Current Research in Environmental Sustainability 7 (2024) 100240

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Current Research in Environmental Sustainability

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Green bonds and sustainable business models in Nordic energy companies

Jordan Mitchell a, *, Throstur Olaf Sigurjonsson a, b, Nikolaos Kavadis b, Stefan Wendt c
a
School of Business at University of Iceland, Reykjavik, Iceland
b
Center for Corporate Governance, Department of Accounting, Copenhagen Business School, Denmark
c
Department of Business at Bifrost University, Iceland

A R T I C L E I N F O A B S T R A C T

Keywords: As green bonds continue their dynamic growth trajectory to finance the transition to a more sustainable future, a
Green bonds gap in the literature remains on how companies have overcome internal barriers to successful green bond
Green finance frameworks issuance. This case-based study analyzes how five Nordic energy companies have successfully surmounted in­
Sustainable finance
ternal barriers to issuing green bonds by leveraging their sustainable business models. The findings show a
Sustainable business models
CSR
number of antecedental features of sustainable business models prior to green bond issuance including: a focus
SDGs on environmental betterment as part of the mission and strategy; investments into assets that provide an envi­
ESG ronmental benefit and a divestiture of those that do not; the active pursuit to reduce CO2 emissions through R&D;
and, strong governance mechanisms. Throughout the process of issuing green bonds, companies introduce
changes to their sustainable business models, most notably, green finance frameworks and additional governance
practices. As a result of the green bond issuance, reinforcing choices and consequences emerge to create virtuous
cycles. In turn, the virtuous cycles support environmental objectives and foster more economic and environ­
mental value for the company, investors, and society. Our study offers a process-based theoretical outline of how
sustainable financing can make a business model more sustainable by removing internal barriers and strength­
ening company strategy, asset choices, and governance.

1. Introduction Nykvist (2020) categorized motives for green bond issuance into three
main pillars: financial, business, and legitimacy. Other researchers
Green bonds have grown to US$2 trillion, representing 2.4% of the acknowledge that strong governance conditions provide a breeding
global bond market (Climate Bonds Initiative (CBI), 2023a, 2023b). ground for green bond issuance (García et al., 2023).
Researchers have investigated green bonds in terms of pricing and the While many internal barriers have been reported in the literature –
“greenium” (i.e., a lower yield relative to conventional bonds) (Ehlers the lack of eligible green projects, concerns over greenwashing, addi­
and Packer, 2017; Hachenberg and Schiereck, 2018; Karpf and Mandel, tional costs, labor-intensive reporting, insufficient involvement in the
2018; Zerbib, 2018; Agliardi and Agliardi, 2019; Larcker and Watts, market, and the lack of awareness (European Union, 2019; Deschryver
2020, MacAskill et al., 2021; Dorfleitner et al., 2022), the impact to the and De Mariz, 2020; Sangiorgi and Schopohl, 2021; Khan et al., 2022) –
issuer's financial and environmental performance (Flammer, 2020, there seems to be a gap in the literature on how companies overcome the
2021; Fatica and Panzica, 2021), and the overall development of the barriers to successful green bond issuance. At a broader level, there is a
green bond market including external barriers for continued growth paucity in the literature that links sustainable financing to sustainable
(Organisation for Economic Co-operation and Development (OECD), business models. While this linkage may seem obvious, in reality, little is
2015; Ehlers and Packer, 2017; Park, 2018; European Union, 2019; known about the complex, dynamic processes at play between sustain­
Tolliver et al., 2020; Deschryver and De Mariz, 2020; Bhutta et al., 2022; able business models and green bonds.
Aneja et al., 2023, European Commission, 2023). Two research questions emerged to address the gap:
Motives to issue green bonds vary. Glavas and Bancel (2018, 2020,
2022) found agency motives and state ownership as key determinants 1. How can companies overcome internal barriers to issuing a green
while emphasizing green bonds' dual role of being both debt and a bond through their sustainable business model?
Corporate Social Responsibility (CSR) policy instrument. Maltais and

* Corresponding author.
E-mail addresses: [email protected] (J. Mitchell), [email protected] (T.O. Sigurjonsson), [email protected] (N. Kavadis), [email protected] (S. Wendt).

https://doi.org/10.1016/j.crsust.2023.100240
Received 1 July 2023; Received in revised form 19 December 2023; Accepted 20 December 2023
Available online 30 December 2023
2666-0490/© 2023 The Authors. Published by Elsevier B.V. This is an open access article under the CC BY-NC-ND license (http://creativecommons.org/licenses/by-
nc-nd/4.0/).
J. Mitchell et al. Current Research in Environmental Sustainability 7 (2024) 100240

2. How does the sustainable business model change (if at all) during or firm performance.
after the company issues a green bond? Casadesus-Masanell and Ricart (2010, p. 198) proposed that business
models comprise concrete “choices” of how the firm operates and
We draw from prior research to explore the notion of sustainable “consequences” of those choices. Under choices, they distinguish be­
business models, applying choices of policies, assets, and governance, tween three main types – policies, assets, and governance structures –
and the consequences of those choices (Casadesus-Masanell and Ricart, where policy choices embody courses of action for the organization,
2010, 2011; Schneider and Clauss, 2020). asset choices constitute tangible resources, and governance choices
Our contribution is a process-based theoretical outline delineating involve decision rights on policies and assets. They set forth that the
how sustainable finance contributes to the sustainable transformation of business model reflects the “realized strategy” of a firm since a firm's
companies. This is an important contribution, theoretically and empir­ strategy might encompass different contingencies, such as changing the
ically, as business and societies grapple with climate change. Proposing business model in reaction to a new industry entrant (Casadesus-Masa­
a deeper understanding of sustainable business models, we reveal the nell and Ricart, 2010, p. 195). Casadesus-Masanell and Ricart (2010)
features that help overcome internal barriers to green bond issuance. concept of realized strategy is distinct from Mintzberg and Waters'
Issuing a green bond is inextricably tied to the business model since the (1985) notion that a firm's realized strategy often differs from the
firm's policies, assets, and governance choices are affected in different intended strategy.
ways than from conventional bonds. It is a choice that necessitates a Drawing from Casadesus-Masanell and Ricart's concept of choices
green finance framework: a set of criteria that guides how the company and consequences, Schneider and Clauss (2020) found virtuous cycles in
manages the funding from green bonds. The green bond carries a set of sustainable business models when firms made three fundamental
conditions that commit the firm to invest in specific assets and establish choices: prioritization of environmental or social objectives; consistency
governance processes that hold the firm accountable for meeting envi­ in behavior and strong transparency; and, extensive collaboration
ronmental improvements. Thus, our study also contributes to sustain­ through partnerships and the broader community.
able business model research by introducing sustainable financing as a Sustainable business model research has often been intertwined with
key choice, allowing organizations to accelerate the transition to lower corporate social responsibility (CSR) concepts, given its inherent push to
emissions and create sustainable value for the firm, customers, investors, “achieve a balance between economic, environmental, and social im­
and other stakeholders. peratives (Triple-Bottom-Line-Approach)” (United Nations Industrial
The study investigates five Nordic energy firms that have issued Development Organization (UNIDO), “What is CSR?”, 2023). The Euro­
green bonds since 2017. Employing a case-based methodology incor­ pean Union (EU) emphasized the importance of integrating social,
porating qualitative interviews and secondary published materials environmental, ethical human rights, and consumer concerns into or­
enabled a thorough, detailed understanding of the internal conditions, ganizations' core strategies (European Union, 2011). For companies to
processes, rationale, management viewpoints, and logic (Creswell, embrace CSR, Latapí et al. (2021a, 2021b) proposed 19 main charac­
2014; Yin, 2014) between business models, sustainability, and firm teristics of a responsible energy company, including the top five of
financing. responsible decision-making, sustainability as a part of business strat­
egy, a purpose-driven mission, a positive contribution to society, and the
2. Literature review replacement of fossil fuels as an energy source. Raith and Siebold (2018)
looked at the United Nations Sustainable Development Goals (SDGs) and
2.1. Sustainable business models encouraged companies to pursue SDGs and build an economically sus­
tainable business model to create shared value (Porter and Kramer,
Scholars have built on business model research to create what has 2011).
become known as “Sustainable Business Models.” Initially, research The inclusion of sustainability and CSR within business models has
focused on integrating “sustainable” practices into the business model also become central to investors increasingly integrating ESG (Envi­
along environmental and social dimensions while considering financial ronmental, Social, and Governance) criteria and the Principles for
and economic viability (Stubbs and Cocklin, 2008; Wells, 2013). In Responsible Investment (PRI) in their investment decisions (United
looking at sustainable innovations, Boons and Lüdeke-Freund (2013) Nations, 2023). From a financing perspective, some researchers have
developed normative requirements for sustainable business models found ESG disclosures result in a lower cost of debt by accessing
where ecological or social elements are integrated into the value prop­ financing at better rates (Raimo et al., 2021) despite other researchers
osition, supply chain, customer interface, and the resulting costs and expressing concerns over data quality in ESG measures where it lacked
benefits. Bocken et al. (2014, p. 50) detailed eight sustainable business materiality, accuracy, reliability, and comparability (Jonsdottir et al.,
archetypes under technological, social, and organizational categories; 2022).
the archetype of “substitute with renewables and natural processes” is While sustainability in business models has increasingly become a
applicable to many renewable energy companies. Evans et al. (2017) core component, the role of firm financing in sustainable business
incorporated economic, social, and environmental benefits into the models is still in the early stages of exploration. Discussions on business
notion of value and clarified that sustainable business models should models have primarily focused on the profit and loss statement as well as
have value flows among multiple stakeholders including the natural the left side (i.e., assets) of the balance sheet (Teece, 2010). In contrast,
environment and society while boosting business performance. As such, firm financing has revolved mainly around the right side (i.e., liabilities
sustainable business models are increasingly considered a source of and equity) (Myers, 2001; Kruk, 2021). This separation of the firm's
competitive advantage (Nidumolu et al., 2009; Porter and Kramer, strategy from financing ostensibly dates back to Modigliani and Miller
2011; Morioka et al., 2017; Geissdoerfer et al., 2018; Nosratabadi et al., (1958) seminal theorem asserting that a firm's financing and risk man­
2019). agement choices would not affect firm value if cash flows were unaf­
Sustainable business models link back to earlier foundational busi­ fected by the decision and if the company operated in perfect markets
ness model research such as Osterwalder et al.'s (Osterwalder et al., (Titman, 2002). Barton and Gordon (1987, p. 69) explained that cri­
2005, p. 4) description of the business model as a “blueprint of a how a tiques had been levelled at Modigliani and Miller's theorem for an
company does business” and Teece's (Teece, 2010, p. 172) idea of how “oversimplification of the assumptions about how the world works” and
the “enterprise delivers value to customers, entices customers to pay for that, by in large, the financing of the firm had been left up to the finance
value and converts those payments to profit.” In the same vein, Zott et al. function with the condition that it be consistent with the company's
(2011) underscored the importance of strategic issues within business long-term strategy. Bridging finance and strategy, Barton and Gordon
model literature including value creation, competitive advantage, and (1987) consider how strategic decisions, the financial context of the

