Anthropocene Fixed Income Institute logo.
Bond spotlight

ICA Gruppen green bond: deforestation risk

Written by Stephanie Mielnik & Ulf Erlandsson

Download full paper (0.2mb)

Swedish food retail chain ICA Gruppen is in the market for an inaugural green bond. The company scores relatively low on the biodiversity and deforestation ranking of its supply chain. The use-of-proceeds of the proposed green bond relating to "eco-efficient and/or circular economy adapted products" raise several questions for investors:

  • Why has the issuer not considered more ambitious or precise targets to ensure that the bond ranks higher than the current "light green"?
  • How do the targets/KPIs relate to requirements set by the recently enacted EU Deforestation Regulation?
  • The low rankings of the issuer from many of the leading providers in the biodiversity space make it hard to invest in the name from a quantitative portfolio allocation angle. Will there be remedies to this, and what will those be?

A successful and highly profitable food retailer in Scandinavia is in a strong position to have a market-leading green bond framework with ambitious use-of-proceeds in terms of biodiversity/food supply chain impact. In its current state, we ask investors to consider if the ICASS proposal gets there.

About the authors

Ulf Erlandsson

Ulf Erlandsson

Founder, Board member

Dr Ulf Erlandsson founded the Anthropocene Fixed Income Institute and was its first CEO. A pioneer of climate-focused fixed income portfolio management, he was named Environmental Finance’s Bond Personality of the Year 2022.

Before you sign up

By completing this form, you agree to AFII sharing information that we think you may be interested in, including our insights on climate transition. See our Data Protection Policy for more information about how we collect and use your personal data, and any rights you may have in relation to your personal data. You may opt out from our distribution list at any time.