Stockholm (NordSIP) – On September 24, Swedish pension fund AP7 participated in a new issuance by the Nordic Investment Bank (NIB) designed to promote corporate climate transition: a Sustainability-Linked Loans Financing Bond (SLLB).
Unlike traditional green bonds, an SLLB channels proceeds into sustainability-linked loans—debt where financing terms are tied to achieving predefined sustainability targets. Under NIB’s SLLB framework, borrowers that meet or exceed their sustainability targets may benefit from favourable financing conditions; failure to meet them can trigger less advantageous terms. NIB has now issued the first bond under the framework launched earlier this month, on September 10.
Through this structure, AP7 aims to steer capital to companies pursuing credible emissions reductions and other environmental objectives. “This investment is an important step in the development of AP7 Räntefond. Today the fund is dominated by green bonds, but we are now gradually expanding placement opportunities to more important formats of sustainable bonds. NIB’s bond is a very good addition that enables a well-balanced risk and strengthens AP7’s contribution to climate transition,” said Charlotte Sillén, Head of Fixed Income at AP7 (in Swedish).
Expanding Beyond Green Bonds
For AP7, which manages the premium pension savings of more than five million Swedes, sustainability-linked bonds are a natural complement to its large green bond allocation. By adding SLLBs, the fund seeks to broaden its toolbox for channeling capital into the transition while maintaining portfolio balance.
According to the pension fund, green bonds now represent more than SEK 70 billion, or over 50% of AP7’s fixed income fund. The portfolio has grown steadily in recent years, from SEK 37.5 billion in 2023 to SEK 44.5 billion (39% of the fund) by mid-2024, before surpassing the 50% mark later that year; the fund’s sustainability report published att the beginning of 2025 placed the total at SEK 76 billion.
AP7 highlights a diverse set of use-of-proceeds examples, including the African Development Bank’s “Great Green Wall”, which focuses on limiting desertification with a goal to restore 100 million hectares of degraded land. More locally, the fund’s financing of Vasakronan’s green bond contributes to energy-efficient real estate in Sweden. Other examples of green financing at scale are related to energy efficiency, renewable energy and water management systems projects supported by bonds issued by the EBRD for Europe and the World Bank and the IFC for emerging markets, where projects to restore biodiversity are also included. Blue bonds also belong under the larger official “green” umbrella.
