Verpassen Sie nicht diese Gelengenheit, das Neueste aus dem Markt zu besprechen! 

Sie sind herzlich eingeladen, am Climate Bonds - Berlin Hyp* Green Bonds Kongress in Frankfurt am Mittwoch 28. Juni teilzunehmen, mit Crédit Agricole als Gastgeber.

Bitte Ihre Anwesenheit zu bestätigen bei Frau Peggy Stadler unter peggy.stadler@ca-cib.com.

Der Tag verspricht eine gut gefüllte Tagesordnung, eingeteilt in zwei Teile.

Am Morgen wird Bridget Boulle, Leiterin der Marktforschung bei Climate Bonds, unseren neuesten Bericht vorstellen: Entwicklungen in der Green Bond Mittelverwendung – pecunia non olet. Bridget wird ihre einschlägige Erfahrung mit uns teilen, die sie in ihren vielen Jahren bei Climate Bonds aufgebaut hat.  

Am Nachmittag haben wir nach einer Podiumsdiskussion die einzigartige Gelegenheit, eines von Deutschlands grünsten Gebäuden zu besichtigen, den Taunus Turm!

Details des Kongresses:

Ort: Crédit Agricole, Taunusanlage 14, 60325 Frankfurt am Main

Zeit: 11.00h (CEST), Mittwoch, 28. Juni

Sprache: Präsentationen und Diskussionen werden in Englisch geführt

Bitte Ihre Anwesenheit zu bestätigen bei Frau Peggy Stadler unter peggy.stadler@ca-cib.com

Tagesordnung:

Vormittag

11:00h

Willkommensgruss

Tanguy Claquin, Head of Sustainable Banking, Crédit Agricole CIB

11:05h

Einleitung durch Berlin Hyp

Gero Bergmann, Vorstandsmitglied, Berlin Hyp

11:20h

Climate Change Action – Warum wir uns beeilen müssen

Manuel Adamini, Director, Investor Outreach & Partners Programme, Climate Bonds

Initiative

11:40h

Post-issuance Use of Proceeds reporting in the Green Bond market: Trends and Best Practice

Bridget Boulle, Head of Market Analysis, Climate Bonds Initiative

12:30h Lunch

Nachmittag

13:30h Podiumsdiskussion: Grüne Gebäude als eine Green Bonds Mittelverwendungskategorie – Wie sieht der Mark aus und wie sollte Bericht erstattet werden

14:30h Spaziergang zum Taunus Turm

14:45h Ein näherer Blick ins Innere Deutschlands grünsten Gebäudes – Besuch des Taunus Turms

Verpassen Sie nicht diese Chance, andere Marktteilnehmer zu treffen.

RSVP bitte hier.

Hoffentlich sehen wir uns dort!

Bis bald,

Climate Bonds

Disclosure: Several organisations named in this communication are Climate Bond Partners. A full list of Partners can be found here.

Disclaimer: The information contained in this communication does not constitute investment advice in any form and the Climate Bonds Initiative is not an investment adviser.  Any reference to a financial organisation or investment product is for information purposes only. Links to external websites are for information purposes only. The Climate Bonds Initiative accepts no responsibility for content on external websites.

The Climate Bonds Initiative is not endorsing, recommending or advising on the merits or otherwise of any investment or investment product and no information within this communication should be taken as such, nor should any information in this communication be relied upon in making any investment decision. 

A decision to invest in anything is solely yours. The Climate Bonds Initiative accepts no liability of any kind, for any investment an individual or organisation makes, nor for any investment made by third parties on behalf of an in individual or organisation, based in whole or in part, on any information contained within this, or any other Climate Bonds Initiative public communication.

CBI latest report focusses on post-issuance, issuer best practice, impact reporting trends and steps to improve market integrity

What’s it all about

The Climate Bonds Initiative has today released its latest report: Post Issuance Use of Proceeds – Trends and Best Practice in Frankfurt am Main at a Berlin Hyp green bonds event hosted by Crédit Agricole.

The report has been published in partnership with Berlin Hyp, BlackRock Inc., and Luxembourg Green Exchange and is Climate Bonds Initiative’s first in-depth analysis of current practice around post-issuance reporting of green funding and monitoring of green bond allocation.

Its launch marks another stage in Climate Bonds work in building market integrity around green capital investment, ranging from science based standards and issuer guidance to national development programs and climate finance advocacy.

The new report sheds light on a subject on which there has been little research and analysis to date.

Dataset

Post-Issuance Use of Proceeds – Trends and Best Practice contains data from 146 issuers (Corporate 43%, Municipal 38%, Commercial Banks 12%, Government agencies and entities 4% and ABS 3%) and 191 green bonds issued up to 1 April 2016 to the value of USD 66bn (Figure 1).

(Figure 1)

Overall findings at a glance

The study highlights that most issuers provided a degree of public information after issuance, with 74% of bonds complying by number or 88% by value within the dataset (Figure 2).

The report also provides examples of best practice by country and by issuer.

(Figure 2)

Impact reporting

The report reflects that impact reporting is a growing feature of reporting. It’s is now in place for 38% of bonds (Figure 3 below).

This trend is increasing year on year: rising from 33% in 2013 to 47% in 2016.

The term ‘impact reporting’ indicates any type of reporting that looks to quantify the climate or environmental impact of a project or asset numerically.

Impact reporting can be extremely useful to investors when looking to measure the positive externalities through their investments.

(Figure 3)

Further detail on the various metrics used to quantify impact reporting in contained in the report.

Key recommendations

Whilst observing an improving trend in transparency, Post-Issuance-Use of Proceeds – Trends and Best Practice makes recommendations for the market to maintain its integrity and build investor confidence as it grows towards a USD $1tn by 2020 green finance ambition.

Core recommendations are set out for both issuers and regulators around:

• Comparability
• Meeting recommended guidance
• Failure to report
• Leadership by large issuers
• Regulator market guidelines
• Common databases and basic reporting templates

Who’s saying what?

Gero Bergmann, Member of the Board of Management of Berlin Hyp:

“Transparent and solid reporting are a robust foundation for integrity in the green bond market. If we want to continue sustainable growth in the market and contribute to mobilizing urgently needed private capital for environmental & climate-related projects, we should secure investors’ confidence in green bonds by supporting quality in green bond reporting. This report clearly assists in achieving that goal.”

Ashley Schulten, Director & Head of Climate Solutions, Fixed Income, BlackRock:

“Impact reporting has been a focus of our work on Green Bonds at BlackRock for several years. 

“Today, this Use of Proceeds report from Climate Bonds Initiative reflects the tremendous progress the market has made in this area. “  

“The development of harmonized reporting guidelines supported by the Green Bond Principles, increased comfort from issuers around disclosure, and positive feedback from investors has paved the way to a significant pick up in quality of environmental reporting on Green Bonds.”  

Jane Wilkinson, Head of Sustainable Finance at Luxembourg Stock Exchange:

“Transparent and comparable reporting on use of proceeds and project impact is a critical component to boosting investor confidence, hence building scale in the green bond market. This Climate Bonds report reflects there are still areas for improvement." 

“The mandatory requirements for green bonds admitted to the Luxembourg Green Exchange (LGX) is a fantastic way for LGX to promote more widespread reporting. And issuers have embraced this initiative. To date, all green bonds displayed on LGX have submitted post-issuance reporting within the relevant reporting deadline."

"Regular reporting and consistent disclosure are amongst the practices that the report recommends should be more widely embedded in green bond markets." 

The Last Word

We leave the last word to Sean Kidney:

“International green bond markets need to accelerate in depth and diversity to meet country climate finance goals. This report reflects the best practice examples by market leaders and where progress is still needed.”

“Wider adoption of its recommendations as the standard by regulators, issuers and potential issuers will strengthen market guidance.”

“This give institutional investors the confidence to commit long term capital allocations at the scale now required to meet global emissions reduction targets.”

Download the full report here.

Till next time,

Climate Bonds

Disclosure: Several organisations named in this communication are Climate Bonds Partners. A full list of Partners can be found here.

Disclaimer: The information contained in this communication does not constitute investment advice in any form and the Climate Bonds Initiative is not an investment adviser.  Any reference to a financial organisation or investment product is for information purposes only. Links to external websites are for information purposes only. The Climate Bonds Initiative accepts no responsibility for content on external websites.

The Climate Bonds Initiative is not endorsing, recommending or advising on the merits or otherwise of any investment or investment product and no information within this communication should be taken as such, nor should any information in this communication be relied upon in making any investment decision. 

A decision to invest in anything is solely yours. The Climate Bonds Initiative accepts no liability of any kind, for any investment an individual or organisation makes, nor for any investment made by third parties on behalf of an individual or organisation, based in whole or in part on any information contained within this, or any other Climate Bonds Initiative publicly communication.

After a busy June, a quieter July for the team. But don’t miss the chance to meet our CEO, Sean Kidney, on his special visit to Australia, or in Beijing.

Or say hello to Serena Vento at the Breakthrough Money roundtable in London on 7^th of July.

If you are going to the HLEG event in Brussels on the 18^th, have a quick coffee with our EU policy expert Diletta Giuliani. You can email her here.

Here’s our July agenda:

'Till next time,

Climate Bonds

Disclaimer: The information contained in this communication does not constitute investment advice in any form and the Climate Bonds Initiative is not an investment adviser.  Any reference to a financial organisation or investment product is for information purposes only. Links to external websites are for information purposes only. The Climate Bonds Initiative accepts no responsibility for content on external websites.

The Climate Bonds Initiative is not endorsing, recommending or advising on the merits or otherwise of any investment or investment product and no information within this communication should be taken as such, nor should any information in this communication be relied upon in making any investment decision. 

A decision to invest in anything is solely yours. The Climate Bonds Initiative accepts no liability of any kind, for any investment an individual or organisation makes, nor for any investment made by third parties on behalf of an individual or organisation, based in whole or in part, on any information contained within this or any other Climate Bonds Initiative public communication.

Ambitious agenda to grow green securitisation, green bonds, ABS & covered bond markets in Europe.

What’s it all about?

A new European Green Securities Steering Committee has been launched with the goal of promoting green securities market development in Europe including covered, asset-backed and senior unsecured bonds. The committee has backing from the Climate Bonds Initiative (CBI) and the European Covered Bond Council (ECBC) with the support of the UNEP Inquiry.

The inaugural meeting of the new Committee was held on June 29^th 2017 where members established the group’s priorities and forward agenda.

Who’s involved?

The Committee is comprised of industry-wide members representing twenty-two European commercial and development banks, investors, rating agencies, NGOs and industry associations, including ABN AMRO, Clifford Chance, Glennmont Partners, and Obvion.

What’s on the agenda?

Members will be working together on the development of Europe’s budding green debt market, influencing policymakers and implementing action plans to support market growth that contributes to the achievement of EU climate objectives and green infrastructure goals.

Committee priorities include:

• Identifying regulatory and supervisory hurdles for both issuers and investors around green covered bonds and green securitisation​
• Supporting common definitions for green at EU level, leveraging existing labelling schemes
• Promoting origination of green assets by facilitating the identification of green assets at the European level and through standardisation of contracts where appropriate
• Developing a common position on relevant regulation under development at the EU level, such as the STS and Covered Bonds files
• Investigating aggregation and warehousing solutions for smaller projects
• Exploring the potential for favourable capital treatment for green securities based on differential risk profiles and asset valuations
• Identifying opportunities to further issuances of green asset-backed securities and covered bonds in well-established markets
• Coordinating and encouraging investor demand

Who’s saying what

Luca Bertalot, Secretary-General, European Covered Bonds Council:

“Coordination on the ‘green’ debate at the European level is essential; this diverse group will facilitate engagement with the European institutions to grow the market for green covered, asset-backed and senior unsecured bonds.”

Nick Robins, Co-Director, UNEP Inquiry:

"This new initiative is perfectly timed - responding to the Europe's growing policy and market interest in expanding green securities. Crucially, it will help to build trust and confidence in the potential of asset-backed securities for financing a sustainable economy.”

Sean Kidney, CEO, Climate Bonds Initiative:

“We have only a short time to achieve our climate and energy targets. The European Green Securities Steering Committee offers an opportunity to maximise the origination of green assets and influence regulation at the European level.”

Where can I find out more?

It depends on what you’re looking for. Here’s some reference material that may help.

April 2015 OECD publication “Unlocking SME finance through market-based debt” on financing via ABS, securitisation and covered bonds is here.

ECBC Covered Bond Fact Book 2016 is a comprehensive annual information resource and is available here.

The Feb 2017 ground breaking Climate Bonds & CCCEP-London School of Economics joint report “Public sector agenda for stimulating private market development in green securitisation in Europe” is here.

March 2017 Climate Bonds two page briefing papers on green securitisation and green covered bonds are here and here.

The April 2017 OECD report “Mobilising Bond Markets for a Low Carbon Transition” that references both green bonds and ABS is here.

May 2017 European Commission announcement “Capital Markets Union: EU reaches agreement on reviving securitisation market” is here and EC background on securitisation policy and STS is here.

The Last Word

Green investment needed to reach the EU’s 2030 emissions targets ranges between 2.6 and 4.5 percent of GDP, with EUR 200 billion of annual investment needed to back clean energy and energy efficiency investments alone.

Increasing the uptake of green bonds and green securities of various types can help unlock finance from debt capital markets for low carbon and climate-resilient infrastructure projects across Europe. 

The new Steering Committee has an ambitious agenda to grow green investment with efforts to be directed at the policy, regulatory, investor and market level. Its foundation members see the opportunities.

Their timing couldn’t be better.

Six global climate leaders including Christiana Figueres have just published a call in the prestigious publication Nation calling for accelerated action on climate and carbon efforts over the next three years, part of the Mission2020 project.

One of their six milestones is a USD1trillion green bonds and green finance market by 2020.

Green bonds and asset-backed, covered and senior unsecured bonds are a growing and increasingly vital segment of climate finance.

They now have an even bigger role to play in new infrastructure investment, emissions reduction goals and transitioning to a low carbon economy.   

The European Green Securities Steering Committee has been established to help achieve exactly that.

