Funding a sustainable future


In August of this year, the UN’s Intergovernmental Panel on Climate Change (IPCC) released a report that made headlines around the world. In what has been called a “code red for humanity”, the report stated that “unless there are immediate, rapid and large-scale reductions in greenhouse gas emissions, limiting warming to close to 1.5°C or even 2°C will be beyond reach.”

Slowing climate change is nowadays definitely on the top of everyone’s agenda. We’ve already seen some of the ambitious targets set on EU and national levels. For example, the European Green Deal aims to make Europe the first climate-neutral continent. Coming closer to home, Denmark has set the goal to reduce CO2 emissions by 70% in 2030. Delivering these “rapid, large-scale reductions”, will require significant investments from both the public and private sectors. In fact, the European Commission estimates that the EU needs to invest an additional €260 billion a year in order to achieve the collective commitment to cut carbon emissions by 55% by 2030. In this context, the role of investors is key in urging decision-makers and businesses to commit to sustainable investments. And financial markets have a central role to play in the transition to a net zero carbon economy: for example the European Central Bank (ECB) has been implementing this year a “centre for climate change” which has also recently set an action plan with nine accurate measures.

How we finance the transition

So how can we, as market participants in the post-trade industry, do our part to fund the transition to a blue and green economy? As early as 2018, the EU’s Technical Expert Group (TEG) highlighted that the financial sector would need to play a significant role in facilitating this transition. More than any other industry, we have the capacity to influence the reallocation of private capital towards more sustainable investments. Our role is to promote the transition of companies to more sustainable business models, and as such we advocate for improvement. That is why we support the TCFD, and we are signatories of the UN Global Compact and the UN Ocean Principles.

One of the most effective instruments at our disposal is the green bond, which the United Nations has called “one of the most significant developments in the financing of low-carbon, climate-resilient investment opportunities.”

The Nordic region: first-movers in green bond investing

The Nordic region actually features quite prominently in green bond history. It was a group of Swedish pension funds that approached the World Bank in late 2007, looking for a way to invest in projects that would help the climate, that led to one of the world’s first green bonds. And it was the Oslo-based Centre for International Climate and Environmental Research (CICERO) that provided the now standard second opinion for that bond – verifying the positive impact the potential investment project would have on the environment.

Nordic exchanges have been pioneers in this space as well. For example, Oslo Børs was the first exchange to implement a list for green bonds back in 2015. They created the list in response to increasing investor interest in sustainable investment opportunities, with the goal of making it easier for investors to identify green bonds. The day the list went live, it contained five listed bonds having a combined issued amount of over NOK 3 billion. To qualify for the list, the issuer needed to have an independent evaluation of the project for which the bond’s proceeds would be used. The evaluation needed to be made public so market participants could understand the project’s environmental impact. Issuers were also obligated to keep investors informed about updates to the project the bond was intended to finance. These requirements are now a part of established best practice and standards for issuing green bonds.

Interest in green bonds accelerates

In 2020, the Oslo Børs green bond list became an integrated part of Euronext ESG Bonds, an online platform which combines all eligible and consenting ESG bonds issuers and securities in our markets in one location (ESG standing for environmental, social and governance). The list now contains over 850 ESG bonds from more than 280 issuers across the globe. This platform connects investors and issuers, creating an international financial community for those actively involved in sustainable investments. Issuers on this platform have raised in excess of €600 billion, representing approximately 44% of total global sustainable issuance.

Since the start of the year, Euronext has added over 250 ESG bonds – which shows that investors’ appetite for sustainable investments is only accelerating. Based on our experience with green bond investing, we see that investors are not only interested in supporting established green bond issuers. They’re also looking to invest in companies just starting their ESG transition. In other words, there’s never been a better time to enter the ESG issuance space. As we see it, embarking on the ESG journey involves three key elements: strategy, visibility and communication.

A clear ESG strategy helps companies avoid the “greenwashing” trap

Investors are becoming increasingly critical of sustainability and eco-friendly claims. In fact, one of the aims of the new European Green Bond Standard (EUGBS) is to protect investors from “greenwashing” – when companies claim they’re doing more for the environment than they actually are. While compliance with this standard is voluntary, it demonstrates the importance of incorporating ESG principles into your long-term corporate strategy, as opposed to approaching ESG initiatives as standalone projects. And, as with any strategy, this needs to be developed in cooperation with your company’s stakeholders and include concrete targets that investors can easily follow.

