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What’s Happening in Sustainable Finance: Sovereigns Focus on Biodiversity, Use of Proceed Instruments Gaining Ground as Sustainability-Linked Instruments Face Scrutiny, and More

Posted on November 29, 2022


 

 

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Episode Summary

Hosts

  • Nicholas Gandolfo, Director, Corporate Solutions
  • Sabrina Tang, Sales Associate, Sustainable Finance Solutions

Despite continued pressure on global financial markets, our hosts Nick and Sabrina highlight some bright spots within sustainable finance. From the array of green bond transactions coming to market in recent months, to sovereigns exploring sustainable finance opportunities to fund biodiversity, marine conservation and social programs, the sustainable finance market continues to push against market headwinds.

Biodiversity Rising on Sustainable Finance and Corporate Agendas

With COP27 ending and the UN Conference on Biodiversity (COP15) coming up in December, the issue of biodiversity continues to resonate among sustainable finance market participants. Companies are starting to focus more on biodiversity issues and their impact, and the Taskforce on Nature-Related Financial Disclosures has also updated its beta framework. Sovereigns, such as Uruguay, are also joining the movement by funding efforts around biodiversity using sustainability-linked bonds.

Use of Proceed Instruments Increase as Sustainability-Linked Instruments Faces Scrutiny

Contracting global financial markets have put pressure on the bond market. However, Nick does note a slight uptick in the number and variety of labeled use of proceed bond issuances in recent months relative to sustainability-linked bond issuances. This could be due, in part, to the growing scrutiny of linked bond instruments. Should they be more nuanced? Do the benefits of the pricing dynamics outweigh the penalties for not meeting targets? These are all valid questions being raised about these financing instruments that have seen tremendous growth over the last few years. It remains to be seen whether these questions translate into new norms for the market.

Key Moments

0:00:57Market overview
0:01:29 GSSS market pressures
0:02:40 Biodiversity and sovereign SLBs
0:03:51 Continuing scrutiny of sustainability-linked instruments
0:04:25FCA consultation on sustainability disclosure requirements
0:05:15 Banks explore funding pools of SLLs
0:05:45Singapore banks' commitments to Net Zero
0:06:32New reports from Climate Bonds Initiative
0:07:55 SLB and SLL overview
0:13:39Audience questions
0:17:56Green bonds overview
0:20:47Green loans overview
0:22:25Social bonds and loans overview
0:23:46Labeled products overview
0:24:50Transition bonds overview
0:26:41Regulatory and country updates

 

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