Jeroen Dicker

November 13, 2015

Cefas van den Tol

Green bonds - the logical next step

Today’s agenda• Introduction from ING

• Green bonds: Bridging the gap between sustainable performance and corporate finance

• TenneT green bond• Profile• The making of a green bond• Execution

• ING: where do we go from here?

Green bonds: Bridging the gap between sustainable performance and corporate finance

Green bonds - the logical next stepNovember 13, 20154

A green hat for treasury?• The way forward:

We believe all sustainable progress is driven by people with the imagination and determination to improve their future and the futures of those around them

• Corporate treasurers can empower people both inside but also outside their organizations to realize their own vision for a sustainable future

Considerations

We cannot hope to create a sustainable culture with any but sustainable souls. - Derrick Jensen

Treasury

Treasury links the three key areas of sustainable development

Environment

Business

Society

Green bonds - the logical next stepNovember 13, 2015

2007 2008 2009 2010 2011 2012 2013 2014 2015

0

10

20

30

40

Forecast Corporate

Government Financial€

bn

eq

uiv

ale

nt

EUR48%

USD28%

SEK7%

GBP7%

Others10%

The green bond market is quickly picking up steam

Corporates take the lead in the primary

**ING house view

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Latest market developments• What are green

bonds: Green bonds constitute fixed income instruments that enable capital raising exclusively for projects with specific sustainability aims such as renewable energy or energy efficiency

• Market is developing fast: With projected green bond issuance expected to top €35bn** in 2015, the market has arrived at an evolutionary stage where issuers and investors aim to develop a liquid market

Considerations

Green bonds - the logical next stepNovember 13, 2015

• Strong investor focus on SRI assets: Sustainable investment asset growth has outpaced growth in total professionally managed assets over 2012-’14 which means that SRI assets now account for c. 35% of the asset total

• Green bond market guidelines: The growth of the green bond market has been facilitated by the establishment of broadly accepted guidelines such as the Green Bond Principles or the Climate Bond Initiative Standards

Key factors

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Negative/exclusionary screening

ESG integration

Corporate engagement & shareholder action

Norms-based screening

Positive/best-in-class screening

Sustainability-themed investing

Impact/community investing

0 5,000 10,000 15,000

74% growth

117% growth

54% growth

82% growth

-1% growth

137% growth

27% growth 2012 2014

US$ billions

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

0

10

20

30

40

50

60

70

0

400

800

1,200

1,600Assets under management (US$ trillion) - LHS

Number of Signatories - RHS

Demand for Social Responsible Investments increasing

SRI assets expanded by 61% to 21.4tr* since ‘12

Incorporate ESG issues into

investment analysis and decision-

making processes

Increasing investor demand

Green bonds - the logical next stepNovember 13, 2015

Sustainability is core at ING

• ING is carbon neutral since 2007 and has an integrated approach to sustainable procurement

• By 2015 more than 1 million children reached via UNICEF

• Group wide programs promoting financial empowerment

• Robust framework publicly disclosed and applied to business globally

• Screening integrated in our systems and procedures

• Chair of the Equator Principles Steering Committee 2012–2014

• Support our clients to become leaders in tomorrow’s economy

• Accelerate sustainable business innovation through entrepreneurship

• Stimulate sustainable finance opportunities and allocate capital

Do Good• Operational impact• Community investment• Financial education

Mitigate Harm• Risk management• Equator principles

Drive Progress

• Financing the transition to a sustainable economy

We use sustainability criteria in our capital allocation choices to help stimulate the transition to a sustainable economy

– Ralph HamersChief Executive Officer of ING Group

Green bond

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Green bonds - the logical next stepNovember 13, 2015

Financing sustainable transitionsSustainability Direction

• ING sees important opportunities to help society meet challenges successfully and to do so in a way that promotes social progress and environmental protection

• ING launched its Sustainability Direction in 2014 which puts central our support of business clients in making the transition to a healthy and sustainable world

Sustainable Finance

• ING created a Sustainable Finance team in 2012 to promote sustainable business opportunities in addition to our ongoing assessment and management of environmental and social risks (ESR)

• In our Sustainable Finance Programme we identify and help our corporate customers in making the transition towards more sustainability and sustainable business

Sustainable Transitions Financed

•Sustainable Transitions Financed (STF) is our way of reporting our financing of clients that are environmental trend setters in their sectors and projects that provide sustainable solutions

•At the end of 2Q15, total sustainable transactions financed were €20.9bn (up 7.2% from 4Q14) of which €3.4bn financing of sustainable projects and assets

FY 2013 FY 2014 1H 20150

700

1,400

2,100

2,800

3,500

1,2751,730 2,003

224

768

1416

Other projects

Renewable energy projects

€m

80%

10%

7%4%

Loans to environmental outperformers

Project Finance - renewable energy

Project Finance - other

ING Groenbank*

Sustainable transitions financed (in %, 1H15) Sustainable projects financed 2013-1H 2015

€20.9bn

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Green bonds - the logical next stepNovember 13, 2015

Profile

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Green bonds - the logical next stepNovember 13, 2015

A grid operator’s task

Transmission servicesEnsuring the construction and maintenance of a robust and efficient high-voltage grid

System servicesMaintaining the balance between demand for and supply of electricity, 24 hours a day and 7 days a week

Market facilitationFacilitating a liquid and stable electricity market that functions efficiently

1

3

2

Our three main tasks

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Green bonds - the logical next stepNovember 13, 2015

VisionSociety has opted for the large-scale introduction of renewable energy. The generation of this energy results in major changes in the dynamics of the electricity supply.

At the same time, our dependence on electricity is increasing. This requires the security of supply to be continuously kept at the right level. In order to keep up with these developments, the European electricity market requires further integration.

A proper market design, technological and operational innovations, solutions for electricity storage, and sufficient grid capacity all play a role to balance cross-border supply and demand.

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Green bonds - the logical next stepNovember 13, 2015

Construct & Operate

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Green bonds - the logical next stepNovember 13, 2015

TenneT at a glanceEurope's first cross-border grid operator

2,813employees

Investments (2014-23)

20 (EUR billion)

EBIT

725(EUR million)

Assets

13.645(EUR billion)

Total grid length

21,000 km

Number of transformer substations

445

Number of cross-border

interconnectors

14

Grid availability

99.99%

Number of end-users

41million

Investments account for 13.3% of EUR 150 billion in the EU.Number of end-users account for 7.7% of a total of 532 million in the EU.

Figures as per 31 December 2014

Credit rating

A- / A3

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Green bonds - the logical next stepNovember 13, 2015

The making ofa green bond

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Green bonds - the logical next stepNovember 13, 2015

Rationale for a green bond

Supporting the sustainable energy policies in the North-West European electricity market

Linking TenneT’s brand values

Responsible

Engaged

ConnectedEnabling TenneT to meet the growing pace of demand for energy

Motivated by the societal challenges

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Green bonds - the logical next stepNovember 13, 2015

Green Bond principles (GBP)Green Bond principles have been created to help issuers and investors deploy capital for green projects

Green Bonds are any type of bond instruments where the proceeds will be exclusively applied to finance or re-finance in part or in full new and/or existing eligible Green Projects.

Four components

1. Use of Proceeds

2. Process for project evaluation and selection

3. Management of Proceeds

4. Reporting

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Green bonds - the logical next stepNovember 13, 2015

Project selection100% transmission of green energy

Gode Wind 2

Innogy Nordsee 1DolWin beta

Gode Wind 1

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Green bonds - the logical next stepNovember 13, 2015

Project evaluation

Structure for verifying the sustainability quality of the projects to be financed through the Green Bond issuance

Definition of use of proceeds categories Specific sustainability criteria Specific indicators to enable quantitative measurement Detailing comprehensive reporting.

Green Bond framework

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Green bonds - the logical next stepNovember 13, 2015

Project evaluation

Transmission of renewable electricity from offshore wind power plants into the onshore electricity grid using direct current technology or alternating current technology

• Consideration of environmental aspects in planning and installation of offshore converter platforms

• Consideration of environmental aspects in operation of offshore and onshore converter stations

• Consideration of environmental aspects in cable-laying (onshore and offshore)• Standards for decommissioning and rehabilitation of cable-laying construction sites • Standards for decommissioning and recycling of offshore converter platforms at end-

of-life• Community dialogue • Working conditions during construction and maintenance work• Social standards in the supply chain

Sustainability criteria & Quantitative factors

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Green bonds - the logical next stepNovember 13, 2015

Project evaluation

• Number of households provided with access to wind power Total number of households per transmission line that would be able

to switch to 100% renewable energy

• Potential avoidance of CO2 emissions CO2 emissions avoided through the transmission of 100% wind

power from offshore plants to the electricity grid

Impact indicators

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Green bonds - the logical next stepNovember 13, 2015

ReportingAnnually

Information • Allocation of proceeds to 3 projects• Advancement of projects in building

phase• Environmental and social impact

indicators

Key performance indicators• Safety performance (accident rate, fatal

accidents)• SF6 emissions• Average interruption time• Transmission losses• Significant controversies

Impact indicators

as defined in the Green Bond Verification Framework

Frequency

once a year and reviewed with limited assurance by the independent auditor

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Green bonds - the logical next stepNovember 13, 2015

Execution

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Green bonds - the logical next stepNovember 13, 2015

Green Bond execution

• Internal awareness, internal focus• Project selection• Sharing information and discussion with CSR rating agencies.• Establishing green bond framework and Second Party opinion• Road Show with clear focus on the green aspect. We brought on the road

also our board member responsible for the projects that were linked to the green bond

• “Normal" bond execution

Summary

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Green bonds - the logical next stepNovember 13, 2015

Green Bond execution

Support sustainability ambitions Further internal awareness on CSR Gained insight in different stakeholders involved in CSR-related matters/ financing

Price advantage ?!

