The Swedish city fined for missing an environmental target

Gothenburg, Sweden's second city, is highlighting its environmental credentials by continuing to put its money on the line.

Back in 2022, the City of Gothenburg, became what is believed to be the first local government in the world to take out a "sustainability linked loan" or SLL.

This is a form of financing pegged to a set of annual environmental and social improvements agreed between a borrower and its banks.

Gothenburg's four target areas are efforts to make renewable energy the sole source of the city's heat production, making the council's own vehicle fleet electric, reducing energy usage in municipality-owned buildings, such as hospitals and schools, and improving the city's poorest neighbourhoods.

Meet agreed annual improvement levels in these sectors and, for each, Gothenburg gets a discount on the yearly fee it pays for the loan of 0.1% or around 100,000 kronor ($10,500; £8,000). But miss one of the targets by a certain amount and it has to pay a fine of the same amount.

In 2022 and 2023 Gothenburg managed to avoid a financial penalty, but the newly released figures for 2024 show that it missed its target for switching to renewable energy. And so it is about to be fined 150,000 kroner.

However, this is offset by the discounts it is getting for continuing to hit improvement levels for energy usage and social improvement. For electrifying the council's vehicles, while it missed its improvement goal, it didn't do so by enough to be fined.

Fredrik Block, portfolio manager at the City of Gothenburg, says that the local authority deliberately set "ambitious" targets.

"You aim high, and you get the whole organisation to strive towards that target. We are not proceeding as fast as we expected, but we are taking one step at a time. The goal is still to be close to carbon-free by 2030.

"We're actually not doing it for the money. We're doing it to show the city's important work and that we are making progress every year. We want to show to the world how it is - that these are the problems, and these are the good things."

The improvements to the city's poorest areas – and whether the council has hit its targets - are measured by yearly resident surveys. People are asked about their feelings towards an area's safety and cleanliness.

Key initiatives have included making housing more secure, introducing more surveillance cameras and increasing police presence as a crime prevention measure in areas of the city like Hjallbo and Biskopsgarden. Located in the north of the city, they have high levels of crime and unemployment, and large immigrant populations.

Public housing agency Framtiden, which is ultimately owned by the City of Gothenburg, says it takes the improvement work very seriously.

"For some of these vulnerable areas, we actually own the majority of the housing," says its research and development manager, Lars Bankvall.

"We are more or less the only official body in these areas. There's no one else there, only us.

"I see us as maybe the most powerful tool that the city has, because we have a lot of financial resources. We are involved in everything."

But Faduma Awil, a social worker who now provides career coaching at an employment centre in Gothenburg, is concerned that increased cameras and police presence sends the wrong message to youth in Gothenburg's deprived areas - and could see racial profiling increase.

"What will our children think when they see cameras everywhere in Hjallbo, but none in a Swedish neighbourhood? How will they feel when they are constantly being watched by police":[]}