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Sustainable Development in the Swedish Financial Market

Sustainable Development in the Swedish Financial Market

In the last couple of years, development of a sustainable society and environment has become increasingly important within the financial market. For example, such development includes avoiding investments in fossil fuels and instead focusing on sustainable alternatives. In 2015 European politics discussed and drew up new goals on the subject, including requirements for actors on the financial market to take matters into account, such as the environment as well as social and corporate governance into account in their investments. Developing the financial market towards sustainable investments include many different aspects of work. The Swedish Government is actively working to develop a sustainable financial market and a few measures are already in place.

In 2014, the Swedish Government appointed an investigation to examine improvement of the Swedish fund market, including the investigation how to increase the comparison of sustainable investments in different Swedish fund management companies. The investigation include all aspects of sustainable work and CSR, i.e. aspects of human rights and ethical investments. In a report from 2016 the investigation proposed a reform including requirements for fund management companies to inform the public about how the management of the fund affect questions concerning the environment, social conditions, labor, human rights and anti-corruption. Such information should be available in the information booklet as well as in the annual report. The proposed requirement seeks to make it easier for investors to decide what aspects of sustainable considerations are made in the management of the fund. The reform is expected to enter into force on the 1st of January, 2018.

In 2014, the Nordic Swan Ecolabel started introducing eco label funds. The criteria for the eco label were launched in the beginning of 2017 and the first eco labeled funds are expected to be ready in the fall of 2017. To obtain an eco label, the management of the fund is required to refrain investments in non-sustainable companies, invest in sustainable companies, and try to affect companies to work for sustainable conditions.

In February 2016 the Swedish Ministry of Finance published a report answering questions about its expectations on how climate change will affect the Swedish financial stability. The Ministry of Finance believes Sweden and Swedish investment companies have small exposure to climate risks, which means there is a small risk of problems with financial stability in Sweden. However, the Ministry of Finance is still of the opinion that there are needs for increased information and more transparency regarding climate risks within the financial sector. Since the report was launched, the Ministry of Finance has continued reporting on how it can contribute to a sustainable development in general.

The Swedish Parliament voted yes to the Swedish Governments proposition proposing a reform whereas all companies exceeding a certain magnitude should establish reports on sustainability. According to the proposition, these requirements will increase the companies’ costs, however, it will also increase the transparency for investors regarding sustainable development.

The Swedish Government has also appointed an investigation to investigate how the market for green bonds can develop. According to the Swedish Government, the market for green bonds has increased fast and it is important to develop a secure validation to increase the confidence in green bonds.

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