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Join us for a digest of the latest research, analysis and insights on the relationships between environmental social and corporate governance issues and global business, finance and society. In each episode, hear from experts sharing their insights on how institutional investors can identify and mitigate risks related to ESG factors, but also leverage opportunities in sustainable investment and debt capital markets. This is ESG in Conversation.
Episodes
Wednesday Apr 20, 2022
Wednesday Apr 20, 2022
Episode Summary
Host: Adam Gorley, Marketing Manager, Corporate Solutions
Guest: Shilpi Singh, Director, Corporate Solutions
In this special episode of the Sustainalytics Podcast, Adam and Shilpi discuss important considerations for any organization starting an ESG program and how to set up your program for success. You’ll hear about gaining leadership buy-in, planning and resourcing your program, meeting reporting requirements, communicating your progress with stakeholders, and the role of third parties, plus potential obstacles you can avoid.
What Successful Corporate ESG Programs Require
As with most projects, good planning and commitment are strong drivers of a successful ESG program. To make the most of their effort, companies starting an ESG program need to have a clear understanding of the ESG issues that affect them, what their impacts are, and how they relate to the business strategy. With this knowledge, a company can effectively address the issues that are most material to the business and confidently and transparently communicate its ESG activities with stakeholders.
Can You DIY ESG?
Can a firm plan and implement an ESG program on its own — that is, without guidance from an external ESG specialist? Yes, says Shilpi, but it’s not for every company. No third party knows your business like you, your team, and your stakeholders, so there is a lot of valuable ESG information that companies can gather and analyze — if you have the resources. At the same time, ESG specialists have a lot to offer in terms of understanding what actions to prioritize, competitive insights, and credibility.
Read Our New eBook, Getting Started With ESG: What Every Company Needs to Know
 |
Download our practical guide to starting a corporate ESG strategy for additional details on the considerations we talked about in the podcast. Discover key action steps for gaining top leadership buy-in, planning and resourcing your program, developing your strategy, and reporting and communicating your progress. |
Monday Apr 18, 2022
Monday Apr 18, 2022
Episode Summary
Hosts
- Nicholas Gandolfo, Director, Corporate Solutions
- Marika Stocker, Senior Manager, Corporate Solutions
In this episode, Nick and Marika welcome special guest Simon Vacklen, Senior Manager with Sustainalytics’ Corporate Solutions to discuss impact reporting for use of proceed bonds. As more funds are allocated to labeled and sustainability-linked bonds, there is growing demand from investors to understand and measure the positive impact of the assets and projects financed. Simon notes that while the current focus is on environmental and climate impacts, such as the amount of greenhouse gases avoided, the market is also looking toward ways to effectively quantify positive social impact.
Sustainalytics Launches Impact Reporting for Bonds and Loans
To support companies and investors looking for opportunities to analyze and investigate the impact of their projects and investments, Sustainalytics now offers Impact Reports for Bonds and Loans. Available for pre- and post-issuance assessments, the reports provide issuers with a credible and independent analysis of the impacts both expected and achieved by financed projects.
Climate Bonds Standard Shares Criteria for Hard-to-Abate Sectors
The Climate Bonds Standard announced that it will be expanding to include criteria and certification for credible transition for heavy industrial sectors, starting with the cement industry. The cement criteria will provide science-based requirements which identify when investment and activity in the sector are aligned with the transition to the Paris Agreement objectives. Throughout 2022, the Climate Bonds Standard plans to expand its criteria to support the low-carbon transition of other heavy-emitting sectors such as basic chemicals and steel.
