Norwegian issuers and Nordic investment banks have played a key role in developing the green bond market. In 2015, Oslo Børs became the first stock exchange in the world to have a separate list for green bonds. “Green finance is a preferred option for many investors. An increasing number of them want to invest in green projects. We want this new list to draw attention to green investment choices," commented Bente A. Landsnes, President and CEO of Oslo Børs, when the green bond list was launched.
Market seeing strong growth
In recent years we have seen a wave of green bond issues listed on Oslo Børs, with numerous new green bond issuers and borrowers (see the chart below for further information). Since launching the green bond list, new borrowers have raised increasingly large amounts by listing green bonds. 2018 was a particularly good year, with six companies listing their first green bonds, bringing the total number of issuers with green bonds on Oslo Børs to 18. In total, NOK 12.8 billion was raised through the nine green bond issues listed in 2018. There are now 25 green bonds on Oslo Børs, with a total outstanding value of nearly NOK 30 billion.
Norwegian and Nordic green bond pioneers
Kommunalbanken ("KBN") has been involved in developing the green bond market on a global scale. Since 2010, KBN has offered a lower interest rate on loans to projects that are part of municipal energy and climate action plans in the Norwegian municipal sector.
In 2013 KBN became the first financial institution in Norway to issue a green bond. "Internationally there is growing demand for climate-friendly investments. With access to major investors and important capital markets around the world, KBN is able to meet this demand and at the same time help Norwegian municipalities to realise their energy and climate action plans," explained Kristine Falkgård, President and CEO of KBN, when the bank listed two issues totaling USD 1 billion in 2015.
The green bond concept was developed by the Nordic financial services group SEB and the World Bank. CICERO, one of the leading global providers of second opinions on green bond frameworks, is based in Oslo, and provided the second opinion for the first green bond issued by the World Bank.
Broader selection attracts new investors
New borrowers and a broader range of projects financed by green bonds attract new investors.
The world’s first green mortgage bond was listed on Oslo Børs last year. “We want to play a leading role in this area and to inspire greater use of this type of bond,” commented Eivind Hegelstad, who is responsible for investor relations at SpareBank 1 Boligkreditt. “There is a growing investor market for green bonds in Europe, which we are seeking to address in accordance with the general approach we have always followed of having as broad and deep a pool of investors for our bond issues as possible,” he continued.
Green mortgages are mortgages for energy-efficient properties. SpareBank 1 Boligkreditt will allocate the funds raised by its green mortgage bond to new and existing residential mortgage loans.
In February 2019, Sunndal Sparebank became the first savings bank to list a green bond on Oslo Børs. Sunndal Sparebank will initially offer loans to private and corporate customers who want to buy vehicles that run 100% on electricity or hydrogen. "We need to take responsibility for increasing awareness and the level of knowledge about climate risk in our communities," commented Jonny Engdal, the CEO of Sunndal Sparebank.
Listing green bonds on Oslo Børs
Issuers looking to list on Oslo Børs’ green bonds list are subject to the same listing requirements and continuing obligations that apply for regular listed bonds. In addition, the following requirements apply:
- An independent second opinion that certifies the environmentally friendly nature of the bonds.
- The second opinion must be made publicly available in order to enable investors to understand the environmental aspects of the projects that are to be financed by the bond.
- The issuer’s ongoing disclosure obligations from issuing a green bond (i.e. continuing project reporting agreed with investors upon the issuance of the bond) must be made publicly available through stock exchange announcements.