Green bonds - Financing climate friendly investments projects
About this good practice
Kommuninvest Green Bonds raise funds from fixed income investors to support lending for investment projects located in Sweden that seek to mitigate climate change or help adapt to it. This supports the overall goal of Sweden’s environmental policy, led by the local government sector. This is an opportunity for the public sector to invest in Swedish climate solutions through a triple-A rated fixed income product. Eligible projects must promote the transition to a low-carbon and climate-resilient society and be a part of the systematic environmental work in the applicant region. The projects must related to Sweden’s national environmental objectives or to regional environmental goals. Eligible projects are screened and approved by Kommuninvest’s Lending department and reviewed and finally approved by consensus vote in the Green Bonds Environmental Committee. The model is based on green lending preceding green funding. The aim is for most of the Green Bonds proceeds to finance new projects. This engages external input to provide investors and other interested parties with independent assurance on its Green Bonds Framework. The framework has a second party opinion from Cicero, the Oslo-based climate and environmental research institute. An annually impact report is published to investors, including project descriptions and expected impact for all projects with a minimum of SEK 25 million in Green Loan financing, project case studies and a summary of the Green Bond development.
Example: Accelerating sustainable investments in Skövde
Cooperation between finance, real estate and environmental departments.. Revised internal rules, Life cycle perspective applied in ROI analysis
Invt. budget 2018: € 1.1 bn
External debt: € 3.4 bn
Green Loans: € 1.6 bn
Evidence of success
250 projects have been approved 35 millions Euro. The procedure to apply is simple and has a straight forward system for applicants. Strong potential pipeline, due to investment trends and green aggregation model.
Results by the end of 2018: 24 GWh energy savings, 120 GWh reduced. 3032 GWh RES. 639000 t avoided CO2e emissions. 23500 t reduced CO2e emissions.
Potential for learning or transfer
Aligning ownership directives, finance policies & certification schemes: point to green/sustainable/“use-of-proceeds”-financing for sustainable investment projects
Partnerships and promotion
Incentives targeting financing costs