Kommunekredit is Denmark's local government funding agency and its purpose is to to offer inexpensive financing for municipalities and regions. It has now issued a green bond for the first time.

The green bond is worth EUR 500 million in total, about DKK 3.7 billion.

The proceeds from the sale will be used to finance environment and climate related investments in Danish local communities in four areas of operation: water management, district heating, energy efficiency, and clean transportation," Kommunekredit writes in an announcement.

Green bonds are securities where the proceeds are used to finance specific environmental and climate related investments. The buyers are institutional investors who wish to invest in projects that reduce climate impacts and promote climate-friendly growth.

"By introducing the new type of green funding for municipalities, regions, and utility companies we do our part to increase focus on the improvement of environmental and climate conditions, which is achieved through investments in the Danish local communities," says CEO Jens Lundager, mentioning as examples a water purification project in Svendborg in south-central Denmark and a district heating project on Bornholm island.

English Edit: Marie Honoré