Page 19 - Connecting cities and communities with the Sustainable Development Goals

United for Smart Sustainable Cities
Connecting cities and communities with the Sustainable Development Goals

programme (of which the green bond framework is a part of) and the climate strategy. The projects funded
by Gothenburg’s Green Bond Program are publicly reported; this includes an annual investor letter that is
available on the city’s homepage. Publishing project-level information also allows the public to access
information on how the proceeds are invested.

2.3 Results

The green bond’s underlying projects contribute to Gothenburg’s sustainability agenda, as well as to the well-
being of the city’s residents. Through the issuance of green bonds, Gothenburg has supported investments
in a variety of sustainable city projects such as a large-scale production of biogas by gasification, zero emission
electric cars for the city’s administrative offices and companies, energy efficient housing and water treatment
9
using the largest ultrafilter ever built in Scandinavia.
The issuance of green bonds allow small-scale environmental projects to get funded by including them as
part of a larger pool of projects. It can also give cities positive visibility. For example, in the case of
Gothenburg, green bonds together with the city’s strategic climate programme were the reasons why
Gothenburg was voted “Swedish Climate City of the Year” by World Wildlife Fund (WWF) in 2015.
In addition to the benefits created by the projects financed through green bonds, the green bonds also help
to limit the city’s financial risks by diversifying the sources of funding. Instead of relying completely on tax
money, cities can tap into additional sources of finance, and access low-cost capital that is needed for
infrastructure investments by issuing green bonds. Green bonds also allow cities to access new investors
compared to mainstream bonds.

3 Conclusions

Many cities that have been actively participating in environmental initiatives and implementing sustainable
projects, are taking the next logical step towards sustainability by including their finances in their
environmental agenda.

Although Gothenburg issued its first green bond in September 2013, COP21 results further encouraged the
city to create funding flows through the issuance of green bonds. One of the elements of the Paris Agreement
urges the creation of financing flows that would support the “below 1.5 degrees’” scenario. This is expected
to be reflected in the emerging interest in city green bonds.
Green bond frameworks can be created within any city context as long as the relevant legal and regulatory
setup and level of creditworthiness permit the creation of such schemes. Gothenburg’s green bond
framework has already been taken as an example by cities in the EU, as well as in developing and emerging
economies, to consider the option of issuing their own green bonds. Gothenburg’s green bond framework
has been useful in terms of transferability particularly because of its transparent management practices. In
addition, the city has actively engaged in sharing information and showed its willingness to help entities
interested in similar setups. Mexico City’s green bond issuance showcases the framework’s high potential for
transferability to other cities.
As seen in the case of Gothenburg, the first city green bond issuance is usually one of many to come. As soon
as a city has the adequate legislation and financial infrastructure in place to issue green bonds, it can continue
with new issuances. The first issuance can be the result of years of efforts, but when the process is in place,
this method of financing sustainable city development projects is noted to be highly scalable.

9 UNFCCC, Gothenburg Green Bonds Sweden,
http://unfccc.int/secretariat/momentum_for_change/items/9935.php (accessed on January 12, 2017).

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