Green is the New Black : A study of investor reliance in green bond investments in the Swedish real estate market

Sammanfattning: After the environmental debate was put firmly into economics literature, an emerging sustainable finance sector attempts to discipline corporate social and environmental behaviour, in which the financial markets and the real estate sector have been stated to play particularly important roles. Research within Swedish real estate financing has identified a growing interest of sustainable financing, mentioning green bonds in particular. Green bonds are based on traditional corporate bonds with the difference that green bonds possess an element of influence. The issuer is obliged to report back to the investor how net proceeds from the issuance have been used to finance green projects, which creates a requirement for transparency. The fact that green bonds is a fairly new financing and investment alternative whilst simultaneously growing incredibly fast has highlighted the significance of reliance for green bonds as a financial product. The aim of this study has been to explore in what ways green bonds in the Swedish real estate market are being initiated and structured and subsequently governed to establish investor reliance.  This research is conducted with a qualitative methodology on the basis of an exploratory nature, and the collection of qualitative data has mainly been performed through semi-structured interviews with all categories of stakeholders currently involved in the use of green bonds in the Swedish real estate market. The empirical results and subsequent analysis have concluded that it is obvious that there are numerous positive incentives related to issuing green bonds. All positive incentives consequently give rise to concerns regarding the true purpose of the issuances and whether or not these are aligned with the original purpose of the product. The more positive incentives, the more the risk of greenwashing increases. The risk of greenwashing could pose a significant threat to the general perception of and reliance in the green bond market. Obviously, all positive incentives do not necessarily entail greenwashing; there has to be positive incentives for the market of green bonds to occur, especially as it is a widely appreciated product with a generally good purpose. However, the issuers must be transparent, and the investors must be aware of the potential risk factors in order to establish investor reliance in green bonds as a financial product.