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firm, and management preferences could affect firm financing. In sum, 3. Methodology
sustainable business model research has not thoroughly delved into the
connection with firm financing; in the next section, we discuss green To investigate the relationship between green bonds and sustainable
bonds in terms of connecting the two themes, thereby enhancing our business models, we adopted a constructivist approach. Given the
knowledge on the means toward sustainable transformation of complexity of business models, sustainability, and firm financing, we
companies. followed Creswell (2014, p. 8) in that the interviews would be “varied
and multiple” and include a “complexity of views.” The critical di­
2.2. Green bonds: motivations, barriers and outcomes mensions to examine were not apparent at the outset given the open-
ended nature of the research questions and our intention to induce
In studying motivations for issuing green bonds, Maltais and Nykvist theory from the field. As such, we employed a qualitative case study
(2020) grouped motivations into: financial reasons (better returns, design at multiple companies (Creswell, 2014; Bansal and Corley, 2012).
reduced financial risk, investor incentives, lower cost of capital, and By selecting this research design, the rationale, motivations, opinions,
better capital access); business reasons (branding, operational effi­ and logic of the people closest to the subject could be examined (Yin,
ciency, creating new markets, and reduced business risk); and, legiti­ 2014). The research process involved four main steps as shown in Fig. 1.
macy (social license to operate, stakeholder accountability, and
institutional pressures). Other researchers presented a signaling model 3.1. Case selection and archival data
and concluded that motivations were linked to managerial incentives
and short-term gains in the stock price (Daubanes et al., 2021). Glavas To select a purposeful sample of case companies (Yin, 2014), the
and Bancel (2018) conducted a study of green and non-green bond is­ focus was on organizations that had issued a green bond. From 2007 to
suers across 27 countries from 2013 to 2017 and purported that agency June 2023, Refinitiv Workspace (2023) listed 8713 green bonds. To
motives (i.e., incentivizing managers to act in the best interest of remove regional differences in green bond market development and
shareholders) and state-ownership were the two main drivers of green regulatory regimes, the Nordic region was selected. Within the Nordic
bond issuance. region, Green, Social, Sustainable, and Sustainability-Linked (GSS+)
Despite different possible motivations, companies have faced several bonds grew 11.5% to €48.6 billion (US$51.2 million) in 2022 and of this
internal barriers to issuing green bonds. In developing the European total, green bonds accounted for 88% (Albuquerque, 2023). While the
Union (EU) bond standard, the EU identified internal barriers as lack of Nordic region is not entirely homogenous, the Nordic countries have
eligible green projects and assets, issuer concerns over reputational risks been collectively regarded as world leaders in sustainability and typi­
and green definitions, unclear economic benefits for the issuer, complex cally rank high on CSR and transparency rankings (Aslani et al., 2013;
and potentially costly external review procedures, labor-intensive Latapí et al., 2021a). Two countries within the Nordics – Sweden and
reporting procedures, and uncertainty on the types of assets that could Norway – are touted as pioneers in the green bond market (Torvanger
be financed (European Union, 2019). Deschryver and De Mariz (2020) et al., 2021).
found risks of greenwashing and the perception of higher issuing costs We focused on the energy industry since energy companies are one of
while Sangiorgi and Schopohl (2021) uncovered insufficient involve­ the leading sectors for green bond issuances and have a significant
ment in the market, lack of awareness, and suitable green projects. Khan impact to society through power generation and distribution. Moreover,
et al. (2022) documented ten internal barriers: unclear ideas about the they are well positioned to make a direct contribution to CO2 emission
“green” concept, unsupportive organizational structure, lack of reductions since energy production has historically been carbon-
employee training and know-how, insufficient analytical capabilities, intensive; over the last 20 years, some energy companies have looked
lack of internal policies and procedures creating risk, low return on in­ to adapt their business models toward cleaner energy sources (Leisen
vestment for green innovations, inadequate technological structures, et al., 2019). Interestingly, the Nordic region has seen long-term eco­
complexity in technology to support, lack of technical expertise, and nomic benefits from diversification into sustainable energy (Ahmed
poor communication with external shareholders. et al., 2022). Firms were subsequently evaluated on whether they
Those internal barriers to issuing green bonds are addressed, ac­ exhibited Bocken et al.'s (Bocken et al., 2014, p. 50) archetypes of sus­
cording to García et al. (2023), in larger companies with strong gover­ tainable business models; all firms evinced the archetype of “substitute
nance, gender board diversity, a sustainability committee, higher with renewables and natural processes.” Additionally, the companies
environmental scores, and lower CO2 emissions. Other studies found met Evans et al. (2017) criteria of having value flows for multiple
that an ownership strategy (i.e., a collaboration pact between owners stakeholders, including the natural environment and society.
that contains guidelines for long-term strategic focus) serves as a critical There are still CO2 emissions within renewable energy portfolios,
governance mechanism that lays the foundation for a focus on SDGs, albeit on a significantly reduced level from fossil fuels. Two companies
ESG, and eventually, green bond issuance (Jonsdottir et al., 2021; were in the process of phasing out fossil fuels, and all of the companies
Kavadis and Thomsen, 2023). require ongoing financing and investments to improve environmental
When looking at any positive side effects of green bonds beyond measures. The companies are partially or fully owned by municipal or
financial or environmental measures, Shishlov et al. (2016) emphasized national governments. Some of the selected firms pursued additional
the importance of communicating the sustainability strategy and activities such as non-renewable district heating or broadband services.
creating internal synergies between financial and sustainability de­ Finally, while market development varies in each of the five Nordic
partments. Additionally, Zhang et al. (2022) demonstrated that green countries, all countries had active green bond markets over the last five-
bonds empowered companies to innovate with green technology by year period (Climate Bonds Initiative (CBI), 2023a, 2023b).
developing more green patents. In a single case study of an Icelandic Based on this selection process, 18 Nordic energy green bond issuers
energy firm, green bonds helped the functioning of the business model were contacted through the authors' professional contacts or via cold
by acting as a two-way reinforcing mechanism between the green bond call emails to senior executives. Interviews were requested with one
and the SDGs/ESG framework (Jonsdottir et al., 2021). individual from finance/treasury and another from strategy/sustain­
Overall, the literature provides clarity on the motivations and bar­ ability closest to the first green bond issuance. Striving for representa­
riers for green bond issuance, but does not detail how companies over­ tion across all types of energy businesses and sources, the number of
come the barriers. Acting as both a financing tool and CSR policy granted interviews was limited by firms willing to engage in the study.
instrument (Glavas and Bancel, 2018), green bonds allow researchers to One of the companies was only able to dedicate one resource for in­
further expound upon and contribute to our understanding of the link terviews and no Finnish companies participated. See Table 1 for
between sustainable financing and sustainable business models. participating companies' key features.

