Green Bonding With Finance : What Motivated the Swedish Government to Issue a Green Bond?

Sammanfattning: This study explores the increasingly popular government practice of issuing green bonds. By interviewing individuals involved in the development of the Swedish green government bond issued in 2020, and examining key documents, it provides an in-depth understanding of the motivations driving a government to issue a green bond. The empirical analysis shows that the Swedish government did not issue the green bond to finance green investments, but to promote the green bond market, communicate what it was already doing in terms of environmental investments, help investors attain more sustainable portfolios and strengthen the Swedish government as a bond issuer. While the political driving force behind the green government bond was the Green Party, it was strongly supported by segments of the financial sector. The main criticism came from authorities within the government itself. Even though the proponents of the green government bond shared a concern about the environment, it was not clear how this policy would ultimately contribute to the green transition. This analysis suggest that it is more appropriate to consider it as a form of industrial policy for supporting the sustainable finance industry. This is the first in-depth case study conducted on a green government bond and thus contributes to a new research topic. It also contributes to the literature on Sustainable Finance and Investment and green bonds more generally. Furthermore, it contributes to research on government debt policy and the political economy of the green transition.