‘Till next time

Climate Bonds

Disclaimer: The information contained in this communication does not constitute investment advice in any form and the Climate Bonds Initiative is not an investment adviser.  Any reference to a financial organisation or debt instrument or investment product is for information purposes only. Links to external websites are for information purposes only. The Climate Bonds Initiative accepts no responsibility for content on external websites.

The Climate Bonds Initiative is not endorsing, recommending or advising on the financial merits or otherwise of any debt instrument or investment product and no information within this communication should be taken as such, nor should any information in this communication be relied upon in making any investment decision. 

Certification under the Climate Bond Standard only reflects the climate attributes of the use of proceeds of a designated debt instrument. It does not reflect the credit worthiness of the designated debt instrument, nor its compliance with national or international laws.

A decision to invest in anything is solely yours. The Climate Bonds Initiative accepts no liability of any kind, for any investment an individual or organisation makes, nor for any investment made by third parties on behalf of an individual or organisation, based in whole or in part on any information contained within this, or any other Climate Bonds Initiative public communication.

Impact Reporting in the green bond market: A closer look at climate and environmental practice

Only a few weeks ago we launched our latest study Post-Issuance Use of Proceeds – Trends and Best Practice.

The report is Climate Bonds Initiative’s first detailed study of current practice around post-issuance reporting of green funding and monitoring of green bond allocation.

The Post-Issuance Use of Proceeds – Trends and Best Practice data pool is 191 green bonds from 146 issuers to the value of USD66bn all with an issue date before 1 April 2016. 

This date was chosen as most issuers commit to annual reporting so this gave a full year plus a 2 month grace period to allow issuers to publish reporting. 

With increasing attention being paid to impact reporting across investment classes, we look a little closer at the findings and issues. 

What is "impact reporting"?

Impact reporting indicates any type of reporting (by a green bond issuer on the bonds' use of proceeds) that looks to quantify the climate or environmental impact of a project or asset that is expressed numerically. 

This level of reporting is gaining prominence in green bond markets, and helps investors measure positive externalities through their investments.

An externality being the consequence of an economic activity affecting someone/something who is not directly involved in it, and it can either be positive or negative. Climate and green bonds by their nature produce positive externalities - emissions or water or energy savings are examples.

To many investors and market stakeholders it is increasingly important. Particulary as the green bond issuer base widens - across geographic regions, across ratings bands, and as the asset base extends from the mainstays of renewable energy to infrastructure and other sectors.

For some potential issuers it remains an additional task and potentially a discincentive. For some institutional investors, it is becoming a mainstream ESG consideration. 

The Overview 

Of the 191 green bonds in the reports' data pool, some form of impact reporting was in place for 38% of bonds. 

(Figure 1)

The Year on Year Trend 

The report also finds that the percentage of issuers providing impact reporting has been rising on a yearly basis, from 33% in 2013 to 47% in 2016.

 (Figure 2)

Should everyone provide impact reporting?

Post-issuance reporting is critical to ensure the integrity of the green bonds market and therefore a requirement by most market guidelines (Climate Bonds Standard, Green Bond Principles or country-specific guidelines), however impact reporting is not key to differentiating between a green and a non-green asset.

Individual investor’s expectations differ according to circumstances, some of them do not demand impact reporting, whereas for others it is a conditio sine qua non.

However, while impact reporting is the best of best practice, most investors do not expect impact reporting for all types of issuers and all types of projects. 

Smaller issuers with small bond programs are not typically expected to provide impact reporting because it can be time consuming and resource-intensive.

Smaller issuers can make an effort to provide basic information about how proceeds are being allocated, and leave impact reporting for wide asset bases and more ‘complicated’ sectors. In 'easy’ sectors like wind or solar power, the call for impact reporting is not as significant comparing to water or greenhouse gasses.

A wide range of metrics

At present, impact reporting lacks a standardized procedure and the metrics being used are inconsistent.

Figure 3 below reflects the many variations we observed. 

For greenhouse gas emissions reporting is mostly on ‘CO2 savings’, however some issuers report on ‘intensity’ or ‘emissions’.

While for energy reporting ‘savings’ is the most common metric, but ‘energy intensity’, ‘TCE reduction’ and ‘production of (clean) energy’ metrics are also used.

The lack of a norm might hold back impact reporting becoming a standard practice.

Focus on specific sectors

As we previously pointed out, some sectors need impact reporting more than others.

For example, buildings themselves are not ‘green’ or ‘low carbon’ assets. Instead, a building can be called green if it achieves certain energy efficiency metrics and certification. In this case, the metrics are what enable investors to define which buildings are green and which are not, with impact reporting holding the key to this judgement.

For solar power, on the other hand, the technology itself is ‘green’ and the energy saving metrics are not required to differentiate one solar plant from another. Here, impact reporting metrics are good to have but not critical to understanding the environmental credentials of the asset.

Variations in Metrics  

                          Figure 3: A breakdown of the differing metrics identified in the analysis. 

Best practice example from a corporate: Berlin Hyp*

Berlin Hyp* uses two baselines to benchmark the performance of its buildings:

1. The average energy performance of existing European buildings. This means that every building in the pool is compared to the average energy performance of existing European buildings. Against this baseline, Berlin Hyp buildings perform very well.
2. The current energy references for different real estate asset classes according to the German Energy Savings regulation (Energieeinsparverordnung, EnEV). This baseline gives a more conservative assumption of carbon emissions that Berlin Hyp has avoided.

The Last Word

As the issuer base widens, investor expectations around transparency and disclosure will continue to grow. 

Impact reporting can be a useful tool for the development of a transparent and harmonised green bond market, and gives institutional investors more confidence to commit long term capital allocations.

For the green finance market to accelerate sharply over the next few years from the current $100bn- $130bn + annual range to the $1tn size by 202 that influential voices are calling for, best practice in impact reporting should be part of that growth path. 

To read more about post-issuance reporting, download the full report here.

‘Till next time,

Climate Bonds

Disclosure: Several organisations named in this communication are Climate Bonds Partners. A full list of Partners can be found here.

Disclaimer: The information contained in this communication does not constitute investment advice in any form and the Climate Bonds Initiative is not an investment adviser.  Any reference to a financial organisation or investment product is for information purposes only. Links to external websites are for information purposes only. The Climate Bonds Initiative accepts no responsibility for content on external websites.

The Climate Bonds Initiative is not endorsing, recommending or advising on the merits or otherwise of any investment or investment product and no information within this communication should be taken as such, nor should any information in this communication be relied upon in making any investment decision. 

A decision to invest in anything is solely yours. The Climate Bonds Initiative accepts no liability of any kind, for any investment an individual or organisation makes, nor for any investment made by third parties on behalf of an individual or organisation, based in whole or in part on any information contained within this, or any other Climate Bonds Initiative publicly communication.

Green finance directions emerge from HLEG process: Feedback sought for final report. If you can’t be in Brussels come to the London Briefing July 20^th.

What’s it all about

The EU High Level Expert Group on Sustainable Finance has just released its Interim Report and is seeking stakeholder comment and feedback prior to the final report being released in December.

What’s in the Interim Report?

The Interim Report identifies a number of directions to build green finance and investment in the EU in order to meet the Paris climate and emissions reduction goals and also ensure the financial system is contributing to long term sustainable economic growth and positive social development.

In summary, the early recommendations of the HLEG are to:

• Develop a classification system for sustainable assets
• Establish a European standard and label for green bonds and other sustainable assets
• Clarify that fiduciary duty encompasses sustainability
• Strengthen ESG reporting requirements
• Introduce a 'sustainability test' for EU financial legislation
• Create 'Sustainable Infrastructure Europe' to channel finance into sustainable projects
• Enhance the role of the ESAs in assessing ESG-related risks
• Unlock investments in energy efficiency through relevant accounting rules

An EU Wide Approach to Green Bond Standards & Labelling?

Such a move would accelerate green bond markets in the EU and attract significant capital commitments from institutional investors and pension funds. 

Larger green debt markets would also support the HLEG recommendation around channelling more finance into sustainable infrastructure projects. 

An EU wide standard and label for green bonds would also provide a powerful signal to potential sovereign issuers and boost the development of nascent green bond markets in emerging economies.

In combination, this sequence could go a long way towards reaching the $1trn by 2020 green bonds milestone, part of the six point plan to slow emissions growth outlined by global climate leaders in a recent statement published in Nature Magazine. 

How do I find out more?

If you’re in Brussels:

The European Commission will be hosting a public hearing on sustainable finance on Tuesday 18^th July to launch a public consultation on the Interim Report. The hearing itself will also allow stakeholders to provide feedback and responses to the HLEG on the Interim Report.

You can register here. 

But if you’re in London?

Invitation: Interim Report London Briefing-July 20th 

London-based members of the HLEG are undertaking a consultation with key stakeholders to review the Interim Report and its recommendations on the 20th July. 

This event is being convened by Climate Bonds Initiative and the Cambridge Institute for Sustainable Leadership (CISL) in association with UNEP, and is kindly hosted by Norton Rose Fulbright. 

RSVP here.

Overview

The day will commence with an introduction by Jacqueline Heng of Norton Rose Fulbright. 

This will be followed by an overview on the Interim Report from HLEG members, and then a Q/A session. 

Confirmed Discussants:  

Nathan Fabian, PRI

Paul Fisher, Cambridge Institute for Sustainability Leadership

Sean Kidney, Climate Bonds Initiative

Sara Lovisolo, London Stock Exchange Group 

Richard Mattison, Trucost (S&P Global)

Nick Robins, UNEP Inquiry

Focused Feedback: 

After the morning coffee break, there will be an opportunity to participate in more focused discussions on topics in the Interim Report to generate immediate feedback for HLEG members. 

A luncheon and networking will take place at the conclusion of these discussions.

Interim Report: London Agenda  

Where:         Norton Rose Fulbright

                     3 More London Riverside, SEI 2AQ

When:          Thursday July 20th 2017          8.00-1.30pm 

Agenda:       Coffee and Pastries                  8.00-9.00am

                     Remarks by Jacqueline Heng   9.00-9.10am

                     Interim Report Overview           9.10-10.30am

                     Q&A                                         10.30-11.00am

                     Coffee Break                           11.00-11.30am

                     Focused Discussions              11.30-12.00pm

                     Luncheon and Networking      12.00-1.30pm

Registration and Additional Information

Please RSVP here or contact Aneil Tripathy (aneil@climatebonds.net) for further information. 

The Last Word

We hope to see you at Norton Rose on the 20^th!

'Till next time,

Climate Bonds

Disclosure: Several organisations named in this communication are Climate Bonds Partners. A full list of Partners can be found here.

Disclaimer: The information contained in this communication does not constitute investment advice in any form and the Climate Bonds Initiative is not an investment adviser.  Any reference to a financial organisation or debt instrument or investment product is for information purposes only. Links to external websites are for information purposes only. The Climate Bonds Initiative accepts no responsibility for content on external websites.

The Climate Bonds Initiative is not endorsing, recommending or advising on the financial merits or otherwise of any debt instrument or investment product and no information within this communication should be taken as such, nor should any information in this communication be relied upon in making any investment decision. 

Certification under the Climate Bond Standard only reflects the climate attributes of the use of proceeds of a designated debt instrument. It does not reflect the credit worthiness of the designated debt instrument, nor its compliance with national or international laws.

A decision to invest in anything is solely yours. The Climate Bonds Initiative accepts no liability of any kind, for any investment an individual or organisation makes, nor for any investment made by third parties on behalf of an individual or organisation, based in whole or in part on any information contained within this, or any other Climate Bonds Initiative public communication.

Un engagement renouvelé pour la croissance des obligations vertes et la taxonomie de la CBI

Le ministère de la transition écologique et solidaire a renouvelé son partenariat avec Climate Bonds Initiative.

En charge de la lutte contre le changement climatique, du développement durable et de l'environnement, le ministère a rejoint le programme de partenariat avec CBI en décembre 2015 lors de la conférence COP21 à Paris.

Cette décision est le signe du soutien de la France en faveur des efforts de Climate Bonds Initiative pour construire la finance verte et en faveur de la poursuite des développements de la taxonomie de CBI.

Cette taxonomie est une ressource qui contribue à la définition de standards robustes pour les obligations vertes.

Dans le cadre de ce partenariat, le ministère de la transition écologique et solidaire apportera la vision française des critères qui définissent ce qui est « vert », en lien avec les trajectoires de réduction des émissions de gaz à effet de serre cohérentes avec l'Accord de Paris.

Nicolas Hulot, ministre d’État, ministre de la Transition écologique et solidaire:

"Construire des marchés pour orienter la finance vers des investissements verts est essentiel pour atteindre les objectifs de l'Accord de Paris."

"Nous soutenons le travail de la Climate Bonds Initiative sur les obligations vertes comme nous sommes engagés auprès des organisations promouvant les objectifs de l'Accord de Paris."

Sean Kidney, PDG de Climate Bonds Initiative:

"La France est un des pays à la pointe pour traiter la question du changement climatique. Avec la tenue de la COP21 en 2015 et l'émission d'une obligation verte souveraine début 2017 pour marquer le verdissement de la finance, du bâtiment, des véhicules de transport, de l'énergie... la France agit de manière remarquée.

"Nous sommes honorés d'avoir le soutien de la France pour guider l'accélération du développement des obligations vertes sur la base de critères fondés scientifiquement et alignés sur les objectifs de la COP21."

Le mot de la fin

Nous étions déjà heureux de faire état du succès de la France en matière d'obligations vertes dans nos communiqués "Etat du marché en 2016" et "La France sous les projecteurs".

Notre taxonomie a déjà été utilisée comme base du label TEEC produit par la France.

Bien des choses restent à faire sur le développement des investissements verts et durables. Nous avons hâte de travailler en étroite collaboration avec la France tout au long de l'année à venir.

French Environment Ministry Renews Partnership Agreement with Climate Bonds Initiative

Renewed commitment to green bonds growth and CBI Criteria and Taxonomy

The French Ecology and Solidarity Ministry (Ministère de la Transition écologique et solidaire) has renewed its partnership with the Climate Bonds Initiative.

