By Beate Sonerud, Climate Bonds Policy Analyst
Oslo Stock Exchange (OSE) announced last week that they will become the first stock exchange in the world to set up a separate list for green bonds. Two separate green bond lists will be set up in late January 2015: One for those listed at OSE, and one for green bonds listed on Nordic ABM. The announcement was made at a very well attended green bonds seminar in Oslo held by Norsif, the Norwegian Sustainable Investment and Finance Association.
It’s great to see a stock exchange taking a more active role in the green bonds market. Similar to criteria for inclusion in an index, the requirements of stock exchanges for listing on the exchange, or as in this case, for making a list within the exchange, can help drive standards in a market because issuers want to have their bond listed on the exchange or included in the list. The benefit to issuers of inclusion is higher level exposure; making it easier for green investors to discover the bond as an investment opportunity. OSE has taken a leadership role in the green bonds market by setting requirements for their green bond list above existing market standards. OSE’s green bond list requires issuers to have second opinions on the green credentials of the bond issuance and, importantly, that this opinion is made public. According to OSE’s Communications manager, Geir Harald Aase, the exchange decided to set such requirements because “it is crucial that investors have transparency. Investors should have equal access to information to analyse the investment”.
The emphasis on second opinions and their disclosure is what makes this development really interesting. In the broader green bonds market, getting a second opinion is a voluntary decision for the issuer. The current market guidelines, such as the Green Bond Principles, only recommend second opinions – it is not a must. Not all decide to get a second opinion: Indeed, our data shows that 42% of the green bonds issued in 2014 do not have a second opinion (data on all the green bonds issued including if they have second opinions is now freely available on our website). Hopefully OSE’s green bond list will encourage new and potential issuers to get a second opinion and publish it. Great news for investors in Nordic green bonds!
Now, to clarify: OSE’s green bond list is not a new green bond index: It is simply a list of the green bonds listed on OSE that comply with certain criteria – it does not track the financial performance of the included bonds. Evolving the list into a green bond index is however something that OSE has said they will consider in the future. That would be exciting – a green bond index where investors would know all the bonds had second opinions. That would make it even easier for investors to identify investments with robust green credentials that also provide the desired returns.
OSE’s green bond lists add to the list of Scandinavian “firsts” in the green bond market: Sweden’s SEB was the underwriter of the first green bond with a second opinion back in 2007/2008, and Gothenburg was the first to issue a Green City bond in September 2013. Now Norway is increasingly joining the game after the first Norwegian green corporate bond was issued in September. Well done, Oslo Stock Exchange!
(Also, look out for our upcoming blog on the third Norwegian corporate green bond after is closes this week – it will be listed on Oslo Stock Exchange)