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Fig. 1. Research Process.

Source: Developed by the authors.

Table 1
Participating companies.
Company Active Countries Date Energy Types Energy Production and Ownership Employees
Established Retail Distribution - (2022)
Terawatt hours (TWh)

1 Eidsiva Energi Norway 2000 Hydro and wind Production: 6.3 TWh City of Oslo +27 municipalities 1253
(partial ownership)
Distribution: 23.4 TWh
2 Landsvirkjun Iceland 1965 Hydro and Production: 14.8 TWh Government of Iceland 285
geothermal
3 Reykjavik Energy Iceland 1909 Hydro and Production: 3.5 TWh City of Reykjavik +2 additional 496
(Orkuveita 1999 (current geothermal Distribution: 1.2 TWh municipalities
Reykjavikur) formation)
4 Ørsted Denmark, Netherlands, 1972 Hydro, wind, coal, Production: 42.0 TWh 50.1% Government of Denmark, 8027
UK 2017 (current gas, solar, biomass remaining institutional and retail
formation) investors (publicly traded)
5 Vattenfall Sweden, Germany, 1909 Hydro, wind, Production: 123.5 TWh Government of Sweden 19,638
Netherlands, Denmark, nuclear, coal, gas, Distribution: 36.3 TWh
Finland and UK solar, biomass (Retail customers)

Source: Developed by the authors based on company websites and Annual Reports. Energy production and distribution were based on electricity and other documented
energy sources such as district heating.

The five companies issued 26 green bond series, including 43

Table 2
different green bond tranches from 2017 to 2023. On average, the
List of Interviewees.
participating companies issued 5.2 green bond series and 8.6 tranches,
ranging from 3 to 8 bond issuances throughout the period. The maturity Interviewee(s) Company Length
ranged from two to 1000 years, with the mean average being 15 years 1 Director of Finance* Company 1 60 min
when removing the 1000-year maturity (the average was 130 years 2 Treasury Manager* Company 1 60 min
when the 1000-year bonds were included). There were six currencies 3 VP of Strategy (Former CFO) Company 1 45 min
4 CFO Company 2 60 min
represented, including the EUR (33%), NOK (23%), GBP (19%), USD 5 Director for Climate and Green Solutions Company 2 60 min
(12%), ISK (9%), and SEK (5%). The three main types were fixed rates 6 Treasury Manager Company 3 60 min
(70%), resettable (19%), and floating (12%). All of the bonds followed 7 Sr. Sustainable Finance Advisor Company 4 30 min
the ICMA (International Capital Market Association) guidelines and 8 Former CFO Company 4 30 min
9 Director of Treasury Company 5 60 min
were subject to second-party opinions from S&P Shades of Green
10 Director of Sustainability Company 5 60 min
(formerly CICERO) and Sustainalytics (S&P Global Shades of Green
CICERO, 2023; Sustainalytics, 2023). See Appendix A for a summary of Source: Developed by the authors.
the participating companies' green bonds.
Table 2 shows the interviewees.
3.2. Interviews and analysis Given the differences in geographic locations, videoconference
communication tools allowed a low-cost method to communicate while
An open-ended semi-structured interview guide was developed to still being able to build rapport, take visual cues, and gauge interest from
understand the important dimensions within each interviewee's specific the interviewees. All interviews were conducted in May and June 2023
context and collect information not explained in publicly available data in English. None of the interviews were recorded to build trust and
(Creswell, 2014; Cassell, 2015). Twenty main interview questions were ensure that interviewees could express “off the record” views if desired.
developed to tease out observations along five main themes including: The principal interviewer took comprehensive notes directly into
the motives for issuing green bonds, internal and external barriers, an­ Microsoft Word. The data was analyzed using a combination of Atlas.ti
tecedents leading to the green bond issue, the process of issuing, and and Excel where quotes were coded under specific themes and struc­
benefits after the bond issue. Throughout the data collection phase, tured in the software to allow for the comparison of results between each
published materials such as annual reports, sustainability reports, green of the interviewees. Throughout the data analysis phase, we applied
finance frameworks, and second-party opinions were referenced. inductive reasoning to gain insight into the linkages between several

