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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 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
00:08 |
Introduction |
00:49 |
Market news |
01:10 |
Forecast for 2022 |
01:32 |
CBI Q3 report |
02:55 |
Post-COP 26 insights |
04:30 |
STBi - Net Zero Target Setting Mechanism |
05:04 |
World Bank report on ways to measure GDP |
05:33 |
ICMA, IFC, UN Women Report - Bonds to Bridge the Gender Gap |
06:04 |
Partnership for Carbon Accounting Financials (PCAF) report |
07:35 |
EU/China Common Ground Taxonomy |
07:52 |
IOSCO calling for ESG ratings regulation |
08:51 |
Green bonds overview |
14:22 |
Social bonds and loans overview |
15:05 |
Green loans overview |
16:11 |
SLB overview |
20:45 |
Audience questions |
24:25 |
SLL overview |
26:12 |
Labeled products overview |
27:35 |
Transition bonds overview |
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
What’s Happening in Sustainable Finance: Innovation is the Name of the Game
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
01:28 |
Market overview |
02:00 |
Greening of IPOs |
02:40 |
Google adds carbon data to flight info |
03:00 |
Green cryptocurrency |
03:32 |
EF conference - ESG Risk Ratings |
04:08 |
ESG derivatives |
04:46 |
Taxonomy report from Natixis |
05:11 |
Nuclear power in sustainable finance |
05:46 |
COP 26 highlights |
06:19 |
New in sustainability-linked finance: relinked SLB |
07:04 |
Biodiversity COP15 highlights |
07:31 |
Green industry unicorns |
08:03 |
Report recommendations: McKinsey & IEA methane reports |
08:40 |
CBI interactive data tool |
09:36 |
Green bonds overview |
15:10 |
Social bonds and loans overview |
21:21 |
Audience questions |
28:21 |
SLL overview |
30:53 |
Labeled products overview |
32:16 |
Transition finance overview |
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
Thursday Jul 22, 2021
Thursday Jul 22, 2021
Episode Summary
Hosts
- Nicholas Gandolfo, Director, Corporate Solutions
- Aditi Bhatia, Regional Sales Manager, Corporate Solutions
In this episode, Nick and Aditi cover some of the recent developments in sustainable finance with market diversification being the common thread. Market volumes continue to increase showing positive year-over-year momentum. Contributing to that growth is new market entries from various sectors as well as a broader scope of activities and projects being funded. With this diversity comes greater scrutiny of the market, especially of issuers and borrowers, their projects and frameworks, as well as their lenders. In our opinion, such scrutiny and debate will ultimately lead to more robust and credible sustainable finance activities.
Climate Transition’s Influence on Sustainable Finance
Although not expressly transition, some sustainable financing frameworks and issuances are coming to market in alignment with ICMA’s Climate Transition Finance Handbook. Japan’s Financial Services Agency has also released its Basic guidelines on climate transition finance with the aim of encouraging the allocation of more funds to contribute to the country’s carbon neutrality goals. In response to a listener question, Nick notes the Handbook’s use in the sustainability-linked bond and loan frameworks of companies in hard-to-abate sectors.
More Sovereigns Move Forward on Sustainable Debt
Sovereigns continue to issue sustainable bonds to support their economic recoveries. Issuances from Germany, the UK and Pakistan made headlines, as did announcements from Canada and Kenya. The principality of Andorra even got in on the action, issuing its first sustainability bond and raising EUR 500 million to finance biodiversity conservation, sustainable water management, employment generation and access to essential services, among other green and social projects.
Diversification's Positive Impact on the Market
Diversification within the global sustainable debt market continues and we see that as a good thing. The entry of market participants from various sectors and the financing of innovative green and social projects has led to greater debate and scrutiny of the market. Highlighted this month are transactions from companies in real estate, semiconductors, agriculture, rail, household goods, banks, technology, education and the mainstay, renewables. This diversification of sectors and types of projects financed is important for the continued evolution and improvement of the sustainable finance market.
