The Swiss government announced Wednesday that it aims to join the growing ranks of sovereign debt issuers participating in the sustainable finance market, setting out plans for the issuance of green Confederation bonds.
According to the announcement by the Swiss Federal Council, by participating in the green bond market, Switzerland aims to show its commitment to sustainability, and further effort for the Swiss financial centre to be an international leader in sustainable financial services.
The announcement comes amid significant growth for the sustainable finance market. A recent report from Moody indicated that green bond issuance in the first three quarters of 2021 soared to a record $380 billion, up 75% year-over-year, and estimated that sustainable bond issuance for the year will exceed $1 trillion for the full year.
The rapid growth is being fueled by increased participation in the market by companies, and, increasingly, by sovereign issuers. With its planned upcoming green bond issuance, Switzerland joins issuers including the UK, which recently completed its inaugural £10 billion Green Gilt offering, and the EU’s recent record-breaking €12 billion issue. Earlier this year, Spain issued its first €5 billion green bond, while Canada recently announced plans for a $5 billion green bond issue, and other countries including Italy and Germany also recently issued their first green bonds.
Green bonds enable issuers to raise money on capital markets, but with proceeds specifically aimed for utilization in eligible green projects, such as renewable energy, energy efficiency, biodiversity preservation, or green buildings. According to the Swiss Federal Council, the Federal Finance Administration (FFA), in cooperation with the Federal Department of the Environment, Transport, Energy and Communications (DETEC) will prepare a green bond framework by the end of 2022, which will include the eligible categories of investments from green Confederation bond issuances, details on the project selection process, and reporting requirements.