Green Voices of Nasdaq: Advanced SolTech Sweden AB Issues Green Bonds to Help Reduce Carbon Emissions in China
The Nasdaq’s Nordic & Baltic Sustainable Bond Market is flourishing due to our continued commitment to the environment, society and a more responsible future. With over two hundred green social and sustainability bonds listed, it is a testament to the extensive integration of sustainable practices amongst Nordic & Baltic companies.
Nasdaq’s sustainable bond markets enforce transparency in alignment with internationally accepted standards that makes it easier for investors to invest and manage risk, which goes hand in hand with our overall mission to provide fair, transparent and efficient markets.
In this series, called Green Voices of Nasdaq, we are providing a platform that allows our sustainable bond issuers and investors to share their stories. This story shines a light on how Advanced SolTech Sweden is issuing green bonds to fund projects that reduce carbon emissions in China.
Advanced SolTech Sweden AB (ASAB), a developer and provider of integrated solar energy solutions, is working to reduce carbon emissions in China by issuing green bonds to finance solar energy projects.
“Our investments make a true impact,” said Max Metelius, chief financial officer and chief operating officer at Advanced SolTech Sweden AB. “Investments in the renewable energy sector in China offset an energy mix with 10-times the emissions of CO2, compared to Sweden.”
ASAB was founded in 2016 as a subsidiary of SolTech Energy Sweden AB after it saw the opportunity to start working with solutions for green financing. That year, ASAB began preparing the company for green bonds issuance. A year later, the company received the highest grade, Dark Green, for its Green Bond Framework from Norwegian company Cicero and its partners, SEI and ENSO.
ASAB has four listed bonds at Nasdaq Stockholm, after having issued a total of about 517.5 million SEK in bonds. The green bonds thus far have strictly been used to finance rooftop solar facilities, renewable sources of electricity that don’t utilize the scarce resource of the land. Proceeds from ASAB’s green bonds, in the form of intra-group loans, go toward Advanced SolTech Renewable Energy Hangzhou Co. Ltd (ASRE), which is the owner and operator of solar power stations on customers’ rooftops in China.
“So far, we have invested in close to 140(MW), which saves about 95 000 tons of CO2 every year,” according to Metelius.
In particular, two bonds – Solt2 and Solt3 (together about 276 million SEK) – have funded 36 projects. Projects financed by the SOLT2 bond avoided 45,673 tons of CO2 emissions a year, while projects funded by the SOLT3 bond avoided 22,500 tons of CO2 emissions annually.
The company also has plans for a listing on Nasdaq’s First North Growth Market in the first half of 2020.
Exposure to the Chinese Market
SolTech has exposure to the Chinese energy market through its majority stake in Advanced SolTech Renewable Energy Co. Ltd. (ASRE), which offers solar energy as a service for customers in China. This means that ASRE builds, owns and manages solar energy facilities from which customers buy all produced energy under 20-to-25-year contracts.
China, one of the world’s most populated countries, has been the world’s largest energy consumer since 2009. But in 2015, China also became the world’s largest solar energy market, which led to a rapid increase in business and installations for ASRE.
When ASRE built its first two plants in 2014, they had a total capacity of 445 kilowatts (kW); today, the company has 139,2 MW of capacity installed. For example, JiangSu YangHe Brewery Co. Ltd. uses roughly 40 million kWh of electricity per year, almost all generated by coal. But with a solar installation, the brewery could use 10 million kWh from solar, which would result in approximately 10,000 fewer tons of CO2 emissions.
To date, the firm has invested more than 1000 million SEK to create approximately 139 MW of installed solar energy capacity in China. With a set installation goal of 1000 MW of solar energy capacity by 2023 ASRE anticipates that further investments of nearly 5 billion SEK will be needed – all of which is expected to be financed through a mix of equity, loans and green bonds.
“The need for increased resources to support a low carbon strategy in China is crucial and requires significant investments,” said Metelius. “I am proud to see that our work in China, investing in and operating a portfolio of solar power stations, has developed so well and that we have been able to establish a great amount of trust among Swedish and Nordic Investors, making it possible to continue our mission to further develop a low-carbon way of life.”
Expanding Access to Retail Investors
The Swedish company has been at the forefront of developing a green bond structure for the Swedish retail market. In March of 2018, Nasdaq Stockholm opened an exclusive market for green retail bonds – Nasdaq First North Sustainable Retail Bond Market.
ASAB’s green bonds are the only corporate bonds in the Nordic market with denominations that allow for direct retail participation.
“We thought that these kinds of investments would be interesting to retail investors, which turned out to be right,” said Metelius. “Many of the investors are more like fans; we are very happy to have such dedicated investors.”
Nasdaq’s Role in Sustainability
The Nasdaq Sustainable Bond Market was launched in July of 2015 with a total volume of 740 million euro. In 2017, €1.7bn ($1.9bn) was raised on the Nasdaq Nordic Sustainable Bond Market, up 81% from 2016. In November of 2019, Nasdaq’s Nordic and Baltic sustainable debt segments lists a total volume of about 13 billion euro. We facilitate infrastructure, monitor issuers and foster dialogue to ensure the continued growth of the markets.
Bonds can be listed on Nasdaq Sustainable Bond Market if a set of criteria are fulfilled. The respective criteria are based on the green and social bond principles (the GBP and SBP), for which ICMA acts as secretariat, and have been developed in cooperation with Sustainalytics, a global leader in environmental, social and corporate governance (ESG) research. Issuers that wish to list green, social or sustainable bonds on our sustainable bond market go through the same process as traditional bond issuers. However, the issuer must supply Nasdaq with information regarding the bond or bond framework as well as the third party’s review when applying to list.
To learn more about the listing process, visit our website.
Are you an investor and would like to know more about how you can find and compare data around sustainable bonds? Go to https://www.nasdaq.com/solutions/nasdaq-sustainable-bond-network.
Are you an issuer and would like to know more about how to showcase your bonds and related documents and data on a centralized open-to-all global platform? Read more about the Nasdaq Sustainable Bond Network.
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