Key Moments
00:08 |
Introduction |
00:46 |
Market news |
01:14 |
Market volumes up |
01:53 |
Shell landmark court verdict |
02:42 |
Exxon shareholder activism |
02:59 |
IEA “Net Zero by 2050” report |
04:36 |
ICMA additional recommendations for building taxonomies |
05:03 |
ICMA additional guidance for climate transition finance |
05:49 |
Transition bonds in danger? |
06:39 |
Challenges to SLBs |
07:28 |
Update to Sustainability-Linked Loan Principles |
08:24 |
Sustainable Trade Finance |
09:12 |
Oil and gas and sustainability-linked frameworks |
10:21 |
New Climate Bonds Initiative reports |
10:44 |
Hong Kong Monetary Authority guidelines on sustainable finance subsidy program |
11:26 |
Transactions overview |
14:53 |
Social bonds overview |
15:49 |
Green loans and bonds overview |
16:24 |
Sustainability-linked bonds overview |
19:42 |
Listener question |
22:11 |
Sustainability-linked loans overview |
24:19 |
Transition bonds overview |
25:21 |
Labeled products overview |
26:08 |
Regulatory update |
Links to Select Resources
- IEA: Net Zero by 2050 report
- APLMA/LMA/LSTA: Sustainability-Linked Loan Principles May 2021
- Climate Bonds Initiative:
- Regulation Asia: HKMA Issues Guideline on Green & Sustainable Finance Grant Scheme
- Air Liquide Sustainable Finance Framework Second-Party Opinion
- Kellogg Sustainability Bond Framework Second-Party Opinion
- CaixaBank Sustainable Development Goals Framework Second-Party Opinion
- Weir Group PLC Sustainability-Linked Bond Second-Party Opinion
- Seaspan Sustainability-Linked Bond Second-Party Opinion
- Environmental Finance: Japan's FSA publishes bond & loan 'transition finance guidelines'
- Forbes India: Green bonds, sustainable bonds demand picks up in India in the pandemic era
Wednesday Jun 23, 2021
Wednesday Jun 23, 2021
Episode Summary
Hosts
- Nicholas Gandolfo, Director, Corporate Solutions
- Marika Stocker, Senior Manager, Corporate Solutions
In this episode , Nick and Marika discuss the bustling labeled bond market and its ongoing diversification in terms of the types of issuers, geographies, the use of proceeds and products. As the year rolls on, the sustainable finance market continues to produce strong volumes in terms of the number of transactions and their value. They also highlight developments around transition finance guidance as well as new and updated principles in the loan market. As always, they take a couple listener questions, this time focused on how bonds are labeled and the emergence of combined instruments.
Sovereign activity in the bonds space
Activity in the labeled sovereign bond market looks to be heating up for 2021. Several nations including Russia, Canada, Hungary, UK are considering issuing sustainable sovereign bonds. We’ll keep an eye on this space to see which countries come to market with green, social or sustainability sovereign bonds.
Transition finance
More is being written about transition finance and whether sustainability-linked bonds (SLBs) have taken their place in the market. No doubt SLBs have come on strong, but we see diversification, especially with respect to product, as important for overall market health. Nick notes some of the challenges that could account for the low number of labeled transition finance thus far but anticipates that in time we will see more transition bond issuances. Nick also highlights two transition-focused reports worth checking out - The Transition Pathways Initiative’s annual "State of Transition" and Natixis’ "Transition Tightrope" series.
Continuing momentum of SLBs
On the SLB front, the segment continues to grow. Transactions beget more transactions as borrowers and lenders gain confidence in the instrument. While some observers have doubted a handful of issuances due to questions around the materiality, relevance and ambitiousness of their sustainability performance targets and KPIs, the scrutiny is ultimately good and will raise the caliber of SLBs coming to market.
Key moments
00:09 |
Introduction |
00:55 |
Market news |
02:20 |
TPI “State of Transition” report |
03:05 |
Ongoing developments in China |
03:55 |
Transition bonds vs SLB? |
05:07 |
Natixis “Transition Tight Rope” report series |
05:40 |
EU Taxonomy developments |
06:31 |
Social Loan Principles released |
07:07 |
ELFA/LMA - ESG considerations in leveraged loan paper |
08:11 |
Bond issuance overview |
13:21 |
Loan transactions overview |
14:18 |
Sustainability-linked bonds overview |
18:54 |
Questions |
22:31 |
Sustainability-linked loan overview |
27:04 |
Transition bond overview |
29:01 |
Regulatory updates |
Links to select resources
- Transition Pathway Initiative: TPI State Transition 2021 Report
- Natixis: Brown Industries: The Transition Tightrope
- European Leveraged Finance Association (ELFA)/Loan Market Association (LMA): Guide to Company Adviser to ESG Disclosure in Leveraged Finance Transactions
- APLMA/LMA/LSTA: Social Loan Principles (new)
- APLMA/LMA/LSTA: Sustainability-Linked Loan Principles (updated)
- Science Based Targets: Public consultation for maritime transport sector
- FedEx Sustainability Bond: Framework | Second-Party Opinion
- NAVER Sustainability Bond: Framework | Second-Party Opinion | News Release
- Berlin Hyp Sustainability-Linked Bond: Framework | Second-Party Opinion
- Environmental Finance: Amundi launches first ‘just transition’ climate fund
Tuesday Jun 08, 2021
Tuesday Jun 08, 2021
Episode Summary
In this round up of news, transactions, and regulatory updates in the global sustainable finance market, Nick and Cheryl discuss climate adaptation and the importance of biodiversity and natural capital. They also share some useful updates and resources from the Climate Bonds Initiative (CBI). CBI recently launched criteria for hydropower, providing guidance for developers on ensuring climate change resilience. It also published several new reports covering the state of green finance in Japan, infrastructure in Malaysia, and the pricing dynamics of green bonds. Finally, CBI shared a helpful list of stock exchanges with dedicated green bond or sustainable bond segments.