Download Our New eBook, Understanding Materiality: Lessons From Industries With High ESG Risk
 |
The business case for addressing material ESG issues is clear: the effective management of ESG risks can contribute to superior long-term enterprise value. Sustainalytics Corporate Solutions can help you better understand how ESG risks can impact your operations. Download our analysis of the five industries with the highest ESG risk to learn how companies in any industry can find opportunities for improving ESG risk management. |
Key Moments
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0:01:10 |
Market news |
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0:01:52 |
AFME - ESG Finance Report 2021 |
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0:02:23 |
Green bond market forecast for 2022 and beyond |
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0:02:57 |
Nuclear and gas debate in the EU green taxonomy |
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0:03:18 |
Environmental Finance Sustainable Bonds Insight 2022 |
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0:03:57 |
Boom in sovereign green issuances |
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0:04:09 |
IFC updates guidelines for blue bonds |
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0:04:18 |
Transition bond debates continue |
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0:04:34 |
Ongoing discussion around mapping Scope 3 emissions |
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0:05:01 |
Outlook on scaling up carbon markets |
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0:05:35 |
ISSB and the harmonization of disclosures |
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0:06:13 |
Challenge directed at SBTi process |
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0:06:59 |
EU Green Bond Standards |
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0:07:04 |
CBI report on premiums for green and social bonds |
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0:07:52 |
CBI China Transition Report |
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0:08:06 |
Climate Bonds Standard transition criteria for cement sector |
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0:08:28 |
Special Guest - Simon Vacklen discusses impact reporting for green and social bonds |
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0:16:45 |
SLB overview |
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0:21:03 |
SLL overview |
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0:25:25 |
Audience questions |
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0:30:38 |
Green bonds overview |
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0:34:13 |
Green loans overview |
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0:35:49 |
Social bonds and loan overview |
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0:36:39 |
Labeled products overview |
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0:38:25 |
Transition bond and regulatory news |
Links to Select Resources
- AFME - ESG Finance Q4 and Full Year 2021 - European Sustainable Finance
- Bloomberg - Emerging ESG Bond Boom Puts World on Path to Sell $1.8 Trillion
- DW - European Commission declares nuclear and gas to be green
- Environmental Finance – Sustainable Bonds Insight 2022
- International Finance Corporation – Guidelines for Blue Finance
- South China Morning Post - Sustainable finance: why transition bonds and loans are not popular even as demand for green and sustainable products is growing
- Environmental Finance – The Changing Shape of the Carbon Markets
- BBC News - Climate Change: Top Companies Exaggerating Their Progress - Study
- Official Monetary and Financial Institutions Forum - Greenium set to stay, say sovereign debt issuers
- Climate Bonds Initiative – Transition Finance in China
- Sustainalytics – Maximum Impact: How Bond Impact Reporting Can Improve Corporate Decision Making
- Sustainalytics SPOs:
- Fabbrica Italiana Sintetici Sustainability-Linked Bond Second-Party Opinion
- Cellnex Sustainability-Linked Financing Framework Second-Party Opinion
- Sparebanken Sør Green and Sustainability Bond Framework Second-Party Opinion
- Central American Bank for Economic Integration Social Bond Annual Review
- iA Financial Group Sustainability Bond Framework Second-Party Opinion
Tuesday Mar 22, 2022
Tuesday Mar 22, 2022
Episode Summary
Hosts
- Nicholas Gandolfo, Director, Corporate Solutions
- Aditi Bhatia, Regional Sales Manager, Corporate Solutions
In this episode, hosts Nick and Aditi discuss notable trends and deals in sustainable finance – from rapid market growth, to increasing diversification of products, new taxonomies, sovereign green bonds and sustainability-linked bonds, impact accounting and reporting, and much more. Nick also tackles audience questions, offering some valuable insight on group frameworks and Sustainalytics’ approach to supporting transition finance.
Rapid Growth in Sustainable Finance
2021 saw incredible growth in sustainable finance and ESG assets under management (AUM) are projected to reach US$50 trillion by 2025 and make up one-third of global AUM. Sustainable bonds already made up 10% of global debt issued in 2021, with US$1 trillion issued for the first time and a 40% increase over 2020. And 2022 is showing no signs of slowing down, with a hot start to the year and good momentum looking forward.
World Economic Fund Risk Report 2022
Of the WEF’s top ten global risks by severity, five are environmental issues and the top three directly relate to climate change. View the report here. Maybe it’s no surprise that this theme is carried forward from the previous risk report, but it highlights the continued importance of funding for projects that address climate risk.
Download Our New eBook Getting Started With ESG: What Every Company Needs to Know
As more and more companies are thinking about incorporating ESG considerations into their strategies, Sustainalytics Corporate Solutions wants to ensure they start off on the right foot. Download our practical guide to starting a corporate ESG strategy. Discover key issues that could affect your company, the benefits of action, and the risks of inaction.
