45BJneSHw04i%2FhnV%2FYYrKXHEY37d1pBzE9fcjZg%3D&reserved=0

https://eur02.safelinks.protection.outlook.com/?url=https%3A%2F%2Fdibk.no%2Fglobalassets%2F02.-om-oss%2Frapporter-og-publikasjoner%2Futredning_av_livslopsbaserte_miljokrav_i_tek_asplan_viak_2018.pdf&data=02%7C01%7Cknut.alfsen%40cicero.oslo.no%7C41372734339a4aa773b308d7a9bb812a%7C87ea3ab60d34424ea0c4cda82a2494bc%7C0%7C1%7C637164495120869283&sdata=utFk45BJneSHw04i%2FhnV%2FYYrKXHEY37d1pBzE9fcjZg%3D&reserved=0

https://ec.europa.eu/clima/policies/strategies/2030_en

https://ec.europa.eu/info/strategy/priorities-2019-2024/european-green-deal_en


The building sector accounts for a large share of primary energy consumption in most countries, and the IEA

reports that the efficiency of building envelopes needs to improve by 30% by 2025 to keep pace with increased

building size and energy demand – in addition to improvements in lighting and appliances and increased renewable

heat sources.33 The energy efficiency of buildings is dependent on multiple factors including increasing affluence

and expectations of larger living areas, growth in population and unpredictability of weather, and greater appliance

ownership and use. Additionally, approximately half of life-cycle emissions from buildings stem from

materials/construction. The other half stems from energy use, which becomes less important over time with the

increasing adoption of off-grid solutions such as geothermal and solar. All of these factors should therefore be

considered in the project selection process. In addition, voluntary environmental certifications such as LEED and

BREEAM or equivalents measure or estimate the environmental footprint of buildings and raise awareness of

environmental issues. These points-based certifications, however, fall short of guaranteeing a low-climate impact

building, as they may not ensure compliance with all relevant factors e.g., energy efficiency, access to public

transport, climate resilience, sustainable building materials. Many of these factors are covered under the World

Green Building Council’s recommendations for best practices for developing green buildings.34 CICERO Shades

of Green assesses all of these factors when evaluating the climate impact of buildings.

The Exponential Roadmap35 lays out a trajectory for reducing emissions by 50% by 2030 and requires that

emissions reductions strategies within the buildings sector be rapidly scaled up. The roadmap advocates for

standardised strategies that are globally scalable within areas such as new procurement practices for construction

and renovation that require dramatically improved energy and carbon emission standards, developing new low-

carbon business models for sharing space and smart buildings to achieve economies of scale, and allocating green

bond funding for sustainable retrofitting and construction.

A large number of LCA studies show that wood-frame building results in lower primary energy and GHG emission

compared to non-wood alternatives including concrete and steel. Less energy, in particular fossil fuels, is needed

to manufacture wood-based building materials compared with alternative non-wood materials. Wood-based

materials use primarily biomass residues for processing energy. Wooden materials also store carbon during their

lifetime, temporarily sequestering carbon from the atmosphere. Large amounts of biomass residues are produced

during the manufacture and end-of-life of wood products, and these can be used to replace fossil fuels. Hence,

wood-based buildings are appropriate for long-term strategies for reducing fossil fuel use and GHG emissions

when combined with sustainable forestry36. Quantitative estimates are imprecise, but some studies indicate energy

savings in the order of one third in the construction phase of wood buildings compared to buildings using mainly

other materials.

33 https://www.iea.org/reports/building-envelopes 34 https://www.worldgbc.org/how-can-we-make-our-buildings-green 35 https://exponentialroadmap.org/wp-

content/uploads/2020/03/ExponentialRoadmap_1.5.1_216x279_08_AW_Download_Singles_Small.pdf 36 R&D Fund for public real estate, The Swedish Association of Local Authorities and Regions (2016): Climate impacts of

wood vs. non-wood buildings. https://webbutik.skl.se/bilder/artiklar/epub/7585-377-2.epub

https://www.iea.org/reports/building-envelopes

https://www.worldgbc.org/how-can-we-make-our-buildings-green

https://exponentialroadmap.org/wp-content/uploads/2020/03/ExponentialRoadmap_1.5.1_216x279_08_AW_Download_Singles_Small.pdf

https://exponentialroadmap.org/wp-content/uploads/2020/03/ExponentialRoadmap_1.5.1_216x279_08_AW_Download_Singles_Small.pdf

https://webbutik.skl.se/bilder/artiklar/epub/7585-377-2.epub


Appendix 4: About CICERO Shades of Green

CICERO Green is a subsidiary of the climate research institute CICERO. CICERO is Norway’s foremost institute

for interdisciplinary climate research. We deliver new insight that helps solve the climate challenge and strengthen

international cooperation. CICERO has garnered attention for its work on the effects of manmade emissions on

the climate and has played an active role in the UN’s IPCC since 1995. CICERO staff provide quality control and

methodological development for CICERO Green.

CICERO Green provides second opinions on institutions’ frameworks and guidance for assessing and selecting

eligible projects for green, sustainability and sustainability-linked bond investments. CICERO Green also provides

Company Assessments, providing an assessment and shading of a company’s revenues and investments as well as

assessing the governance structure to indicate the greenness of a company. CICERO Green is internationally

recognized as a leading provider of independent reviews of green bonds, since the market’s inception in 2008.

CICERO Green is independent of the entity issuing the bond, its directors, senior management and advisers, and

is remunerated in a way that prevents any conflicts of interests arising as a result of the fee structure. CICERO

Green operates independently from the financial sector and other stakeholders to preserve the unbiased nature and

high quality of second opinions.

We work with both international and domestic issuers, drawing on the global expertise of the Expert Network on

Second Opinions (ENSO). Led by CICERO Green, ENSO contributes expertise to the second opinions, and is

comprised of a network of trusted, independent research institutions and reputable experts on climate change and

other environmental issues, including the Basque Center for Climate Change (BC3), the Stockholm Environment

Institute, the Institute of Energy, Environment and Economy at Tsinghua University and the International Institute

for Sustainable Development (IISD).