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The environmental financing story

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Story: A green bond to finance a zero-emission vehicle fleet

All big shifts require capital, and capital is what we do. One way in which we help finance sustainability ventures is as an underwriter of green bonds. As in the case with Daimler, the German automotive corporation, which has set out to shift to a zero-emission vehicle fleet.

Green bonds and SEB’s role explained

Bonds in a brief overview:

  • A bond is essentially a loan, where the issuer borrows money from the investors. The issuer gets financing for a project, while the investor is compensated for the risk through interest rate.
  • A green bond is a bond where the money that is raised is earmarked for climate and environmental projects.
  • An underwriter of a bond is the party which designs the terms of the bond – so that these are beneficial for both the issuer and the investors – and helps issuers and investors find each other.

 

As an underwriter of green bonds, SEB is a pioneer and an international thought leader. When the World Bank issued its first green bond back in 2008, this was done together with us. Today, SEB’s global share of underwriting is substantially bigger than the bank’s global market share.

SEB has also issued a green bond of its own in 2017 to finance green loans to low-carbon and climate change-resilient projects and investments.

The Daimler story

In 2020 Daimler launched its first bond to finance its new, green framework. The bond raised 1 billion euros – money that will have a profound effect on the company’s ability to shift to a sustainable vehicle fleet and a sustainable production process.

The capital within Daimler’s green framework is earmarked to fund zero-emission vehicles, powertrains and charging infrastructure, as well as recycling systems for batteries and fuel cells and investments to reduce energy and resource consumption. It constitutes an important move in the necessary transformation that the automotive industry needs to undergo.

In connection with Daimler’s issuance of its first green bond, SEB acted as underwriter, structural advisor and joint lead manager. Furthermore, SEB was the sole structural advisor in the development of Daimler’s new, green framework.