Advantages

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ING: where do we go from here?

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Green bonds - the logical next stepNovember 13, 2015

TenneT ‘plug & play’ into greenTransaction details

• TenneT’s decision to purse financing via green bonds underpins TenneT’s efforts in the sphere of climate change mitigation and represents a natural step in the company’s debt capital market presence

• The proceeds raised are exclusively used to finance projects relating to the transmission of renewable electricity from offshore wind power plants into the onshore electricity grid

• TenneT has set up an independently verified green bond framework which serves as a structure for verifying sustainability quality of the projects to be financed

• During a 3-day roadshow TenneT meet over 60 key investors in the UK, France, Germany & Netherlands

• Approx. 17% of investors in TenneT’s green bond issue are “dark green” accounts while approx. 53% are “light green” accounts

Key terms Investor analysisIssuer TenneT Holding B.V.

Status Senior Unsecured

Format Green bond

Rating A3 (Moody’s) / A- (S&P) both stable

Listing Euronext Amsterdam

Law Dutch Law

Docs EMTN / CoC / 3m Par Call / MWC

Denoms €100k+1k

Trade date May 28, 2015

Maturity 6 year 12 year

Amount €500m €500m

Maturity Date June 4, 2021 June 4, 2027

Coupon 0.875% 1.750%

Re-offer Yield 0.933% 1.824%

Issue spread MS + 45bp MS + 80bp

Benchmark DBR 2.5% Jan-21 DBR 0.5% Feb-25

ING’s role Joint-Bookrunner, EMTN Arranger and Billing & Delivery

TenneTEUR 500m0.875% Green Bond due 2021

EUR 500m1.750% Green Bond due 2027

Joint BookrunnerCorporate Issuer

05/15The Netherlands

26

33%

28%13%

10%

5%

11%

Germany & AT France Benelux

UK & Ireland Switzerland Other

33%

28%

13%

10%

5%

FM Ins/Pens BankSupra Other

37%

22%13%

12%

10%6%

Germany & AT France Benelux

Nordics UK & Ireland Other

60%

26%

8%6%

Ins/Pens Supra BankOther

Green bonds - the logical next stepNovember 13, 2015

Green bond investorsTop Green bond investors*

Holder name GeographyKFW GermanyAPG The NetherlandsIlmarinen Mutual Pension Ins Co FinlandQBE International Insurance Great BritainAviva Asset Management France FranceHSBC Asset management GermanyBlackrock USANorges Bank Investment Management NorwayNatIxis Asset Management FranceAllianz Global Investors Frankfurt GermanyUnion Investment Institutional GmbH GermanyWGZ Bank GermanyAllianz Global Investors France FranceBNP Paribas Asset Management FranceCredit Agricole FrancePetercam SA BelgiumErste Sparinvest GermanyParvest Investment Management FranceKLP Fondsforvalting AS NorwayState Street Corp United KingdomSella Gestioni ItalyMN Services Nv The NetherlandsAllianz - RAS Asset Management Spa ItalyLBBW AM GermanyDeutsche AWM GermanyMEAG Asset Management GmbH GermanyNord LB AM GermanyPrado Marseille FranceVersam GermanyM&G Investment Great BritainSEB AG GermanyAmundi FranceBayern Invest Germany

Green bond investor comments

We are able to provide clients with the full range of SRI Funds and Strategies across asset classes inlcuding equities, fixed income and money market products

BlackRock Impact platform manages over $225 billion in low carbon passive strategies and screened funds, designed to align clients’ portfolios with their objectives

One of the largest managers of SRI in the world with approximately €60 billion in socially-screened assets.

