(Bloomberg) -- One of Europe’s largest ethical debt investors is calling out the green bond industry for the slow pace of putting funds to work in helping the environment.

The asset management arm of Sweden’s second-largest bank Svenska Handelsbanken AB is now engaging with certain bond issuers in Europe to “make them realize they need to make these investments quicker,” said its newly appointed head of sustainability Aurora Samuelsson.

“In some cases we see a company issuing a green bond and very little happens for two or three years and the bond is only five years in maturity,” said Samuelsson in an interview at the bank’s Stockholm headquarters. “We want them to be more ambitious.”

The comments are the latest criticism of a rapidly burgeoning market sector that pulled in record funds last year of over $500 billion. There’s concerns companies are overestimating their environmental action plans to attract ethical investors and get cheaper borrowing costs.

Green bond guidelines from the International Capital Market Association, among the most commonly adhered to, don’t specify when funds have to be spent, so these companies are not breaking the rules. Instead the principles call for transparency in unused bond proceeds and annual reporting on spending.

While the problem isn’t sector specific, Samuelsson says the engagement by asset manager Handelsbanken Fonder so far has been more with European companies than just those in Sweden. It has clout by overseeing about 52 billion kronor ($5.3 billion) in green and sustainability-linked bonds, making it one of Europe’s biggest investors in debt tied to environmental, social and governance goals.

“We are making the point that we are not satisfied with the investment pace,” she said, adding it is ultimately about making the money work harder. “If an issuer has only allocated 15% of the green bond proceeds after two years, what happened to the 85% that is just sitting on an account?”

Her concerns come amid what she sees as “a contradiction” between the expectations on companies to continually expand and still meet climate goals. Firms are under pressure from European rules that aim for the continent to become net-zero on emissions by 2050.

“There is a lot of talk on more efficient emissions when a company is growing, but the overall emissions level is still going up,” she said.

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For that reason Handelsbanken Fonder is increasingly focused on total emissions in its funds. Next week, the unit will publish a climate report on the progress made toward its goal of halving the intensity of greenhouse gas emissions across its assets under management by 2030. That report will show its Scope 1 and 2 emissions fell by 22% last year, according to Samuelsson.

“We try to be as ambitious as we can be and we expect that from others as well,” she said.

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