Is Green the New Normal? : Incentives for Green Financing Within the Swedish Real Estate Sector

Sammanfattning: During the past years sustainability within the Swedish real estate financing market has experienced remarkable growth. Continued progress is predicted as new EU regulations, the EU Taxonomy, will be implemented. The objective of establishing a unanimous green classification system is needed to direct investments towards environmentally sustainable projects. The real estate sector’s vital role of mitigating and adapting to a sustainable development induces us to study the structure of the green financing market within the real estate sector, and the implications that the expected development will have for the involved parties. This thesis examines annual reports from the ten largest listed real estate companies in Sweden and interviews key participants that possess roles within the green real estate financing market with the aim of uncovering incentives for Swedish real estate companies to issue green debt, and to provide inputs on how green financing can develop in the future.  Corporate behavioural and corporate finance theories such as the concept of corporate social responsibility, stakeholder theory, legitimacy theory and pecking order theory have been used to analyse the empirical findings. It can be concluded that incentives to be active in the green real estate financing market can be explained by financial factors as the most prominent reason but also the will of legitimising a company’s business practises. It can be concluded that there is no consensus regarding what is considered to be green today on a company level, but further developments of the EU Taxonomy are promising. Finally, stakeholders believe that the green aspect of real estate will over time become the new norm and gradually be replaced by the notion of a brown aspect deviating from the new norm.