Annual Report 2025

KBN has chosen to prepare its sustainability report based on the principles of the European Financial Reporting Advisory Group’s (EFRAG’s) Voluntary Sustainability Reporting Standard for non-listed SMEs (VSME), Option B: Basic Module and Comprehensive Module. In addition to the data points in the VSME, KBN has also chosen to include information on material topics from its double materiality analysis that are not covered through the VSME. This VSME report generally follows the same chapter structure as the European Sustainability Reporting Standards (ESRS) but will not meet the ESRS requirements.

Kommunalbanken AS is a limited liability company with no subsidiaries and is not part of a group. This report covers the company's value chain, including its upstream and downstream value chains, and KBN’s own activities. For the double materiality analysis process, KBN’s downstream value chain was defined as one step away from the customer, meaning that the investment projects of KBN’s customers are included in KBN’s assessment. Underlying suppliers to customers’ investment projects (construction projects) are not included.

Information about KBN:

• Undertaking’s legal form: Limited liability company
• NACE sector classification code: 64.190 Banks and credit institutions
• Size of the balance sheet: NOK 533,239 million
• Net interest NOK 2,466 million²
• Number of employees: 90
• Location of primary operations: Filipstad brygge 1, 0252 Oslo, Norway (Coordinates: 59˚54’36.72363)
• Geolocation of sites owned, leased or managed: KBN has only one business address. It runs all its activities from its headquarters.

KBN works systematically to reduce its environmental impact and has achieved Eco-Lighthouse certification from the Eco-Lighthouse Foundation.

With total assets of over NOK 500 billion, KBN is one of the largest financial institutions in Norway. KBN is owned by the Norwegian state to provide stable, long-term and efficient financing to Norwegian municipalities, county authorities and companies that perform local government tasks. The state also owns KBN to help facilitate the sustainable transition and greater value creation. KBN provides a broad range of lending products to the local government sector, including both green and normal loans.

KBN’s value creation is intended to balance financial, social, and environmental factors such that it achieves the highest possible return over time subject to the limits of sustainability. KBN has been designated a systematically important financial institution on the basis of an annual assessment carried out by the Financial Supervisory Authority of Norway adopted by the Norwegian Ministry of Finance, that is founded on KBN’s total assets as a share of mainland Norway’s GDP and its lending to the Norwegian public sector as a share of total lending to the sector in Norway. KBN finances its activities by ensuring it has efficient access to the world’s capital markets. Maintaining a credit rating equivalent to the Norwegian state’s (AAA) rating is essential to KBN’s business model.

KBN’s sustainability-related objectives are integrated into its strategy and are monitored on a continual basis in the same way as its other objectives. 

Sustainability issues within climate and environmental matters (E): Climate change, pollution, water and marine resources, biodiversity and ecosystems, and circular economy

KBN has existing practices/policies/future initiatives for sustainability issues within climate matters. These consist of a framework for green lending and funding. These are available to the public on KBN’s website. The measures specified include green loans with an associated framework, and greenhouse gas emission reductions. KBN has strategic objectives for climate matters related to its volume of green lending, the proportion of KBN’s total lending portfolio that is green lending, the proportion of its total customers that have a green loan, as well as for the level of its greenhouse gas emissions. These strategic objectives are approved by the Board of Directors. See also the section on KBN’s strategic objectives (Link).

Sustainability issues within social matters (S): Own workforce, and workers in the value chain

KBN has existing practices/policies/future initiatives for sustainability issues within social matters. These consist of its staff handbook, which is not available to the public. KBN has strategic objectives for social matters related to sick leave, the gender balance, competence development, and the results of its employee survey for the topics of engagement and execution. These strategic objectives are approved by the Board of Directors. See also the section on KBN’s strategic objectives (Link).

Sustainability issues within governance (G): Good business conduct

KBN has existing practices/policies/future initiatives for sustainability issues within governance. These relate to KBN’s Code of Conduct. In addition, KBN has internal guidelines for measures to combat money laundering and terrorist financing, as well as guidelines on market conduct, whistleblowing, and sustainable investment. KBN’s Code of Conduct is available to the public on its website. The general guidelines are approved by the Board, while any supplementary guidelines are approved by the CEO.