Responsible for climate change, sustainable development and environment, the Ministry joined the Climate Bonds Partner Programme in December 2015 during the COP21 Paris conference.

The decision is a signal of French support for Climate Bonds efforts to build green finance and the continued development of the Climate Bonds Taxonomy as a resource for robust green bond standards.

Under this partnership, the Ministère de la Transition écologique et solidaire will bring forward the French vision of green standardisation, in line with the emission reduction trajectories of the Paris COP21 Agreement.

Nicolas Hulot, ministre d’État, ministre de la Transition écologique et solidaire:

“Building green investment and climate finance markets are essential to meeting the Paris Agreement targets. We support the work of the Climate Bonds Initiative on green bonds as part of our commitment to those organisations focussed on global climate goals.”

Sean Kidney, CEO, Climate Bonds Initiative:

“France has been a world leader on addressing climate change. From COP21 in 2015, to the sovereign green bond issuance in early 2017, to supporting green directions in finance, buildings, vehicles and energy, their actions stand out.

We are privileged to have their support in driving the acceleration of green bonds growth supported by science based criteria aligned to Paris COP21 goals.”

The Last Word

We’ve been happy to previously note French achievements on green bonds in our State of the Market (État Du Marché en 2016), and climate finance and sustainable investment in our December 2016 La France sous les projecteurs. 

Our Taxonomy has already been incorporated into the French TEEC label.

So much more remains to be done on green investment and sustainable development.

We’ll be looking to work closely with the French over the next year.

‘Till next time,

Climate Bonds

Disclaimer: The information contained in this communication does not constitute investment advice in any form and the Climate Bonds Initiative is not an investment adviser.  Any reference to a financial organisation or investment product is for information purposes only. Links to external websites are for information purposes only. The Climate Bonds Initiative accepts no responsibility for content on external websites.

The Climate Bonds Initiative is not endorsing, recommending or advising on the merits or otherwise of any investment or investment product and no information within this communication should be taken as such, nor should any information in this communication be relied upon in making any investment decision. 

A decision to invest in anything is solely yours. The Climate Bonds Initiative accepts no liability of any kind, for any investment an individual or organisation makes, nor for any investment made by third parties on behalf of an individual or organisation, based in whole or in part, on any information contained within this or any other Climate Bonds Initiative public communication.

Two Events focused on Green Bonds, both in Mumbai.

Accessing Green Municipal Bonds for Infrastructure – Workshop

& Launch of “Green Municipal Bonds in India: Potential, Barriers and Advantages” report

When: 9.30 am - 4 pm, 25^th July 2017

Where:  To be confirmed.

RSVP:  kundan.burnwal@giz.de

Held in partnership with GIZ India & Smart City Mission, this all day workshop will focus on critical steps needed to build green bond finance for cities and municipal infrastructure. Also, “Green Municipal Bonds in India: Potential, Barriers and Advantages” report launch will provide an opportunity to look at successful examples and to discuss the critical steps needed to demonstrate viability of green municipal bonds.

More details below.

SEBI Green Bonds Guidelines - High Level Roundtable

When: 3 pm -7 pm, 27^th July 2017

Where: National Stock Exchange, Bandra Kurla Complex

RSVP:  kanika.grover@ficci.com; sandeep@climatebonds.net

Held under the auspices of the India Green Bonds Council this event is being held in partnership between FICCI and the Climate Bonds Initiative. This is an invitation only event. More details below.

Background: Mobilizing Finance for Green Urban Infrastructure: Green Municipal Bond Market in India

20 years since the first municipal bond was issued in India and a dry patch of almost seven years since the last bond, a new wave of municipal issuance is gathering pace thanks to the Smart City Mission launched in 2015. This urban transformation programme covering 100 cities has PM Modi’s backing and government support of INR480 billion (USD7.5bn).

An equivalent amount is to be additionally raised by cities themselves to cover infrastructure needs. The Ministry of Urban Development has granted a two percent interest subsidy to prospective bond issuers for a 10 year period, setting off a hot race for muni issuance, at least amongst the top rated city corporations.

Already, AA+ rated Pune Municipal Corporation has hit the Bombay Stock Exchange on 22 June with an INR200 crore bond. In the next five years, it plans to issue INR22.62bn (USD350m) of bonds to help fund an INR32 billion 24x7 water supply project for the city.

More bonds are expected in the next couple of months, notably Ahmedabad Municipal Corporation, New Delhi Municipal Corporation and the Great Hyderabad Municipal Corporation.

This is a welcome re-start of munis in India. By 2050, almost half of the Indian population will be living in cities.

Sustainable urbanisation will be essential to drive the high quality growth India needs as well as ensure cities are low-carbon and climate resilient.

Can green municipal bonds show the way?

The potential of muni bonds in India is definitely huge. But, a host of supply and demand side issues have traditionally resulted in a sluggish performance.

Not many cities are even aware of the opportunity to tap into capital markets. Cities have been used to state grants and institutional finance and have shown a general lack of robust reporting systems; only 10 out of the 94 cities rated till now are in the (Indian) AA category.

Various measures are required to break the inertia and set the ball rolling. Credit ratings, pricing and performance of initial offerings will also have a big impact on demand.

The event will examine these issues in depth.

Co-organised with GIZ India and the Smart City Mission, this event will see the launch of the report “Green Municipal Bonds in India: Potential, Barriers and Advantages” and provide an opportunity to look at successful examples and to discuss the critical steps needed to demonstrate viability of green municipal bonds.

Participants will include representatives from the Ministry of Urban Development, SEBI, municipal issuers, investors, arrangers and thinks tanks.

Register here:

Space is limited for the 25^th July event.

Please RSVP to kundan.burnwal@giz.de by Thursday the 20^th.

Background: SEBI’s Green Bonds Guidelines: Scope and Perspectives

This event will be a high level exchange between Securities and Exchange Board of India (SEBI) and issuers and investors around the scope of the Green Bonds Guidelines SEBI released in May 2017.

Held under the auspices of the India Green Bonds Council the event is being hosted by the Federation of Indian Chambers of Commerce (FICCI) in partnership with the Climate Bonds Initiative.

Will SEBI’s Green Bonds guidelines help the green bonds market grow in India?

SEBI’s guidelines are in tune with international norms and frameworks and take into account the domestic imperatives of transitioning to a climate resilient economy.

There are many areas where regulation and policy can positively intervene to deepen the Green Bonds market in India, from improving market transparency through better reporting, to coordination with other regulators such as the Reserve Bank of India, Pension Fund Regulatory and Development Authority and Insurance Regulatory Development Authority.

This is a high level Roundtable aimed at potential green bond issuers, institutional investors & asset managers.

Space is very limited.

Register your Interest:

Please register your interest to either FICCI kanika.grover@ficci.com; or Climate Bonds sandeep@climatebonds.net.

We’ll see you in Mumbai.

‘Till next time,

Climate Bonds

Disclaimer: The information contained in this communication does not constitute investment advice in any form and the Climate Bonds Initiative is not an investment adviser.  Any reference to a financial organisation or debt instrument or investment product is for information purposes only. Links to external websites are for information purposes only. The Climate Bonds Initiative accepts no responsibility for content on external websites.

The Climate Bonds Initiative is not endorsing, recommending or advising on the financial merits or otherwise of any debt instrument or investment product and no information within this communication should be taken as such, nor should any information in this communication be relied upon in making any investment decision. 

Certification under the Climate Bond Standard only reflects the climate attributes of the use of proceeds of a designated debt instrument. It does not reflect the credit worthiness of the designated debt instrument, nor its compliance with national or international laws.

A decision to invest in anything is solely yours. The Climate Bonds Initiative accepts no liability of any kind, for any investment an individual or organisation makes, nor for any investment made by third parties on behalf of an individual or organisation, based in whole or in part on any information contained within this, or any other Climate Bonds Initiative public communication.

The first half of 2017 has seen public sector issuance, regulator moves, and new market incentives to energizing domestic green bond markets.

Download our analysis of 2017 1^st and 2^nd Quarter’s biggest green bond policy developments. We look back on the last six months and look ahead to developments for the remainder of the year.

Six Months into the year of sovereign green bonds

Our 2016 end of year policy roundup pointed to 2017 as the year of the sovereign green bond. France delivered their first sovereign green bond in January and amongst emerging economies Nigeria is expected to come to market later this year.  

We are looking at between 8-10 nations to have issued or signaled an intention to issue by the end of the year.

Beyond sovereigns, Canada, Australia and Argentina have also set great examples of how provinces and states can get the ball rolling on green bond issuance. Sub-nationals and sub-sovereigns may yet steal the limelight if national leaders are slow to act. 

We also saw a debut issuance for $587 million by the National Bank of Abu Dhabi, an exciting first for the Gulf region. More national banks need to do the same. 

Regulators release new guidelines

Several nations have made progress in developing green bond guidelines and ensuring the process for domestic green bond issuance follows international best practice.  

• The China Securities Regulatory Commission issued guidelines broadly aligned with PBoC’s green definitions, with minor provisions.
• India’s Securities and Exchange Board (SEBI) has finalised its guidelines for domestic issuers 
• Japan, Luxembourg and Taiwan are making strides and other intiatives are underway in South Africa, Nigeria, Indonesian and through ASEAN.  

Central banks announcing green bond incentives

The Monetary Authority of Singapore has launched a Green Bond Grant Scheme to support issuers with the cost of external reviews - a burden which is often brought up by issuers who are yet to approach the market. 

PBoC in China is exploring the possibility of allowing green bonds in the bank’s collateral framework as well as the integration of green lending in macro-prudential assessment frameworks. 

We hope to see more actions from central banks in the near future given their crucial role in addressing financial stability, including risks associated with climate change.

U.S. green bond growth

The U.S. green bond market can still expect to see significant growth, despite President Trump’s decision to withdraw from the Paris Climate Accord.

Overwhelmingly, key actors at the state, city investor, and at corporate level have reiterated support for the Paris Accord and reaffirmed their climate pledges. At a subnational level, California is leading the way in growing domestic climate finance and green bond markets with an extensive action plan.

The Last Word

Total green bond issuance for the year currently sits over USD$53 billion, and with favorable circumstances we now hope to see that number reach USD$130bn by the end of the year, down a little from our Jan/Feb forecast.

Public sector policy is essential to enabling and scaling up private capital flows into green bond issuance and investment at a rapid rate. The EU HLEG Sustainable Finance process is an example.

$1Trillion by 2020? 

We’re also heartened to see global climate leaders call for green bonds to be scaled up tenfold by 2020, one of six urgent climate action milestones they identify.

That would give a glonal market size of around $1trillion, a level of climate finance that would significantly boost progress on NDCs and implementation of country climate plans.

What a platform that would make for the critical COP 27 in 2021! 

Governments at all levels have well-established tools that have been previously used to steer private capital towards policy priority areas. They can again be applied to enable green markets and channel capital towards climate firendly infrastructure and investment. 

This is the public policy challenge. We have the tools, we have the timeline and we have the targets. 

Let’s see what progress we can report on by years end.

Download the Q1-Q2 Update here.

‘Till next time,

Climate Bonds

PS: We are looking for a Climate Science Programme Manager. It's an exciting job, based here in London. Details are here. 

Disclaimer: The information contained in this communication does not constitute investment advice in any form and the Climate Bonds Initiative is not an investment adviser.  Any reference to a financial organisation or debt instrument or investment product is for information purposes only. Links to external websites are for information purposes only. The Climate Bonds Initiative accepts no responsibility for content on external websites.

The Climate Bonds Initiative is not endorsing, recommending or advising on the financial merits or otherwise of any debt instrument or investment product and no information within this communication should be taken as such, nor should any information in this communication be relied upon in making any investment decision. 

Certification under the Climate Bond Standard only reflects the climate attributes of the use of proceeds of a designated debt instrument. It does not reflect the credit worthiness of the designated debt instrument, nor its compliance with national or international laws.

A decision to invest in anything is solely yours. The Climate Bonds Initiative accepts no liability of any kind, for any investment an individual or organisation makes, nor for any investment made by third parties on behalf of an individual or organisation, based in whole or in part on any information contained within this, or any other Climate Bonds Initiative public communication.

Lots of coverage in June Media Digest: The Economist, Institutional Investor, Financial Times, The Guardian, I&PE, La Tribune, Börsen-Zeitungand more!

The Economist, Green bonds channel private-sector funding to the climate

Green bonds and Climate Bonds Initiative once more on the pages of The Economist.

One option is certification offered by the Climate Bonds Initiative (CBI), an NGO. Others opt to get a second opinion from a specialised environmental consultancy such as Vigeo Eiris, or from a large auditor like EY or KPMG. The CBI reckons 85% of bonds issued in 2017 have undergone an external review.

International Banker, Green Bonds are on the rise, Emily Frost

An article that is an in-depth and very valuable story of green bonds market development, key issues it’s facing and prospects for the future. It is also one of several media pieces that, after Donald Trump’s back off from the US environmental commitments, points to green bonds as the sector that is set to continue prospering.

With substantially more investment funds required to be generated, therefore, green bonds are now increasingly considered to be among the most useful instruments to help countries achieve those targets.

Institutional Investor, Investors need better green filter, Joe McGrath

Verifying the „greenness” of the investment is also the key theme of Institutional Investor article.

Investors need better ways of evaluating a fund manager’s green credentials or risk being seduced by investment strategies dressed-up as environmentally friendly.

Financial Times, Deals designed to keep the lights on in emerging markets, Laura Noonan

An interesting article on innovative ways of financing infrastructure investments in emerging economies.

Still, the firm managed to structure financing that included the following: the first climate bond from an emerging market certified by the Climate Bonds Initiative; the first local-currency project bond in the Philippines power sector; the first credit-enhanced project bond in Asia since the 1997 Asian financial crisis; and the first green bond issued in the Philippines.

Global Capital, Green bond bulls run free

Bullish ambitions of the green bonds industry players to see a double-digit share of the market.

Beside emerging market sovereigns, development banks, local authorities, commercial banks and even corporates are likely to start funding through local green bonds markets market players forecast. As many as six new emerging market agencies should issue this year, CBI’s Kidney anticipates.