Key Moments
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Market news |
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02:17 |
Hot start to the year: looking for $1tn ESG investment in 2022 |
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03:31 |
Big year for taxonomies? ASEAN, Korea, Indonesia, plus EU changes |
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03:58 |
WEF Risk Report: top risks climate-related |
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05:10 |
ESG risk ratings scrutiny – usefulness and robustness |
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05:45 |
Fashion industry financing decarbonization and scope 3 emissions |
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06:20 |
Impact accounting |
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07:15 |
Nuclear & Gas and the EU Taxonomy |
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07:52 |
John Holland Sustainability Linked Bank Guarantee (Australia) |
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08:32 |
COVID recovery and Build Back Better |
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09:02 |
CBI report: Thailand infrastructure |
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09:25 |
World Bank report: sovereign SLB KPIs |
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09:51 |
IEA report: digitization as enabler for transition |
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10:20 |
Environmental Finance report: Green Bond Impact Reporting |
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Green bonds overview |
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11:25 |
Sovereigns: Egypt, Cyprus, Qatar, Denmark, Uruguay |
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12:00 |
Banks |
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13:40 |
Lots of activity and diversification in India |
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14:50 |
Social bonds to fund affordable housing, microfinance, employment |
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Green loans overview |
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16:15 |
Renewables |
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16:40 |
Property |
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17:05 |
Industrial machinery: sustainable water management |
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SLB overview |
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18:10 |
Coal terminals: scope 3 emissions and transition plans |
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19:02 |
Construction: reducing scope 1 and 2 carbon emissions |
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19:38 |
Private equity: coverage approach, science-based targets |
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20:40 |
Telecom: scope 1, 2 and 3 reductions |
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22:55 |
Chemicals: scope 1 and 2, recycling, SBT, Transition Pathway Initiative, IEA |
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Listener questions |
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24:20 |
Q: Can a group framework cover all the entities in the group? |
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26:13 |
Q: How does Sustainalytics sign off on transition and what’s our approach? |
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SLLs |
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29:15 |
Sector activity: shipping, pulp and paper, finance, property, retail, telecom, rail, IT, manufacturing, chemicals, construction, and more |
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Labeled products overview |
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32:30 |
Saudi Arabia: green deposits |
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32:40 |
Insurance connected to climate |
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32:58 |
Trade finance and solar loans |
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Transition finance overview |
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33:28 |
Hydrogen, mining, oil companies, McKinsey report, Japan |
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34:50 |
Countries and regulations |
Links to Select Resources
- Banking Exchange: Global ESG Assets to Hit $50 Trillion by 2025
- Asian Investor: Sustainable Finance Bonds Make Up 10% Of Global Debt Issued in 2021
- World Economic Fund: Global Risks Report 2022
- Morningstar: ESG Ratings Are Bottom-Line Focused, but Have Broader Impacts
- Environmental Finance: 'Impact Accounting' Bodies Launch Survey Of Existing Approaches
- Climate Bonds Initiative: Keeping the Momentum: China Introduces Innovative Labels Into Domestic Market
- Environmental Finance: Impact report quality deters green bond fund investors
- Bloomberg: Global Issuers Land in Canada as Nation’s Banks Fund Abroad
- Sustainalytics SPOs:
- Danske Bank Group Green Bond Framework
- Banco do Brasil Sustainable Finance Framework
- FONPLATA Sustainable Debt Framework
- Northland Power Green Financing Framework
- Sumitomo Mitsui Banking Corporation's Green Bond Framework
- ICG Sustainability-Linked Bond Framework
- Cellnex Sustainability-Linked Financing Framework
- Coca-Cola İçecek A.Ş. Sustainability-Linked Bond Framework
- The Central America Bottling Corporation Sustainability-Linked Financing Framework
Friday Feb 25, 2022
Friday Feb 25, 2022
Episode Summary
Hosts
- Nicholas Gandolfo, Director, Corporate Solutions
- Marika Stocker, Senior Manager, Corporate Solutions
In this episode, Nick and Marika provide a run-down of notable deals in the sustainable finance market, from sovereigns issuing sustainable debt, to corporate activity in green and social bonds and loans, to the introduction of new products and structures. They also answer audience questions about the outlook for labeled transition bonds and possible biodiversity-related indicators for linked transactions.
A Premium for Social Bond Issuances?
While evidence of a premium for green bonds – or greenium – continues to emerge, a similar advantage is being seen for social bond issuances. According to research, compared with conventional bond equivalents, social bonds received a yield discount of around 12 basis points at issuance. The explosion of social bond issuance in response to the COVID-19 pandemic, and the oversubscription of social bonds are contributing to this social premium or “socium” found for some social bond issues.
Insight on Elements for a Just Transition
The World Benchmarking Alliance published a report examining the social elements of companies’ low carbon transition. The report assessed 180 companies across three sectors – oil and gas, electric utilities, and automotive – and found that the majority of high-emitting companies are not taking action to move toward a just transition. Other key findings suggest the people most at risk are left out of decision making; companies will need to reskill their workforce as part of their transition plans; companies are not using their influence to advocate for a just transition; and that a just transition needs to be underpinned by companies’ respect for human rights. Hopefully, we’ll see some of the findings from this report reflected in the performance indicators and use of proceeds of sustainable finance transactions going forward.
Download Our New eBook Getting Started With ESG : What Every Company Needs to Know
As more and more companies are thinking about incorporating ESG considerations into their strategies, Sustainalytics Corporate Solutions wants to ensure they start off on the right foot. Download our practical guide to starting a corporate ESG strategy. Discover key issues that could affect your company, the benefits of action, and the risks of inaction.
Key Moments
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01:45 |
Market news |
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02:09 |
Ideas for a "greener" holiday season |
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02:26 |
December market volumes |
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03:12 |
EU taxonomy discussions continue |
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03:34 |
Steeper borrowing costs for sovereigns slow on climate |
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04:21 |
Socium for social bonds |
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05:01 |
World Benchmarking Alliance just transition corporate assessments |
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05:49 |
Data centers and technology in green finance |
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06:48 |
Using avoided emissions as targets |
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06:54 |
SBTi report on private equity |
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07:22 |
TPI report on pathways for other high-emitting sectors |
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08:12 |
Green bonds overview |
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13:23 |
Social bond overview |
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15:03 |
Green loans overview |
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16:19 |
SLB overview |
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19:30 |
Audience questions |
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24:22 |
SLL overview |
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28:27 |
Labeled products, transition, and regulatory overview |
Links to Select Resources
- Bloomberg: Australia Seen Facing Steeper Borrowing Costs If Slow on Climate
- Environmental Finance: Social Bond 'Socium' Equivalent to One-Notch Credit Rating Upgrade
- GlobeNewswire: The Data Centre Dilemma: The Challenge of Becoming Carbon Neutral - A Look at Twenty Key Metro City Markets
- Treehugger: Volcano-Powered Bitcoin City Proposed for El Salvador
- Transition Pathways Initiative: Carbon Performance Assessment of Other Industrial Companies – Discussion Paper
- Environmental Finance: There Is a Market for Biodiversity - and It Is Expanding
- Wealth Briefing: ESG Phenomenon: Schroders Stokes "Avoided Emissions" Research; Jersey Finance
- Climate Bonds Initiative: Common Language on Financially-Supported Agricultural Green Development Report
Wednesday Feb 02, 2022
Wednesday Feb 02, 2022
Episode Summary
Hosts
- Nicholas Gandolfo, Director, Corporate Solutions
- Aditi Bhatia, Regional Sales Manager, Corporate Solutions
Your hosts Nick and Aditi showcase recent deals and transactions in the global sustainable debt and loan markets, share interesting reports, and highlight new labeled products and regulatory developments in this space.
Climate Promises Made, but What Do They Mean in Practice?
Reflecting on the outcomes from COP26, Nick and Aditi highlight some of the commitments made during the conference and what they could mean going forward. Many of the delegates, including some of the world’s largest polluters, made pledges to target net-zero emissions, curb deforestation, reduce methane emissions, and ‘phase down’ coal and fossil fuels.
The issue of what developed nations could and should do to support developing nations in building resilience against the impacts of climate change was also a hot topic. Some participants and observers were dissatisfied with the outcomes from COP26, and their disappointment was understandable. Though things may not be progressing as far or as quickly as needed, it is promising to see that these pressing climate issues continue to take center stage.
Bridging the Gender Gap Through Sustainable Finance
Among the recommended reading for this episode, a recent report from the International Capital Markets Association (ICMA), UN Women, and the International Finance Corporation (IFC) stands out. Bonds to Bridge the Gap: A Practitioner’s Guide to Using Sustainable Debt for Gender Equality, outlines how sustainable finance can help direct capital to reduce the financial and economic inequalities between women and men. The report offers case studies and examples of gender-related activities, targets, and key performance indicators for issuers to consider.
In a blog post from last year, Sustainalytics’ Ijeoma Madueke also discussed the idea of using gender lens investing and gender bonds to finance the empowerment and socio-economic advancement of women and girls globally. It’s clear that gender is a key issue that could, and should, be included in more sustainable finance transactions.
Key Moments
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00:08 |
Introduction |
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00:49 |
Market news |
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01:10 |
Forecast for 2022 |
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01:32 |
CBI Q3 report |
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02:55 |
Post-COP 26 insights |
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04:30 |
STBi - Net Zero Target Setting Mechanism |
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05:04 |
World Bank report on ways to measure GDP |
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05:33 |
ICMA, IFC, UN Women Report - Bonds to Bridge the Gender Gap |
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06:04 |
Partnership for Carbon Accounting Financials (PCAF) report |
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07:35 |
EU/China Common Ground Taxonomy |
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07:52 |
IOSCO calling for ESG ratings regulation |
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08:51 |
Green bonds overview |
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14:22 |
Social bonds and loans overview |
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15:05 |
Green loans overview |
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16:11 |
SLB overview |
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20:45 |
Audience questions |
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24:25 |
SLL overview |
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26:12 |
Labeled products overview |
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27:35 |
Transition bonds overview |
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29:06 |
Regulatory update |
Links to Select Resources
- Bloomberg – Modi Urges $1 Trillion to Help India’s Transition: COP26 Update
- Market Screener – SEB's The Green Bond Report: COP26 - a Qualified Success
- SBTi – The Net-Zero Standard
- The Age – Hitting Net-Zero Requires a Major Banking Shake-up
- Bloomberg – Nuclear Energy Generator Splits ESG Buyers With Green Bond
- Global Capital – EU, China Produce First Common Ground Taxonomy
- Responsible Investor – IOSCO: ESG Ratings and Data Need Regulatory Oversight to “Increase Trust”
- Sustainalytics SPOs:
- Frost CMBS 2021-1 Green Securitized Bond Framework Second-Party Opinion
- Barclays Capital Real Estate Inc. Social Bond Framework Second Party Opinion
- KPN Sustainability-Linked Finance Framework Second-Party Opinion
- Encevo S.A Green Schuldschein Framework Second Party Opinion
- Empresa Generadora de Electricidad Haina, S.A. Sustainability-Linked Financing Framework Second Party Opinion
Monday Jan 17, 2022
Monday Jan 17, 2022
Episode Summary
Hosts
- Nicholas Gandolfo, Director, Corporate Solutions
- Marika Stocker, Senior Manager, Corporate Solutions
The recurring theme in this episode’s round up of market developments is innovation! Nick also offers a list of recommended reading for the month (be prepared, it’s a long one) and concludes the tale of his encounter with an elephant in Bangladesh first mentioned in October’s episode.
Innovation is the Name of the Game in Sustainable Finance
The thread of innovation continues throughout sustainable finance – from green cryptocurrency to ESG derivatives, and relinked sustainability instruments (sustainability-linked bonds tied to sustainability-linked loans). Ultimately, it’s good to see the market continue to develop, but caution and scrutiny are needed to ensure that labeling and the increasing complexity of financial instruments don’t lead to greenwashing.
Greening of IPOs
On the heels of Allbirds’ initial public offering (IPO), for which Sustainalytics provided a corporate ESG assessment of the company, there are continuing discussions about the greening of IPOs. As the number of companies going public continues to rise, they are each looking for ways to signal to investors that they are a safe bet when it comes to managing material ESG risk and overall company management. Having their ESG or sustainability performance assessed by a third-party prior to their IPO is one way to do that. Watch this space as we see how this trend develops for new IPOs in 2022.
Recommended Reading
Nick runs down a list of reports and research focused on reducing emissions and transition finance.
- IEA – Tracking Report: Methane Emissions from Oil and Gas
- McKinsey – Curbing Methane Emissions: How Five Industries Can Counter a Major Climate Threat
- IEA – Global Hydrogen Review 2021
- IEA – An Energy Sector Roadmap to Carbon Neutrality in China
- Energy Transitions Commission – Keeping 1.5°C Alive: Actions for the 2020s
- HSCB – A Practitioner’s Guide to Net Zero for Banks
Key Moments
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01:28 |
Market overview |
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02:00 |
Greening of IPOs |
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02:40 |
Google adds carbon data to flight info |
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03:00 |
Green cryptocurrency |
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03:32 |
EF conference - ESG Risk Ratings |
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04:08 |
ESG derivatives |
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04:46 |
Taxonomy report from Natixis |
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05:11 |
Nuclear power in sustainable finance |
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05:46 |
COP 26 highlights |
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06:19 |
New in sustainability-linked finance: relinked SLB |
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07:04 |
Biodiversity COP15 highlights |
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07:31 |
Green industry unicorns |
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08:03 |
Report recommendations: McKinsey & IEA methane reports |
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08:40 |
CBI interactive data tool |
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09:36 |
Green bonds overview |
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15:10 |
Social bonds and loans overview |
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21:21 |
Audience questions |
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28:21 |
SLL overview |
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30:53 |
Labeled products overview |
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32:16 |
Transition finance overview |
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33:30 |
Regulatory and country update |
Links to Select Resources
- Natixis – The New Geography of Taxonomies
- CBI Interactive Data Platform
- CBI – China Green Securitization State of the Market 2020
- Oilprice.com - EU’s Green Bond Debut Comes Out Swinging
- Forbes - Africa’s Seychelles Blue Bond Economy Inspires Belize
- Natural Gas World - Japan's Inpex Issues Its 1st Green Bonds
- Reuters - APICORP sells $750 million in debut green bonds
- Sustainalytics SPOs:
- Kvika Bank Green Financing Framework Second-Party Opinion
- The Famur Group Green Bond Framework Second-Party Opinion
- Autodesk Sustainability Financing Framework Second-Party Opinion
- OVS Group Sustainability-Linked Bond Framework Second-Party Opinion
- Autonom Sustainability-Linked Bond Framework Second-Party Opinion
Friday Nov 12, 2021
Friday Nov 12, 2021
Episode Summary
Hosts
- Nicholas Gandolfo, Director, Corporate Solutions
- Aditi Bhatia, Regional Sales Manager, Corporate Solutions
In this episode, Nick and Aditi discuss hot topics in sustainable finance. As the global green, social, sustainable, and sustainability-linked market continues to thrive, our hosts take note of the growing variety in use of proceeds, the debate around sustainability-linked bond penalties, and an eyebrow-raising new SLB issuance from Philip Morris International.
Sustainable Bond Market Reaches Half a Trillion in 2021
The Climate Bonds Initiative (CBI) reported that total labelled bond issuances (green, social, sustainability, transition and sustainability-linked) hit the half trillion mark in the first half of the year. That’s a 59% increase compared by 2020. For the green bond market specifically, CBI predicts annual volumes will reach $1 trillion by 2023. Other trends noted in the report are the continued growth of social and sustainability bonds, with social bond volumes quadrupling in H1 and sustainability bonds increasing 20%. The volume of sustainability-linked bonds also continued to soar in 2021. Transition bond issuances, on the other hand, are still struggling to gain traction.
Biodiversity on the Agenda
Nick notes that biodiversity continues to draw the attention of investors and issuers globally, with a growing number of reports and articles on the topic. This year also saw the UN Convention on Biological Diversity, or COP 15, wrapping up in China, and the launch of the Task Force on Nature-related Financial Disclosures over the summer. In the world of sustainable finance, we think biodiversity-related targets and use of proceeds will likely become more prominent within linked instruments and labeled bond issuances.
Webinar | ESG Risk Rating in APAC: Supporting the Corporate Sustainability Journey
Key Moments
| 00:02:50 | Market overview |
| 00:02:52 | CBI report on H1 2021 |
| 00:04:36 | Tier 2 subordinated debt |
| 00:05:28 | Greenwashing debate |
| 00:06:33 | SLBs and questions about penalties |
| 00:07:05 | Biodiversity |
| 00:08:02 | Nuclear |
| 00:09:18 | Philip Morris SLB |
| 00:10:06 | CBI report on Latin America |
| 00:10:44 | CBI annual conference |
| 00:11:53 | Green bonds overview |
| 00:21:35 | Social loans overview |
| 00:22:58 | Green loans overview |
| 00:24:23 | SLB overview |
| 00:27:57 | Audience questions |
| 00:30:09 | SLL overview |
| 00:31:47 | Transition bonds overview |
Links to Select Resources
-
Climate Bonds Initiative: Sustainable Debt Highlights H1 2021
-
Asian Investor: Do Fears of Greenwashing Outweigh the Evidence?
-
Environmental Finance: French Financial System 'Significantly Exposed' to Biodiversity Risk
-
European Scientist: Kazakhstan Banks on Nuclear Energy For Transition to Low-Carbon Future
-
Climate Bonds Initiative: Latin America & Caribbean: Sustainable Finance State of the Market 2021
-
Climate Bonds Initiative: Climate Bonds Conference21 Videos
-
Climate Bonds Initiative: Transition Finance for Transforming Companies discussion paper
-
Sustainalytics SPOs:
- Isle of Man Sustainability Finance Framework Second-Party Opinion
- Grupo Aeroportuario del Pacífico Green Financing Framework
- Verizon Green Financing Framework
- Axis Bank Sustainable Finance Framework Second-Party Opinion
- California Housing Finance Agency Social Bond Framework for the Purchase and Financing of Citibank, N.A. Affordable Housing Loans
- Bosam Social Bond Framework
- Rumo S.A. Sustainability-Linked Finance Framework
- Lilly Sustainability Bond Framework
- Vodafone Sustainable and Sustainability-Linked Finance Framework Second-Party Opinion
- CEMEX Sustainability-Linked Financing Framework Second-Party Opinion
Wednesday Oct 13, 2021
Wednesday Oct 13, 2021
Episode Summary
Hosts
- Nicholas Gandolfo, Director, Corporate Solutions
- Marika Stocker, Senior Manager, Corporate Solutions
In this episode, Nick and Marika discuss recent developments in sustainable finance that have caught their eye. The diverse topics covered range from the growing momentum behind sustainability-linked bonds to the Tokyo Olympics’ focus on sustainability to the latest report from IPCC. They also note the continued growth of sustainable finance globally due to more issuers, markets, products, and diversification.
Climate Change Considerations for Global Sporting Events
With the summer Olympics behind us and the winter games only a few months away, Nick and Marika discuss the climate frameworks being developed by the International Olympic Committee and other global sporting organizations. These groups are considering the future impact of climate change on global sporting events and vice versa. The frameworks will address issues such as scope 3 emissions due to travel and transport and the effects of changing weather patterns on the locations for future events and athletes’ safety.
The Nuanced and Multidimensional Nature of ESG Ratings
In response to a recent article criticizing the use of ESG scores in credit analysis, Nick touches on the nuances of ESG ratings and how they are used. He cites the multidimensional nature of ESG ratings, noting that some of Sustainalytics’ clients don’t use the top-level ESG Risk Rating score, but rather use aspects of the data to inform their models and investment approach.
Earth Overshoot Day and IPCC's "Code Red" for Humanity
Two interesting and important sets of research are also highlighted. The first is Earth Overshoot Day, which fell on July 29 this year. This marks the date when the human population’s demand for ecological resources outstrips what the Earth can generate in that year. Unfortunately, the date continues to creep closer and closer to the start of the year.
The second is the Intergovernmental Panel on Climate Change’s (IPCC) sixth assessment report. Climate Change 2021: The Physical Science Basis analyzes global climate science research and warns that some of the key effects of climate change, such as rising sea levels, may be irreversible for thousands of years. This work on the current state of the global climate system and the effects of climate change will make for a sobering read ahead of the COP26 conference in Glasgow at the end of October.