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factors of green bonds, sustainable business models, CSR, SDGs, ESG, selling off several diverse businesses, refocusing, and creating an
and firm financing overall. This included the development of high-level ownership strategy in 2014 that placed environmental considerations on
business model visual representations shown in the next section. equal footing as profits. The ownership strategy guided major decisions
at the company. Ørsted went through a major transformation after its
4. Results predecessor, DONG (Danish Oil and Natural Gas) Energy, sold off its oil
and natural gas portfolio in 2017 and committed to renewable energy,
For context, we begin by summarizing the main motives for issuing a adopting a new name. Over time, Ørsted's goal was to convert its coal
green bond before explaining the barriers the firms faced. We then turn and natural gas plants to sustainable biomass. Vattenfall divested its
to how those barriers were overcome by summarizing the main features lignite coal business in Germany in 2016, closed its last coal-fired plant
of the sustainable business model before the green bond issuance in in the Netherlands in 2019, and committed to phasing out coal from
terms of choices – noting the difference between policy, asset, and district heating by 2030, allowing it to focus largely on renewables with
governance choices – and consequences, including a visual representa­ wind power and biomass.
tion. Finally, we consider the business model after the green bond was At the core, the five participating companies all had one major
issued noting virtuous cycles or other positive side effects with a second element of their business model in common: the generation of electricity
visual representation of the sustainable business model. through renewable sources directly or via subsidiaries. For example,
For quotes, interviewees are identified by using a letter (note: the Eidsiva's largest business area was power distribution through the
assigned interviewee letter does not follow the order in Table 2). Ap­ electricity grid with co-ownership in 74 hydroelectric power generation
pendix B shows expanded quotes by theme. plants in Norway, along with additional businesses in district heating
and broadband services. Somewhat similar was Reykjavik Energy,
4.1. Motives for issuing a green bond which operated electricity and district heating utility companies while
producing electricity and hot water at two geothermal plants and one
Nearly all interviewees mentioned the two top motives for issuing a hydro facility, while additionally offering the fiber network and green
green bond in tandem: formalizing the commitment to the overall CSR tech start-up carbon storage subsidiary Carbfix (Birgisdóttir, 2023).
mission and accessing more capital. For the first, all interviewees Landsvirkjun's main business was hydropower generation, operating 15
highlighted the importance of the green bond in communicating and plants throughout Iceland as well as operating three geothermal plants
reinforcing the overall company mission of improving the environment and one small-scale wind farm. Ørsted had international operations and
as a key part of the business strategy. For the second, most of the issuers was involved in a diverse set of power generation including wind power
were trying to broaden their investor base either in local Nordic markets (105 onshore and offshore wind farms owned or built), bioenergy, solar,
or internationally to reduce financial risk and ensure sufficient thermal power, distribution, and district heating. Similarly, Vattenfall
financing. For example, two companies were trying to attract new in­ was an international operation engaged in the production of electricity
vestors and one was striving to enter into a new bond market by via 71 hydro plants, 35 wind farms, 16 biomass, 11 coal or gas, 10 solar
appealing to US investors to raise funds in US dollars. Some of the parks, four nuclear facilities, and one industrial waste site.
companies also talked about wanting to improve their credit ratings, All the companies formally demonstrated their commitment through
which was the main reason why they were trying to broaden their governance choices by having dedicated resources to environmental
capital sources. Nearly all interviewees talked about the “greenium” (i. issues and sought to be transparent by openly sharing metrics with
e., where the investor receives a lower yield than traditional bonds) but stakeholders and the public. For example, the participating companies
most did not issue conventional bonds in the same period to compare the started to collect environmental data and publish it in environmental
pricing. While the interviewees knew that a greenium might be possible reports between 2008 and 2012, leading to publicly available docu­
hence allowing them to lower their cost of capital, all of them said it was ments that detailed environmental goals, measurements, and commit­
not the primary reason behind issuing a green bond. Finally, as the ments for the future. Between 2012 and 2017, all of the companies
market matured, the motivations for continuing to issue green bonds has expanded from environmental (“E”) reporting to incorporate social (“S”)
changed. All of the interviewees agreed green bonds had become the and governance (“G”) measures. Furthermore, all companies voluntarily
“standard” in their industry. committed to the United Nations Global Compact (UNGC) and between
2015 and 2018 adopted some of the UN's SDGs as part of their corporate
4.2. Sustainable business model prior to green bond issuance goals.
Another critical policy choice was an active pursuit of research and
The most resounding feature of all business models prior to the green development (R&D) to reduce CO2 emissions, often with a combination
bond issuance was the key policy choice to focus on environmental of in-house efforts and partnerships with research institutes, universities
betterment as part of the companies' mission and strategy. The vision and suppliers, albeit at varying levels of scale. For example, prior to
and mission statements of the participating companies include: Eidsiva's first green bond, the company had collaborated with research
institutes to invest in R&D at district heating and hydro plants, leading
• Eidsiva: “We shall create value for all our stakeholders by offering to more efficient delivery of hot water and electricity (Sevault et al.,
new, smart, and sustainable solutions.” 2018). Before its first green bond, Vattenfall had 120 people in a dedi­
• Landsvirkjun: “Landsvirkjun's vision is a sustainable world, powered cated R&D department along with other staff in business units and
by renewable energy.” external collaborations to actively reduce the environmental impacts
• Ørsted: “To create a world that runs entirely on green energy.” through a number of projects such as using artificial intelligence (AI) to
• Reykjavik Energy: “To improve the quality of life and with social monitor hydro plants, applying optimization models to reduce nitrogen
responsibility as a guiding light.” oxide (NOx) at district heating plants, combining wind and solar plants
• Vattenfall: “Our goal is to enable fossil-free living within one to prevent grid imbalances, and an overall effort to work with major
generation.” partners to electrify the manufacturing of steel, cement, and biofuel to
reduce CO2 emissions in Sweden by 30% (Vattenfall, 2016-2022).
Although the companies' journeys to embed CSR and adopt sus­ Ørsted actively solicited R&D and technology development projects
tainability as a key part of the mission were distinct, three companies from suppliers (including an open invitation on its website) and worked
experienced a major transformative asset choice throughout their recent with research institutes and universities around the world; some ex­
history that supported the move toward greater sustainability. For amples of its R&D included the development of a new foundation for
example, Reykjavik Energy emerged from near bankruptcy in 2010 after offshore wind projects and digital analytics software for offshore wind

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turbine monitoring (Ørsted, 2017). Landsvirkjun had a dedicated R&D to confront such as the lack of eligible green projects, unclear economic
department (that originally housed the environmental group before benefits, and uncertainty on the types of assets that could be financed.
being spun out as a separate division in 2018) that worked with research All companies had already committed to key policy, asset, and gover­
institutes, universities, and suppliers to improve CO2 emissions and nance choices to drive performance improvements and were clear about
sequestration on hydro and geothermal projects (Landsvirkjun, 2017). the investments that would drive dual environmental and economic
Similarly, Reykjavik Energy had participated in a major R&D project benefits. Furthermore, the key strategic choice to focus on environ­
dating back to 2007 with scientists at leading universities around the mental improvement largely removed other internal barriers mentioned
world to develop Carbfix, a novel way of permanently storing CO2 in in the literature review section, such as being unclear about the “green”
basalt rock, among other initiatives to improve monitoring and energy concept or having unsupportive organizational structures. While the
loss at hydro and geothermal plants (OR, 2023; Mitchell et al., 2021, sustainable business model was seen as being key in pre-empting many
2022; Jonsdottir et al., 2023). of the “typical” barriers, all interviewees still mentioned some external
The last major choice on governance was in regards to how the and internal barriers to issuing green bonds.
owners, board of directors, and management related with one another. Two main challenges were mentioned on external market factors.
As previously mentioned, the ownership strategy in addition to the The first was the lack of market readiness caused by the “newness” and
shareholder's agreement provided a stable guide to Reykjavik Energy lack of standardized practices for green bonds. The second was market
amidst changes to the elected officials at the municipal governments (i. timing; while most interviewees felt they did not have a challenge with
e., the owners of the company). Eidsiva had a similar ownership struc­ their first green bond issuances (issued between 2017 and 2019), a
ture (albeit with 28 municipal government owners) but did not have a complicated geopolitical situation led to tumultuous markets in 2022
separate ownership strategy from the binding shareholder's agreement. and 2023.
As for national governmental ownership, Landsvirkjun and Vattenfall, From the standpoint of internal barriers, interviewees mentioned:
were both governed by standardized shareholder agreements that selecting the correct measurements, setting up internal policies and
oversaw respective nationally-owned companies. Ørsted was different reporting procedures, increasing know-how, and explaining the business
than the other four companies in that it was owned 50.1% by the Danish model to second-party opinion providers and investors. Interviewee A
state and the remainder by institutional investors in Denmark (19%), highlighted:
North America (10%), UK (10%), and others (11%). “The green bond is not that ‘plug and play’ like a conventional bond
When analyzing the collective choices from all five companies, one of where you have a credit rating, investors that buy it, and a standardized
the main consequences was a strong corporate culture oriented toward process. We could do a conventional bond in five days. With a green bond,
long-term energy transformation. While each of the business models is you need a lot more planning. It requires more due diligence, procedures,
unique, Fig. 2 shows a high-level business model representation to written principles, and the investors go much more into our business model.”
visualize the common choices and consequences noted across the five Interviewee G talked about the barriers their company faced with the
companies. first green bond:
“It was a massive headache to get the first green bond issue through; the
4.3. Barriers and challenges to issuing green bonds team came to me several times and asked ‘Can we scrap it?’ They were getting
frustrated because not all external consultancies were used to handling large
The presence of sustainable business models in the participating hydro projects. There were preconceptions of what a large hydro project
companies removed many of the barriers that other organizations need would mean, and we had to educate them on how our projects worked.

Fig. 2. Generalized High-Level Business Model Representation prior to Green Bond. (For interpretation of the references to colour in this figure legend, the reader is
referred to the web version of this article.)
Source: Developed by the authors.

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J. Mitchell et al. Current Research in Environmental Sustainability 7 (2024) 100240

