In May 2014 Stockholm County Council was the first county council in Sweden to issue a green bond. Since then, four more green bonds have been issued, in 2015, 2016, 2017 and 2018. The County Council specifies investment objects with a particular environmental focus in green bonds so that investors know that their money is being spent on projects that are good for the future.
The framework for green bonds
Green bonds were first issued by the World Bank in 2008 following development of the concept together with SEB in 2007.
Green bonds are a way of borrowing money for investment projects with a particular environmental focus. They are a tool for raising awareness of climate-related challenges and solutions while at the same time safeguarding green development projects in the county. In terms of risk, return, legislation and documentation, green bonds have the same characteristics as other investments offered on similar terms. They still account for a small portion of the overall bond market, but both interest in, and the market for, green bonds are growing rapidly.
The money that the County Council borrows within the framework of the green bonds is earmarked for environmental projects and is held in a separate traceable account that is only used for investments that meet specific environmental criteria.
There has been great interest in the Stockholm County Council's green bond transactions from Swedish and international investors with focus on sustainability. Among the investors are investment funds and pension fund managers.
Stockholm County Council has participated in a Nordic initiative for reporting in 2017. Read more about this.
Green development projects in the County Council
Investments that are eligible for funding with green bonds must lead to reduced energy consumption and a lower carbon footprint. The investment projects to be funded by the green bond are selected by the Growth, Environment and Regional planning in consultation with the Treasury department. The projects lie within four identified project areas:
- sustainable public transport
- sustainable buildings
- waste management
- water management.
Environmental work audited by independent climate institute
Stockholm County Council is pursuing long-term and award-winning environmental work and in 2013 was named Sweden's greenest county council. A green bond is an important and obvious step for the County Council to raise awareness of climate-related challenges and solutions while it secures green development projects in the county.
The independent research institute CICERO in Oslo has audited Stockholm County Council's environmental work and approved the environmental areas that the County Council is focusing on as green investments.
Concrete results of the County Council's overall environmental work:
- 85 % of the County Council's transport uses renewable fuel
- 96 % of the County Council's properties use renewable energy for heating, cooling and electricity
- All central procurement processes include chemical requirements, where relevant, in accordance with the environmental programme.
- Particulate emissions from public transport have decreased from 27 to 18 tons since 2011, with nitrogen oxide emissions falling by close to 1000 tons.
- 43 % of the County Council's food is organic.
*All figures are in accordance with the 2016 environmental report.
Nordic issuers release guide on green bonds impact reporting
A group of ten Nordic public sector issuers have released a joint position paper on green bonds impact reporting. Developed with the primary aim of assisting Nordic public sector borrowers, the signatories hope that it will prove useful also for issuers from the private sector and from other countries as well as for the investor community. The position paper, which has been 14 months in the making, was launched at the OECD Green Investment Financing Forum in Paris on 24 October 2017.
The paper has been developed by a working group comprising public sector green bond issuers from the four Nordic countries Denmark, Finland, Norway and Sweden. They include the local government funding agencies Kommunalbanken (Norway), Kommuninvest (Sweden) and MuniFin (Finland); the Swedish Export Credit Corporation (SEK); and six Swedish municipal or regional issuers including City of Gothenburg, the municipalities of Lund, Norrköping and Örebro, Region Skåne and Stockholm County Council. Denmark's municipal lending agency KommuneKredit has been part of the working group but intends to comply at a later stage.
The paper proposes an outline for reporting environmental benefits of green bond investments. It provides guidance on general matters such as to report on actual impact when feasible, to distinguish between reduced and avoided emissions, and to report impact in relation to the share financed by green bonds. The paper also recommends issuers to report impact in relation to amounts disbursed and outstanding, as opposed to amounts committed.
The paper furthermore provides suggestions for metrics and indicators relevant to eight different project categories. This effort builds upon reporting approaches suggested by the Green Bond Principles and multilateral development banks, but adds indicators for categories such as clean transportation and green buildings, that have previously not been addressed.
As a first step toward approaching social impact, the paper includes a few social impact indicators on a 'nice to have' basis.
The paper has benefited from input from CICERO Center for International Climate Research, the Nordic Investment Bank, SEB, and Crédit Agricole CIB as well as several investors throughout the process.
The issuer group intends to manage the position paper as a live document, to be updated on a regular basis. The group encourages feedback and will seek to develop its methodology to provide as relevant and appropriate impact reporting as possible. Events to introduce the paper to issuers and investors are planned for a number of cities, with Frankfurt, London, Paris and Stockholm confirmed at time of the launch.
Feedback on the green bonds
In May 2014, Stockholm County Council was the first county council in Sweden to issue a green bond. The bond funded two investment projects with a particular environmental focus: the Roslagsbanan expansion programme and the new construction and renovation of Södertälje Hospital. The amount of the first green bond, which is SEK 1.1 billion, has been fully invested as of the 31st of March 2015.
