Stimulating and very interesting.
Skanska, the Swedish property company, has become the latest organisation to issue a green bond in a move which underlines the growing interest among mainstream investors for sustainable financing.
The 850 million Swedish Kronor (£76 million) proceeds of Skanska’s bond will be used for green commercial property developments under a framework endorsed by Norway’s Centre for International Climate and Environmental Research. Staffan Haglind, Skanska’s Green Business Officer, said the issue was important both because it will help the company diversify its investor base, adding that a high level of investor interest meant it was able to set an attractive interest rate.
“We think [the green bond market] will grow quickly. The interest [in Skanska’s issue from investors] was really big and so we were able to raise more than we had expected,’ he added.
The company had originally expected to raise SEK 500 million but, due to the high level of interest from investors, it increased the amount to SEK 850 million – and, even then, the issue was oversubscribed. It is a floating rate note, with a margin of 0.85% above three-month Stibor (the Stockholm Interbank Offered Rate).
Skanska is the latest entrant in a market which, until recently, was largely the province of financial institutions like the World Bank. In March, the consumer products company Unilever issued a £250 million bond which it will use for reducing waste, water use and greenhouse gas emissions. This followed similar issues from French energy group EDF, which raised €1.4 billion for investment in renewables projects, of which 25% went towards solar, and Toyota, which launched a $1.75 billion bond issue to finance car loans for electric and hybrid vehicles.
Will Dawson, Principal Sustainability Advisor at Forum for the Future, remarked that Skanska’s issue “shows that companies are innovating financially for sustainable projects which are needed to meet the challenges of the future. It also shows that there is really good demand from institutional investors for green infrastructure and buildings. This is a good way for companies to go direct to market to meet investor demand for such projects.’
The total raised through green bonds in 2013 was $11 billion. The current flurry of issues suggests that the prediction by World Bank President Jim Kem, that the market could reach $50 billion by 2015, could easily be met. – Heather Connon
Photo credit: Architecture photography © Morley von Sternberg