Nordics Rise as Green Bond Global Power

Stockholm (NordSIP) – The Green Bond Market in the Nordics, a new report commissioned by Handelsbanken and prepared by the Climate Bonds Initiative, contains good news for the Nordic countries: combined, they remain a global power when it comes to green financing, pulling far ahead of peers in international markets in 2017.

The Climate Bonds Initiative analysed progress in Denmark, Finland, Iceland, Sweden and Norway in issuing loans tied to finding solutions to climate change. The Scandinavian countries now account for 6.7% of the entire global green bond market, and 18.5% of the green bond market in Europe. New green bond issuances reached €7.8 billion, over ten times higher than five years prior in 2013.

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In addition, four of the five countries ranked in the global Top 20 for the size and performance of their green bonds.

  • Sweden, in 6th position, issued €10.2 billion. Kommuninvest was the largest issuer of green bonds, with 3 totalling €1.5 billion.
  • Norway, placed 16th, issued €2.7 billion. Kommunalbanken was the largest issuer, with 13 totalling €1.6 billion.
  • Denmark, placed 17th, issued €2.3 billion. Ørsted (formerly Dong Energy), the Danish energy company, was the largest issuer, with two bonds totalling €1.25 billion.
  • Finland, placed 20th, issued €1 billion. MuniFin issued three bonds totalling €0.9 billion.

“Nordic nations have been at the forefront of green bond market development in Europe and worldwide. Maintaining a presence in the Top 20 of issuing nations is a significant achievement,” said Climate Bonds Initiative CEO Sean Kidney in a comment to the report. “Continued policy measures to promote environmental sustainability and low carbon development with support from institutional investors can stock exchanges can help maintain the momentum.”

Nasdaq Nordic, for instance, launched Nasdaq First North Sustainable Bonds in January, the first market focusing on sustainable bonds that can be socially or environmentally sustainable, by contrast with the green bond market itself, which focuses almost exclusively on environmental sustainability.

The findings in the report, released at a conference in Stockholm last week, underline the strong regulations and climate change policies across the Nordic countries that require developers to address sustainability concerns. Money raised from the loans is channelled back into green projects: 29% went back into renewable energy projects, 20% into energy-efficient buildings and another 20% into low-carbon transport.

The report similarly estimates that the global green bond market could reach the $300 billion milestone in the course of 2018. It must increase to minimum $1 trillion by 2020, however, to be in a position to effectuate restrictions on real climate change.

“In combination with existing public sector green investment directions, more aggregation structures and sovereign issuance, a new phase of accelerated green finance could emerge between now and 2020,” Kidney added.

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