Financing sustainable city goals in Sweden: preliminary findings

This briefing reports preliminary findings on the financing of sustainable city goals in Sweden. While Swedish cities are actively pursuing climate neutrality and sustainability, there is no national coordination, leading to varied levels of ambition. External financing is not a primary bottleneck due to low interest rates, though borrowing is restricted to capital expenditure. Green bonds are used primarily for marketing and strategic reasons rather than financial gain, while social bonds and social impact bonds are viewed as too complex or small-scale to be viable. The report identifies a 'silo effect' between sustainability project teams and finance departments as a potential barrier to progress.

• Swedish cities and regions are actively pursuing environmental and social sustainability and climate neutrality, but their plans lack national coordination and vary significantly in format and ambition. Some municipalities use comprehensive programs with targets for 2030 and 2050, while others use visions or indicators to avoid negative auditor judgments if specific goals are not met.
• External financing is not considered a bottleneck for achieving sustainability goals in Swedish municipalities and regions due to low interest rates and the ability to borrow for capital expenditure. However, borrowing is limited to capital expenditure (CAPEX); operational costs (OPEX), such as salaries and heating, must be funded via tax-based income, meaning future operational costs can limit current investment capacity.
• Green bonds issued by Swedish municipalities and regions are primarily driven by non-financial motives rather than financial gain. These motives include marketing sustainability projects, avoiding public criticism for diverting health budgets to green investments, and providing green investment opportunities for the financial market.
• There is low interest among Swedish municipalities in issuing social bonds. This is attributed to the difficulty of measuring the impact of social assets compared to green assets, the small scale of many social projects, and the fact that social activities often require operational expenditure, which cannot be funded through debt.
• Social impact bonds (SIBs) are not viewed as a viable financing option for sustainability agendas in the studied Swedish municipalities. They are perceived as too complicated to set up and too small in scale; for example, Norrköping's SIB was only SEK 10 million.
• A 'silo effect' exists in some municipalities where teams implementing sustainability technologies or projects have little to no contact with the finance departments that could provide funding, creating a potential bottleneck for ambitious goals.

APA

Sjöström, E., Waltré, N., Nilsson, A., Carrion, A. R., Eriksson, A., Agerström, M., & Vanhuyse, F. (2020). Financing sustainable city goals in Sweden: preliminary findings. Stockholm Environment Institute. https://www.sei.org/wp-content/uploads/2020/03/discussion-brief-oct-2020-financing-sustainable-city-goals-in-sweden.pdf

Chicago

Sjöström, Emma, Nina Waltré, Astrid Nilsson, Alicia Requena Carrion, Aina Eriksson, Magnus Agerström, and Fedra Vanhuyse. Financing sustainable city goals in Sweden: preliminary findings. Stockholm Environment Institute, 2020. https://www.sei.org/wp-content/uploads/2020/03/discussion-brief-oct-2020-financing-sustainable-city-goals-in-sweden.pdf.

Wikipedia

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BibTeX

@techreport{sjstrm2020financing, author = {Sjöström, Emma and Waltré, Nina and Nilsson, Astrid and Carrion, Alicia Requena and Eriksson, Aina and Agerström, Magnus and Vanhuyse, Fedra}, title = {{Financing sustainable city goals in Sweden: preliminary findings}}, institution = {Stockholm Environment Institute}, year = {2020}, month = oct, url = {https://www.sei.org/wp-content/uploads/2020/03/discussion-brief-oct-2020-financing-sustainable-city-goals-in-sweden.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }