Nordic sustainable quarterly – Going green

In H1 24, Nordic sustainable bond issuance was down 6% y/y with an overall volume of EUR31bn. Nordic sustainable corporate issuance rose 18% y/y, while sovereign, supranational and agencies (SSA) issuance was up a high 59% y/y. At the same time, issuance by financial institutions group (FIG) issuers dropped 48% y/y.

This meant that corporates contributed 50%, and both FIG and SSA issuers 25% to total sustainable bond issuance. This is a drastic change in composition compared to previous years when FIG contributed the most. In addition, a staggering 94% of all sustainable bond issuance was delivered in green format. One notable green bond issue came from the Republic of Iceland that joined the club of Nordic sovereigns who have issued green bonds by issuing its inaugural EUR750m 10yr green bond in March. In June, Iceland also became the world’s first sovereign to issue a gender bond (labelled as a social bond).

In order to assess the status and development of alignment with the EU’s criteria for environmentally positive economic activities - the EU Taxonomy - we compiled data from the recently published 2023 annual reports for some 80 Nordic companies under our Credit Research coverage. The average taxonomy alignment for these companies measured as a share of total revenues for 2023 is 20% (2022: 17%), with an average taxonomy eligibility of 49% (2022: 42%). As the taxonomy continues to evolve and the guidance for reporting becomes clearer, we expect the share of taxonomy alignment to increase.

In the last section of this report, we present an overview of the recently approved Energy Performance of Buildings Directive (EPBD). EPBD is a part of the EU’s overall climate plan and ambition to reduce greenhouse gas emissions by at least 55% by 2030 (‘Fit for 55’). With the introduction of the EPBD we expect demand for green and taxonomyaligned assets to increase. Conversely, those companies with a high share of non-energy-efficient buildings and that lack credible transition plans could face both lower equity valuations and higher funding costs.

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