Reuters, Euro zone debt chiefs cautiously eye sustainable bond options

Reuters says we might soon see sovereign green bonds from countries such as Portugal, Ireland and Italy.

France this year became the second sovereign after Poland to sell so-called "green bonds", where the proceeds are used to finance projects to address climate change.

Financial News, Green bond standards tighten – but is it enough?, Mark Cobley and Tim Burke

An industry discussion stirred by the changes recently introduced to the Green Bond Principles by The International Capital Markets Association. Are they going far enough?

Sean Kidney, the chief executive of the Climate Bonds Initiative, backed the use of testable performance indicators but only in "some sectors". He pointed to the contrast between an energy firm raising money to finance solar panels instead of building a coal plant - where a reduction in carbon emissions can be taken as read - and a company financing energy-efficiency improvements to buildings.

Investments & Pensions Europe, ESG round-up: Industry green bond standards updated, Susanna Rust

Revision to Green Bond Principles also covered by I&PE.

According to a statement from ICMA, the changes to the principles includedupdated “project and traceability language” to facilitate more issuance, especially from sovereigns and corporates, and stronger guidance on issuer communication of environmental strategy and management of material environmental and social risk factors.

The Guardian, Making the planet great again: Nigeria’s role in the Green Agenda, Daniel Akinmade Emejulu

Is Nigerian green bond going to be the first sovereign green bond issued by an African nation?

About N12billion will help to fund the replanting of forests that support local livelihoods; solar power installations in local communities; and off-grid power plants for schools and hospitals.

FT Adviser, Green bond investors demand transparency, Simoney Kyriakou

Author voices demands of the investors for more transparency and assurance in the green bonds market.

Although the principles require green bond issuers to reportannually on the projects they fund, there are no requirements to stipulate in quantitative terms the actual impact on the environment.

Bloomberg, The $123 Billion Question Hanging Over Renewable Energy, Katie Linsell

Read to find out what bodies already scrutinize green bonds issued around the world.

At the end of last year, about 80 percent of issuers were committed to reporting on the use of bond proceeds and the environmental impact, or to undergo external review, up from about 70 percent in the first quarter of 2015, according to Bloomberg New Energy Finance.

Reuters, Public sector investors favor real estate, renewables - survey

The investor survey conducted by The Official Monetary and Financial Institutions Forum shows growing interest of public sector issuers in green bonds.

The survey noted a growing interest in the green economy, with 38 percent planning to buy more green bonds, and 35 percent wanting to boost their exposure to renewables

Corporate Knights, Sizing up the market, Sean Kidney, Toby A.A. Heaps

Sean Kidney and Toby A.A. Heaps on ways Canada can harness the potential of green bonds to fund ambitious infrastructure plans.

Issue-guide-grant. It’s a formula for federal action on green bonds that could set the stage for increased funding for our infrastructure needs, for meaningful reductions in climate emissions and for Canadian leadership in the growing global market for sustainable financing expertise.

Forbes, Should You Invest In 'Green Bonds?', Kerry Hannon

Read this article if you are an individual investor interested in adding some green bonds to your portfolio.

Don’t be discouraged, though. There are ways small investors can buy green bonds — through ETFs and mutual funds that purchase them. Just don’t count on enormous yields right now.

Tidal Energy Today, Marine bonds draft criteria up for public review

Marine Renewable Energy Criteria for marine related-investments under the Climate Bonds Standard are up for public review. Tidal Energy reports.

Once completed and released, the criteria can be used by green bond issuers who are seeking Climate Bonds Certification, which is a tool to assist investors and issuers in prioritizing investments that contribute to addressing climate change, according to World Ocean Council (WOC).

And some foreign language coverage….

La Tribune, Paris se voit en "capitale mondiale de la finance verte”

Le marché des green bonds a explosé l'an dernier, atteignant 81 milliards de dollars, fin 2016. Cette année, on dépasse les 49 milliards d'après Climate Bonds Initiative.

Boursorama, Vers une maturité du marché des Green Bonds?

Toutefois, « si l’harmonisation est désirable et envisageable, une uniformisation totale est inatteignable » estime Anna Creed, en charge de la définition des critères de la Climate Bonds Initiative. Cette réserve tient au rôle clé des organismes de contrôle et d’évaluation.

Börsen-Zeitung, Lückenhafte Berichte zu Green Bonds

Die Berichterstattung über die Mittelverwendung von Green Bonds lässt zu wünschen übrig. Zu diesem Ergebnis kommt eine jetzt vorgelegte Studie der Climate Bonds Initiative (…)

Institutional Money, Neue weltweite Studie zur Mittelverwendung von Green Bonds

Herausgeber der Studie „Use of Proceeds“ ist die Climate Bonds Initiative, ein weltweiter Zusammenschluss verschiedener Unternehmen und Organisationen mit dem Ziel, den Markt für Green Bonds zu fördern. BlackRock ünterstützte die Studie ebenso wie die Berlin Hyp und die Luxembourg Green Exchange.

ASIA

Reuters, China c.bank plans fresh incentives to support green financing, Kevin Yao

Good news for the Chinese green bonds market.

The People's Bank of China is studying plans to add banks' qualified green credit into collateral for monetary policy operations and to include institutions' green credit performance in the central bank's macro-prudential assessment (MPA), Chen Yulu told a news conference.

Finance Asia, Green Bonds still strong despite US move, Ray Chan

US withdrawal from the Paris agreement won’t hurt the green bonds market says Ray Chan.

The withdrawal of the world’s biggest economy from the Paris climate accord is a blow to those fighting climate change. But China’s growing awareness of the problem means Asia’s green bonds market has plenty of room to grow.

Nikkei Asian Review, China leads in green bonds, but money may be going elsewhere, Joyce Ho

 ‘Loose standards’ for issuing green finance products in China questioned by Nikkei.

Of the $2.47 billion in green bonds issued by China in the first quarter of this year, however, nearly 61% failed to meet the international definition of such instruments, according to Climate Bonds Initiative, a London-based organization that promotes the market that emerged only a decade ago.

Renewables Now, China’s green bond market is more orderly than you might think

Renewables Now republishes our article, in which we explain why Climate Bonds Initiative sees China as a leader of global efforts in harmonizing green standards.  

The need for progress on standardisation and harmonisation, the fundamental importance of international market integrity is generally accepted by all stakeholders. The move towards these objectives in the worlds’ biggest and fastest growing green bond market should also be acknowledged.

Infrastructure Investor, China’s green bond regulation ‘most rigorous in the world’

The boss of the Climate Bonds Initiative thinks concerns over the country’s green bond standards and verification procedures are exaggerated.

Brink News, China Takes Global Green Bonds Market by Storm

Summary of our „China Green Bond Market 2016” report.

According to the report, China’s experience demonstrates that policy tools are essential for the growth of green finance. That said, it still needs to push for a harmonization of standards to facilitate the entry of even more capital into green finance.

Breaking Views, Green Silk Road, Lisa Jucca

The new Silk Road might be co-financed by green bonds issued by the Beijing’s development bank, the Asia Infrastructure and Investment Bank (AIIB).

Road projects such as railways and water routes could be eligible for sustainable financing if they were used, for instance, to replace carbon-intensive motorways. If the triple-A rated AIIB were to issue green bonds to fund such projects, it would entice investors.

APPLE GREEN BOND

$1 bn blockbuster green bond by Apple attracted a lot of media coverage.

Financial Times, Apple raises $1bn through ‘green bond’ in environmental push

Apple has raised $1bn in debt in a “green bond” to fund environmentally focused initiatives, weeks after the company’s chief executive criticised President Donald Trump’s decision to pull out of the Paris climate pact.

Reuters, Apple issues $1 billion green bond after Trump's Paris climate exit

The offering comes over a year after Apple issued its first green bond of $1.5 billion - the largest issued by a U.S. corporation - as a response to the 2015 Paris agreement.

Bloomberg, Apple Issues a Second Green Bond to Finance Clean Energy, Alex Webb

Apple said it plans to use the proceeds to finance projects involving renewable energy resources and energy efficiency, among other things.

International Business Times, Apple issues mammoth 'green' bond offer to finance environmental causes, Gaurav Sharma

Apple also said it would step up its efforts towards making its supply chain more sustainable, and double up its drive to use recycled material, thereby reducing its need to mine rare earth minerals.

Yahoo News, Apple is investing $1 billion in clean energy with this unique approach, Maria Gallucci

Apple's latest bond offering also includes a focus on advancing Apple's goal of a closed-loop supply chain, where products are made using only renewable resources or recycled materials to avoid having to mine for new materials.

Nasdaq, Apple Green bond gets US$3.5bn order book

Tech giant Apple notched up a US$3.5bn book for its new US$1bn 10-year Green bond on Tuesday which priced with no new issue premium.

PV Magazine, Apple takes another bite out of Climate Change with 2nd billion-dollar green bond, Ian Clover

Technology giant Apple has served up the perfect riposte to U.S. President Donald Trump’s disavowal of the Paris Agreement by issuing $1 billion of green bonds with the explicit instruction that proceeds raised be steered towards clean energy and eco-friendly projects.

Disclaimer: The information contained in this communication does not constitute investment advice in any form and the Climate Bonds Initiative is not an investment adviser.  Any reference to a financial organisation or debt instrument or investment product is for information purposes only. Links to external websites are for information purposes only. The Climate Bonds Initiative accepts no responsibility for content on external websites.

The Climate Bonds Initiative is not endorsing, recommending or advising on the financial merits or otherwise of any debt instrument or investment product and no information within this communication should be taken as such, nor should any information in this communication be relied upon in making any investment decision. 

Certification under the Climate Bond Standard only reflects the climate attributes of the use of proceeds of a designated debt instrument. It does not reflect the credit worthiness of the designated debt instrument, nor its compliance with national or international laws.

A decision to invest in anything is solely yours. The Climate Bonds Initiative accepts no liability of any kind, for any investment an individual or organisation makes, nor for any investment made by third parties on behalf of an individual or organisation, based in whole or in part on any information contained within this, or any other Climate Bonds Initiative public communication.

Since our last Market Blog, we have seen 19 issuers, including a new green RMBS from one of our green bond pioneers Berlin Hyp, first time issuance from Italy’s Intesa Sanpaolo and Norway’s Nordea Bank has taken the plunge into green waters.

Now this is good, but let’s look at some big thinking…

$1 Trillion in Green Bonds by 2020?

Writing in Nature Magazine, a group of global climate leaders including Christiana Figueres have identified six urgent climate action Milestones for 2020.

Among the actions is a call for the green bond markets to be scaled up by a factor of 10, and Milestone No 6 sets the objective of $1 trillion by 2020.

It’s no blue sky 2040 or 2050 target. It’s a right here, right now goal for the end of the decade.

Three and half years and four global COP Conferences away.

The onus is now on policy makers and global finance. 

We think its achievable. What do you think? Read the full story here.

New issuers

Repeat issuers

Certified Bonds

China Three Gorges Corporation - EUR650m (USD726m) and CNY2bn (USD294.8m)

China Three Gorges Corporation (CTG) has just issued two green bonds – for onshore and offshore wind projects.

1. Offshore wind CNY2bn issued on China interbank market:

All proceeds will go to two offshore wind farms in China with 300MW installed capacity each China Bond Rating provides a second opinion.

Underwriter: Agricultural Bank of China, CITIC Securities Company.

2. Offshore and onshore wind EUR650m issuance listed on the Irish Stock Exchange:

The EUR-denominated green bond will finance an offshore wind project in Germany and an onshore wind farm in Portugal.

So the assets for this bond are all wind projects which means that they are included for Certification as the underlying assets are low carbon wind energy generation, which is as green as it gets.

CTG may be better known for its hydro projects than its wind assets and we note that previous bonds issued by the company are currently pending inclusion on our green bond database as they finance large scale hydro projects. Hydro power is a contentious area, and we have a Technical Working Group examining the climate science around hydro energy.

At present, we don’t have standards in place defining which types of hydro projects are eligible. For this reason, we fall back on existing standards, such as UNFCCC or IFC hydro criteria.

The move to grow the wind portfolio is welcome.

It’s another positive example where green bonds are about the assets more than the company.  

Second opinion is provided by EY.

Underwriters: Deutsche Bank, J.P. Morgan and Bank of China.

Corporate

Humlegården Fastigheter AB - SEK1.25bn (USD143m)

Humlegården is the latest in the ever-expanding list of Swedish property companies issuing green bonds.

The proceeds will finance various projects/assets under the green bonds framework, including:

• Green buildings; residential and commercial properties that:
  • are certified to Miljobyggnad Silver, BREEAM-SE Very Good, BREEAM in-use Very Good or LEED Gold
  • have an energy use intensity at least 40% below current building standards​​​​​​​​​​​
• Energy efficiency investments – improving existing properties
• Renewable energy: solar or geothermal power
• Clean transportation: investments in support infrastructure, e.g. EV charging stations

The second opinion was provided by CICERO, who rated the green buildings component of the green bond framework as medium green.

Humlegaarden has committed to an annual disclosure of the use of proceeds and project details.

Underwriter: Handelsbanken.

Commercial Banks

Intesa Sanpaolo, EUR500m (USD557m)

Intesa Sanpaolo became the first Italian bank to issue a green bond with their inaugural EUR500m bond issuance, attracting book orders upwards of EUR2bn! Great stuff.

The bond will be use to fund investments in eligible projects including:

• Renewable Energy – production, transmission, infrastructure and associated assets. The main focus will be wind, solar, bio-energy, and hydro energy generation
  
  • Additional hydro criteria: up to 25 MW or, if larger, meeting one the following: Hydropower Sustainability Protocol Published assessment report; score of 3 or above on all relevant pillars ORIFC Standards; publicly stated commitment to meet the requirements outlined by all 8 IFC performance standards​​
     
• Energy Efficiency:
  
  • New investment in infrastructure, technology and services that reduce energy usage including energy storage, district heating, smart grids, LED lighting, and retrofitting of buildings
  • Construction or renovation of buildings which meet at least LEED Gold, BREEAM Good, HQE Very Good, CASBEE A or equivalent, that have lifecycle consumption levels of <20% of city baseline

The renewables criteria are clear cut and we welcome the additional clarification on hydro assets.

For green buildings, we do not have a clear comparison for all of those building standards but note that the Climate Bond Standard requires a minimum of LEED Gold or equivalent, which is in line with the criteria above, which is great.

For city baselines, the Standard requires that buildings are in the top 15% of a city baseline (a bit more stringent than above).

Intesa has also committed to annual reporting on the use of proceeds and environmental benefits, until bond maturity, with verification and independent party.

The second opinion was provided by Vigeo Eiris.

Underwriters: Banca IMI, Crédit Agricole CIB, HSBC, Societe Generale CIB.

Nordea Bank, EUR500m (USD563.15m)

While we’ve often seen Nordea’s name mentioned as an underwriter, this is the first time it is issuing a green bond - for EUR500m with a 2022 maturity.

The following projects are eligible:

• Renewable Energy: Wind power, hydro power (smallrun-of-river and existing plants)
• Pollution Prevention and Control: Water management, waste water management, waste-to-energy
• Green Buildings: Certified commercial and residential buildings with a certification level of either, LEED “Gold”, BREEAM “Very good”, or Miljobyggnad “Silver”

The renewable energy criteria include hydro but includes only small run-of-river projects or upgrades to existing projects which is consistent with most guidelines.

On pollution control, we have yet to find or publish good guidelines around what qualifies as ‘green’ or the ‘greenest’ pollution control projects/technology but we note that these criteria are in line with what other issuers have specified.

Water management generally comes under our Water Criteria and we’ve also launched a Waste Management TWG in January, which will be considering issues around waste water and waste-to-energy. It’s due to report in early 2018. We’ll post updates in our Blog and hold some information webinars to keep you all informed.

For green buildings, the threshold of LEED Gold is in line with the view of our expert group which is great news. Because the certifications schemes are quite broad (e.g. points are given for bicycle parking, water management etc.), the higher levels of LEED certification give better certainty on the actual energy performance of a building -  there is little guarantee that buildings with low certification levels are energy efficient.

The second opinion on the Nordea’s green bond framework by Oekom is available here.

Underwriters: BNP Paribas, HSBC, Nordea.

We need to see other banks moving from underwriting to issuing. Well done to Nordea for taking the next step.

Banque Centrale Populaire, EUR135m (USD150.8m) private placement with IFC and Proparco

The Banque Centrale Populaire (BCP) in Morocco has issued a private placement green bond. The EUR135m raised will be used to finance renewable energy projects in Morocco, mainly onshore wind energy.

IFC and Proparco (subsidiary of Agence Française de Développement) are the sole investors with EUR100m and EUR35m respectively. The green credentials of the bond have been subject to external review by the UK Green Investment Bank.

The Green Impact Report is available here.

BCP has committed to annual reporting outlining how the proceeds are being used, however this is relatively rare in the private placement market.

You can find out more about what levels of information green bond issuers are disclosing in our latest report Post-issuance reporting in the green bond market.

State Owned Institutions

RATP Group, EUR500m (USD559m)

The Régie autonome des transports parisiens (RATP), the French operator of Paris & Île-de-France Métro, tram, bus services, and some RER (Réseau Express Régional) trains has become the latest public transport organisation to issue a green bond.

The EUR500m 10-year bonds will be allocated to a variety of modernisation projects across the organisations operations.

Proceeds will be used for projects such as:

• Transport infrastructure maintenance and renovation
• Public transport rolling stock renovation and renewal to metros and RER (regional commuter) trains
• Other public transport low-carbon vehicles – electric or hybrid buses.

These all meet the Criteria outlined by the Climate Bonds Initiative for Low Carbon Transport.

By upgrading existing transport infrastructure, RATP is seeking to lower the carbon footprint of their current assets whilst rolling out low carbon alternatives such as electric or hybrid buses.

The group is one of the largest public transport operators in the world providing services in Europe, Asia, Africa and the Americas. 

It has now taken the green bond track. 

Policy makers everywhere should be urging their public transport groups to follow. 

Second opinion was provided by Vigeo Eiris.

Underwriters: Crédit Agricole CIB, HSBC, Natixis.

Municipalities/Cities

King County, Washington State USD31.2m

King County in Washington State has become the latest US municipality to throw their hat into the green bond ring.

This USD31.2m issuance is the 29^th green bond issued by US municipalities in 2017.

King County is committed to reducing GHG emissions from their own operations to 50% of their 2007 baseline by 2030.

In addition to these targets, the county has also developed a Strategic Climate Action Plan (SCAP) with the aim of identifying the best strategies for climate change mitigation and adaptation in the region.

The green bond will help achieve these targets by funding the following eligible projects falling under their green bond framework:

• Renewable Energy - Development of solar PV systems, wind and wholly dedicated transmission infrastructure, and bioenergy
• Energy efficient new buildings and upgrades - Net zero GHG emissions from municipal buildings, energy upgrades and retrofits, and communal heat systems
• Clean transportation - Infrastructure for urban rail systems, infrastructure for urban bus rapid transit (electric or hybrid), transit fleet conversion to electric drive buses, transportation infrastructure and logistics upgrades logistics
• Water infrastructure and efficiency upgrades
• Adaptation e.g. resilience infrastructure to reduce impacts of flooding and increased rainfall

A second opinion provided by CICERO can be found in the appendices of the official statement. They highlight King County’s comprehensive plan for climate action and have awarded it their highest rating - dark green, indicating that King County has a strong low carbon, climate resilient vision. 

Proceeds will be managed and recorded in a designated account, which will track the use of funds and their allocation.

Underwriter: Citigroup.

City of Long Beach, California, USD26m

The City of Long Beach has joined fellow Californian Municipality, East Bay Municipal Utility District, in issuing a green bond this month.

This is in line with the Port’s plan to meet targets set by California’s Global Warming Solutions Act 2006 as outlined in the San Pedro Bay Ports Clean Air Action Plan.

Green bonds relating to port infrastructure are pretty new. We covered the Port of Los Angeles (POLA) green bond of Sept 2016 but that’s the only one we can find.

The proceeds of the Long Beach green bond have been designated for environmental improvements at the Port of Long Beach mainly through reducing GHG emissions by upgrading operational processes at the port to use equipment that is either electrified or zero emissions.

Eligible projects include:

• Electrified rail mounted gantry cranes
• Shore to ship power outlets which will allow ships to reduce emissions by shutting off auxiliary generators
• Developing infrastructure to assist electric automatic stacking cranes and electrified gantry cranes, removing the requirement for HGVs

We don’t have science-based criteria in place yet to define what the green port of the future looks like, and we don’t know all that much about the technologies they have outlined.

But the infrastructure upgrades are undoubtedly a step in the right direction and will improve environmental quality in the surrounding area by reducing dependence on diesel powered equipment and HGVs.

The second opinion provided by Sustainalytics is available here.

Underwriters: Citigroup, Merrill Lynch, Pierce, Fenner & Smith, and Siebert Cisneros Shank and Co.

Other Climate-Aligned Bonds

OPEN Cleantech has issued a EUR500m green bond. We have excluded it from the main section of this blog as we have yet to see a green bond framework or other information about the underlying projects.

While there is limited information to go on, a press release by OPEN Cleantech states that the proceeds for the bond will be used for “proven and innovative cleantech and renewable energy technologies, and tangible assets (for example onshore wind and solar photovoltaic plants)”.

On face value it looks good, but given the large size of the bond, we need some more transparency and disclosure around use of proceeds. And a green bond framework.

Spanish company Tradebe has recently raised EUR265m in what is believed to be the world’s first ‘green syndicated term loan’. Sustainalytics provided a second opinion and deemed it to be green on the basis that Tradebe’s income came from activities with a positive environmental impact, such as recycling and energy recovery.

Gossip and News Bites

Volvo and the end of the ICE Age for automobiles?

Volvo announced they are abandoning internal combustion engines and from 2019 they will only be producing electric and hybrid vehicles.

As highlighted in our previous market blog, last month’s green bond issuance by Volvofinans Bank allocated the proceeds to cars which met the definition of ‘environmentally friendly’ and vehicles that can be entirely or partially powered by non-fossil fuels.

The iconic Swedish brand has been owned by China based Zheijiang Geely since it was sold by Ford in 2010.

The company also announced that their first ‘all electric’ car will be produced in China.

No surprise there, as major cities are plagued by serious air quality issues and a transition to EVs as the passenger and light transport market grows being incorporated in policy directions.

Market Blog readers with good recall will have noted Zhejiang Geely issued a USD400m green bond in May 2016 to finance the development and manufacturing of the world famous London Black Cab to a new low emission model. Meeting Euro 6 emissions standards, the TX5 will be aimed at the domestic and export markets. 

On the green horizon

The Rural Electrification Corp’s green bond is out! More analysis to come soon.

A green sukuk may be on the way in Malaysia from Quantum Solar Park for solar PV.

Mexican Grupo Rotoplas, specialized in water solutions such as storage, piping, purification and treatment products, just launched their inaugural Sustainability Bond.

Paris expects to launch in 2018 a dedicated green investment fund!

French Prime Minister Édouard Philippe announced the government will launch a EUR50bn investment plan to notably finance the low carbon transition, transport and agriculture sectors.

Natixis, Ivanhoe Cambridge, and Callahan Capital issue very first Green CMBS deal (more in next blog).

Axis Bank of India may be issuing green bonds in the near future. Railway operators, Eurofima and SNCF Reseau, are looking to issue green bonds in the near future.

The Indian EESL (Energy Efficiency Services Limited) is looking to raise USD100m dollars for environmental initiatives.

Sovereign and Policy News

The Fijian Government has confirmed that they plan on issuing $100 million in green bonds to combat climate change.

CBZ Bank of Zimbabwe is seeking to issue $200 million in green bonds.

Climate Bonds Q1-Q2 Policy Highlights is now available.

Reading and Reports

Climate Bonds report Post-Issuance Reporting in the Green Bond Market is available.

UNEP Enquiry Green Finance Update July 2017 is here.

PRI 10 Year Blueprint for Responsible Investment has been released.

EC HLEG Interim Report on Sustainable Finance is open for stakeholder comment. Download a copy. Give your feedback & respond to the questionnaire here.

OMFIF Monthly Bulletin: Green Finance Heats Up July 2017 is here.

CDKN & PWC have launched New Markets for Green Bonds. Understanding the building blocks of a green bonds market. We’ve only just come across this last one. It’s now on our reading list.

Moving Pictures

Take a coffee break. Catch a India, clean energy, infrastructure & green investment talk from Sean Kidney & Krishnamurthy Vijayan. 9mins. Well worth it.

Other market news

LuxFLAG (Luxembourg Finance Labelling Agency) launched their own certification scheme for green bonds.

The ICMA Green Bond Principles (GBP) have been updated. Latest version is here.

Global Capital is bullish about the prospects of green bonds.

Bank of China has become the first Chinese member of the Green Bond Principles Executive Committee.

Luxembourg Stock Exchange has launched an index which will track Chinese green bonds.

Rockefeller Foundation, Lion’s Head Global Partners, South Pole Group and Affirmative Investment Management (AIM) have pooled together to establish carbonyield.org, with the aim to quantify the climate change mitigation enabled by green bonds.

Zurich Brasil, Zurich Santander, and Brasilprev, are the latest signatories to the Brazil Green Bonds Statement coordinated by the Climate Bonds Initiative, Principles for Responsible Investment (PRI), and the Brazilian ESG body SITAWI.

The European Covered Bond Council has teamed up with the Climate Bonds Initiative to create a European Green Securities Steering Committee to drive green finance development within the EU.

Good Energy has issued a GBP10m green bond aimed at financing projects related to energy storage and electric vehicles.

Public sector institutional investors want more real estate, renewables and green bonds according to OMFIF latest survey Thomson Reuters reports.

Can't find a green bond story? 

To make this blog more manageable, we're trying to report on 20 bonds at a time.

A few bonds came out as we were writing, including Korea Development Bank (KDB), Adif Alta Velocidad, Greenko, The Rural Electrification Corp, L&T Infrastructure Finance, Grupo Rotoplas and others. You’ll hear about them next time.

And Finally………

Happy Birthday EIB Green Bonds!! 

The EIB has published a special newsletter this month, marking the 10^th anniversary of their inaugural green bond.

Initially created with the ambition of “implementing EU objectives in the areas of energy policy and environmental protection”, to date, the EIB has issued over EUR18bn in green bonds.

The EIB just recently issued a new EUR1bn Climate Awareness bond. Yes, you read right, EUR1bn!

The press release also confirmed a new tree planting scheme.

Climate Bonds Initiative CEO, Sean Kidney, has nothing but praise:

“The EIB started this market. It continues to push and grow it, and ensures the market maintains a critical focus on climate change."

"We owe the Bank a great debt.”

Here’s to wishing the trailblazers at the EIB continued success in advancing green finance.

‘Till next time,

Climate Bonds

Disclosure: Several organisations named in this communication are Climate Bonds Partners. A full list of Partners can be found here.

Disclaimer: The information contained in this communication does not constitute investment advice in any form and the Climate Bonds Initiative is not an investment adviser.  Any reference to a financial organisation or debt instrument or investment product is for information purposes only. Links to external websites are for information purposes only. The Climate Bonds Initiative accepts no responsibility for content on external websites.

The Climate Bonds Initiative is not endorsing, recommending or advising on the financial merits or otherwise of any debt instrument or investment product and no information within this communication should be taken as such, nor should any information in this communication be relied upon in making any investment decision. 

Certification under the Climate Bond Standard only reflects the climate attributes of the use of proceeds of a designated debt instrument. It does not reflect the credit worthiness of the designated debt instrument, nor its compliance with national or international laws.

A decision to invest in anything is solely yours. The Climate Bonds Initiative accepts no liability of any kind, for any investment an individual or organisation makes, nor for any investment made by third parties on behalf of an individual or organisation, based in whole or in part on any information contained within this, or any other Climate Bonds Initiative public communication.