Relative to alternative financing, green bonds were purely driven by our need work. It has taken some time to get the reporting set-up, and now it is done
to show who we were; if it was based on cost only, we would not have done alongside the financial reporting.” Some companies made their major
it.” changes to reporting routines prior to issuing green bonds; Interviewee I
Interviewee H talked about the situation at their company: “The explained: “We had started to professionalize the reporting in 2014 and
green finance framework was a lot of work and we had to have many in­ 2015, so we were advanced and had good quality data prior to the green
terviews to determine what types of projects should be included.” bond.” Even still, at that company, after the green bond issuance, sus­
tainability reporting was placed under the finance function to support
4.4. Overcoming barriers – throughout or after green bond issuance ESG and environmental reporting.
For tracking the use of proceeds, one company made changes to the
In most cases, the idea to issue a green bond caused the company to accounting system to mark whether the asset was under the green
develop a green finance framework first. The green finance framework finance framework, allowing it to be assigned to a specific bond series.
acts as a policy choice and governance tool. The participating com­ Other companies talked about tracking the eligible projects indepen­
panies' green finance frameworks followed ICMA's green bond guide­ dently from a specific bond series taking into account the net total
lines by documenting the use of proceeds, project evaluation and proceeds of the bond on one side and applying it to eligible projects on
selection, management of proceeds, and reporting (ICMA, 2021). Some the other.
companies included information on their strategy, sustainability initia­
tives, alignment to SDGs, and additional governance features. The 4.5. Financial benefits
companies all developed the green finance framework with the intention
of issuing a green bond. Interviewee J talked about the introduction of Most of the companies emphasized the benefits as broadening the
the green finance framework at their company: investor base and opening up additional sources of financing. Nearly all
“The green finance framework is a very good way of motivating change – interviewees also mentioned some level of greenium, but most admitted
let's burn down the old way, and the virtue of pain is that it makes you want to it was difficult to measure. Others were divided on whether it dis­
change. I think, in this case, the stick is more effective than a carrot. The green appeared after the first or second green bond or whether it strengthened
financing framework is considered a regulatory thing – managers are afraid over time. However, other interviewees said the greenium had been
of being in breach of regulation. The formalization of a green bond frame­ constant throughout the bond issuances. Finally, some interviewees
work creates a perceived notion of this to be mandatory and part of the status talked about how the green bond helped improve the image in the
quo, so it forces people to do it even though some of it might be optional.” investor community of the company overall.
Interviewee H explained how the green finance framework was a The financial results improved for all companies from 2017 to 2022.
consequential change within their company: “The green finance frame­ Additionally, some saw their credit ratings improve. The interviewees
work created much more conversation between departments. When we were underscored that executing the company strategy – the realized strategy
issuing brown bonds, no one cared; we just issued the brown bonds, and it in the form of the sustainable business model – effectively led to eco­
financed everything. Now, pretty much everyone knows about the green nomic performance improvements (i.e., the green bonds themselves
bond.” were not directly attributed to economic performance). See Appendix C
Accompanying the green finance framework, additional governance for a financial summary.
mechanisms were already in place or emerged. For example, in one
company, a sustainability committee had previously been formed and 4.6. Non-financial benefits
led by the CFO. The committee included representation from the sus­
tainability department, which in tandem with an external consultancy All interviewees highlighted environmental benefits and the
and banking advisory, developed the first green finance framework and continued improvement of key performance measures, such as re­
had decision rights over subsequent versions. Another company created ductions in CO2 emissions, which originated from the sustainable busi­
a specific Green Bond Committee, including representation from ness model. The issuance of green bonds cultivated other reinforcing
finance, sustainability, strategy, and investor relations. Participating internal benefits, including: organizational learning on becoming more
companies mentioned that the sustainability department became a co- sustainable, encouraging others in the company to become more sus­
owner of the green finance framework along with finance and senior tainable, considering new projects that were not previously planned,
management. All the companies had issued two to three subsequent refining the focus on sustainable projects, increasing the amount of
versions of the green finance framework after the first. Committees and external certification on environmental measures, and improving com­
constant communication between individuals across finance, sustain­ munications between departments resulting in a greater shared purpose.
ability, strategy, and operations, were deemed essential to overcome the Interviewee C summed up the effect as: “Green bonds have sped up our
challenges in developing the first green finance framework and deter­ learning and consciousness of the importance of sustainability in general.
mining how the environmental improvements would be measured. They have been part of the motivation to become more sustainable.” Inter­
Some interviewees highlighted the involvement of external banks and viewee D talked about how green bonds created a common purpose:
consultancies playing a pivotal role in helping to develop the green “Nearly everyone agrees that climate change is human-induced and very
finance framework and work through the “newness” of the market. real, and we have to act on it. However, while some people are driven by
To facilitate the reporting, some companies had previously deter­ reducing emissions and respecting nature, others are truly driven by other
mined specific procedures for measuring environmental metrics while forces whether that be acknowledgement, finance, risk, etc. With green
others needed to introduce new procedures. Over time, some companies finance, we're getting to a common ‘why’– it connects all of the reasons why
made the decision to have certain metrics certified or verified by the company should behave well. It's not exclusively because of nature, but it
external parties. Interviewee B explained the impact of new reporting also offers acknowledgment, financial reasons, and a reduction in risk.”
requirements:
“Green bond investors are looking at two issues: They want a confirma­ 4.7. Business model representation after green bond issuance
tion about proceeds in the framework and are concerned about the envi­
ronmental impact from all the proceeds. We had to start doing green bond Tying together the many themes, linkages were found between new
reporting. If you handle green financing in the proper way, it modernizes your choices. For illustrative purposes, three distinct choices are shown: the
entire organization.” green finance framework, decision rights on the green finance frame­
Interviewee J shared their perspective on reporting in the early work, and the decision in some companies to certify measures. Flowing
stages: “Initially, the reporting was tedious as it was too much hands-on from these choices are positive “consequences,” whereby the benefits

7
J. Mitchell et al. Current Research in Environmental Sustainability 7 (2024) 100240

strengthened key elements of the business model and produced virtuous companies overcome internal barriers to issuing a green bond through
cycles. Fig. 3 shows this representation: their sustainable business model? How does the sustainable business
model change (if at all) during or after the company issues a green bond?
4.8. Potential drawbacks and future concerns The main internal barriers were not as broad as in Sangiorgi and
Schopohl (2021) or Khan et al. (2022) studies; however, our empirical
The main drawback that some of the issuers mentioned was the context was focused on an industry in which awareness is already high
additional cost of securing the second-party opinion and increased for environmental issues and in a geographic area that is a global
reporting procedures. In one company, the perceived greenium out­ pioneer in green financing. As such, our empirical context has enabled a
weighed these costs. However, other interviewees surmised that green more stringent exploration of the processes through which companies
bonds might have been more costly as the greenium became smaller can overcome internal barriers to green bond issuance, as well as sub­
after the first and second issuance. sequent changes in their sustainable business model. Importantly,
Additional concerns emerged on greenwashing, the EU's taxonomy, participating companies already had sustainable business models in
and the difficulty driving future environmental benefit. Interviewees place, allowing them to remove barriers that other types of companies
indicated that awareness of potential greenwashing pushed them to might face, such as having eligible projects or being unclear about the
ensure the pursuit of sound projects with real and measurable envi­ “green” concept. The main internal barriers were: selecting the correct
ronmental benefits. However, a couple of interviewees talked about how measurements, setting up internal policies and reporting procedures,
applying voluntary green bond rules in different industry contexts increasing know-how, and explaining the business model to other
opened up the possibility of greenwashing. While other interviewees stakeholders. The external barriers of market readiness and consistency
welcomed improved clarity, some cautioned that reporting under the of green bond standards were aligned with early studies (Ehlers and
EU's Taxonomy was perhaps moving away from the strategic intent. Packer, 2017; Park, 2018; Tolliver et al., 2020; Deschryver and De
Finally, as many of the companies had already reduced large amounts of Mariz, 2020; Bhutta et al., 2022).
CO2 emissions, some interviewees highlighted the difficulty in har­ In observing the antecedents of the companies' business models
nessing further reductions. through interviews and published materials, Evans et al. (2017) concept
of value and performance improvements encompassing economic, so­
5. Discussion cial, and environmental benefits was observed. Schneider and Clauss'
(2020) three conditions of prioritization of environmental or social ob­
The aim of this paper was to answer two main questions: How can jectives, consistency in behavior and strong transparency, and extensive

Fig. 3. Generalized High-Level Business Model Representation after Green Bond. (For interpretation of the references to colour in this figure legend, the reader is
referred to the web version of this article.)
Source: Developed by the authors

