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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
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