Issue 4 of our Quarterly Newsletter

If you’re already an avid follower of our Standards and Ceritification quarterly editions and need no further introduction, go straight to the newsletter here.

What's inside?

Munis dominate US green bond issuance

Municipals make up nearly 50% of total US green bond issuance.

Building this figure to 50% and beyond should be high on the agenda for the cities and states committed to the Paris Agreement and needing to fund new infrastructure. 

California has already taken steps to promote green bonds to meet infrastructure and climate change needs across the US.

We look forward to Treasurer Chiang's Green Bonds Symposium in February 2018 to provide further direction for prospective issuers at city & municipal level. 

"Be Climate Smart says BART"& "Invest in the Planet-Invest in the MTA"

Big public authorities on both the East and West Coast are taking the lead on green finance with innovative campaigns aimed at "mom & pop"retail investors.  Both have had some success. 

They are also becoming early adopters of the streamlined programmatic process for multiple Climate Bonds Certification.

The programmatic process is well suited to municipal authorities and cites with ongoing bond programs and a desire to meet best practice in climate standards.

There's more information in our previous Q1 newsletter or contact Rob Fowler direct for a one-on-one briefing. 

New Criteria in the pipeline

Release or public consultation is imminent for:

• Marine Renewable Energy Criteria

• Nature Based Water Criteria

• Bioenergy Criteria

• Forestry & Land Conservation Criteria

• Fisheries Criteria

Watch our Blog or Twitter for announcements and Webinar dates. 

Certified Bond Issuance on the up

Over Q1 and Q2 this year, USD 6.5bn of Certified Climate Bonds have been issued, raising the total of Certified Climate Bonds to USD 15.8bn.

In 2016, USD 7.5bn of Certified Climate Bonds were issued.

At the halfway point of 2017 we are now only USD 1bn shy of the total for all of 2016.

And there’s more coming in the pipeline for Q3. 

See page 3 for full data analysis of Q2 Certified Climate Bonds.

Snapshot of Certified Climate Bonds Q2: April – June 2017

Want to see the full picture? Download the Q2 Newsletter here. 

The Last Word

Climate Bonds is hiring! 

While we’ve got your focus on Standards and Certification we should remind you we have a new opening for Climate Science Programme Manager.

A role that sits square in the middle of our Climate Bonds Standards work.

Is this you or maybe someone you know? 

Take a look at the job description for more details.

‘Till next time

Climate Bonds

Disclaimer: The information contained in this communication does not constitute investment advice in any form and the Climate Bonds Initiative is not an investment adviser. Any reference to a financial organisation or debt instrument or investment product is for information purposes only. Links to external websites are for information purposes only. The Climate Bonds Initiative accepts no responsibility for content on external websites.

The Climate Bonds Initiative is not endorsing, recommending or advising on the financial merits or otherwise of any debt instrument or investment product and no information within this communication should be taken as such, nor should any information in this communication be relied upon in making any investment decision.

Certification under the Climate Bond Standard only reflects the climate attributes of the use of proceeds of a designated debt instrument. It does not reflect the credit worthiness of the designated debt instrument, nor its compliance with national or international laws.

A decision to invest in anything is solely yours. The Climate Bonds Initiative accepts no liability of any kind, for any investment an individual or organisation makes, nor for any investment made by third parties on behalf of an individual or organisation, based in whole or in part on any information contained within this, or any other Climate Bonds Initiative public communication.

Leading hydropower operator China Three Gorges Corporation (CTG) has issued its first offshore green bond, raising EUR650 million for wind projects in Germany & Portugal

Strong Investor Demand

The June issuance from CTG attracted investors worldwide and saw 3.1 times oversubscription, bringing in price benefits alongside its positive environmental impact.  

The bond was also the first from a Chinese issuer to be Certified by the Climate Bonds Initiative, and also the first Euro-denominated green bond from a Chinese corporate.

CTG's issuance has attracted a wide base of investor support with buyers from Germany, France, Switzerland, UK, Italy, Norwayy, Netherlands, Portugal, Spain, UAE, Singapore, South Korea, Japan and Malaysia.

In terms of price benefits, the coupon rate of CTG's euro green bond was set lower than that of the seven-year ordinary euro bond it issued in 2015, due to lower interest rate environment and tighter spreads, translating into an annual cost savings of EUR3 million, and an aggregate amount of EUR21 million, equivalent to RMB150 million, can be saved throughout the bond duration.

Rise in off-shore issuance

The seven-year Certified Climate Bond was listed on the Global Exchange Market of the Irish Stock Exchange (ISE).  Due to the fully state-owned background of CTG, the green bond was rated A1/A+ by Moody’s and Fitch Ratings, with coupon rate of 1.3%.

EY has provided an external review and issued an Assurance Report on the issuance.

CTG is no stranger to the green bond market: it has issued in China’s onshore market CNY6 billion of green corporate bonds and a CNY2 billion green MTN.

This latest bond is the debut offshore green bond issuance of China Three Gorges. It follows in the footsteps of others who have tapped international green bond markets over the last two years: Agricultural Bank of China, Bank of China, (bothlisting their greenbonds on the LSE), Xinjiang Goldwind Science & Technology and Zhejiang Geely Group.

The total issuance size of offshore Chinese green bonds amounts to nearly USD6 billion, compared to over USD41 billion of onshore green bond issued.  

Zhejiang Geely Group, owner of the London Taxi Company attractedworldwide attention in 2016 with the issuance of a $400m green bond to fund development of a new low emission model of the iconic London black cab.

Chinese issuers going offshore showcase the process of green bond issuance in the international market and at the same time, help engage international investors, building familiarity with Chinese issuers. The latest China-HK Bond Connect Scheme opens up China’s bond markets to international investors, complements China’s effort to deepen the domestic green bond market.

First Chinese green bond to gain Certification under the Climate Bonds Standard

As disclosed in the prospectus, CTG will allocate the proceeds to two wind power projects, including an offshore wind project in Germany and onshore wind farms in Portugal. It is estimated that these two projects can reduce up to 1,250,000 and 960,000 tonnes of CO2 emission respectively.

This use of proceeds meets the Climate Bonds Standard Wind Criteria, and CTG has also complied with other requirements from the Climate Bonds Standard on project selection and evaluation process, use/management of proceeds, and regular reporting.

EY, an Approved Verifier under the Climate Bonds Standard, provided assurance on CTG’s compliance with the Standard. All the requirements around international best practice in green bond issuance were met.  

Certification and international markets

The Climate Bonds Standard and Certification Scheme aims to provide the green bond market and institutional investors with the trust and assurance in the environmental credentials of a bond. The Standard convenes experts around the world to develop science-based criteria about “what is green” and guidance on how to assess the climate credentials of assets and projects.

The associated Certification scheme provides assurance on environmental credentials of green bonds with associated verification, transparency and disclosure requirements around use of proceeds.

The Certification allows Chinese issuers to clearly demonstrate to overseas investors that their bond meets international industry standards for environmental integrity. It also makes it easier for international investors to identify and invest in quality green bonds from Chinese issuers, reducing the need for expensive due diligence.

Certification is increasingly being adopted in major green bond markets. The chart below reflects the 2016 status.

The path to Certification

Chinese issuers of green bonds need to obtain domestic Chinese regulatory approval to issue and label their green bonds, which is similar to the process under the Climate Bonds Standard & Certification Scheme.

Chinese green bond issuers can receive the Climate Bonds Certification with only a small amount of additional preparation and administrative work. The Certification can be done in parallel with domestic approvals, or it can be done after the domestic process is finalised.

The process is summarised below.

The Climate Bonds Standard & Certification Scheme also provides detailed guidance and procedures for approved verifiers to conduct third-party verification of green bonds.

The standardised approach removes the need for verifiers to develop their own methodologies or make subjective decisions on the eligibility of the assets being financed by the green bond. This reduces the effort and costs for issuers and verifiers for them to go through the verification process.

Going global

For Chinese green bond issuers that plan to go global, aligning with a credible international standard gives confidence in the international green bond market on the environmental credentials of the bonds. 

Put all the parts together, well governed companies, quality bond offerings, internationally recognised certification, then the shape of China’s offshore green bond opportunity begins to emerge. 

‘Till next time

Climate Bonds

​

Note: Original text published in Chinese. English translation by Ivy Lau and Lily Dai from Climate Bonds with additional editing by Andrew Whiley.

Disclaimer: The information contained in this communication does not constitute investment advice in any form and the Climate Bonds Initiative is not an investment adviser. Any reference to a financial organisation or debt instrument or investment product is for information purposes only. Links to external websites are for information purposes only. The Climate Bonds Initiative accepts no responsibility for content on external websites.

The Climate Bonds Initiative is not endorsing, recommending or advising on the financial merits or otherwise of any debt instrument or investment product and no information within this communication should be taken as such, nor should any information in this communication be relied upon in making any investment decision.

Certification under the Climate Bond Standard only reflects the climate attributes of the use of proceeds of a designated debt instrument. It does not reflect the credit worthiness of the designated debt instrument, nor its compliance with national or international laws.

A decision to invest in anything is solely yours. The Climate Bonds Initiative accepts no liability of any kind, for any investment an individual or organisation makes, nor for any investment made by third parties on behalf of an individual or organisation, based in whole or in part on any information contained within this, or any other Climate Bonds Initiative public communication.

A less sticky summer for Sean & Justine, working across the other side of the Equator - apart from a one-day trip to New Delhi for a FICCI Summit at the end of the month. Sometimes we like it cold.

In Sydney or Melbourne at the beginning of August? You can meet our CEO, Sean Kidney. Drop him an email here. Or maybe Rio de Janeiro on the 31st? Make some time for a chat with our Director of Market Development, Justine Leigh-Bell.

Below our August agenda:

‘Till next time,

Climate Bonds

Disclaimer: The information contained in this communication does not constitute investment advice in any form and the Climate Bonds Initiative is not an investment adviser.  Any reference to a financial organisation or investment product is for information purposes only. Links to external websites are for information purposes only. The Climate Bonds Initiative accepts no responsibility for content on external websites.

The Climate Bonds Initiative is not endorsing, recommending or advising on the merits or otherwise of any investment or investment product and no information within this communication should be taken as such, nor should any information in this communication be relied upon in making any investment decision. 

A decision to invest in anything is solely yours. The Climate Bonds Initiative accepts no liability of any kind, for any investment an individual or organisation makes, nor for any investment made by third parties on behalf of an individual or organisation, based in whole or in part, on any information contained within this or any other Climate Bonds Initiative public communication.

Wir danken White & Case für die freundliche Unterstützung, welche die deutschen Übersetzungen ermöglichte. 

Die Themenpapiere

Wir haben die Papiere kurz und knackig gehalten. Wählen Sie eines oder alle zum runterladen.

Grüne Verbriefungen: Eröffnung von Finanzierungsmöglichkeiten für kleinere kohlenstoffsparende Projekte 

Grüne Verbriefungen können helfen, Finanzierungsmöglichkeiten in den Fremdkapitalmärkten für kleinere kohlenstoffsparende und klimaschonende Projekte zu erschließen. Der öffentliche Sektor spielt eine wesentliche Rolle bei der Erweiterung der Märkte für Verbriefungen für grüne Projekte.

Green Covered Bonds: Aufbau grüner Deckungswerte

Covered bonds sind ein ideales Instrument für die Finanzierung klimaschonender Infrastruktur, die bereits in anderen wichtigen öffentlichen Bereichen eingesetzt wurden. Die Identifizierung bestehender grüner Deckungswerte und der Aufbau von Rahmenkonzepten für andere klimaschonende Projekte werden zu verstärkten Investitionen beitragen.

Die Rolle der Börsen bei der Beschleunigung des Marktwachstums für Green Bonds

Es besteht ein deutliches Potenzial für die Einrichtung eigener Handelssegmente für Green Bonds, die Entwicklung entsprechender Indizes sowie die Unterstützung von Marktinformationsinitiativen durch die Börsen, um den Anlegern die Entscheidung für klimafreundliche Investitionen zu erleichtern und die Marktliquidität zu verbessern.

Green City Bonds: Finanzierung einer klimaschonenden städtischen Infrastruktur 

Green City Bonds werden von Kommunen und anderen ihnen nahestehenden Einrichtungen wie Versorgungs - und Transportunternehmen zunehmend für die Finanzierung einer klimafreundlichen Infrastruktur eingesetzt.

5 Einfache Schritte für Emittenten von Green Bonds

Ein Schritt-für-Schritt-Anleitung für neue Emittenten, die den grünen Anleihenmarkt betreten wollen.

Das letzte Wort

Grüne Finanzierungen können kompliziert aussehen. Aber die breit gefassten unterstütztenden Maβnahmen sind es meist nicht. Diese Themenpapiere sind unsere jüngste Anstrengung, um einige konkrete Handlungsperspektiven für Entscheidungsträger aus Politik und Wirtschaft aufzuzeigen. Bitte wählen Sie hier.

Mit diesen Bausteinen sollte es uns allen gelingen, bis zum Jahre 2020 mindestens eine Billion USD für Klimafinanzierung zur Verfügung zu stellen.

Wir hoffen, daβ Sie unsere Dokumente hilfreich und informativ finden.

Bis bald,

Climate Bonds

Disclaimer: The information contained in this communication does not constitute investment advice in any form and the Climate Bonds Initiative is not an investment adviser. Any reference to a financial organisation or debt instrument or investment product is for information purposes only. Links to external websites are for information purposes only. The Climate Bonds Initiative accepts no responsibility for content on external websites.

The Climate Bonds Initiative is not endorsing, recommending or advising on the financial merits or otherwise of any debt instrument or investment product and no information within this communication should be taken as such, nor should any information in this communication be relied upon in making any investment decision.

Certification under the Climate Bond Standard only reflects the climate attributes of the use of proceeds of a designated debt instrument. It does not reflect the credit worthiness of the designated debt instrument, nor its compliance with national or international laws.

A decision to invest in anything is solely yours. The Climate Bonds Initiative accepts no liability of any kind, for any investment an individual or organisation makes, nor for any investment made by third parties on behalf of an individual or organisation, based in whole or in part on any information contained within this, or any other Climate Bonds Initiative public communication.

