We recently celebrated the 10-year anniversary of launching the world’s first commercial green bond fund. Today, Storebrand’s Green Bond Fund, which built on the World Bank’s issuance of its pioneering green bond in 2008, stands as a symbol of the evolution of green and sustainability-linked bonds.
Since inception in 2015, the fund has grown to nearly SEK 11 billion (US$1.1 billion) in assets under management (AUM) – Sweden’s largest of its kind – and delivered a 6% return over the past five years, more than double its benchmark index.
From niche to mainstream
The fund was a niche product at launch, and we had to demonstrate its benefits in detail to investors. Sustainability-related bonds now make up over half of all corporate bonds issued in Sweden and our fund is a mainstream vehicle for sustainable investments, financing projects such as energy-efficient housing, sustainable waste management, train connections, and bike lanes. We also recently expanded into areas including aluminium recycling, battery production equipment, truck electrification, and supply chain decarbonization.
Real estate remains a cornerstone of Sweden’s corporate bond market. Buildings account for approximately 40% of the EU’s total power consumption, making their decarbonization essential for the energy transition and green bonds are playing a critical role in helping finance this shift.
A broader and more diverse market
The growing demand for sustainable bonds has seen annual issuance rise to over US$1 trillion. Cumulative global GSS+ bond volumes reached US$5.7 trillion at the end of 2024, with green bonds alone accounting for US$3.5 trillion, according to the Climate Bonds Initiative (CBI).
The market has also become more diverse. When Storebrand’s Green Bond Fund was launched a decade ago, corporate issuers were primarily concentrated in the financial and real estate sectors but they now span a broad range of industries.
Frameworks like the International Capital Market Association’s (ICMA) Green Bond Principles (GBP) and the European Green Bond Standard (EUGBS) have helped the market to mature. These guidelines have increased transparency and curbed greenwashing, giving investors greater confidence and clarity.
What’s next?
Growth is such that pure green bond funds may cease to exist within the next ten years. As they continue to expand into mainstream mandates, sustainability could well become embedded across all investments.
Indeed, as sustainable bonds move further into the mainstream, their transformative impact on sustainable finance becomes ever clearer. Green bond funds have not only driven the transition but also laid the groundwork for a more environmentally conscious fixed-income market. Whether they exist in the future or not, their legacy for sustainability and transparency is undeniable.
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*The Storebrand Green Bond fund, which at its launch was named SPP Grön Obligationsfond, has marketing permission in Sweden.
In its Morningstar category, "Fixed income SEK Bonds Mix," Storebrand Green Bond is in the top 5 for three-year rolling returns (as of 2025-02-17).
The Storebrand Green Bond fund has returned 6.02% over the past five years (2019-12-31—2024-12-31), while its benchmark index has returned 2.77% over the same period. Returns in Swedish kronor, excluding inflation. The fund's benchmark index is OMRX Mortgage Bond All.
Historical returns are no guarantee of future performance. Money invested in funds can both increase and decrease in value, and it is not certain that you will get back the entire invested amount. Fact sheets and information brochures can be found on our website
