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Episode Summary
Hosts
- Nicholas Gandolfo, Director, Corporate Solutions
- Sabrina Tang, Sales Associate, Sustainable Finance Solutions
In this episode, Nick and Sabrina recap recent developments in the global green, social, sustainability, and sustainability-linked market. They highlight a major milestone for Morningstar Sustainalytics’ sustainable finance team, which delivered its 1,000th second-party opinion in the spring. They also discuss the ever-evolving regulatory environment around ESG disclosures and reporting, the prevalence of measuring impact in the green, social, sustainability and sustainability-linked (GSSS) bond market, and share some of the updated GSSS guidance coming from International Capital Markets Association (ICMA).
ESG and Sustainable Finance Regulations Continue to Roll Out Globally
As noted in previous episodes, the regulatory train continues to roll along for issuers, investors, and service providers in the sustainable finance space. In the U.S., the Securities and Exchange Commission is proposing greater corporate disclosures related to climate and scope 1, 2, and 3 emissions. Also, in Europe, negotiations for the EU Green Bond Standard continue. Finally, there are continued calls for regulation of ESG data and ratings providers as this information is increasingly integrated into global investment decisions. Companies and investors should continue to monitor the shifting regulatory landscape and be prepared to disclose more when it comes to climate and other ESG-related issues.
Reporting on Impact: The Next Big Think in the GSSS Market
It’s a promising sign that a growing number of issuers are funding green and social projects with labeled bonds, but investors also want to know that proceeds from their GSSS bonds are having a positive impact. So, more and more issuers are crunching the numbers on the impacts of their sustainable bonds and loans. During its annual conference, the ICMA released new and updated guidance for GSSS bonds, which include new metrics for impact reporting for green and social projects. Sustainalytics’ Corporate Solutions offers Impact Reporting for Bonds and Loans providing issuers with analysis of the expected and achieved impacts of their financed projects.
Growing Focus on Biodiversity
The Taskforce for Nature-based Financial Disclosures has published the next iteration of its reporting framework, which is looking at issues related to biodiversity and metrics. The International Finance Corporation and World Benchmark Alliance are also working to help advance the biodiversity finance market. Nick anticipates that we’ll start to see and hear more about companies being “nature positive,” how that can be measured, which KPIs should be targeted and tracked, and which use of proceeds are eligible. With over half of the world’s GDP at risk due to biodiversity loss, it’s great to see a growing spotlight on biodiversity.
Key Moments
| 0:01:25 | Market overview |
| 0:01:36 | Sustainalytics’ 1,000th SPO |
| 0:02:07 | Bond market headwinds |
| 0:03:12 | Mainstreaming of sustainable finance |
| 0:03:35 | Blue carbon credits |
| 0:03:40 | Scrutiny over greenwashing continues |
| 0:04:41 | EU Green Bond Standard |
| 0:05:11 | Measuring impact in the GSSS bond market |
| 0:06:13 | Nuclear, gas and the Green Taxonomy |
| 0:06:41 | SEC proposal for scope 1, 2, and 3 disclosures |
| 0:07:02 | TNFD published next draft framework |
| 0:07:36 | GFANZ released guidance for decarbonizing portfolios |
| 0:07:59 | ICMA guidance updates |
| 0:10:14 | Australian Sustainable Finance Initiative taxonomy |
| 0:10:51 | FIFA World Cup going carbon neutral? |
| 0:11:09 | New reports from CBI |
| 0:11:51 | SLB overview |
| 0:15:14 | SLL overview |
| 0:19:40 | Audience questions |
| 0:25:00 | Green bonds overview |
| 0:31:45 | Green loans overview |
| 0:34:09 | Social bonds and loans overview |
| 0:35:33 | Labeled products overview |
| 0:36:35 | Transition bonds overview |
| 0:38:07 | Regulatory and country updates |
Links to Select Resources
- Sustainalytics – The Road to 1,000th SPO: How We Got Here and What’s Next in Sustainable Finance
- Environmental Finance - 'Strong rebound' in EM Sustainable Bond Issuance in 2021
- OilPrice.com - Could Blue Carbon Credits Be the Future of Sustainable Financing?
- Market Screener - European Green Bonds: Proposed Regulatory Tightening Aims to Curb Greenwashing
- Portfolio Adviser - ‘Clear rationale’ for Regulating ESG Ratings, says FCA
- TNFD - TNFD Releases Second Iteration Beta Framework Including Initial Guidance on Metrics
- Environmental Finance - IFC Launches Biodiversity Guide Draft for Bonds
- Glasgow Financial Alliance for Net Zero (GFANZ) - GFANZ Releases Guidance on Credible Net-zero Transition Plans and Seeks Public Input to Accelerate Action
- ICMA - The Principles Announce Key Publications and Resources in Support of Market Transparency and Development
- Regulation Asia - Australia to Start Work on Sustainable Finance Taxonomy in July
- Doha News - Will the FIFA World Cup be Carbon Neutral? Advocates Cast Doubt
- Climate Bonds Initiative
- Sustainalytics SPOs:
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