The past year has seen continued acceleration in global green bond issuance and the future remains promising for companies looking to finance sustainable projects. JOOL specializes in providing small and mid-sized issuers with access to the green bond market. In 2019, the company has raised over SEK 500 million of green bond financing.
What makes a bond green?
A corporate bond is a debt instrument and a loan made by an investor to a borrowing company. A “green” bond is a bond where the proceeds have been specifically earmarked for climate-friendly purposes such as energy efficiency, pollution prevention or other projects with benefits to the environment. One example is JOOLs 2019 green bond issue for Advanced SolTech Sweden AB, a solar energy company developing and building photovoltaic plants.
“In Advanced SolTech’s case, new installations often replace an existing coal powered electricity supply, leading to a major green change for the client”, says Emil Jangvik, Project Manager at JOOL.
Because of the company's creation of a green bond framework, investors know that the raised capital can only be used for investments and construction of photovoltaic plants. Additional annual reporting requirements also make it easier for the public to follow how the bond proceeds are used and to assess the environmental benefits that are generated.
While the Nordic bond market is expanding as a result of low interest rates and stricter banking regulations, the green bond subset has grown rapidly in the wake of increasing climate awareness. Previously, the green bond markets were accessible mainly for large corporates, banks and governments. Now, specializing in debt financing for small and mid-sized Nordic companies, JOOL helps introduce the green financing alternative to a new issuer segment.
“We see that the combination of increased environmental awareness and a strong appetite for yield in a continued low rate environment is fuelling the interest for green bonds, both among investors and issuers in the SME segment”, says Emil Jangvik.
How can my company issue green bonds?
“If you are interested in raising money through green bonds, a good first step is to contact us at JOOL so that we can set up a structure that suits you. In addition to the usual bond structuring process, the issuer of a green bond needs to design a mandatory green bond framework that describes how the money can be used, which must also be verified by an independent third party”.
External third parties include consultants or institutions with recognized expertise in environmental sustainability. One such organisation conducting green bond review and certification is the Climate Bonds Initiative (CBI), an international not-for-profit organisation working solely to mobilise the $100 trillion bond market for climate change solutions.
As one of the few Nordic CBI partners, JOOL has gained the expertise and knowledge required to offer these products, which is what has enabled the company to raise over half a billion SEK of green bond financing during 2019. Jangvik stresses that green bonds can be issued within many different industries:
“This is not just about renewable energy – the real estate sector is already at the forefront, leading Nordic green bond issuance. In addition, the SME segment makes up a large share of the Nordic private sector revenue and needs to gain better access to the green markets. We are at your disposal and are happy to help you structure this type of financing”, concludes Emil Jangvik.
Contact us to learn more
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The JOOL Group is a family-owned corporate group, rooted in Swedish industrial tradition. Our passion is entrepreneurship - both our own and that of others. We match companies in need of growth funding with financially strong investors and institutions. Specializing in debt financing and fixed income investments, JOOL has emerged as market leader in SEK 30-200 M Nordic corporate bonds.