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J. Mitchell et al. Current Research in Environmental Sustainability 7 (2024) 100240

collaboration through partnerships and the broader community were Bancel, 2018). Some of Barton and Gordon (1987) propositions were
present in all participating companies. Many conditions also aligned observed, namely management's risk appetite, company goals, and the
with Latapí et al.'s (Latapí et al., 2021a; Latapí et al., 2021b) study on financial context of the firm, all affecting the decision to take on debt in
energy companies' characteristics after adopting CSR, such as a purpose- the form of a green bond.
driven mission, sustainability integrated into the business strategy,
positive contribution to society, and replacing fossil fuels as an energy 6. Conclusions
source.
A few additional pre-issuance features of sustainable business models This study adds to the discussion on how organizations can overcome
emerged. First, most companies had a catalyst that produced the choice internal barriers to financing the transition to a more sustainable future.
to invest in assets for environmental benefit and divest non-renewable The importance lies in prioritizing environmental measures in the
assets. Second, all companies had some level of research and develop­ strategy (policy choice) and securing it in place through a governance
ment (R&D) either as a separate department in the case of larger com­ mechanism such as shareholder agreement, ownership strategy, or
panies or embedded within the business in smaller companies. The R&D board of directors' alignment (governance choice). It may follow logi­
focused the company on specifically improving environmental mea­ cally that a sustainable business model should have sustainable
sures. Third, companies all had set-up procedures for collecting and financing; our study revealed how sustainable financing helps companies
measuring environmental data, while formalizing reporting through an become more sustainable.
ESG framework. Finally, strong governance supported the overall sus­ Our study proposes some additional features to be considered as part
tainability strategy, even though the manifestation of the governance of sustainable business model research: investing in assets that provide
mechanism was distinct, such as shareholder agreements or non-binding an environmental benefit and divesting of those that do not (asset
ownership strategies. The last observation was consistent with García choice), embedding R&D formally or informally to reduce the environ­
et al. (2023) observation of strong governance being a key factor for mental impact (policy choice), collecting and measuring environmental
firms to issue green bonds. data (policy choice), adopting a formal ESG reporting method (gover­
The vital importance of developing the green finance framework as a nance choice), and introducing a green finance framework (policy and
key policy choice and the subsequent governance choice for shared governance choice). The features can be applied in different industries,
decision rights on the green finance framework were the two main albeit with different levels of scope and application.
changes noted in nearly all of the companies. On one hand, this may We additionally found several other benefits for companies,
seem like an obvious observation. However, in talking with the in­ including corroborating many of the oft-studied financial benefits of
terviewees, they emphasized that the green finance framework signaled increasing capital sources and achieving a lower cost of capital through
a substantial policy, governance, and mindset change toward financing a greenium. On non-financial benefits, we observed greater organiza­
at the company. At the same time, it is clear that those changes may be tional learning on becoming more sustainable, encouraging others in the
accompanied by the increasing weight of new rules and procedures, and company to embrace sustainability, considering new projects that were
subsequently by increasing chances of organizational conflict and poli­ not previously contemplated, refining the focus on sustainable projects,
tics around them, as well as resistance to change from some organiza­ and improving communications between departments, resulting in a
tional actors. In short, sustainability and the important changes it may greater shared purpose.
bring are not immune to interests and agency. This may be an important This study has some limitations. First, a qualitative design was
avenue for future research to examine, as shedding light on the human chosen in a specific industry and geography. While this enabled us to
factor and its role may help alleviate challenges in transitioning to explore our research questions in a more stringent empirical context, as
greater sustainability (Kavadis et al., 2024). the selected companies might be predisposed to acting for the public
The financial benefits that flowed from the green bond issuance were good, the very same conditions or characteristics may not be present at
consistent with the literature in that nearly all the firms noted greater other companies in other contexts. In particular, within the energy in­
access to capital (Shishlov et al., 2016; Maltais and Nykvist, 2020). The dustry and the Nordic region, there is a high awareness of environmental
knowledge of having a broader funding pool was necessary for several issues and a general acceptance of the need to reduce harmful envi­
firms as it strengthened the environmental focus. Most firms acknowl­ ronmental practices. All of the companies had renewable energy as a key
edged some greenium (Ehlers and Packer, 2017; Hachenberg and part of their strategy for several years, which demonstrated the amount
Schiereck, 2018; Zerbib, 2018; Agliardi and Agliardi, 2019; MacAskill of value they were putting on environmental betterment. In addition, of
et al., 2021) even though some said that it started to dissipate after the the selected companies, all had some government ownership either at
first few green bond issuances (Karpf and Mandel, 2018). During the the national or municipal level.
period analyzed (2017–2022), all of the companies experienced During the interviews, the business model was discussed at a higher-
improved economic performance, driven by their realized strategy – i.e., level, making it challenging in some cases to comprehensively document
the sustainable business model. all of the features of the companies' business models. Furthermore, long-
As for the non-financial benefits, this study expanded on Shishlov term insights were sought, which required the interviewees to trace
et al. (2016) earlier observations of communicating the sustainability steps and activities back to 2017 and before. The collective experiences
strategy and greater communication between the finance and sustain­ of the five companies were induced into one business model represen­
ability departments. The benefits were broader since some companies tation. As such, it does not emphasize nuanced, firm-level specificities
talked about green bonds accelerating the organization's overall and discussion of how each specific company competes in their
learning on sustainability and encouraging others in the organization to respective markets. Nevertheless, our objective was to draw from rele­
integrate sustainability into their operations. The importance of the vant prior research and propose a process-based theoretical outline
“compliance-like” mechanism also emerged, in line with Shishlov et al. about how companies could create sustainable value through their
(2016) comparing it to ISO certification and Glavas and Bancel (2018) business model and financing. This offers a starting point for future
classifying green bonds as a CSR policy instrument. Additionally, com­ research to build on our outline and potentially develop testable
panies were more open to projects that might not have been funded hypotheses.
before green bonds and used the opportunity for project-focus In order to encourage further development of green projects and
refinement. grow the amount of green financing, it is crucial for companies, financial
While debates still circulate as to the mixing of corporate financing institutions, investors, and researchers to consider the interplay between
and company strategy, green bonds connect the two because of the dual sustainable financing and sustainable business models. Future studies
purpose of being a financing tool and CSR policy instrument (Glavas and could investigate other industries and geographic contexts where the

9
J. Mitchell et al. Current Research in Environmental Sustainability 7 (2024) 100240

business model changes as a result of pursuing sustainable finance. more economic and environmental value for the firm, customers, in­
Different sustainable finance instruments such as social, sustainable, vestors, and society at large.
sustainability-linked, and transition bonds and loans could also be
studied to understand how those distinct instruments may affect the Declaration of Competing Interest
sustainable business model. Additionally, researchers could seek to un­
derstand the role sustainable finance plays in helping companies that do There are no conflicts of interest to declare.
not have sustainable business models transition toward greater sus­
tainability over time. Investigating the relationship between sustainable Data availability
business models and sustainable finance will help ensure companies are
well-prepared to accelerate the transition to lower emissions and create Data will be made available on request.

Appendix A Green Bond Issuances from Participating Companies: 2017 to 2023

Issue Date Maturity Date Term (years) Amount (millions) Currency Type Coupon Frequency Coupon Second-Party Opinion

Eidsiva
05-Oct-2017 05-Oct-2023 6 750 NOK Floating* Quarterly 1.64% S&P (CICERO)
22-Oct-2019 22-Oct-2029 10 1000 NOK Fixed Annually 2.54% S&P (CICERO)
22-Oct-2019 22-Oct-2026 7 500 NOK Fixed AnnFREFually 2.40% S&P (CICERO)
02-Oct-2020 02-Oct-2025 5 900 NOK Floating* Quarterly 0.95% S&P (CICERO)
02-Oct-2020 02-Oct-2030 10 1000 NOK Fixed Annually 1.82% S&P (CICERO)
26-May-2021 26-May-2028 7 600 NOK Floating* Quarterly 0.87% S&P (CICERO)
26-May-2021 26-May-2031 10 600 NOK Fixed Annually 2.375% S&P (CICERO)
20-Jan-2022 20-Apr-2026 4 500 NOK Fixed Annually 2.347% S&P (CICERO)
20-Jan-2022 20-Apr-2026 4 500 NOK Floating* Quarterly 1.560% S&P (CICERO)
20-Jan-2022 20-Jan-2032 10 1000 NOK Fixed Annually 2.750% S&P (CICERO)

Landsvirkjun
09-Mar-2018 09-Mar-2023 5 85 USD Fixed Semi-Annually 4.12% Sustainalytics
09-Mar-2018 09-Mar-2025 7 30 USD Fixed Semi-Annually 4.30% Sustainalytics
09-Mar-2018 09-Mar-2028 10 20 USD Fixed Semi-Annually 4.41% Sustainalytics
18-Nov-2020 18-Nov-2029 9 50 USD Fixed Semi-Annually 2.79% Sustainalytics
08-Feb-2021 08-Feb-2030 9 100 USD Fixed Semi-Annually 2.84% Sustainalytics

Reykjavik Energy (Orkuveita Reykjavikur)

