Lund’s Green Bonds for Net-Zero Urban Transformation

Lund has positioned green bonds as a strategic financing instrument to accelerate its transition toward climate neutrality by 2030. Building on its long tradition of innovation and strong sustainability governance, the municipality has modernised its Green Bond Framework (2024) to align with ICMA’s Green Bond Principles and the EU Taxonomy. Independent verification, a rigorous selection process, and transparent reporting help direct capital toward high-impact projects, from energy-efficient buildings and renewable energy to sustainable mobility. With approximately USD 400 million already allocated (approx. 30% of Lund’s eligible project portfolio) , green bonds are now a central mechanism for scaling climate investments, enhancing investor confidence, and strengthening Lund’s brand as a leading EU Mission City and as exemplary UTM City.

Lund’s implementation approach is structured, transparent, and iterative, reflecting international best practice.

1. Updating the Green Bond Framework (2024)

The city revised its framework to integrate ICMA’s Green Bond Principles (2021), align to the EU Taxonomy, and map all project categories to relevant SDGs. Criteria were tightened, including a new requirement on embodied emissions for green buildings, enhancing environmental integrity .

2. Independent Verification

Sustainalytics conducted a second-party review confirming robustness, alignment with governance standards, and contribution to SDGs 6, 7, 9, 11, 14 and 15. This step ensures technical rigor and investor confidence.

3. Collaborative Project Selection

A multi-stakeholder governance structure brings together:

• Finance department

• Sustainability and environmental teams

• Implementing municipal departments

• Municipally owned companies and inter-municipal associations

This collaborative model ensures high-impact selection and strong accountability.

4. Annual Allocation and Impact Cycle

The process follows a consistent annual rhythm:

• Needs identification
• Cross-departmental checks
• Committee review and project approval
• Development of an Effect Report
• External review
• Public disclosure of allocations and impacts

This cycle embeds continuous learning and transparency into Lund’s financial management.

5. Integration with Mission 2030 Governance

Green bonds support the city’s climate contract, reinforcing links between procurement, budgeting, climate action, and citizen engagement.

Lund’s green bonds rely on strong institutional and knowledge partnerships.

• Collaboration across municipal departments
• Coordination with municipal companies and associations
• External sustainability verification through Sustainalytics
• Engagement with national and EU Mission structures
• Strengthened dialogue with investors seeking high-quality municipal green assets

Transparency is central to maintaining public trust and investor interest.

• Annual Effect Reports published openly
• Clear communication of project impacts through visuals and charts
• Public-facing explanations of green bond principles and benefits
• Regular updates through EU Mission City communication channels

Green bonds provide capital at better terms while reinforcing financial discipline.

• USD 400 million already allocated across renewable energy, buildings, and transport
• AAA credit rating improves borrowing conditions
• External verification and post-issuance review ensure strong governance
• Costs include additional staff time and external review fees

Lund’s green bond system strengthens climate action, finance credibility, and institutional capacity.

• Stronger alignment between investment decisions and climate goals
• Greater investor interest and improved green finance branding
• Scaled-up investment in buildings, renewable energy, and clean mobility
• Enhanced internal capacity to evaluate and monitor environmental benefits
• More transparent climate governance across municipal departments

Lund’s experience highlights operational and institutional challenges.

• Increased workload for selection, evaluation, reporting.
• Significant cost and time needed for external verification
• Long-term commitment required to maintain high standards
• Complexity of aligning projects with both ICMA and EU Taxonomy criteria
• Need to continuously update data and emissions baselines

Lund’s approach is highly replicable for cities aiming to integrate green finance into climate-neutrality strategies. Key elements include a clear framework, independent verification, cross-departmental governance, transparent reporting, and consistent political commitment. The city’s 2024 framework update, embedding the EU Taxonomy, SDG mapping, and stronger building criteria, offers a mature model for municipal green bonds.

Lund demonstrates how mid-sized cities can use green bonds not just as a financing tool but as a lever to elevate governance, align budgets with climate goals, and build trust with residents and investors. As EU Mission Cities scale their climate investments, Lund provides a compelling blueprint for credibility, transparency, and impact.

• Lund Municipality Green Bonds
• Lund Municipality Green Bond Framework (2024)
• ICMA Green Bond Principles (2021)
• ICMA Green Bond Principles & Guidelines (2025)
• Lund's Climate City Contract _ EU Cities Mission

Annette Henriksson
Finance EconomistCity of Lund
annette.henriksson3@lund.se