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The Nasdaq Nordic Sustainable Bond Market is flourishing due to our continued commitment to the environment, society and a more responsible future. With over one hundred green and sustainable bonds listed, it is a testament to the extensive integration of sustainable practices amongst Nordic companies.
Nasdaq’s sustainable bond listings offer high transparency that makes it easier for investors to invest and manage risk, which goes hand in hand with our overall mission to provide fair, transparent and efficient markets.
In this series, called Green Voices of Nasdaq Nordic, we are providing a platform that allows our green bond issuers and investors to share their stories. This story shines a light on how Crédit Agricole CIB and Garantum are bringing more sustainable investing products to market, and how these products will be a central part of the transition to a sustainable society.
With the considerable rise of sustainable investing, French corporate and investment bank Crédit Agricole CIB and Swedish brokerage firm Garantum Fondkommission are working together to bring more green investment products to the market as demand for such instruments intensifies.
“Crédit Agricole CIB has always been a pioneer in terms of implementing ESG in its strategy, and very early on we have developed [a green notes framework] into the investment bank,” said Hugues Delafon, part of the sustainable banking team at Crédit Agricole CIB.
“We all know that we are on the brink of a rather revolutionary transition into sustainable society and that finance will have to play a very important role in that transition, [by] financing the transition and making sure that resources are allocated to the right projects, at the right time,” said Mikael Axelsson, CEO of Garantum Fondkommission AB. “[Sustainable investing is] not a fad. It's not a trend. It's here to stay, and it will just continue to grow.”
Mikael Axelsson
In September 2018, Nasdaq Stockholm launched a new market segment for sustainable investment products. The first products were issued by Crédit Agricole Financial Solutions, arranged by Garantum, and were built from Crédit Agricole’s Green Notes Framework.
“Even before [green bond principles] were produced, it was very clear that the bank wanted to have its own green bond, and develop a green bond framework,” said Delafon. “The objective was twofold: To embark on our ESG strategy by understanding what green assets we had on our balance sheets and further engage with the market on those, but also to provide green investors the opportunity to invest in bonds that meet the green bond characteristics.”
“We had not seen any structured product made with a green bond, and when we came across it with the French issuers, it was fairly obvious for us to go for it,” said Axelsson. “In this part of the world, you can’t work with finance – or anything else for that matter – without being confronted with sustainability issues because it’s such a huge topic here.”
Going Green
Crédit Agricole CIB and Garantum have had a long-standing relationship, which has been reenergized with their successful collaboration in green financing.
When the Swedish brokerage firm saw that Crédit Agricole CIB was developing an innovative, structured products issuance program with the capability of issuing green investment products, Garantum wanted to be involved to better serve its investor base with a significant interest in sustainable investments.
“We’ve been looking for sustainable investments for quite some time,” said Axelsson. “We’ve done a couple of indices with a green slant, but none of those really worked out.”
For some time, the perception was that investors would have to sacrifice return potential in order to participate in sustainable, ethical, and other ESG-related investments.
“We wanted to find something where you would not have to give up return potential, but you could actually have the sustainable aspect,” said Axelsson.
Garantum found such a financial instrument through Crédit Agricole’s Green Notes Framework that focuses on funding environmental projects, specifically in such sectors as renewable energy, sustainable building and energy efficiency, which includes waste and water management. By the same token, with the green bonds, bond issuers such as Crédit Agricole CIB can tap into an additional and expanding investor base.
“Our green bonds are placed mainly in the international capital markets to institutional investors,” said Delafon. “Progressively, we are addressing retail markets in several regions. We've done the first retail issuance of green notes in France, in the U.S., and now in Sweden and Italy as well.”
All or Nothing
The Green Notes Framework used to bring green bonds to global markets has been both strategically and culturally beneficial to Crédit Agricole CIB, not only widening its investor base but also uniting the teams around sustainable projects, according to Delafon. For the employees of the bank, it is fantastic to be able to show that capital markets and finance can make a difference and that you can make a difference in your day-to-day life at work, Delafon continued.
Hugues Delafon
At Garantum, awareness and support of sustainable investing reach every level of the corporation, from entry-level to CEO, spanning generations.
“Everyone is involved, and we have a lot of young employees,” said Axelsson. “There is a very clear and distinct difference between generations; I would say millennials are much more into sustainable thinking than perhaps older generations, but it's brushing off on everybody, right now.”
“For us, it's all or nothing. Right? So, either we as a company get involved in this, or we leave it aside,” Axelsson continued. “What we've done so far – we’ve launched the structured products based on green bonds, together with Crédit Agricole CIB – has been very successful. We've also created a section on the mutual fund platform, with all these sustainable funds.”
The recent launch of these products aims to serve surging investor demand, which may be prompted by a greater sense of urgency to address issues such as climate change and inequality.
“There's a lot of things that need to be done, to reverse the development that we see now – and, it's not just the environment; we have developments in society at large that we need to deal with as well,” said Axelsson. “We have a long way to go, and we need to act now.”
“[Sustainable investing] will continue to grow,” Axelsson said. “The appetite is definitely there, and, it doesn't matter if you talk about institutional investors, private banking, or retail investors, they are all interested in this type of product.”
Nasdaq’s Role in Sustainability
The Nasdaq Sustainable Bond Market was launched in July of 2015 with a total volume of 740 million euro. In 2017, €1.7bn ($1.9bn) was raised on the Nasdaq Nordic Sustainable Bond Market, up 81% from 2016. In 2018, more than 4,7 billion was raised on Nasdaq’s Nordic and Baltic sustainable debt segments. We facilitate infrastructure, monitor issuers and foster dialogue to ensure the continued growth of the markets.
Bonds can be listed on Nasdaq Sustainable Bond Market if a set of criteria are fulfilled. The respective criteria are based on the green and social bond principles (the GBP and SBP), for which ICMA acts as secretariat, and have been developed in cooperation with Sustainalytics, a global leader in environmental, social and corporate governance (ESG) research. Issuers that wish to list green, social or sustainable bonds on our sustainable bond market go through the same process as traditional bond issuers. However, the issuer must supply Nasdaq with information regarding the bond or bond framework as well as the third party’s review when applying to list.
To learn more about the listing process visit our website.
Read related coverage of Green bonds:
- Green Voices of Nasdaq Nordic: A Forest of Opportunities
- Green Voices of Nasdaq Nordic: Growing Green Bonds
- Green Voices of Nasdaq Nordic: Branching Out in the Green Bonds Market
- Green Voices of Nasdaq Nordic: Local Government Plays a Key Role in Blossoming Green Bonds Market
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