18-Feb-2019 18-Feb-2055 36 2140 ISK Fixed Semi-Annually 2.60% S&P (CICERO)
02-Sep-2019 02-Sep-2034 15 2700 ISK Fixed Semi-Annually 1.70% S&P (CICERO)
23-Oct-2020 02-Oct-2023 2 3000 ISK Fixed Quarterly 2.80% S&P (CICERO)
15-Apr-2021 18-Feb-2042 20 2197.5 ISK Fixed Semi-Annually 4.50% S&P (CICERO)

Ørsted
24-Nov-2017 26-Nov-2029 12 750 EUR Fixed Annually 1.500% S&P (CICERO)
24-Nov-2017 24-Nov-3017 1000 500 EUR Resettable Annually 2.250% S&P (CICERO)
16-May-2019 17-May-2027 8 350 GBP Fixed Annually 2.125% S&P (CICERO)
16-May-2019 16-May-2033 14 300 GBP Fixed Annually 2.500% S&P (CICERO)
16-May-2019 16-May-2034 15 250 GBP Fixed Semi-Annually 0.375% S&P (CICERO)
09-Dec-2019 09-Dec-3019 1000 600 EUR Resettable Annually 1.750% S&P (CICERO)
18-Feb-2021 18-Feb-3021 1000 500 EUR Resettable Annually 1.500% S&P (CICERO)
18-Feb-2021 18-Feb-3021 1000 425 GBP Resettable Annually 2.500% S&P (CICERO)
14-Jun-2022 14-Jun-2028 6 600 EUR Fixed Annually 2.250% S&P (CICERO)
14-Jun-2022 14-Jun-2033 11 750 EUR Fixed Annually 2.875% S&P (CICERO)
13-Sep-2022 13-Sep-2031 9 900 EUR Fixed Annually 3.250% S&P (CICERO)
13-Sep-2022 13-Sep-2034 12 375 GBP Fixed Annually 5.125% S&P (CICERO)
13-Sep-2022 13-Sep-2042 20 575 GBP Fixed Annually 5.375% S&P (CICERO)
08-Dec-2022 08-Dec-3022 1000 500 EUR Resettable Annually 5.250% S&P (CICERO)
01-Mar-2023 01-Mar-2026 3 700 EUR Fixed Annually 3.625% S&P (CICERO)
01-Mar-2023 01-Mar-2030 7 600 EUR Fixed Annually 3.750% S&P (CICERO)
01-Mar-2023 01-Mar-2035 12 700 EUR Fixed Annually 4.125% S&P (CICERO)

Vattenfall
24-Jun-2019 24-Jun-2026 7 500 EUR Fixed Annually 0.500% S&P (CICERO)
12-Mar-2020 15-Oct-2025 5 500 EUR Fixed Annually 0.500% S&P (CICERO)
12-Feb-2021 12-Feb-2029 8 500 EUR Fixed Annually 0.125% S&P (CICERO)
26-May-2021 26-May-2083 62 500 SEK Resettable Annually 2.400% S&P (CICERO)
26-May-2021 26-May-2083 62 3000 SEK Floating Quarterly 5.459% S&P (CICERO)
29-Jun-2021 29-Jun-2083 62 250 GBP Resettable Annually 2.500% S&P (CICERO)
17-May-2023 17-Aug-2083 60 250 GBP Resettable Annually 6.875% S&P (CICERO)
Source: Green bond information from Refinitiv Workspace, Summary table developed by authors.
Note: *Eidsiva's floating rates are on top of NIBOR (Norwegian Inter-Bank Offer Rate) 3-month rate.

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J. Mitchell et al. Current Research in Environmental Sustainability 7 (2024) 100240

Appendix B interviewee quotes by theme

A.1. Motives for issuing a green bond (from Section 4.1)

Theme Quote

Reinforcing Overall Company Mission and G:“I saw there was a new way to advocate what the company stands for”
Strategy
D:“The green bond was a platform to show our environmental commitment in a financial manner.”

I: “It was signaling everything we were doing was related to sustainability.”

J:“We wanted to go green and issuing the green bond was a manifestation of what we wanted to achieve; by connecting to the financial markets,
the investors could understand it as it was consistent with our business focus on wind energy.”

A:“The main motive is to show that most of our investments are green and have high standards and a green bond is a way of communicating
ambitions and strategies.”
Broaden Investor Base G: “We're denominated in USD and USD in Europe is a difficult and fickle market, which pushed us to get in to the US bond market. If you meet
their standards, you get repeat business from a lot of investors.”

B: “We had difficulties as we did not have the credit rating that we have today and we wanted to have greater access to capital sources.”
Green Bonds becoming the standard for B: “If we started issuing ordinary bonds again, I would have severe problems”
their companies
H:“If we were to issue a brown bond, people would wonder why.”

A.2. Barriers and Challenges to Issuing Green Bonds (from Section 4.3)

Theme Quote

External Barrier: Lack of Market J: “Initially, there were some uncertainties regarding the formats as the markets established itself since green bonds were fairly new at the time.”
Readiness
G:“Some of the US investors saw ‘green bond’ on the cover, and they later told me that it piqued their interest as the green bond market was not quite as
developed at that stage.”
External Barrier: Market Timing H: “[When doing a green bond issuance], you of course always have to look at the market as a whole; there's been a crisis in the market in 2022 and 2023,
different from the first time we issued green bonds.”
Internal Barriers Included in Section 4.3
B: “The green bond is not that ‘plug and play’ like a conventional bond where you have a credit rating, investors that buy it, and a standardized process.
We could do a conventional bond in five days. With a green bond, you need a lot more planning. It requires more due diligence, procedures, written
principles, and the investors go much more into our business model.”

G: “It was a massive headache to get the first green bond issue through; the team came to me several times and asked ‘Can we scrap it?’ They were getting
frustrated because not all external consultancies were used to handling large hydro projects. There were preconceptions of what a large hydro project
would mean, and we had to educate them on how our projects worked. Relative to alternative financing, green bonds were purely driven by our need to
show who we were; if it was based on cost only, we would not have done it.”

H: “The green finance framework was a lot of work and we had to have many interviews to determine what types of projects should be included.”

A.3. Overcoming Barriers – Throughout or After Green Bond Issuance (from Section 4.4)

Theme Quote

Green Finance Included in Section 4.4

Framework J: “The green finance framework is a very good way of motivating change – let's burn down the old way, and the virtue of pain is that it makes you want to change. I
think, in this case, the stick is more effective than a carrot. The green financing framework is considered a regulatory thing – managers are afraid of being in breach of
regulation. The formalization of a green bond framework creates a perceived notion of this to be mandatory and part of the status quo, so it forces people to do it even
though some of it might be optional.”

H: “The green finance framework created much more conversation between departments. When we were issuing brown bonds, no one cared; we just issued the brown
bonds, and it financed everything. Now, pretty much everyone knows about the green bond.”
New reporting routines Included in Section 4.4
B: “Green bond investors are looking at two issues: They want a confirmation about proceeds in the framework and are concerned about the environmental impact
from all the proceeds. We had to start doing green bond reporting. If you handle green financing in the proper way, it modernizes your entire organization.”

J: “Initially, the reporting was tedious as it was too much hands-on work. It has taken some time to get the reporting set-up, and now it is done alongside the financial
reporting.”

I: “We had started to professionalize the reporting in 2014 and 2015, so we were advanced and had good quality data prior to the green bond.”
Governance committees J: “The committee was a handful of green finance enthusiasts within the company, and we looked after several items including gathering the specific metrics and
creating the first reporting structure.”

B: “If you only do ordinary bonds and provide cash, you do not need to have any contact with others in the company. When you start to issue green bonds, we all get
more dependent on each other. We in finance need to understand what we are investing in. Is it a category that is eligible? Why? In finance we need to understand what
we're using the proceeds for and the environmental and operations people helped us to understand this.”
(continued on next page)

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J. Mitchell et al. Current Research in Environmental Sustainability 7 (2024) 100240

(continued )
Theme Quote

D: “In the early stages, the question from finance was ‘We need some KPIs. Do you have some?’ However, as green finance has evolved, the importance of actually
selecting appropriate KPIs that made sense from both an environmental and financial standpoint. Luckily, we had the measures, but we have had to develop how our
KPIs are presented to follow the ongoing evolvement of green finance.”

