Market for green bonds in Sweden growing rapidly

Economic Commentaries, News In recent years, the market for green bonds has grown significantly and in Sweden the market is large, in an international perspective. It is therefore important, from a financial stability perspective, that the Riksbank should understand and follow this market, write the authors of the Economic Commentary Green bonds – big in Sweden and with the potential to grow.

Green bonds are an example of a financial instrument that gives investors the potential to place capital in more sustainable investments and in this way support a transition to a less fossil-based economy. It is important for the continued development of the market for green bonds to have clear and common definitions of what are green and brown projects, and for investors to have good access to climate-related information. This is also a pre-condition for investors to be able to steer capital from brown to green operations more effectively.

Climate-related risks can create financial risks, such as credit risk, for participants in the financial system. If these risks are not managed, there may be consequences for financial stability. The Riksbank’s mandate includes promoting resilience to climate-related risks in the financial system.

By Maria Ferlin and Vanessa Sternbeck Fryxell. The authors work in the Financial Stability Department of the Riksbank.

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Updated 15/12/2020