Sustainalytics Launches Transition Bond Second-Party Opinion Service
Series supports corporate issuers in transition industries looking to finance projects that help to decarbonize their production processes
June 3, 2020, Toronto – Sustainalytics, a leading global provider of ESG research, ratings and data, today announced it is launching a Transition Bond Second-Party Opinion Service that provides independent opinions on transition-focused bond frameworks. While the green bond market has experienced significant growth in recent years, leading investors and underwriters recognize that to achieve international climate goals the market must expand to include investments in ‘hard to transition’ activities that incrementally shift toward green. As the largest second-party opinion provider, Sustainalytics is responding to this need by offering a Transition Bond Second-Party Opinion Service based on its assessment framework, which is informed by market input and grounded in research produced by authoritative bodies such as the Intergovernmental Panel on Climate Change and the International Energy Agency.
Sustainalytics defines transition as the decarbonization of economic activities along pathways that are consistent with international goals of net-zero carbon emissions by 2050. Leveraging Sustainalytics’ Transition Bond Second-Party Opinion Service, corporations in high-emitting industries will now be able to signal to investors the credibility of their transition strategy and potentially be able to access capital from the sustainable finance market. The service also enables underwriters to expand their corporate clientele and offers investors access to Sustainalytics’ second-party opinions to help them make more informed decisions regarding transition-focused investments.
Sustainalytics’ framework assesses a transition bond along two dimensions, one on issuance-level considerations and the other on issuer-level considerations. Issuance-level considerations encompass the alignment of use of proceeds with transition goals, while issuer-level considerations center on an issuer’s strategy and commitment to a transition pathway. To support its assessments, Sustainalytics has developed detailed industry-specific criteria for transition-eligible activities. Given market demand, the firm’s service initially focuses on companies in the natural gas and steel industries. Over the next several months, the service will roll-out to companies in several other industries including, but not limited to, marine shipping, aviation, cement and aluminum.
“High-emitting industries and companies have a critical role to play in the transition toward net-zero carbon emissions,” said Kevin Ranney, Director of Sustainable Finance Solutions at Sustainalytics. “Transition finance is helping to incentivize the allocation of capital toward the development of low-carbon solutions. We look forward to working with underwriters and new corporate issuers to accelerate transition finance activities in the market globally.”
To learn more about Sustainalytics’ Transition Bond Second-Party Opinion Service, please visit here.