Key Moments
| 00:00:09 | Introduction |
| 00:01:18 | Market overview |
| 00:03:11 | EMIA's enhanced principles for labeled bonds |
| 00:03:58 | IOC climate framework |
| 00:05:23 | Earth Overshoot Day |
| 00:06:07 | Blockchain and green finance |
| 00:06:42 | ESG score's place in credit ratings |
| 00:07:49 | IPCC climate report |
| 00:09:25 | Carbon offsets vs targets |
| 00:11:06 | Green bonds overview |
| 00:16:21 | Social and sustainability bonds overview |
| 00:18:12 | Green loans overview |
| 00:19:49 | SLB overview |
| 00:23:23 | Audience questions |
| 00:27:27 | SLL overview |
| 00:31:29 | Labelled products |
| 00:32:33 | Transition bonds overview |
| 00:33:28 | Regulatory developments |
Links to Select Resources
- South China Morning Post: What is Driving an Almost 200 Per Cent Growth in Sustainability-linked Debt Financing
- Environmental Finance: EMIA Releases 'Enhanced' Principles for Labelled Bonds
- Earth Overshoot Day
- Ledger Insights: BIS, HKMA to Explore Tokenizing Green Bonds, Including Public Blockchain
- Environmental Finance: 'Blunt' ESG Scores Have 'No Place' in Credit Rating Process, Says KBRA
- IPCC: Climate Change 2021: The Physical Science Basis
- Environmental Finance: Initiative Launches to Build 'Integrity' in Voluntary Carbon Markets
- GlobalCapital: Deutsche Bank Debuts Green Label in Formosa Format
- The Economic Times: Axis Bank to Now Raise up to $1 Billion Via Overseas AT1 Issue
- Bloomberg Green: JPMorgan Plots Derivatives Path Into New Era of ESG Finance
- Hellenic Shipping News: NYK Issues First Transition Bonds in Japan
- Bloomberg: China Firms Shy Away From ESG Loans Holding Them to Account
- Sustainalytics SPOs:
Tuesday Sep 14, 2021
Tuesday Sep 14, 2021
Episode Summary
Hosts:
- Nicholas Gandolfo, Director, Corporate Solutions
- Aditi Bhatia, Regional Sales Manager, Corporate Solutions
In this episode, Aditi and Nick highlight sustainable finance market developments that happened over the summer. From growing adoption of sustainability-linked debt in the Asia-Pacific region, to the recently published Social Loan Principles, to the continued flurry of sovereign activity in the market, there is a lot to cover. Suggested reading from this episode includes the Energy Transition Commission’s report Bioresources within a Net-Zeto Emissions Economy: Making a Sustainable Approach Possible to learn more about key environmental considerations around biomass as a fuel source.
The EU’s Sustainable Finance Train Keeps Rolling
The European Commission released its renewed sustainable finance strategy, an update to its 10-point action plan from 2018. The strategy covers several initiatives to address climate change and environmental challenges, while increasing investments. It sets out of actions, including broadening sustainable finance to include transition finance and developing international sustainable finance initiatives and standards, among others.
The European Commission also launched its voluntary European Green Bond Standard for corporations and sovereigns. The standard requires proceeds be used for investments that are 100 percent aligned with the EU’s taxonomy and that issuers undergo audits to ensure funds are allocated to the right projects. The European Commission also adopted the Delegated Act supplementing Article 8 of the Taxonomy Regulation. The Delegated Act specifies how large financial and non-financial companies should disclose on the share of their business, investments or lending activities aligned with the EU taxonomy. For full details, please visit the European Commission website.
Climate Aligned Bond Market Much Larger Than We Think
The Climate Bonds Initiative (CBI) published a few interesting reports over the summer including Climate Investment Opportunities: Climate-Aligned Bonds & Issuers 2020. The report presents research on unlabeled climate-aligned bonds (i.e., bonds not explicitly labeled as green by the issuer, but that finance climate-related activities or projects). CBI found 420 climate-aligned issuers from 45 countries with US$913.2 billion in climate-aligned bonds, highlighting sizable investment opportunities.