The second green bond, to the amount of SEK 1.8 billion, was issued in May 2015 and is intended for three projects: the Roslagsbanan expansion programme, the construction of New Karolinska Solna, and the new construction and reconstruction of Södertälje Hospital.
The third green bond of SEK 1.5 billion was issued in May 2016 and pertains to three projects: the construction of New Karolinska Solna, the upgrade of the Metro's Red Line and new construction and renovations at Södertälje Hospital.
In June 2017, the county council's fourth green bond was issued to the amount of SEK 2.0 billion and pertains to three projects: the construction of New Karolinska Solna, the upgrade of the Metro's Red Line and a development of a depot in Högdalen as part of the work on the expansion of the entire subway network.
The fifth green bond was issued in March 2018, at SEK 1.0 billion, for financing of the development and modernization of public transportation in Stockholm.
The table below is continuously updated with capital generated in Stockholm County Council's green investments.
New Karolinska Solna
Construction of New Karolinska Solna (NKS) was begun in the summer of 2010. In order to safeguard the very high environmental and sustainability goals that have been set, the whole project is being carried out from a sustainability perspective. One of the tools used to this end is environmental certification of the buildings. Two systems of certification are being used for NKS: the Sweden Green Building Council and the international system LEED. The aim is to achieve the Gold level in both systems. In September the fourth and final construction phase was approved for Gold level certification in accordance with the Green Building Council. A preliminary certificate can thus be issued for the entire installation after an extensive third party inspection has been carried out by the certification body Sweden Green Building Council.
One aspect of the Green Building Council system is to reduce the energy requirements of the heating, cooling and maintenance of the installation. This is being done at NKS to such a degree that much less of the energy requirements permitted by legislation (Boverket's Building Regulations) will be needed. This will mean substantial savings, both financial and environmental, since this annual reduction in energy requirements is the rough equivalent of the amount of energy used in 1,200 private homes. The fact that the energy that must still be used is 99 percent renewable and does not give rise to global warming emissions means that the maintenance of NKS will be climate-neutral.
Another focus area is to reduce the use of chemicals which have a detrimental impact on health and the environment by inspecting all the construction materials used. Thanks to the deliberate choice of flooring material, the use of softeners harmful to health (phthalates containing allergy-causing and hormone-disruptive properties) has been reduced by at least 70,000 kg compared with conventional construction – and this is only one of all the materials used in the construction.
The Green Building Council
The Green Building Council is a Swedish certification system for building installations where the focus lies on energy, the indoor environment and construction material. Clear follow-up of supplier deliveries and reduced maintenance costs is one of the issues for which the Green Building Council is known.
A building can achieve the Bronze, Silver or Gold level. On completion of the construction planning a preliminary certificate is awarded. In order to be awarded a final certificate, the preliminary certificate must be verified no later than two years after the commissioning of the installation.
Red Line programme
Creating a possibility for more people to travel by public transport entails a considerable reduction of carbon dioxide emissions (CO2) in the atmosphere, which is one of the County Council's main ways of reducing negative environmental impact in the County. The upgrade of the Metro's Red Line aims to develop and strengthen capacity and thereby contribute to sustainable public transport. The goal is to increase capacity by 25 per cent in rush-hour traffic. To achieve this goal, investments are being made in
- a new service command centre and new service command system
- an increase in the number of depots
- new quieter vehicles that are more energy efficient than older models
Depot for extended Metro in Högdalen
The extension of Stockholm's Metro is the largest investment in the subway system in modern times. 19 kilometres of new track and 11 new stations divided into four sections are being built and, around 2025, Metro service will operate between Nacka C, Barkarby station and Arenastaden. More vehicles and garaging points with greater capacity for servicing these vehicles are needed for the Metro extension. Today, the number of vehicles and depot capacity fall short of the requirements necessary for the successful extension of the planned Metro.The extended Metro will be a resource-efficient and climate-smart travel alternative to fossil-fuelled means of transport. During the project, environmental and sustainability aspects have been taken into account in every area. The Metro extension will have a large climate impact during its construction phase, but from a life-cycle perspective, the Metro will have a clearly positive effect with reduced resource consumption and reduced climate burden for the county's residents. Multiple measures are planned to reduce the climate impact in the construction phase, such as optimisation of material selection and resource consumption, reduction of the number of transports, etc. The climate burden from the extended Metro will be reduced by at least 25% during the project's implementation and no serious work environment accidents will occur.
The County Council's Extended Metro Administration is environmentally certified according to ISO 14 001. Through climate calculations, the County Council monitors the climate impact of stations right from the design stage. The project's sustainability coordinator provides support and monitors sustainability issues in every project. The certification system CEEQUAL will be used to ensure that the County Council's strategic environment work is integrated into the planning and project engineering of all sub-projects. The objective is to achieve the rating of Very Good as a minimum.
