The Swedish government has made the country’s export credit system a climate change-friendly one. Financiers are benefiting from new guarantees from state institutions EKN and Riksgälden (National Debt Office), backed by Sweden’s AAA rating, as well as green loans issued by state-owned Svensk Exportkredit (SEK).
EKN’s Green Export Credit Guarantee allows exporters and banks to insure up to 100 percent of the transaction value to protect themselves against the risk of non-payment. Standard EKN export credit guarantees typically provide risk coverage of up to 95 percent.
“In order to benefit from a green export credit guarantee, the export transaction must relate to environmentally friendly products or products whose end use is part of an environmental activity,” says Victor Carstenius, Senior Analyst at EKN, adding: “EKN follows the EU taxonomic classification of environmental activities that contribute to climate change mitigation and adaptation to determine whether an export transaction can be covered by the new guarantee.”
The export-oriented guarantee complements EKN’s green loan guarantee for environmental investments and working capital needs in Sweden. This guarantee covers loans of up to SEK 500 million for environmental investments and working capital needs within Sweden only and covers the bank’s risk up to 80 percent (up from the previous 50 percent). The two types of guarantee have the same green incentive (higher coverage ratio) and the same environmental definition (EU taxonomy).
To cover more than SEK 500 million worth of green investments in Sweden, the government has given Riksgälden the mandate to provide state loan guarantees for new loans taken out by companies from lending institutions to finance large green industrial investments. The loan guarantees can be issued in SEK, EUR or USD. Riksgälden uses the EU taxonomy as a tool for determining sustainability.
EKN and Riksgälden provide the net coverage, and SEK can provide refinancing through environmental, social and sustainable linked loans. SEK provides green loans to companies and projects that contribute to the transition to a low-carbon economy and contribute to the UN Sustainable Development Goals. “SEK is active in the green bond market and issues green bonds for financing, which is used to finance the green loan portfolio,” says Helena Engner Eilley, Senior Sustainability Analyst, concluding that Swedish industry and exports are well positioned to meet the needs for investment in transition technologies: “The financial strength of SEK, EKN and Riksgälden, as well as clean technologies from leading global suppliers, form an unbeatable combination.”
From start-ups to established multinationals, Swedish exporters are prominent in clean technology with innovations that help ease the transition to a carbon-free society. Electric mining equipment, non-fossil fertilizers and biofuels are just a few examples.