B: “The information was in the organization somewhere, but we needed to collect it, process it, do quality assurance, and then report on it. In a way, the information
was not new, but it was not shared before, and it was used very differently in the past.”
External Advisors J: “We were fortunate to have strong banking advisory, and that helped formalize the bond issuance – it would be much harder for smaller issuers that might not have
access to a big banking advisory.”

A.4. Financial Benefits (from Section 4.5)

Theme Quote

Broadening the investor base C: “The green bond opened up more financing options and reduced the financial risk. It is important for an energy company to have access to
funding.”

G: “Green bonds allowed us to get funding from completely new sources in the US in USD that we did not have previously.”
Greenium H: “The first green bond was a better yield, but now after the third one, it is pretty much the same.”

B: “Most of the greenium is on the first or second issue and now, all of our new bonds are green so it is difficult to compare to regular bonds.”

E: “Internally, we tend to say it is about 10 bps, which over time makes a big difference for the amount we are issuing.”

B: “We were told it was about 15 bps by the banks, and we later participated in a study with several Nordic issuers and they found 5 bps on average.”

J: “Other things are more important than the yield. The additional basis points cannot really be tracked to any one thing as it has to do with market
sentiment, and market sentiment might even be what an investor ate for lunch that day.”
Improving the image with the investor E: “A green bond changes the narrative with investors and internal areas pursuing projects. In the investor's mind, there is less risk of the money
community financing a stranded asset. The green bond makes the story clear of how we are raising money and where we are spending it.”

A.5. Non-Financial Benefits (from Section 4.6)

Theme Quotes

Lower emissions D: “We are almost at carbon neutral, and we've already shown a large reduction in CO2.”

Greater organizational learning on sustainability C: “Green bonds have sped up our learning and consciousness of the importance of sustainability in general. They have been part
of the motivation to become more sustainable.”

G: “When we issued the first green bond, we posted information on the internal website. We got much interest from all
employees. They asked how it worked and what it meant for the company. It gave everyone more knowledge about green finance
and a sense that we're doing good.”

J: “Green bonds are more effective as a facilitator for change as they create a conversation internally.”
Encouraging others in the company to become more G: “It pushed the lever up in the company. For example, the procurement department asked, ‘if finance can do it, why can't we?’
sustainable They started to ask suppliers for environmental measures and greener products. It was a motivation for others to look for ways in
their departments to do something toward the vision.”

J: “If you want to drive change, if you can piggyback on external verifications or making something institutional, it certainly
helps. Any institutional push facilitates change.”
Considering projects that might not have been funded C: “There are certain projects that are marginally profitable with a net present value (NPV) of zero. In the past, we would have
previously said, ‘do you have any other projects?’ Now, even if a project is just marginally beneficial from a financial standpoint but strong
from a sustainability perspective, we will support it. That wouldn't have happened without the green bond and green finance
framework.”
Refining the project focus E: “The framework is very clear that the funding can only be used in certain projects and that means if you're not part of one of
those projects, you have to look elsewhere for the money. It really limits and focuses the pool of money of what we fund.”
Improving communications between departments resulting B: “One of the things that isn't spoken about that much is the internal effects on the organization. If you only do ordinary bonds
in a greater shared purpose and provide cash, you have no need to have any contact with others in the company. When you start to issue green bonds, you
get much more dependent on each other.”

G: “The green bond made the finance function talk to the sustainability area. Other than maybe going for lunch together, the two
areas had no business reasons to talk.”

J: “One thing the green finance framework and green bond did is open the communication channel between the financial and
sustainability areas. We're sitting in the same meetings with banks and investors and we understand a lot more about each
other's worlds now.”

D: “Nearly everyone agrees that climate change is human-induced and very real, and we have to act on it. However, while some
people are driven by reducing emissions and respecting nature, others are truly driven by other forces whether that be
acknowledgement, finance, risk, etc. With green finance, we're getting to a common ‘why’– it connects all of the reasons why the
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(continued )
Theme Quotes

company should behave well. It's not exclusively because of nature, but it also offers acknowledgment, financial reasons, and a
reduction in risk.”

A.6. Potential Drawbacks and Future Concerns (from Section 4.8)

Theme Quote

Greenwashing E:“In the beginning, I believe companies were issuing green bonds more for green purposes. However, I feel greenwashing has grown. If you take companies doing a
small-scale energy efficient building versus the scale of an energy producer building a wind farm, which one will be more impactful relative to your dollars spent?
Obviously, the wind farm. Going forward, for the market to be used more strategically, that greenwashing element needs to be addressed by showing greater
granularity so investors can easily identify the difference between the scale of the environmental impact.”
EU Taxonomy J: “I worry that the EU Taxonomy reporting requirements might be narrowing the focus too much on certain reporting aspects instead of the overall idea of investing
in green assets.”

H: “With the EU Taxonomy, we have to split out the project into two categories where we have always tracked it as one category in the past. The regulation is not
getting any simpler.”
Harnessing further G: “Investors want to see continuous environmental improvement. It is a problem for us, because the CO2 emission numbers are already so low, to get better and
reductions show improvement becomes very challenging.”

Appendix C Participating Companies Financial Results: 2017 and 2022

Reported Financials Converted to USD

Eidsiva 2017 2022 CAGR % or ppt 2017 2022

millions NOK NOK FX USD USD
0.1210 0.1045
Revenues 3956 11,118 23.0% 479 1161
EBITDA 1434 4344 24.8% 174 454
EBITDA/Sales 36.2% 39.1% 2.8% 36.2% 39.1%
Total Assets 18,895 50,832 21.9% 2287 5310
Total Debt 8992 16,309 12.6% 1088 1704
Debt/Assets 47.6% 32.1% − 15.5% 47.6% 32.1%
Credit Rating (Scope) BBB- BBB+ BBB- BBB+

Landsvirkjun 2017 2022 Inc/(Dec) % 2017 2022

millions USD USD USD USD
1.0000 1.0000
Revenues 491 709 7.6% 491 709
EBITDA 346 455 5.7% 346 455
EBITDA/Sales 70.4% 64.2% − 6.2% 70.4% 64.2%
Total Assets 4506 3873 − 3.0% 4506 3873
Total Debt 2043 844 − 16.2% 2043 844
Debt/Assets 45.3% 21.8% − 23.5% 45.3% 21.8%
Credit Rating (S&P) BBB BBB+ BBB BBB+

Ørsted 2017 2022 Inc/(Dec) % 2017 2022

millions DKK DKK USD USD
0.1518 0.1417
Revenues 59,709 132,277 17.2% 9063 18,744
EBITDA 16,158 23,925 8.2% 2453 3390
EBITDA/Sales 27.1% 18.1% − 9.0% 27.1% 18.1%
Total Assets 146,521 314,142 16.5% 22,241 44,514
Total Debt 29,636 71,547 19.3% 4499 10,138
Debt/Assets 20.2% 22.8% 2.5% 20.2% 22.8%
Credit Rating (S&P) BBB+ BBB+ BBB+ BBB+

Reykjavik Energy 2017 2022 Inc/(Dec) % 2017 2022

millions ISK ISK USD USD
0.0094 0.0074
Revenues 44,000 56,965 5.3% 413 422
EBITDA 26,717 35,745 6.0% 251 265
EBITDA/Sales 60.7% 62.7% 2.0% 60.7% 62.7%
Total Assets 311,258 450,870 7.7% 2921 3342
Total Debt 144,479 170,806 3.4% 1356 1266
Debt/Assets 46.4% 37.9% − 8.5% 46.4% 37.9%
Credit Rating (Fitch) BB+ BBB- BB+ BBB-

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(continued )
Reported Financials Converted to USD

Vattenfall 2017 2022 Inc/(Dec) % 2017 2022

millions SEK SEK USD USD
0.1172 0.0993
Revenues 135,114 239,644 12.1% 15,834 23,787
EBITDA 36,279 56,683 9.3% 4252 5626
EBITDA/Sales 26.9% 23.7% − 3.2% 26.9% 23.7%
Total Assets 409,132 792,327 14.1% 47,947 78,647
Total Debt 87,154 176,765 15.2% 10,214 17,546
Debt/Assets 21.3% 22.3% 1.0% 21.3% 22.3%
Credit Rating (S&P) BBB+ BBB+ BBB+ BBB+
Source: Developed by authors based on information in companies' annual reports and Refinitiv Workspace.
Note: Lansdvirkjun sold a material asset, the transmission system operator (TSO) Landsnet in 2022.

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