Sweden plans to issue sovereign green bond says financial markets minister

Bolund says government wants to help develop the market

Sweden is working on issuing a sovereign green bond, Responsible Investor has learnt.

The country’s Minister of Financial Markets, Per Bolund, said the proceeds may not be used just for climate-aligned projects, but also for wider environmental initiatives.

“The green bond market was pioneered by Sweden and Sweden’s banks,” the Green Party politician told RI.

“And we are keen to remain in front.” Bolund said this would include issuing a government green bond, as well as looking at ways to make the green bond market more attractive for issuers and investors in the country.

“We are considering a sovereign green bond, and working out how to make it possible under Swedish budgetary legislation, which currently prevents us from raising money to channel into a specific project or action. We need to solve that part of the puzzle, but we believe there’s strong support for us to do that: we know there is a need for more green bond issuers, and government green bonds can combine very secure paper with a solid environmental aspect, so it would be a very positive development for the market.”

Proceeds from sovereign green bonds in Sweden could be used to finance several sectors or initiatives, Bolund added, including government-owned renewables companies, the development of high-speed rail infrastructure and decreasing “the climate impact of societal activities”.“But we should not only focus on climate issues – there are other environmental targets that have to be reached as well,” he explained, citing biodiversity ventures and the reduction of hazardous chemicals.

Sweden is not the only country eyeing the green bond market. The CEO of the Nigerian Stock Exchange, Oscar Onyema, today confirmed that it is working with the Nigerian government on issuing green bonds. He was speaking at an event at the London Stock Exchange.

If it goes ahead, it will be the first green bond out of West Africa. It will also be the first sovereign green bond out of the continent, although the Kenyan government is understood to be mulling a deal as well.

France announced an ambitious government green bond programme recently, which will begin next year. Bangladesh, China and Italy are all also understood to be considering issuing.

Bolund also said the Swedish government was looking at the possibility of “acting as some sort of mediator or guarantor for the quality of green bonds,” to help bolster the market and meet investor demand. “There is a lack of standardisation for green bonds, and that’s a real vulnerability that we want to help deal with,” he explained, adding that this could involve mediating between different standardisation initiatives to help reach greater consensus.

With reporting by Vibeka Mair.