The team of Verifiers keeps growing worldwide: US Water and Energy specialist joins.

Say welcome to Kestrel Verifiers!

What’s it all about?

The Climate Bonds Standard Board has confirmed Kestrel Verifiers as an Approved Verifier under the Climate Bonds Standard and Certification Scheme.

Kestrel Verifiers is a woman-owned small business providing strategic planning and consultation to government agencies, businesses and community organizations.

Headquartered in Hood River, Oregon, they also operate from sites in California and Tennessee. Their experience includes consultation on renewable energy, water supply, water quality, ecosystem restoration, and recycled water.

As an Approved Verifier, they will be assessing green bond projects' eligibility and compliance with our Water, Solar and Wind Criteria providing certification under the Climate Bonds Standard.

Who’s saying what?

Monica Reid, CEO and Principal Consultant, Kestrel Verifiers, Inc:

“As a small business, we will maintain our total commitment to being responsive and trustworthy in service to our clients.

We look forward to working with the Climate Bonds Initiative and issuers, and doing our part to catalyze solutions to the tremendous environmental and infrastructure challenges posed by global climate change.”

Sean Kidney, CEO Climate Bonds Initiative:

“Kestrel coming on board is a welcome addition to our US based Verifiers. There is enormous growth potential for Certified green bonds, particularly in the municipal sector and to fund system upgrades and new climate resilient infrastructure.

Kestrel's long-term expertise, particularly around water, energy and environmental assessment well matches where we see the US market developing.”

The Last Word

The Climate Bonds Standard is a screening tool for investors and governments which allows them to easily prioritize climate and green bonds with confidence that the funds are being used to deliver climate change solutions.

Kestrel joins a global team of 24 Approved Verifiers, who play a vital part in the Climate Bonds Certification scheme which increases assurance for investors around the funded assets.

As the US market expands, their West Coast presence and expertise around energy and water issues will come to the fore.  American green finance and green bond markets are growing, particularly in California and we expect states to follow. 

Congratulations!

‘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.

Climate Bonds is looking for a capable and committed individual to manage the Markets and Data team on a one-year contract

There is possibility for extension depending on funding and work flow.  

The Job – Manager of Market Analysis

Key tasks:

• Manage the workflow and dynamics of a team of four staff members;
• Coordinate and develop the research and drafting of key Market Analysis reports and regular market commentary;
• Manage data services for partners and respond to internal and external data requests;
• Develop new areas of research and associated sponsorship and revenue support from existing Climate Bonds partners and external stakeholders.

You can find the full job description here.

What you need to know

We’re a fast-growing organization with a big mission, so the roles will involve pitching in to all sorts of other projects as well. Flexibility and enthusiasm are essential requirements.

We’re also an NGO. Wages are not commercial, but our ambitious agenda and diversity of projects will always keep you excited.

Find out more at www.climatebonds.net.

We’re based in central London, at London Bridge.

Eligibility to work in the UK is a must.

To apply:

Email your CV and Cover Letter to:

Head of Operations:

claire.berson@climatebonds.net.

We’ll send a more detailed briefing to selected applicants.

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.

Cities are taking a greater role in meeting NDC goals as part of country plans in the fight against climate change

Municipals and sub-sovereigns are increasingly looking to the bond markets to finance low carbon and climate change-resilient infrastructure developments

What's it all about? 

Our recently launched 'Bonds & Climate Change: The State of the Market 2017' carries 10 city-based studies and finds that while on issuance volume US munis continue to lead, having reinforced their climate commitments, the mega cities of tomorrow are making their way onto the scene.

"70% of global greenhouse gas emissions come from cities, and many of 

the world’s most populated cities sit on coastlines, rivers and flood plains, 

they are particularly vulnerable to negative impacts from a changing climate."

Cities, Megacities & NDCs   

The UN estimates that 66% of the world’s population will live in urban areas by 2050, and the number of megacities will grow from today's 28 to 41 in 2030.

33 of these cities will be located in Africa, South-East Asia and Latin America.

As populations concentrate and cities expand, the impact of poor air quality, flooding and extreme weather events will increasingly threaten these urban areas.  