Norges Bank Investment Management seeks to safeguard investments in more than 9,000 companies worldwide by promoting good corporate governance standards and encouraging businesses to improve social and environmental standards

More than half of investors now say that environmental, social and ethical criteria are important or very important to them when they are making investment decisions

*Source: Bloomberg, orderbooksThis list shows only a selection of Green bond investors and is not exhaustive

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• Who plays in Green bonds?: Being a top trader in € corporate bonds, ING also knows who is buying green corporate paper. ING’s pan-European decentralized presence enables ING to cover the full range in European investors

• Dedicated Green funds: While certainly not all mentioned investors maintain dedicated green bond funds, we do note the increasing focus on social responsible investments

Considerations

Green bonds - the logical next stepNovember 13, 2015

ING Green bond researchING actively published Green bond research

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• ING dedicated to Green bond research: ING is acknowledging the growing trend for Green investments and as such publishes dedicated research to educate the investor base thoroughly on a continuous basis

Considerations

Green bonds - the logical next stepNovember 13, 2015

30

40

50

60

1-May-15 8-May-15 16-May-15 24-May-15 1-Jun-15

Z s

prea

d m

id (

bp) TenneT2022 4.500%

Alliander2022 2.250%Gasunie2022 2.625%Enexis 2022 3.375%

Signs of outperformance?• Green bonds

supportive for secondary curve?: In the recent market environment where credit spreads tend to widen, we observe that TenneTs credit curve on relative basis widened less than peers

• Pricing advantage vis-à-vis plain vanilla paper: In general, green bonds within the utilities sector trade in line or at a spread discount when benchmarked against the issuers’ implicit plain vanilla secondary curves

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TenneT vs comparable senior spread performance

30

40

50

60

70

80

1-May-15 25-May-15 18-Jun-15 12-Jul-15 6-Aug-15 30-Aug-15 23-Sep-15 17-Oct-15 11-Nov-15

Z s

prea

d m

id (

bp)

TenneT2022 4.500%Alliander2022 2.250%Gasunie2022 2.625%Enexis 2022 3.375%

28-05-2015: TenneT Green bond issuance

Considerations

40

50

60

70

80

1-Oct-15 11-Oct-15 21-Oct-15 31-Oct-15 11-Nov-15

Z s

prea

d m

id (

bp) TenneT2022 4.500% Alliander2022 2.250%

Gasunie2022 2.625% Enexis 2022 3.375%

20b

p

5bp

TenneT (A-/A3)

Alliander (AA-/Aa2)Gasunie (A+/A2)

Enexis (A+/Aa3)

Enexis (A+/Aa3)

Alliander (AA-/Aa2)

Gasunie (A+/A2)

Enexis (A+/Aa3)

TenneT (A-/A3)

Alliander (AA-/Aa3)

Gasunie (A+/A2)

Liability and copyright of TenneT

Disclaimer

This PowerPoint presentation is offered to you by TenneT TSO B.V. (hereinafter: “TenneT”). All its content – i.e. all texts, images, and sound files – is protected under the Netherlands Copyright Act (“Auteurswet”). The contents of this presentation may not be copied – unless TenneT has explicitly provided facilities for that purpose – nor may it be altered in any way. TenneT strives to provide correct and up-to-date information, but cannot guarantee that all details are correct, accurate, and complete.

TenneT does not accept any liability for any (supposed) damage incurred as a result of your use of this presentation, nor for the consequences of activities undertaken on the basis of data and information included in it.

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This presentation of ING Bank N.V. (“ING”) shall serve solely for information purpose and as a platform for discussion. Copyright and intellectual property right protection of this presentation is reserved to ING. It may therefore not be reproduced, distributed or published by any person for any purpose without the prior express consent of ING. All rights are reserved.

While ING has taken reasonable care to ensure that the information contained herein is not untrue or misleading at the time of presentation to the client, ING makes no representation with regard to the accuracy or completeness of the information, part of which was obtained from the client and public sources and relied upon as such. The information contained in this presentation is subject to change without notice. Neither ING nor any of its officers or employees accepts any liability for any loss arising from any use of this presentation or its contents.

The information is further subject to there having been, in the sole opinion of ING, no material adverse change in the international capital or loan markets prior to the implementation of this proposal.

This presentation does not constitute an agreement or a commitment or an offer to commit to any transaction or any financing by ING. Any such commitment or agreement shall be subject to further negotiation, satisfactory completion of due diligence, ING credit and other approvals, execution of legal documentation acceptable to ING and receipt by ING of positive opinions from legal counsel.

ING calls for attention to the fact that it is part of ING Groep N.V. (“ING Group”). Members of ING Group may advise or provide services (including investment advice) and act as an active investor in equity shares and other securities. Please be informed that in order to avoid any possible conflicts of interest, investment decisions in securities are taken fully independently by the investment portfolio professionals.

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Disclaimer

Green bonds - the logical next stepNovember 13, 2015

TenneT is Europe's first cross-border grid operator for the transmission of electricity. With approximately 21,000 kilometres of high-voltage lines and 41 million end-users in the Netherlands and Germany, we rank among the top five grid operators in Europe. Our focus is to develop a North-West European energy market and to integrate renewable energy.

www.tennet.eu

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