Help keep the momentum going to green up the EU financial system, drive capital investment towards climate, sustainability and infrastructure goals

What’s it all about? 

The EU High Level Expert Group on Sustainable Finance published its Interim Report setting out a host of recommendations for the creation of a financial system that supports sustainable investment. Formed in late 2016, the Expert Group is comprised of twenty banking, investment, and green finance and sustainability figures, including our CEO Sean Kidney.

This is the largest consultation of green finance ever undertaken by the EU. Its significance is underscored by the decision to have DG FISMA, the Directorate charged with financial stability, financial services and capital markets union, coordinate rather than the DG ENV, the environment directorate.

Full House at Brussels & London Presentations

The Brussels launch attracted an audience of five hundred on 18^th July, and included presentations from the members of the Expert Group and several panel discussions with first reactions to the report. Both Vice Presidents of the European Commission, Valdis Dombrovskis and Jyrki Katainen, attended the briefing and welcomed the HLEG’s work so far and committed to begin implementing the recommendations in early 2018.

In London, Climate Bonds, the Cambridge Institute for Sustainability Leadership (CISL) & the PRI coordinated a half day stakeholder consultation to an overflow audience at the offices of Norton Rose Fulbright on the 20^th July.

Take a peek:

What you can do

The Expert Group is seeking stakeholder comment and feedback prior to the final report being released in December. You can do it by replying to the public questionnaireuntil 20 September.

If you want your views to be discussed at the next Expert Group meeting, then complete the questionnaire before the 6^th September.

What’s in the Interim Report?

The early recommendations of the Expert Group are to:

• Develop a classification system for sustainable assets
• Establish a European standard and label for green bonds and other sustainable assets
• Clarify that fiduciary duty encompasses sustainability
• Strengthen ESG reporting requirements
• Introduce a 'sustainability test' for EU financial legislation
• Create 'Sustainable Infrastructure Europe' to channel finance into sustainable projects
• Enhance the role of the ESAs in assessing ESG-related risks
• Unlock investments in energy efficiency through relevant accounting rules

Green Bond Standards, Capital and Infrastructure

From a Climate Bonds perspective, these are a couple of points that stand out:   

• European green bonds standard
  • “the EU should consider introducing official European standards for green bonds; the EIB work with Climate Bonds Initiative to develop a taxonomy for green assets that contribute to meeting the EU’s climate change objectives is a next useful step in this direction”
  • “the Commission introduces official European standards for green bonds, based on the association of the EU green taxonomy (once defined) and existing and widely accepted Green Bond Principles”​

​

• Capital raising plans
  • “develop capital-raising plans at the member state and EU levels to provide investors with visibility over the role they are expected to play in delivering on sustainability objectives”
  • “create ‘Sustainable Infrastructure Europe’ – a dedicated advisory and match-making facility between public authorities and private investors would appear useful to boost Europe’s ambitious infrastructure plans”
  • “investors need to become more engaged to ensure that sustainable investments are available”

Together with the recommendation around a classification system for sustainable assets, we think these core recommendations have the capacity to transform EU investment frameworks in a positive direction.

The last word

As we’ve noted previously, the Interim Report identifies a number of directions to build green finance and investment in the EU in order to meet the Paris climate and emissions reduction goals.

It’s also about ensuring the financial system is contributing to long term sustainable economic growth and positive social development.

In short; connecting finance and investment more directly to both climate action and the real economy.

There’s momentum behind it at EU/EC level.

The more responses the Expert Group receives the better. Institutional investors, asset managers, pension funds and sustainable investment groups should take this opportunity to contribute to the final report due in December.

The questionnaire is here. You know what to do.

‘Till next time,

Climate Bonds

P.S: You can follow the Expert Group on Twitter here @HLEG_Sus_Fin.

Disclaimer: The information contained in this communication does not constitute investment advice in any form and the Climate Bonds Initiative is not an investment adviser. Any reference to a financial organisation or debt instrument or investment product is for information purposes only. Links to external websites are for information purposes only. The Climate Bonds Initiative accepts no responsibility for content on external websites.

The Climate Bonds Initiative is not endorsing, recommending or advising on the financial merits or otherwise of any debt instrument or investment product and no information within this communication should be taken as such, nor should any information in this communication be relied upon in making any investment decision.

Certification under the Climate Bond Standard only reflects the climate attributes of the use of proceeds of a designated debt instrument. It does not reflect the credit worthiness of the designated debt instrument, nor its compliance with national or international laws.

A decision to invest in anything is solely yours. The Climate Bonds Initiative accepts no liability of any kind, for any investment an individual or organisation makes, nor for any investment made by third parties on behalf of an individual or organisation, based in whole or in part on any information contained within this, or any other Climate Bonds Initiative public communication.

Como parte do 2º Diálogo Econômico-Financeiro Brasil-Reino Unido, organizações dos dois países se encontram e unem forças para impulsionar desenvolvimento sustentável e financiamento verde

Mais detalhes

Durante a visita ao Brasil para o 2º Diálogo Econômico-Financeiro Brasil-Reino Unido, o Ministro da Fazenda do Reino Unido, Phillip Hammond, lançou a Parceria Brasil-Reino Unido em Finanças Verdes, um compromisso para promover o crescimento econômico sustentável mútuo. O evento foi sediado pela FEBRABAN (Federação Brasileira de Bancos) em São Paulo.

Em seu discurso de anúncio, o Ministro declarou:

"É imperativo para o Reino Unido, como principal centro financeiro do mundo, e o Brasil, com um árduo compromisso com a sustentabilidade e um grande apetite de investimento em infraestrutura, para unir forças, garantindo assim o fluxo de capital para projetos sustentáveis ​​muito necessários.

Esta parceria será crucial para o aprofundamento dos laços de desenvolvimento sustentável entre os nossos dois países; impulsionando inovação e liderança ética; e, consequentemente, aumentando os fluxos de capital verde".

A Parceria, liderada pela City of London’s Green Finance Initiative e pelo Conselho de Desenvolvimento do Mercado Sustentável do Brasil, foi anunciada pelo Ministro ontem em São Paulo. O evento foi apresentado pelo Presidente da FEBRABAN, Murillo Portugal e Justine Leigh-Bell, nossa Chefe de Desenvolvimento de Mercado, e fez parte do Diálogo Econômico-Financeiro Brasil-Reino Unido, um encontro anual para fortalecer as relações entre os dois países.

O evento em São Paulo também incluiu a presença do embaixador do Reino Unido no Brasil, Vijay Rangarajan, dezenas de corporações e representantes do setor financeiro brasileiro e do Reino Unido, incluindo BNDES, Itaú-Unibanco, Zurich Brasil, UBS, CPFL Energia, Ecoagro, City of London, London Stock Exchange, CEBDS, entre muitos outros.

Comentários e Opiniões

Stephen Barclay, Ministro do Tesouro do Reino Unido

"A parceria Reino Unido-Brasil oferece uma ótima oportunidade em finanças verdes. Estamos ansiosos para construir uma discussão em torno do tema. É uma agenda muito importante".

Murilo Portugal, Presidente da FEBRABAN

"Uma parceria entre o Reino Unido e o Brasil certamente representa uma oportunidade para aumentar o nível de atenção em torno das finanças verdes e para estabelecer um canal de comunicação mais forte para compartilhar práticas sobre este assunto e identificar novas oportunidades de negócios entre as duas partes".

André Salcedo, Chefe de Desenvolvimento de Mercados de Capitais, BNDES

"A agenda verde existe dentro do BNDES e acredito que o Conselho, do qual somos orgulhosos parceiros, vai ajudar a vencer os desafios de acesso a novos mercados. Estamos comprometidos a fazer essa agenda avançar no país".

Marina Grossi, Presidente, CEBDS

"A parceria entre Brasil e Reino Unido nos abrirá portas e permitirá uma rica troca de informações e experiências entre os dois países. O papel do Conselho se fortalece nesse contexto ao reunir as partes interessadas desse mercado. Teremos desafios, claro, mas a agenda vai se fortalecer no país."

Sylvia Coutinho, CEO, UBS Brasil

"Precisamos de capital estrangeiro para financiar projetos que, muitas vezes, são verdes por natureza. O Brasil tem os maiores ativos ambientais do mundo e temos de criar ligações entre os investidores para trazer esse capital ao Brasil".

Chris Mayo, Chefe de Mercados Primários - Américas, London Stock Exchange

"Vimos muita inovação na agenda de finanças verdes e em títulos verdes especificamente, ao longo dos anos. Tivemos um enorme sucesso com a Índia e a China recentemente e acreditamos que agora é hora de o Brasil aproveitar esta inovação".

Justine Leigh-Bell, Chefe de Desenvolvimento de Mercado, Climate Bonds Initiative

"Esta é a oportunidade de o mundo ver que o Brasil tem o potencial de ser líder na agenda de finanças verdes. Há muito trabalho a ser feito, mas o Conselho e o nosso trabalho com a FEBRABAN são o ponto de partida perfeito".

Última palavra

A Parceria é outro passo importante para o estabelecimento de um forte mercado de títulos verdes no Brasil. É um compromisso dos stakeholders locais e do Reino Unido para desenvolver financiamentos sustentáveis ​​que ajudem o Brasil a cumprir as metas feitas em Paris (NDCs) e metas nacionais de desenvolvimento.

Vamos deixar como conclusão as últimas palavras do discurso do Ministro:

"O Brasil é muitas vezes descrito como "os pulmões do mundo". Vamos dar capacidade adicional para esses pulmões. Ao trabalhar em conjunto. Juntar a próxima geração de empresas globais do Brasil e a experiência única do Reino Unido em finanças. Para que possamos mostrar ao resto do mundo como o crescimento sustentável pode ser alcançado".

Até mais,

Climate Bonds

Disclaimer: As informações contidas neste documento não constituem conselhos de investimento sob nenhuma forma. A Climate Bonds Initiative não é uma consultora de investimentos. Qualquer referência a uma organização financeira ou produto de investimento destina-se apenas a fins informativos. Links para sites externos são apenas para fins informativos. A Climate Bonds Initiative não se responsabiliza pelo conteúdo de sites externos.

A Climate Bonds Initiative não está endossando, recomendando ou aconselhando sob o mérito, ou não, de nenhum investimento. Nenhuma informação contida neste documento deve ser considerada como tal, e nenhuma informação aqui contida deve ser invocada para tomar decisão de investimento. A decisão de investir em qualquer produto financeiro é exclusivamente sua.

A Climate Bonds Initiative não aceita nenhum tipo de responsabilidade, por qualquer investimento feito por qualquer indivíduo ou organização, nem por qualquer investimento feito por terceiros em nome de um indivíduo ou organização, com base total ou parcial, em informação contida neste ou outros comunicados da Climate Bonds.

Brazilian and UK organizations meet and join forces to grow sustainable development and green finance as part of 2nd annual Economic & Financial Dialogue

What's it all about?

During a visit to Brazil for the 2^nd annual UK–Brazil Economic and Financial Dialogue, UK Chancellor of the Exchequer Phillip Hammond has launched the UK-Brazil Green Finance Partnership, a commitment to mutual sustainable economic growth.

The launch event was hosted by FEBRABAN (the Brazilian Bank Federation) in São Paulo.

In his announcement speech the Chancellor stated:

“There is a clear imperative for the UK, with the world’s leading global financial centre, and Brazil, with a passionate commitment to sustainability and a huge appetite for infrastructure investment, to join forces, thereby ensuring capital flows into much-needed sustainable projects.

This Partnership will be crucial to deepening sustainable development ties between our two countries; driving innovation and thought leadership; and ultimately scaling up green capital flows.”

The Partnership was announced by the Chancellor yesterday in São Paulo and will be led by the City of London’s Green Finance Initiative and the Brazilian Sustainable Market Development Council, a joint project between CEBDS and Climate Bonds formed in mid 2016.

The Partnership event was opened by FEBRABAN’s President, Murilo Portugal, and Justine Leigh-Bell, our Head of Market Development, and was part of the UK–Brazil Economic and Financial Dialogue, an annual gathering to strengthen relations between both nations.

The Chancellor's address drew a diverse attendance including the UK Ambassador to Brazil Vijay Rangarajan, dozens of Brazilian and UK financial sector representatives and corporations with BNDES, Itau-Unibanco, Zurich Brasil, UBS, CPFL, Ecoagro, City of London, London Stock Exchange and CEBDS prominent.

Who said what?

Stephen Barclay, UK Treasury Minister:

“The UK-Brazil partnership offers a great opportunity in green finance. We are looking forward to constructing a discussion around the theme. It is a very exciting agenda.”

Murilo Portugal, President of FEBRABAN:

“A partnership between the UK and Brazil certainly represents an opportunity to increase the level of attention around green finance and to establish a stronger communication channel to share practices on this matter and identify new business opportunities between both parties.”

‪André Salcedo, Head of Capital Markets Development, BNDES:

"The green agenda exists within BNDES and I believe that the Council, of which we are proud partners, will help to overcome the challenges of access to new markets. We are committed to making the green agenda move forward in the country."

Marina Grossi, President, CEBDS:

"The partnership between Brazil and the United Kingdom will open doors and allow a rich exchange of information and experiences between the two countries. The role of the Council strengthens in this context, by bringing together market stakeholders. We will have challenges, of course, but the green agenda will be strong in the country."

Sylvia Coutinho, CEO, UBS Brasil:

"We need foreign capital to finance projects that are often green in nature. Brazil has the largest environmental assets in the world, we have to create the links among investors to bring this capital to Brazil."

Chris Mayo, Head of Primary Markets - Americas, London Stock Exchange: 

“We've seen a lot of innovation in the green finance agenda and green bonds specifically throughout the years. We've had huge success with India and China recently and we believe now it's time for Brazil to take advantage of this innovation.”

‪Justine Leigh-Bell, Head of Market Development, Climate Bonds Initiative: 

“This is the opportunity to the outside world to see that Brazil has the potential of being the leader in the green finance agenda. There is a lot of work to be done but the Council and our work with FEBRABAN is the perfect starting point.”