KBN uses 2019 as the base year for its greenhouse gas accounts, and its emissions are calculated using the principles in the GHG Protocol. In 2025, KBN’s greenhouse gas emissions totalled 52.0 tCO2e across scopes 1, 2 and (parts of) 3, which represents a decrease of 37% from 2024 and a decrease of 73% from 2019. For electricity, KBN uses location-based emissions. The difference between location-based and market-based is that location-based calculates emissions based on the actual energy mix in the geographical area where the electricity is produced, while market-based calculates emissions based on the electricity that is actually bought and sold in the market. This can include electricity from both renewable and non-renewable sources.

KBN’s reported scope 3 emissions totalled 51.3 tCO2e in 2025, which is a decrease of 23% from 2024. KBN carries out an annual screening of material scope 3 categories, and the scope 3 emissions currently included in its greenhouse gas accounts are waste and business travel. KBN has worked on developing a method for calculating its remaining scope 3 emissions, i.e. category 15 – financed emissions. KBN has an ongoing collaboration with Nordic Trustee, KLP and the Norwegian Association of Local and Regional Authorities (KS) relating to a calculation model for financed emissions. A first version of the model was introduced in spring 2025, but there is still work to be done to further develop the method and model in collaboration with the organisation that gathers the data from the municipalities. KBN has therefore not included figures for its financed emissions in its 2025 sustainability report.

KBN’s 2025 greenhouse gas emissions are divided between the scopes as follows:

• Scope 1: 0 tCO2e
• Scope 2: 0.7 tCO2e
• Scope 3: 51.3 tCO2e

Emissions intensity is a measure of the relationship between total greenhouse gas emissions and financial activity/value creation. KBN’s results for its emissions and emissions intensity (by full-time equivalent employee and revenue) for 2025, 2024 and the base year of 2019 are summarised in the table below:

KBN has a target of cutting its own CO2 emissions (direct) by at least 55% by 2030 relative to 2019. Its own CO2 emissions totalled 52.0 tCO2e in 2025, which is a decrease of 73% from 2019. KBN has therefore already achieved its reduction target, five years ahead of schedule.

KBN uses the Task Force on Climate-related Financial Disclosures (TCFD) framework to assess and report on its climate risk. KBN updates its analysis regularly and can be found on KBN’s website.

KBN is a financial institution with office operations carried out at a single location. Its scope 1 and scope 2 emissions will therefore be limited. KBN’s offices are located in a newly renovated building. An important factor when KBN chose its premises was the landlord's documentation of the optimisation of energy consumption in the building. To reduce energy consumption, the building’s heating is adjusted throughout the day and over the course of the week. During periods when the level of office activity is expected to be low, the temperature is set lower. The target temperature during normal working hours is 23-23.5˚C. KBN will continue to follow up with the landlord to reduce energy consumption to the greatest extent possible. KBN’s move to its new office with lower energy consumption in 2024 is a significant reason for the decrease in its measured and reported emissions.

KBN publishes a separate impact report in addition to its Annual Report. The impact report gives investors and other stakeholders detailed information about the projects which are financed by KBN’s green bonds through the green loans it makes. At the end of 2025, KBN’s outstanding green loans totalled NOK 75.7 billion across 570 local government projects, 40 of which were new projects in 2025.

KBN’s total energy consumption in MWh in 2025 was 55.8 MWh. This energy consumption related to electricity (as reflected in KBN’s electricity bills).

KBN seeks to offer high-quality and safe working conditions that are also in line with all relevant legislation and regulations. KBN’s 2025 equality statement in accordance with the Norwegian Equality and Antidiscrimination Act is published on its website.

KBN offers its employees competitive terms and conditions of employment, and all employees are part of the company’s welfare and insurance schemes. All employees also have the right to join a trade union and are given information on the option at the start of their employment at KBN.

The CEO has the overall responsibility for ensuring that KBN’s working environment is satisfactory and is responsible together with the Labour Inspection Authority and Working Environment Committee for continually mapping the working environment in terms of risk factors, health hazards and welfare, in addition to implementing any measures required. Employees, because of their duty to cooperate as well as in accordance with the Code of Conduct, help to ensure that KBN has a high-quality and safe working environment.

KBN’s employees must have a workload that is reasonable, and the HR function and department managers carry out monitoring throughout the year to ensure that no employee has an excessive workload. In addition, the trend in the sick leave rate is also monitored, and employees’ experience of their work-life balance is also surveyed using the annual employee survey.