The Depot-Vehicle project has the task of reinforcing the capacity at the existing Högdalen depot by several measures, promoting the resilience and capacity of the overall Metro system. The Högdalen maintenance facilities "garaging points" will be expanded and the connection possibilities to the depot will be extended to be accessible to both the Green and the Blue Lines. All of these measures will make it possible to increase the number of vehicles which is much needed. The project is vital for ensuring that the finished Metro lines will be fully operational for the scheduled launch of service. At the same time, an upgrade is being performed on the vehicle fleet and the transport systems. Reinforcing sustainable transport systems reduces the level of carbon dioxide emissions in Stockholm County. The project has the objective of achieving the rating of Very Good as a minimum.
Multiple measures are planned to reduce the climate impact in the construction phase of the depot. An above-ground garage, with a timber frame is planned, which will provide an estimated climate improvement of around 165 tonnes of carbon dioxide equivalents compared with a steel frame. It has also been engineered to enable the installation of solar cells on buildings above ground and placing the entrances to the garage below ground, cutting the heating costs. Constant optimisations are made to reduce resource consumption, especially the amount of concrete that is used. The use of light concrete is an important aid for reducing the number of heavy transports in the construction phase.
CEEQUAL is a sustainability assessment, rating and awards scheme for civil engineering, infrastructure, landscaping and public realm projects.
CEQUAL was developed by the British industrial association Institution of Civil Engineers (ICE) and was launched in 2003 in the UK and Ireland. 2 The rating "Very Good" is the second highest rating on the scale and means that the project received more than 60%, but less than 75 % of the total points.
New construction and renovation of Södertälje Hospital
Södertälje Hospital is being expanded and modernised to create more modern, more efficient premises. The project is intended to meet the estimated increased need of care capacity in the immediate area by 2020. An important starting point for the project is that the hospital should allow greater flexibility for the future. The technical systems are duplicated to cope with outages in more than one section.
One of the major challenges is to implement the project on a relatively small property while the hospital remains fully operational.
A key goal of the project is to meet the requirements of the Sweden Green Building Council's Gold level of certification and to support achieving the County Council's environmental goals including having an energy consumption that is at least 30 per cent lower than that specified in Boverket's regulations for new buildings. The regulations for new building specify 125 kWh/m2 per year, whereas the forecast for the new Södertälje Hospital is 76 kWh/m2 per year.
Other goals in the project are to:
- achieve greater interactivity and process orientation for cohesive outpatient care and sterile technology
- achieve better logical links between inpatient care, emergency department and treatment functions
- create generally designed wards for greater flexibility
- ensure that the working environment for staff meets current demands without reducing the available range of care
- use the building materials assessment systems to ensure approved materials are incorporated in the buildings
- reduce energy consumption over time
- dispose of waste in an eco-friendly way
- ensure that transport over which Locum has influence is effective and environmentally friendly
- avoid substances with a detrimental impact on health and the environment
Roslagsbanan expansion programme
The Roslagsbanan expansion programme aims to develop and strengthen the capacity of a historical railway line that is of great importance for public transport in the north-eastern sector of Stockholm county. Creating the opportunity for more people to travel on public transport by train is more climate-smart compared with travelling by bus, but above all considerably better than driving a car.
The overall goal of the programme is to:
- increase the capacity of Roslagsbanan and allow a regular 10-minute service frequency for the majority of stations
- reduce sensitivity to traffic disruption
- keep us within the noise limits indicated in the Government's Infrastructure Bill for new railway construction
- adapt stations and existing carriages for accessibility
- improve safety in the rail system.
The Roslagsbanan expansion programme favours a sustainable future, as it will facilitate increased travel by public transport and provide relief for the E18 and E4 roads. Roslagsbanan has approximately 46,000 travellers (boarding) per weekday, which saves around 80 tons CO2 per weekday compared with the equivalent travel by car (SCB/SIKA, average petrol consumption of a car in Stockholm: 0.86 litres/10 km, average occupancy 1.72 people per car and assumed journey 15 km).
In addition to promoting sustainable travel, the programme includes a large number of environmental initiatives.
Noise disturbance is one environmental aspect that can have a negative impact on the individual's well-being and health. Noise poses a problem to public health, and the Roslagsbanan expansion programme involves a substantial effort to introduce noise-protection measures along the entire track.
Here are some examples:
- the renovation of Stockholm Östra in the form of various noise-reducing measures, such as targeted, less intrusive loudspeaker announcements and noise absorbers on the ceilings and edges of the platforms (see Picture 2)
- construction document preparation for double track stretches and a programme and system document for the new depot in Molnby
- noise-protection measures on the stretch between Stocksund and Djursholms Ösby and on the Näsbypark branch line, including 5,000 metres of noise screens along the track, which will improve the situation for many residents in the area
- refurbishment of the existing carriages will provide better accessibility (96 carriages out of 101 ready by December 2015)
- safety improvement measures at level crossings
- the procurement of a supplier of new carriages (to be assigned at the beginning of 2016).