Sustainable Finance Insights - Climate Adaptation, Biodiversity, Natural Capital, and More

Posted on June 8, 2021

 

 

 

 

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Episode Summary

Hosts:

  • Cheryl Tay, Senior Associate, Corporate Solutions
  • Nicholas Gandolfo, Director, Corporate Solutions

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. 

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

  • Japan state of the market,
  • Malaysia infrastructure opportunities,
  • semi-annual green bond pricing dynamics report,
  • sustainable stock exchanges
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 bonds overview
00:24:56 Sustainability-linked loans overview
00:26.55 Transition bonds 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: