Page 16 - Connecting cities and communities with the Sustainable Development Goals

United for Smart Sustainable Cities
Connecting cities and communities with the Sustainable Development Goals

1 Introduction

1.1 Background
This case study introduces two examples of cities that have issued green bonds, namely Gothenburg and
Mexico City. The City of Gothenburg has in many terms been a positive example within the city green bonds
market as a result of the city’s experience in green bond issuance since 2013, and the transparent design of
its green bond framework. Mexico City offers an example of a more recent green bond issuance in a less
developed Latin American market.

Gothenburg, located on the western coast, is Sweden’s second largest city and home to Scandinavia’s largest
port. The city of Gothenburg was originally focused on heavy industry; however, over the years it has
successfully transformed into one of the global leaders on climate change issues, and became the first city in
the world to issue a green bond. The city is currently experiencing a significant growth in population and it
has been calculated that by the year 2035, the city will experience a 27% increase in its population. As the
population grows, so does the challenge of providing all the necessary services to its residents. The challenges
faced by the metropolitan area of Mexico city with over 20 million inhabitants, are not only focused on
population growth, but also on many of its derivatives such as pollution, traffic, insufficient waste
management, scarce water supply, lack of sustainable housing etc. In 1992, the United Nations labelled
Mexico City as “the most polluted city”, which for the first time set in motion the city’s environmental
management efforts.

The increased focus on environmental issues and sustainability in general has been a catalyst in increasing
interest in green bond issuance. More recently, the Sustainable Development Goals (SDGs) and the Paris
Agreement (COP21) are also being reflected in cities’ development plans. It is important to note that the
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concept of green bonds is specifically important to SDG 1, target 1.5 . Therefore, implementing this concept
in cities will assist with the attainment of SDG 1.

1.2 Challenge and response
In the case of Gothenburg, the root of the problem that led to the design and implementation of the city’s
green bond framework was related to the city’s industrial setup. The transition towards greener initiatives
was set in motion in 1987 when Gothenburg’s Environmental Project was established. Since then, the city
has adopted a number of environmental best practices and implemented sustainable initiatives in the city
context. More recently, the population growth has extended the city’s needs for realizing sustainable city
development projects. Mexico City has faced various challenges related to the geographical location of the
city (as it is built on what used to be a lake), rapid growth of the population and city expansion, socio-
economic situation (social inequality, poverty), natural disasters (earthquakes, floods) and the effects of
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climate change (rains, floods, droughts, heat waves, landslides).
After setting environmental and climate-related goals, Gothenburg decided to allocate funding for the
achievement of their environmental goals. Likewise, to address the challenges the city faces today, Mexico
City has had to consider innovative ways to access financing through capital markets. By issuing green bonds,
cities can mobilize capital for climate change related investments and hence promote sustainable
development that will improve the well-being of their residents.

1 SDG 1, target 1.5: By 2030, build the resilience of the poor and those in vulnerable situations and reduce their
exposure and vulnerability to climate-related extreme events and other economic, social and environmental shocks
and disasters.
2 According to the Mexico City Climate Action Program (PACCM) 2014-2020, approximately 5.6 million people in the
city are vulnerable to the effects of climate change.

10 U4SSC series