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Nordic green bonds – is it greener in the Nordics?

The Nordic capital market was early on putting sustainability and ethical investing high on the agenda. Especially large institutional Swedish investors have been driving the demand and other investors have followed. It is maybe not that surprising that the Nordic region played an important role in introducing green bonds in the global capital market.

But first of all, what is a green bond?

A green bond is a bond where the capital raised only can be used towards environmentally friendly projects. In order to establish if a bond can be classified as green or not, “the Green Bond Principles (GBP)” have been defined and can be used as a guideline. In short, these principles require the bond documentation to include what the capital will be used for, continuous evaluation of the green project, separate management of the bond capital and reporting requirements to investors.

Who determines if a bond is green?

It is not enough that an issuer has followed the green bond principles for a bond issuance, the market expect an independent evaluation and second opinion from a trusted provider. Today, there are an increasing number of research companies and consultants that provide independent second opinions. One provider that has gained a decent share in the global market is Cicero, a Norwegian climate research institute.

As the green bond market still is under construction, different markets might operate with slightly different criteria in order to classify a bond as green. For instance, a slot on the green bond list on the Oslo Stock Exchange requires the following criteria:

  • An issuer has to apply for an independent second opinion that certifies the environmentally friendly nature of the bond
  • The second opinion must be made public in order to enable investors to understand the environmental aspects of the projects
  • All obligations (ongoing project reports etc.) that issuers have in relations to issuing a green bond will have to be made public through stock exchange announcements


Growing Nordic green bond market


Source: The green bond market in the Nordics – Climate Bonds Initiative, 2018

The first green bond was issued by the European Investment Bank in 2007 and along with the sustainability theme gaining ground; the market has grown quite substantially since. The following year, the World Bank issued its first green bond, 2,35 billion in Swedish Krona (~250million EUR), clearly stating the interest and demand from the Swedish market. The bond was issued in collaboration with the Swedish bank SEB and got an independent second opinion from Norwegian Cicero.

The Oslo Stock Exchange in Norway was also a forerunner and was the first stock exchange to offer a separate listing for green bonds in 2015. The Swedish Stock Exchange, Nasdaq Stockholm, also followed with a green bond listing later the same year. There are currently 23 bonds spread over 17 issuers listed on the Oslo Stock Exchange. Issuers in this list include real estate company Entra, Kommunalbanken (KBN), AB Stena Metal and several utility companies. The green bond listing on the Swedish exchange is bigger as we still see a bigger investor demand in Sweden. Stockholm Nasdaq currently hosts 104 bonds spread over 29 issuers in their sustainable bonds listing. The real estate sector is dominating the sustainable bonds list with names such as Atrium Ljungberg, Castellum, Klövern, Rikshem and Vasakronan. Real estate company Vasakronan was the first company to issue a green corporate bond back in 2013 and currently has no less than 25 bonds listed on the sustainable bond list. (Vasakronan is owned by the Swedish AP funds 1-4).

Swedish Landshypotek Bank, focusing on the agriculture and forest sector, became historic earlier this year when the company issued the first green covered bond. The bond issuance followed the green bond principles and received a second opinion from Cicero. The bank issued 5,25 billion SEK (~550 million EUR) in May, maturing in five years and the bond was heavily oversubscribed, amounting to 12 billion SEK (~1,3 billion EUR).

Even though the interest for green bonds obviously is growing, this new bond type still has to find its place in the credit market among other bonds. How much are issuers and investors willing to pay for a green bond? This will be the topic in a following article.

Sources: Oslo Stock Exchange, Nasdag OMX, ICMA Group, Moody’s,, DNB Markets.

On the same subject:

Norway – a sustainable oil and gas producer, does that really exist and what is the future?

Norway is among the highest ranked nations in the world on ESG factors (Environmental, Social and Governance) according to RobecoSam and ISS*. Of noticeable particularities in the country, is the domestic green hydropower covering all the domestic electricity consumption. They also have the highest proportion of electric cars in the world. Moreover, at the same time, Norway produce oil and gas, albeit in the cleanest way and reserving the money earned to the Norwegian people.

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