Key Moments
|
0:00:54 |
Market news |
|
0:01:10 |
Market numbers |
|
0:02:29 |
Continued uptake of social bonds |
|
0:03:19 |
Updated EU sustainable finance strategy |
|
0:03:46 |
EU Green Bond Standard |
|
0:05:02 |
EU Green Deal |
|
0:05:53 |
Bioresources report from the Energy Transition Commission |
|
0:07:05 |
EU Green Bond Framework |
|
0:07:52 |
Market expresses greenwashing concerns |
|
0:08:15 |
Sukuk transactions and sustainable finance |
|
0:08:26 |
Debate around nuclear continues |
|
0:08:51 |
Concept of double materiality |
|
0:09:30 |
Climate Bond Initiative resources |
|
0:10:28 |
Green bonds overview |
|
0:15:27 |
Social bonds and loans overview |
|
0:17:52 |
Green loans overview |
|
0:19:02 |
SLB overview |
|
0:23:43 |
Audience questions |
|
0:26:19 |
SLL overview |
|
0:28:58 |
Labeled products overview |
|
0:30:45 |
Transition bonds overview |
Links to Select Resources:
- Bloomberg: ESG Bond Sales Spring to $1 Trillion as Investors Force Change
- European Commission: Renewed EU Sustainable Finance Strategy
- LMA/LSTA/APLMA: Social Loan Principles
- The Energy Transition Commission: Bioresources within a Net-Zeto Emissions Economy: Making a Sustainable Approach Possible
- Raconteur: Sustainability Metrics Matter: Good Intentions Are No Longer Enough
- World Nuclear News: MEPs Call on EC to Recognize Nuclear as Sustainable
- Climate Bonds Initiative:
- Sustainalytics SPOs:
- RBC Green Bond Framework Second-Party Opinion (2019)
- Virgin Media O2 Green Bond Framework Second-Party Opinion (2021)
- Kaiser Green Bond Framework Second-Party Opinion (2021)
- Shui On Land Sustainability-Linked Bond Framework Second-Party Opinion (2021)
- Seaspan Blue Transition Bond Framework Second-Party Opinion (2021)
Sunday Aug 22, 2021
Sunday Aug 22, 2021
Episode Summary
Hosts:
- Nicholas Gandolfo, Director, Corporate Solutions
- Marika Stocker, Senior Manager, Corporate Solutions
In this episode, Nick and Marika share updates on the latest deals and transactions in the global green, social, sustainability and sustainability-linked (GSSS) debt market. The market shows no signs of slowing down as the numbers for the first half of 2021 surpass all of 2020. Some forecast that the total value of the global GSSS market for 2021 may reach US$1 trillion.
Nick also shares highlights from ICMA’s annual meeting and discusses the growing number of oil & gas companies delving into sustainable finance. Marika gives an overview of recent green bond activities. Responses to audience questions focus on the hot topic of sustainability-linked bonds.
A Push for More Climate-Related Reporting and Disclosure
Leaders at the G7 summit were urged to follow the UK’s lead and make it mandatory for companies to report on their exposure to climate risks as part of a broader effort to decarbonize global investment portfolios. Currently, investors lack information on the climate-related risk linked to the companies they invest in. The Value Reporting Foundation has also come out with more guidance around corporate reporting. The International Financial Reporting Standards (IFRS) is also working on standards around sustainability reporting.
More Oil & Gas Companies Wade into Sustainable Finance
As the global sustainable finance market continues to mature and evolve, companies from hard-to-abate sectors are testing the waters. With more oil & gas companies dipping their toes into the sustainable finance pool, we note a few important things for them to consider when looking at sustainability-linked debt:
- The extent to which scope 3 is included (or not) in the company’s sustainability strategy and framework. This is of particular importance for companies operating in hard-to-abate sectors.
- The extent to which offsets are included (or not) in the company strategy. In our view, they should be a minor part.
- The extent of ongoing exploration and capital expenditures for the existing oil & gas businesses. If it’s significant with no indication of change, then it really doesn’t align with sustainability goals and targets.
Assessing the Ambitiousness of Sustainability-Linked Instruments
In response to an audience question, Nick outlines Sustainalytics’ approach to assessing the ambitiousness of KPI and targets for sustainability-linked instruments. Companies should be evaluating against their past performance, against the performance of their peers and against science-based benchmarks. There are several resources in the market to help companies judge the ambition of their indicators/targets such as the Science-Based Target Initiative, Transition Pathway Initiative, ICMA’s Green Bond Principles and Social Bond Principles, among others.
Key Moments
|
00:52 |
Market news |
|
02:18 |
ICMA resources |
|
03:46 |
Nasdaq Green Designation |
|
04:59 |
Push for more climate disclosures |
|
05:10 |
Value Reporting Foundation guidance |
|
05:32 |
Market talk about SLBs |
|
06:25 |
Sustainability-linked debt in eight metrics |
|
07:24 |
More oil & gas companies in sustainable finance |
|
08:32 |
Biodiversity report |
|
09:00 |
CBI resources |
|
09:42 |
Green bonds overview |
|
15:04 |
Social bonds overview |
|
16:24 |
Green loans overview |
|
17:48 |
Audience questions |
|
24:41 |
SLB overview |
|
26:45 |
SLL overview |
|
29:58 |
Labelled products |
Links to Select Resources:
- ICMA Resource Centre
- Nasdaq Green Designations
- Environmental Finance: Sustainability-Linked Debt in Eight Metrics
- ESG Investor: Financial System Must Play Dual Role on Biodiversity
- Climate Bonds Initiative (CBI) Webinars and Resources
- Slovenian Sovereign Sustainability Bond Framework Second-Party Opinion
- UBS Green Funding Framework Second-Party Opinion
- LimakPort SLB Framework Second-Party Opinion
- TELUS Sustainability-Linked Bond Framework Second-Party Opinion
- Worley Limited Sustainability-Linked Bond Framework Second-Party Opinion