Visibility is crucial to attracting the right investors

The growth of the green bond market over the past 10 years testifies to private and professional investors’ interest in sustainable investment opportunities. However, work is still needed to make green investments more visible, and to help investors understand what “green” actually means. The biggest issue barring investments into a greener economy is the lack of visibility and transparency for market participants. This is one of the reasons the EUGBS is introducing a shared EU Taxonomy ¬– a common classification system for sustainable economic activities. The hope is that by creating a shared standard for issuers, investors will be able to identify sustainable investments more easily.

The need for greater visibility is also one of the driving factors behind our dedicated bonds platform. By consolidating green bonds in one location, and employing a shared taxonomy based on recognised standards, we can help investors who have the capital to find the ESG projects they want to finance. This visibility is also key for issuers, as it helps you connect with an international investor pool and get the funding you need.

Life beyond Green: the Blue Economy

Being a leading listing venue for companies that operate in ocean industries and other businesses related to Blue Economy, Euronext became in 2020 the first and only Exchange signatory of the UNGC Sustainable Ocean Principles that provide a framework for responsible business practices across sectors and geographies. Furthermore, it has contributed to the UNGC Blue Bond Reference Paper, with the scope of identifying opportunities to use the ESG bond market to secure capital for ocean-related projects and companies that have made, or are planning to make, a significant contribution to the UN SDGs especially the Sustainable Development Goal 14 “Life Below Water”. Mid 2021, we had 162 companies listed in sectors related to the Blue Economy, in all Euronext countries. These companies had a market capitalisation of over 675 billion euros, with total revenues of over 840 billion euros, and employed over 1,4 million people.

Communicate the right information to the right people

For investors interested in sustainable investments, analysing a company’s relevant ESG criteria is a fundamental part of assessing the value of an ESG investment. This information gives them insight into how the company is performing with relation to its ESG goals and the company’s level of commitment regarding its ESG projects. However, different investors require different types of information. And depending on a company’s jurisdiction, a wide range of ESG reporting requirements might apply. So, as an issuer, when determining how much to report, you need to identify your stakeholders and investors, analyse their interests and needs, and consider which information is relevant for them. This will help you define the scope of your reporting and put the necessary reporting tools in place to capture the right data.

As an example, we offer issuers tailored programmes to increase ESG knowledge, connect them with relevant stakeholders and advocate for their goals and interests, and also a set of guidelines on ESG reporting. This last one draws on recommendations from the UN Sustainable Stock Exchanges Initiative, and are designed to help listed companies structure their approach to ESG.

Board the ESG train before it leaves the station

Globally, green bonds have been issued for over €850 billion. Of that, €227 billion was issued in 2020 alone. Analysts expect €340 billion in green bond issuance in 2021. And the bond market isn’t the only area where we’re seeing an increase in ESG investment. The same trend is evident in stocks and indices as well. For example, the recent launch of the CAC 40 ESG®, a sustainability-oriented version of the French national benchmark index, CAC 40®; the MIB ESG Index on Borsa Italiana, Italy’s first blue-chip index dedicated to ESG practices; and Euronext’s ESG WORLD Index chosen by the German Government, all demonstrate that ESG will be the dominate theme in the investment market for the foreseeable future. Whether we’ll see similar dedicated indices in the Nordics remains to be seen. What is clear is that there has never been a better – or more critical – time for issuers to solidify their ESG strategies and do their part to fund a sustainable future.


ESG is about more than the environment. While projects to reduce carbon emissions and switch to green energy sources garner most of the attention, there are other types of bonds in this category. For example, 2021 has been a good year for social bonds (the ‘S’ in ESG) – where the proceeds finance socially beneficial activities, such as affordable housing or building essential facilities. In the first four months of this year, Euronext listed 18 social bonds, as compared to 18 in all of 2020.

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Bjørn Stendorph Crepaz

Head of Issuance & Issuer Services at Euronext Securities

Phone: +45 2969 2815

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- Bjørn Stendorph Crepaz , Head of Issuance & Issuer Services at Euronext Securities