KBN does not accept discrimination or harassing behaviour, or physical, psychological, or sexual violence, as is set out in its Code of Conduct. Such behaviours are prevented by means of general working environment measures, and the employee handbook describes the procedures for whistleblowing at KBN. Employees can make a whistleblowing report using various channels, internally at KBN to their employer or a health and safety representative, employee trade union representative or the employer’s law firm, as well as to KBN’s external whistleblowing channel (PwC) or publicly by means of a public supervisory authority or other public authority. An electronic whistleblowing channel is available to all KBN’s employees on the intranet and, as mentioned, there is also an external whistleblowing channel provided by an external organisation. Information on KBN’s channels and procedures for whistleblowing is provided as part of the annual training provided on KBN’s Code of Conduct.

KBN’s Code of Conduct (which covers matters related to human rights) for its own workforce addresses working conditions, discrimination, and the prevention of accidents. The Code of Conduct does not contain dedicated sections on child labour, forced labour, or human trafficking due to the nature of KBN’s activities and the associated low risk of such issues occurring. There were no confirmed incidents within the company’s own workforce related to child labour, forced labour, human trafficking, discrimination, or other similar matters during the reporting year, and these are considered low-risk issues for KBN's type of business activity.

KBN works to have a high level of inclusion and diversity. It seeks to create a working environment in which everyone is seen, respected and valued for who they are, and it works to create diversity among its employees. In the hiring processes and employment conditions, KBN addresses grounds for discrimination such as gender, pregnancy, leave due to childbirth or adoption, care giving duties, ethnicity, religion, beliefs, disability, sexual orientation, gender identity, gender expression, and combinations of these grounds. At KBN all employees receive equal pay for equal work.

KBN employs a targeted approach in its recruitment processes in order to attract a diverse range of applicants. It is challenging to attract female applicants for particular positions in specialist areas in finance, risk management and IT.

The tables below summarise the characteristics/indicators of KBN’s employees.

The table below summarises the average salaries for women and men, and the proportional difference between men and women. The figures in the table include fixed salary, variable salary paid during the reporting period, remuneration for overtime and taxable benefits.

In the category Middle Managers/subject Specialists, there are three female employees, and for privacy reasons, women’s average salaries and salaries as a percentage of men’s salaries are not disclosed.

The pay differences in the categories Senior Advisors/senior operational staff and Advisors/operational employees/administrative staff can largely be explained by the composition of the groups. There is an overrepresentation of men with long experience in more specialized professional roles, which raises their average salary. At the same time, several experienced women have left KBN in recent years and have, to some extent, been replaced by younger women. This has contributed to a higher proportion of women in the early stages of their careers within these job categories, with lower salaries than their older male colleagues.

KBN’s credit strategy for its lending activities, along with its guidelines for lending and its credit assessment principles for borrowers, provide the framework for its monitoring of customers. This framework determines what needs to be assessed when entering into and continuing customer relationships, as well as when granting new loans. In this context, it is to be noted that all Norway’s municipalities and county authorities are existing customers of KBN, with 1-2 at any one time not having a loan from KBN but nonetheless a continuing customer relationship. The guidelines and principles are important governance documents for how KBN is to exercise its role. The risk of a negative impact resulting from KBN providing incorrect or incomplete information is decreased by means of clear guidelines for how and what type of advice customer managers can give customers.

All loans from KBN are linked to the financing of investments that are either approved directly by a municipal or county council or indirectly through approved loan guarantees. The administrations at KBN’s customers (hereinafter ‘customers’) will be legitimate representatives of their local communities. KBN’s financing is therefore directly subject to the decisions and priorities of elected bodies.

KBN’s customer managers, its customer centre and its Chief Lending Officer are in continual dialogue with customers, but the most frequent contact takes place when a new loan relationship is being initiated and completed. KBN organizes annual customer seminars and surveys, as well as regular customer webinars.

KBN has a separate channel for complaints from customers, and an external whistleblowing channel is available via KBN’s website. Feedback from dialogue with customers, worse-than-expected results from customer surveys and any whistleblowing reports are followed up immediately. The Chief Lending Officer is operationally responsible for monitoring and engaging with affected communities (customers), but guidelines are set by the management team and Board of Directors.

KBN’s Board of Directors sets general guidelines, and the CEO sets supplementary guidelines. The guidelines are reviewed annually.