Simultaneously the development of new green infrastructure; the urban transport networks, energy and water systems of these megacities is a critical factor in meeting NDC targets and holding global warming at two degrees as well as achieving various SDG goals and contributing to the wider 2030 Agenda.

In combination with other investment and capital market tools, green bonds can be an effective capital raising tool for municipalities, city governments, energy and water utilities, public-private partnerships, transport groups and private companies. 

This point has already been underlined in a plethora of reports and guides, too numerous to mention here.

The current picture

To date, our research shows cities and states have used green bonds primarily to finance urban transport and water systems, followed by energy efficiency/low carbon buildings.

Leaders & Potential Issuers

Our State of the Market 2017 report identifies upcoming opportunities for green city bonds and showcases 5 leaders and 5 potential issuers across the globe.

The focus is on expanding issuances from early adopters such as Gothenburg and Cape Town and build new issuance, especially in developing countries.

We summarise some of the report highlights: 

Africa: In July, Cape Town issued its first green city bond, amounting to R1bn (USD77.2m). The Certified Climate Bond will re-finance projects in water treatment and low carbon public transport. The issuance was described by city officials as a “resounding success” and was oversubscribed four times, reaching 29 different investors.

The green bond is part of the financing strategy for the City’s climate action plan to reduce emissions by 13% and achieve 10% share of energy from renewable sources by 2020.

Look out for our upcoming Briefing and Webinar on Cape Town’s first green bond.

Lagos is seen as a potential candidate for green bonds issuance, given its presence in the debt market and its development plans.

Because of its unique planning and adaptation challenges, the City could benefit significantly from green bond issuance across a number of sectors, including water treatment and flood resilience projects.

Latin America: Mexico City became the first city in Latin America to issue a green bond in December 2016, with a MXP1bn (USD50m) bond allocated to water treatment, energy efficiency and public transport projects.

Mexico City’s green city bond is part of its ambitious climate action plan, which aims to cut GHG emissions by 30%.

The City has announced more issuances will follow.

In Colombia, USD24.7bn worth of green city projects have been identified, with Medellín’s 2016-2019 development plan being a strong candidate for green bond financing.

Asia: The emerging Chinese and Indian markets are still small in green city bonds, but there are promising signs for growth.

Chinese municipalities are not traditionally able to issue bonds, but the establishment of pilot zones for green finance development is allowing selected cities to do so. One of these is Wuhan, where Wuhan Metro has issued two green city bonds to finance and refinance seven metro lines in total.

In India, where the population is projected to overtake China’s by 2050, reviving a muni bond market is high on the Indian government's agenda, with subsidies for issuers being granted under the Smart City Mission.

After a 10-year hiatus, the first muni bond appeared again on the market in 2017. Ten cities are slated to issue muni bonds by the end of the year, paving the way for green city bonds to be issued in the near future.

Mumbai is well-poised to become a green bond issuer in the short-term, given its projected growth rate and dearth of infrastructure projects under development, from waste management to public transit.

Alternative Financing models: transport-oriented development 

Megacities in developing countries should also look to some of their neighbour’s successful financing models for low carbon infrastructure development. In Hong Kong, the Mass Transit Railway (MTR) has been a leading green bond issuer. Its innovative land value capture model has permitted the rail network operator to develop new stations and metro lines by selling or leasing the property around or above the stations.

Similar models have been used elsewhere such as in São Paulo, Brazil, where air right sales for property development have been used to finance public transport, and could usefully be scaled up as megacities grow.

The Last Word

Green city bonds are a way to access low-cost financing for low carbon urban development. This includes the traditional infrastructure projects – urban transit, water and sewage systems, energy efficiency and smart energy solutions. Funding will be increasingly needed to build adequate levels of resilience against future conditions, heat and water supply impacts at one extreme, flooding and storm surge combinations at the other. 

The finance sector and making cities green

It is vital that growing megacities develop infrastructure in line with climate mitigation and adaptation goals, as they are not only the emitters of tomorrow, but also the most vulnerable.

While Superstorm Sandy caused considerable damage in New York, the state and city itself also had deep resources and the insurance coverage to respond.  