IFRS Sustainability Standards Board
On the topic of the growing call for global sustainability standards and the integration of sustainability into financial reporting, Nick and Cheryl discuss the International Finance Reporting Standards (IFRS) Foundation’s proposal for a sustainability standards board that would sit alongside the International Accounting Standards Board and build on the work of other standard setters focused on sustainability reporting.
Development in US Sustainability
In the U.S., the Biden administration announced commitments to cut emission by 50% compared to 2005 levels. Nick anticipates that the U.S. Securities and Exchange Commission’s increasing focus on environmental, social and governance (ESG) and climate issues in finance will ultimately have positive ramifications for the broader sustainable finance market.
Combination Instruments
Touching on a prediction made about what we might see in the market this year (listen to our 2021 Outlook episode), Nick touches on the emerging trend of combination instruments. Both Takamatsu Construction Group in Japan and Verbund in Austria issued sustainability-linked green bonds which combine the best of both worlds. Though many investors and issuers still show a preference for either use of proceed bonds (more transparent and explicit allocation of funds) or linked instrument (allowing more flexibility), the idea of a combined approach is being floated in the market.
Nick and Cheryl wrap things up by answering a couple of listener questions and offering up a fun fact about bees and why it’s imperative that we protect these pollinators.
Hosts:
- Nicholas Gandolfo, Director, Corporate Solutions
- Cheryl Tay, Senior Associate, Corporate Solutions
Key Moments:
00:00:09 |
Introduction |
00:01:39 |
Market news |
00:01:39 |
Climate adaptation article |
00:03:07 |
CBI Hydropower criteria |
00:04:08 |
Additional CBI reports
|
00:05:59 |
IFRS reporting standard proposal |
00:07:55 |
Biodiversity / natural capital initiatives |
00:09:25 |
US administration new emission targets |
00:10:09 |
SLB continuing trend |
00:11:38 |
Hybrid instruments - linked and labelled |
00:12.58 |
Green elements of insurance |
00:14:04 |
Bond issuance overview |
00:19:49 |
Green loans and social bonds overview |
00:22:04 |
Sustainability-linked bond overview |
00:24:56 |
Sustainability-linked loan overview |
00:26.55 |
Transition bond overview |
00:28:58 |
Sustainable product developments |
00:30:08 |
Listener questions |
00:32:13 |
Fun fact - why we need to protect bees |
Links to Select Resources:
- Climate Bonds Initiative: Japan Green State of the Market | Green Bond Pricing H2 2020 | Hydropower Criteria
- Environmental Finance: IFRS Foundation Sets Out Strategic Direction for Global Sustainability Standards
- Bloomberg: Global Securities Watchdog Targets Greenwashing in New ESG Plan
- ON SPO with EU Taxonomy add on
- Global Capital: Enel Takes Crown from AB InBev for Largest SLL
- Sustainalytics Published Projects: Visit our website to view the second-party opinions and annual reviews mentioned in this episode
- Earthday.org: Facts about bees
Wednesday May 26, 2021
Sustainable Finance Insights - Discussing ESG Insights in Supply Chains
Wednesday May 26, 2021
Wednesday May 26, 2021
In this special episode of the Sustainalytics Podcast, our host Nick Gandolfo is joined by Nicole Verkindt, Director, Sustainalytics Corporate Solutions to discuss the role of ESG in supply chains. Given the large proportion companies spend in their supply chain (about 70% on average), the environmental, social and governance (ESG) and sustainability performance of supply chain companies can not be ignored. And for suppliers, a focus on improving their own ESG performance could be a competitive advantage.
Nicole and Nick also discuss the launch of Sustainalytics’ ESG Assessment Platform, a tool to help companies assess the overall sustainability of the organizations that they work with, from customers to suppliers to partners.
Visit our website to learn more about the ESG Assessment Platform.
Host:
Nicholas Gandolfo, Director, Corporate Solutions (Commercials), APAC
Guest:
Nicole Verkindt, Director, Corporate Solutions