KBN’s Code of Conduct is approved by the Board of Directors and is a guide to the behaviour that is expected of KBN’s employees. All KBN’s employees are required to be familiar with it. The Chief Compliance Officer is the document manager and is responsible for monitoring the Code of Conduct. In addition to the Code of Conduct, KBN has special guidelines (central conduct rules) in special areas that are relevant to business conduct. Annual training in key conduct rules, including the Code of Conduct, is provided for all employees under the supervision of the compliance department, and all employees must confirm each year that they have read and are familiar with the rules.

KBN’s conduct rules emphasise the importance of respect, a high level of integrity and transparency. In accordance with the Code of Conduct, employees have a responsibility to act in accordance with KBN’s values. In addition to the Code of Conduct, KBN has a wide range of other guidelines that provide instructions and are intended to promote a healthy corporate culture. These include KBN’s guidelines on sustainability, on measures to combat money laundering and terrorist financing, on IT and data management, as well as those on risk management and internal control, the assessment of conflicts of interest, data privacy, security management, market conduct, supplier management and information management.

It is important for KBN to build an organisational culture and organisational structure that reduce the risk of corruption and bribery. KBN’s procedures for addressing corruption and bribery are first and foremost covered by the Code of Conduct. There are also separate guidelines for measures to combat money laundering and terrorist financing.

KBN’s governance structure is also intended to reduce the risk of corruption and bribery. It is particularly in those departments which exercise a high level of discretion regarding market participants that there is an inherent risk of corruption and bribery in KBN’s own operations. Controls intended to reduce this risk to an acceptable level have been implemented in the various departments.

There were no convictions or fines for corruption or bribery during the reporting year.

It is important for KBN to have procedures that attend to the rights of whistleblowers, and for KBN’s employees to be informed about the processes for managing whistleblowing reports. Whistleblowing and KBN’s whistleblowing procedure are part of the annual training provided for all KBN’s employees on conduct rules. The guidelines are subject to regular assessment and revision.

The guidelines for whistleblowing describe the roles and responsibilities involved, provide definitions for whistleblowing, and set out what constitutes a censurable matter and how employees can make a whistleblowing report, both internally and externally. KBN’s Chief Compliance Officer manages KBN’s whistleblowing channels and will normally be the person who processes whistleblowing reports that are received internally, but he/she also ensures that KBN has an external whistleblowing channel. There were no whistleblowing reports at KBN in 2025.

The Board of Directors has approved a separate IT strategy in the technology area. The IT strategy sets the direction for how KBN will use information technology to support its strategic objectives and ambitions. The IT strategy, together with KBN’s guidelines, provides the framework for ongoing decisions in the IT area.

IT and cyber security are important for KBN to protect sensitive data, prevent financial losses, and maintain trust in the market. In addition, IT and cyber security are also important for compliance with legislation, to ensure continuing operations, and to avoid causing losses or disruption for customers and counterparties because of weak security procedures at KBN. The Board of Directors has determined that KBN’s risk appetite for operational risk, including IT and cyber risk is low.

KBN’s general guidelines for security management, risk management and internal control, and IT and data management set limits and requirements for KBN’s governance of IT and cyber security. The Chief Technology and Operations Officer are responsible for the security governance framework and carries out a risk and vulnerability analysis each year for the IT and cyber area, and this determines which actions and measures are implemented and carried out to ensure KBN operates within the established risk appetite for the IT area. Security measures in IT and cyber security are intended to ensure the confidentiality, integrity and availability of the information and systems, both physical and digital, that are used by KBN.

All of KBN’s critical business processes and support functions depend on IT systems and services, and it is therefore important that all employees have basic knowledge of good security procedures and put them into practice. KBN provides annual training in IT and cyber security as part of an obligatory review of the Code of Conduct for all employees. IT and cyber security training is also provided in the form of phishing tests, participation in Norway’s National Security Month and digital security quizzes.

KBN uses CIS Controls as the technical standard for implementing security measures. Threats are monitored and technical vulnerabilities are closed on a continual basis. Security tests are carried out at different levels, including different penetration tests.

KBN has no activities or related revenues from the following sectors: controversial weapons, cultivation and production of tobacco, fossil fuels or chemicals production. KBN is not excluded from any of the EU reference benchmarks that are aligned with the Paris Agreement.

The Norwegian Limited Liability Companies Act requires at least 40% representation of each gender on the boards of large and medium-sized companies. KBN’s Board of Directors consists of nine members, five of whom are women. 56% of its members are thus women, and 44% are men.