The Last Word

The Partnership is another important step towards establishing a strong green bonds market in Brazil. It is a commitment from local and UK’s stakeholders to develop sustainable finance that assists Brazil meets its climate commitments and national development goals.

It builds on the momentum established by formation of the the Sustainable Market Development Council and the growing support for green finance reflected in the latest Investor Statement.  

We’ll leave the last words from the Chancellor’s announcement speech:

“Brazil is often described as “the lungs of the world”. Let’s give extra capacity to those lungs. By working together. Pairing Brazil’s next generation of global companies and the UK’s unparalleled expertise in finance. So that we can show the rest of the world how sustainable growth can be achieved.”

'Till next time,

Climate Bonds

Disclaimer: The information contained in this communication does not constitute investment advice in any form and the Climate Bonds Initiative is not an investment adviser. Any reference to a financial organisation or debt instrument or investment product is for information purposes only. Links to external websites are for information purposes only. The Climate Bonds Initiative accepts no responsibility for content on external websites.

The Climate Bonds Initiative is not endorsing, recommending or advising on the financial merits or otherwise of any debt instrument or investment product and no information within this communication should be taken as such, nor should any information in this communication be relied upon in making any investment decision.

Certification under the Climate Bond Standard only reflects the climate attributes of the use of proceeds of a designated debt instrument. It does not reflect the credit worthiness of the designated debt instrument, nor its compliance with national or international laws.

A decision to invest in anything is solely yours. The Climate Bonds Initiative accepts no liability of any kind, for any investment an individual or organisation makes, nor for any investment made by third parties on behalf of an individual or organisation, based in whole or in part on any information contained within this, or any other Climate Bonds Initiative public communication.

Anecdotal evidence has suggested that green bonds are heavily oversubscribed and may price tighter than expected. Green Bond Pricing in the Primary Market: January 2016 - March 2017 explores the data to discover whether or not this is happening.

What’s it all about?

The green bond market continues to grow and as of July 2017 totalled over USD 233 billion. The ongoing strength of the labelled green bond market illustrates the extent of investor demand for climate-related investments.

Climate Bonds & International Financial Corporation (IFC) with support from Rabobank, Pax and Obvion undertook a detailed analysis of recent green bond issuance compared to vanilla bonds looking for any differences in pricing performance.

Green Bond Pricing in the Primary Market: January 2016 - March 2017 is the result of that initial study comparing green and vanilla bonds. 

Is there a Greenium?

Anecdotal evidence has suggested that green bonds may be heavily oversubscribed, and may price tighter than vanilla equivalents giving issuers access to cheaper funding.  

Methodology

In total we looked at sixty two (62) investment grade green bonds issued in EUR or USD over a 15 month period, to better understand the dynamics of green bond pricing in the primary market. 

To be included, bonds had to meet the following parameters:

• Currency: USD or EUR only
• Date: announcement 01/01/2016 - 31/03/2017
• Size: > = USD200 million
• Rating: Investment grade rated
• Maturity: Minimum term of 3 years

Summary of findings:

Some indicators show that there are differences between green and vanilla bonds

• Green bonds tend to attract a broader range of investors including those looking to comply with ESG focused mandates.
• USD corporate green bonds within our sample priced on average 22.2bps tighter than Initial Price Talk when compared to corporate vanilla bonds (16-17bps) issued during the same period.
• Spread performance compared to a corresponding broad market bond index: seven (7) days after announcement date, 70% of green bonds had tightened more than their corresponding index, 71% after twenty-eight (28) days.
• This suggests that green bonds within our sample perform better than the market within the first 28 calendar days.

Some indicators show green bonds behave in line with vanilla bonds

• EUR corporate green bonds in our sample price on average 13.4bp tighter than IPT. This is within the normal range of 13-14bp for vanilla bonds over the same period.  
• Average oversubscription in our sample is 3 times. Oversubscription of 3-4 times is not unusual in the corporate bond market.
• Spread performance: 70% of green bonds had tighter spreads 7 days after announcement date, 63% 28 days after*. Bonds often tighten in the immediate secondary market.
• The ‘Greenium’– some green bonds in the sample priced inside their own credit curves, some priced on their own credit curves, and some priced outside their own credit curves.
• This is broadly comparable to vanilla bonds.

What’s it all mean?

This is a complex subject, the market is still immature and it’s a relatively small pool of bonds being compared in this initial analysis.

Accordingly, results are mixed. It’s best illustrated by us simply replicating the last few paragraphs of the Conclusion:

Sometimes, green bonds price outside their curves, sometimes, they price inside, and sometimes, they price on their curves. In this respect, green bonds perform no differently from other categories of bonds as far as we can tell.

We have however, seen that after generating good demand, and pricing tight, for many green bonds, spreads tightened materially in the first seven and twenty-eight days after the announcement date, both on an absolute basis, and when measured against a corresponding index.

This suggests that many green bonds are under-priced at issuance.

We are not able to say whether this market behaviour will persist, but this could point towards tighter pricing in the future.

For the time being, this data should allay concerns among investors about longer term underperformance by green bonds, since there doesn’t seem to be any.

There is certainly no penalty attached to holding green bonds as opposed to other bonds of the same issuer and, in some instances, our analysis suggests there may be a reward.

The full report carries additional detail and various examples. You can download it here.

More to come

Note that this publication is part of an ongoing series. Our next publication will monitor qualifying bonds issued in Q2 2017, April to June.

As well as the metrics we have included here, we will explore other ways of comparing green bonds to a vanilla sample.

‘Till next time

Climate Bonds

PS: Special thanks to the report partners and funders: IFC, Pax, Obvion and Rabobank

Disclosure: This report has been prepared by the Climate Bonds Initiative IFC, Obvion, Rabobank, and Pax. Additional funding was received from the Ministry of Finance of Japan and the Government of the Kingdom of Denmark through the Ministry of Foreign Affairs.

Disclaimer: The information contained in this communication does not constitute investment advice in any form and the Climate Bonds Initiative is not an investment adviser. Any reference to a financial organisation or debt instrument or investment product is for information purposes only. Links to external websites are for information purposes only. The Climate Bonds Initiative accepts no responsibility for content on external websites.

The Climate Bonds Initiative is not endorsing, recommending or advising on the financial merits or otherwise of any debt instrument or investment product and no information within this communication should be taken as such, nor should any information in this communication be relied upon in making any investment decision.

Certification under the Climate Bond Standard only reflects the climate attributes of the use of proceeds of a designated debt instrument. It does not reflect the credit worthiness of the designated debt instrument, nor its compliance with national or international laws.

A decision to invest in anything is solely yours. The Climate Bonds Initiative accepts no liability of any kind, for any investment an individual or organisation makes, nor for any investment made by third parties on behalf of an individual or organisation, based in whole or in part on any information contained within this, or any other Climate Bonds Initiative public communication.

Urban infrastructure bonds to ride on the back of policy push. And if you’re looking for the coming rail boom, it’s already here. 

The Indian green bond market is growing rapidly. India is among the top 10 green issuers in the world with issuances at USD 6.1 billion, a third of which hit the market in 2017 alone. We expect this volume to increase with new regulatory and policy measures providing a positive nudge to the market.

Regulation and markets are evolving fast, both geared to unlocking private capital at scale to finance India’s clean energy targets, national development goals and climate plans.

Two recent events in Mumbai illustrate the evolution at a national, city and municipal level.
 

Roll out of SEBI’s Green Bonds Guidelines

India has now joined the handful of countries where regulation on green bonds is in place. The Security and Exchange Board of India (SEBI) guidelinesreleased in May this year are a timely signal to market participants to scale up issuances across sectors, improve reporting, disclose the impact of green bonds funded projects, and catalyse broader investor interest in the local green bond market.

The first interaction between SEBI and market players following the launch of the guidelines was held on 27^th July at the National Stock Exchange in Mumbai.

(Middle photo, from left to right: Rita Roy Choudhry (FICCI), Ishita Vora (NSE) and Barnali Mukherjee (SEBI))

The “Roundtable on SEBI Green Bonds Guidelines: Scope and Perspectives” organised by the India Green Bonds Council (IGBC) saw the regulator and major stakeholders discussing the new framework.

IGBC is hosted by FICCI in India and co-chaired by Climate Bonds.

Focus on disclosure and transparency:

The Guidelines are an overarching and enabling instrument and define what can be included as green. SEBI looks at regular reporting as an important measure for the regulator to track deployment of capital to green projects and their impact. Suffice to add that market transparency is vital to its growth and important to attract and retain investor interest.

The Guidelines keep the third party assurance optional.

One of the suggestions was to release an FAQ on the Guidelines, which SEBI has taken on board for active consideration. Besides clarification on the provisions, many suggestions came forth on the adoption of the Guidelines by issuers. We expect many of these to be clarified in the proposed FAQ.

Munis and cities: Big to get bigger   

It’s sometimes overlooked that India’s population will overtake that of China before 2050. India’s major urban areas increasingly figure in lists of the world’s largest cities and megacities by 2030 and 2050. They are also among the fastest growing top 10 cities in terms of their GDP.

However, it will not be possible to fully fund the clean, green infrastructure needed to match this population surge without attracting increased private capital. There is a huge need for financing sustainable development of cities with an assessment of INR 2 trillion needed just out to 2020.  

Rebooting municipal bonds

The Ministry of Urban Development (MoUD) has prioritized action on municipal bonds under its Smart City Mission launched in 2015. In a recent announcement, it has granted two percent (2%) interest subsidy to incentivise municipal issuers.

Combined with SEBI regulation on municipal issuance released in 2015, a reboot of this class of bonds is underway. 

It’s against this backdrop of enormous urban growth and financing needs that, Climate Bonds and its event partner GIZ organized a high level workshop in Mumbai attended by municipal issuers, rating agencies, investors, leading issuers, bilateral agencies and SEBI.

(Green urban infrastructure workshop)

The main conclusion from “Mobilizing Finance for Green Urban Infrastructure: Green Municipal Bonds Market in India,” was that the municipal bond market, which has remained rather sluggish in the last two decades, is on the cusp of change.

Dependence on state grants and institutional finance has traditionally resulted in little incentive for municipalities to mobilise capital from the domestic market. Even less so from international markets.

Consequently, only a few municipalities have governance and management systems in synch with the level of disclosure & reporting increasingly demanded by investors in global capital markets.

Municipalities, even the more conservative and cash rich entities, agreed that tapping the bond market will not only help them access new sources of funds, but will also trigger reform in organisational processes and improvement in their service delivery.

Municipalities pointed out that areas that need immediate and ongoing support include building general capacities, including data capture and consistency for reporting, project management expertise, exploring pooled fund bond issuance, and creating credit enhancement agencies.

All these measures are important for upward migration of ratings for municipalities to attract investment.

The experience of the Pune Municipal Corporation (PMC) June bond issuance shows that a high credit rating of AA+ is possible despite the challenges. PMC achieved it based on an agreed tax structure that envisions a 30 year forward looking tax rate and an escrow mechanism of certain taxes that will service the bonds.

The PMC Chief Accounts Officer, Ulka Salaskar said “Governance and discipline will be much better after the bond issuance.”

Muni Project Aggregation into Pooled Trusts?

SEBI is actively considering the option of pooled financing for smaller municipalities which will allow them to pool specific projects in a trust which will then issue bonds.

Coming Up - Muni Bonds from Smart Cities

At least 10 proposed smart cities are slated to issue muni bonds by the end of this year. Pune already has, and at least three major municipal corporations (Hyderabad, Ahmedabad, Delhi) are close on their heels.

Pune’s municipal bond in June raised INR 200 crore. In the next five years, it plans to issue INR 22.62bn (USD 350m) of bonds to help fund an INR 32 billion 24x7 water supply project for the city.

The Metro Rail Boom

As many as 30 cities in the country have ongoing and planned metro projects. A slew of announcements by MoUD in the last couple of months indicate that this sector is set to surge further.

A Metro Rail Policy for India is on the agenda to enable innovative finance such as land value capture, Transit-Oriented Development (TOD) for new Metro Rail projects.

TOD has been formulated and approved by the Government of India. In addition, the government is planning to roll out a ‘green mobility scheme’ to improve travel facilities at the last mile.

The Indian Credit Rating Agency estimates the cost of expansion to hover over INR 2.5 lakh crore in the next three to five years.

As of May 2017, over 529 km of metro lines were under construction in Delhi, Mumbai, Chennai, Jaipur, Kochi, Kolkata, Ahmedabad and Bengaluru and 341 km operational.

Given these developments, we expect urban infrastructure to emerge as an active sector for green bonds issuance in India in the near future. 

Policy support and incentives by the government, as well as commensurate ground-up work by current and prospective issuers will continue to remain important in the near to mid-term to attract investment at scale.

The Last Word

The carbon intensity of India’s development path out to 2050 and global climate outcomes are intertwined and cannot easily be separated. Low carbon growth on this scale cannot be achieved without sustained green investment including increased offshore capital.

Two years on from Paris, it's evident plans are being made, potential investment pipelines (and they are huge pipelines) in green energy, cities and transport can be discerned and regulators and policy makers are playing a more active role.

The India story is growing. Can the India green finance story keep pace?

'Till next time,

Climate Bonds 

Disclaimer: The information contained in this communication does not constitute investment advice in any form and the Climate Bonds Initiative is not an investment adviser. Any reference to a financial organisation or debt instrument or investment product is for information purposes only. Links to external websites are for information purposes only. The Climate Bonds Initiative accepts no responsibility for content on external websites.

The Climate Bonds Initiative is not endorsing, recommending or advising on the financial merits or otherwise of any debt instrument or investment product and no information within this communication should be taken as such, nor should any information in this communication be relied upon in making any investment decision.

Certification under the Climate Bond Standard only reflects the climate attributes of the use of proceeds of a designated debt instrument. It does not reflect the credit worthiness of the designated debt instrument, nor its compliance with national or international laws.

A decision to invest in anything is solely yours. The Climate Bonds Initiative accepts no liability of any kind, for any investment an individual or organisation makes, nor for any investment made by third parties on behalf of an individual or organisation, based in whole or in part on any information contained within this, or any other Climate Bonds Initiative public communication.