Helsingborg, Sweden, has become the first city to sell a sustainability-linked bond as the practise of ESG investing has gained popularity throughout the world. The bond's returns are correlated to Helsingborg's goal of achieving net-zero greenhouse gas emissions and is listed on Nasdaq's Sustainable Bond Market.

Helsingborg, Sweden, has become the first city to sell a sustainability-linked bond as environmental, social, and governance (ESG) investing has gained popularity around the world (SLB). The bond's returns are correlated to Helsingborg's goal of attaining net-zero greenhouse gas emissions by 2035. It is listed on Nasdaq's Sustainable Bond Market.

With this SLB, we set a strong and clear aim for our action on climate change. We can all gain if other cities across the world follow; if they do, the climate will, according to Göran Heimer, group treasurer for the city of Helsingborg.

The trajectory of the city's yearly emission reduction efforts serves as the key performance indicator for the SLB in accordance with this framework, which was created in collaboration with Danske Bank and in accordance with the Sustainability-Linked Bond Principles of the International Capital Market Association. Notably, the Swedish National Emissions Database, a third party that tracks emission reduction targets and is open to the public, allows investors to watch the development of the sustainability performance target while increasing transparency.

Helsingborg believes it is feasible to achieve net-zero emissions by 2035 after making efforts in reducing greenhouse gas emissions with a 52% decrease since 1990. Göran Heimer admits that the path will be difficult, though.

That's a difficult challenge because the largest sources of local industry and private mobility emissions are. The third largest are heating and electric, and the city has a direct impact here. We are working on this project, Heimer stated.

The SLB will contribute to the city's efforts to improve quality of life, create a more sustainable society, and reduce greenhouse gas emissions.

We are actively addressing these issues both internally inside the city's organisation and with key participants. This is demonstrated, for instance, by our work on regional climate agreements and our innovation programmes. We were finalists in the EU Green Capital competition held by the European Commission in September, and right now we're evaluating our chances of being chosen as one of the 100 cities in Europe to lead the fight against climate change. According to a press release from deputy mayor Lars Thunberg, this is a significant step in the right direction.

Helsingborg chose an SLB over a green bond, which has proceeds designated for assets and projects with environmental benefits, in contrast to other European towns. The city's strategy, which goes beyond projects directly under Helsingborg's jurisdiction, fits better with the SLB route.

The SLB format works better for us because it's about an improved standard of living for everyone in the Helsingborg region, according to Heimer.

The SLB was able to issue at a "greenium," or the premium bondholders are prepared to pay to invest in green securities rather than traditional ones, which is similar to green bonds.

There is a greenium, plus a little more, Heimer remarked. In this instance, the premium is higher, but it will decrease if we fall short of our goals. The investor doesn't pay anything for this premium. It is a huge win for all investors cutting the cost of climate change if we reach our goals and other cities follow.

Heimer stated, "Climate change will have an impact on the investing market; for some, it's a significant expense, for others, it's an investment opportunity. We expect that investors would see the importance of addressing the major parameter, greenhouse gas emissions, in this SLB because it is challenging to reduce the cost of climate change."

Source: nasdaq news