Stockholm (NordSIP) – On Wednesday, September 20th, Swedish Finance Minister Elisabeth Svantesson (Pictured) announced its revised budget plan for 2024. In what the government described as an “economic winter”, the dominating theme of the plan was fighting inflation. “The budget for 2024 is characterized by the [inflationary] economic situation and priorities are required in order not to risk fueling inflation. At the same time, it is clear that households and welfare need support in the tough situation,” the Swedish government argued.
To this end, the government announced it would lower taxes on automobile fuel part of the new fiscal program. “The tax on petrol, diesel and agricultural diesel will be reduced next year,” the government announced. These and other measures led the government to acknowledge that Sweden would deviate from the CO2 emissions reduction path it set in 2021, to reduce its carbon footprint by 70% by 2030, vis-à-vis its 2010 emissions. Instead of the approximately 5 million tons of annual CO2 emissions by 2030, the Swedish government is now forecasting it will emit somewhere in the range of 11 million to 15 million tons by that date.
Greenwasher and Swedish Greenbonds
The announcement caused a stir in the environmental community, not least for green bond investors. Ulf Erlandsson, CEO of the Anthropocene Fixed Income Institute (AFII) warned that these measures and the Swedish government’s new emissions path expose it to greenwashing accusations and ridicule.
“The recently presented budget makes it clear that the Swedish government intends to increase carbon emissions by around 25% in 2024 and 2025 and then stay on that higher trajectory for the remainder of the decade. This expansion of emissions is based on measures to counter the ‘Clean transportation’ use-of-proceeds in the issuer’s green bond that was issued in 2020,” Erlandsson said.
“This means that not only does the issuer breach a core intentionality in the green bond, climate change mitigation, but actively counteracts one of the specific use-of-proceeds, clean transportation. Another factor at play here is that the bond was issued with the explicit aim to support the green bond market in Sweden. Instead, it risks drawing greenwashing attention to it,” Erlandsson warned.
“From our perspective, the ‘green’ bond should, on the basis of the recent GHG emission expansion plans, be stripped of its ‘green’ label. We would not be comfortable lending to a government targetting such carbon emission increases and represent that as ‘green’ lending to end investors,” Erlandsson concluded.
