The bond market: Its relevance and functionality for the climate transition

This report highlights the bond market's role in climate transition, showing investors how to use it for climate-conscious investing and risk management. It underscores the market's potential for mitigation efforts and suggests directions for future research to amplify its impact on the climate agenda.

A growing number of financial market participants include climate change as a decisive factor in their asset management decisions. There are several explanations for this, from attempts to protect the portfolio against financial risks to trying to contribute to climate change mitigation. The purpose of this report is to explain and highlight the importance and functionality of the bond market for investing that can have an impact on the climate transition. It presents ways for investors to use bond market mechanisms to include climate perspectives and to push the agenda in this area. It also suggests topics for further investigation in future research.

Authors:

Emma Sjöström, PhD, Misum, Stockholm School of Ecomomics, and Stockholm Sustainable Finance Centre
Ulf Erlandsson, PhD, Anthropocene Fixed Income Institute