Green bonds in Gothenburg

Green bonds are being trialled in Gothenburg as a way to finance the city’s environmental efforts. The bonds provide funds for various projects concerning climate adaptation and limiting emissions that have an impact on the climate.

Finding financing for climate-related projects is a major challenge faced by all municipalities in Sweden. In addition, it is commonly a prioritisation issue, with various environmental projects requiring a large proportion of the total financing that is available. In this respect, the green bonds are a tool to ensure the financial means are available.

Finansiering, pengar

What is a green bond?

A green bond is, like a normal bond, a loan agreement that involves investors contributing to financing various projects by buying a security with a specific redemption date. The “green” colour of the bond means that the money the bonds bring in is only used for environmental projects such as climate change adaptation measures.


The City of Gothenburg was the first to borrow money with the help of green bonds. Securities with a value of SEK 0.5 million were released in 2013. Within the scope of the city’s framework, the money is used to finance selected projects that are environmental or serve the public good.

One of the projects that is currently being implemented is the construction of Lackarebäck Waterworks and purification filters that have a distinct climate adaptation purpose. Increased rainfall and sea levels due to climate change increase the future risk of water-borne disease and parasitic outbreaks. A new waterworks makes the long-term production of drinking water possible and reduces the vulnerability of the city’s water supply. Lackarebäck Waterworks purifies water at the viral level with the help of microbiological barriers and ultrafilters. The project has a budget of SEK 700 million and is financed by green bonds. Lackarebäck Waterworks is expected to be operational in 2015.

Green bonds have also been used to pay for projects that have a strong link to limiting climate change, for example the large-scale production of biogas (GoBiGas) and electric vehicles for the city’s departments and companies.

This project has been a positive experience, which resulted in Gothenburg coming to the market with new green bonds in May 2014 and obtaining many times the total for 2013. The city sees green bonds as a natural part of its future borrowing portfolio.


The benefits of green bonds can be divided up into two main groups: environmental and financial. The environmental benefits are based on green bonds’ contribution to fulfilling the city’s environmental goals such as adapting to climate change.

The financial benefits are primarily that green bonds attract new groups of investors who have not previously financed the city. In addition, the green bonds widen the city’s borrowing portfolio and contribute to spreading the risk more widely in the city’s borrowing programme. There are investors who have a clear ethical objective and want to invest their savings in projects that benefit society, for example some pension funds, various pension fund managers and the Church of Sweden. Aside from these, some international companies that are looking for green investment opportunities without having to forgo the return.


Challenge 1: There is no standardised process for accounting and reporting green investments, but it must be ensured that the lending is transparent and sustainable the whole way through. This means that the entire accounting process must be continual throughout the lifetime of the bonds.

Solution: The simplest solution is to openly report to investors where the money is to be spent and be clear about which projects will be prioritised in the city’s efforts.

Challenge 2: Assessment of all completed projects is also an important issue when the focus is on efficiency and fulfilment of objectives.

Solution: The independent environmental and climate research institute CICERO in Oslo has reviewed Gothenburg’s environmental efforts and written a “second opinion” on Gothenburg’s framework for green bonds.


More examples of climate adaptation

This is one of many examples of climate adaptation. There are more in the collection of ideas being built up by the Swedish National Knowledge Centre for Climate Change Adaptation at the Swedish Meteorological and Hydrological Institute (SMHI). The collection of examples has the aim of sharing experiences and providing ideas to everyone who works with climate adaptation. Examples describe concrete measures and challenges in several subject areas. They show how different actors have worked to adapt their activities to the climate changes that are already being noticed today and those that we cannot prevent in the future.