Insurance as a fall back for large cities against ongoing climate risks or the damage from repeat events may not be so easily accessed in future decades.

Money for NDCs

There is also still much to be done to connect NDC targets to climate plans, and pipeline development, project finance and risk bridging by IDBs and MDBs.

Differences in creditworthiness, capacity to manage and domestic policy settings at a city level are all issues needing support and resolution.

Notwithstanding these hurdles, international banks, institutional investors and asset managers are increasingly being called upon to step up green capital investment by 2020. 

We are looking to more innovation, development of sound risk sharing and robust investment models to accompany the trillions in investment that global finance can, and must, muster.

‘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.

Reach of science based Standard extended

Marine Renewable Energy joins the suite of sector Criteria already available; Wind, Solar, Geothermal, Transport, Buildings & Water

More in the pipeline 

Today, we’re excited to announce the release of the Marine Renewable Energy Criteria for use under the Climate Bonds Standard.

This release means that marine renewable energy investments are now eligible for Climate Bonds Certification.

What’s in the Marine Renewable Energy Criteria?

These Criteria lay out disclosure, GHG emission mitigation and climate adaptation and resilience requirements that marine renewable energy investments must meet to be eligible for Climate Bonds Certification.

Bonds seeking Certification must also meet the reporting and transparency requirements of the overarching Climate Bonds Standard.

Why a Marine Renewable Energy Criteria? 

A diverse array of technologies are being developed and deployed to harness clean power from tides, waves, ocean currents, offshore wind, offshore solar and salinity and temperature gradients. Technology convergence has not yet occurred and new applications continue to emerge.

As technologies progress from research and prototyping to commercial scale, marine renewable energy offers potential to meet power needs. However, more investment in the sector is imperative to realise this potential.

The Marine Renewable Energy Criteria have been designed to encompass all marine renewable energy technologies, both the established and the emerging. The Criteria can be applied to offshore wind, offshore solar, wave power, tidal power and have been designed so that emerging marine renewable energy technologies can comply in the future. Find a brief summary here.

Where can I find more?

Further details on the Marine Renewable Energy Criteria can be found in three supporting documents:

1. The Marine Renewable Energy Criteria Summary
2. The Marine Renewable Energy Criteria
3. The Marine Renewable Energy Background Document

Isn’t all renewable energy already climate friendly?

Put simply: yes, renewable energy generation replaces fossil fuel energy generation and accordingly is climate-friendly.

Increased renewable energy generation capacity and associated climate-resilient infrastructure is essential to move to a low carbon economy and is definitely in-line with limiting warming to 2°C – the key principle we guide all our Sector Criteria by.

However, distinct Criteria for marine investments is now necessary for the following reasons:

1. To ensure sufficient transparency and disclosure
2. To confirm facilities do not rely on substantial fossil fuel back-up and 
3. To confirm the climate resilience of the assets.

Three Steps for Marine Renewable Energy Certification

What Marine Technologies are covered?

The Criteria apply to ALL marine renewable energy technologies and related dedicated infrastructure, such as;

• Offshore wind
• Offshore solar
• Tidal
• Wave
• Ocean thermal energy conversion
• Salinity gradient electricity generation
• And, any other new marine renewables technology that may emerge as the sector expands

Why is Marine Renewable Energy so important?

Marine renewables are a growing and essential part of the future energy mix. The IEA recognises that the energy mix is being redefined and increased renewables capacity, alongside nuclear, will supply most of the demanded growth.

They also recognise that sustainable energy systems need to feature diverse energy sources. Marine renewable energy is a crucial generation technology for helping provide this diversity.

In recent news, the cost of offshore wind has fallen dramatically since the results of competitive auctions for new contracts to provide clean electricity were announced. Both onshore and offshore wind compare well or are becoming cheaper than gas and nuclear.

As we see more offshore wind being developed, this Criteria and green bonds can play an important role in helping developers access the finance they need.

Who developed the Marine Renewable Energy Criteria? 

To develop the Criteria we convened a Technical Working Group (TWG) and an Industry Working Group (IWG). The TWG was convened in April 2016 with the remit of developing Criteria for marine renewable energy, fisheries, aquaculture and coastal infrastructure. Wind & Solar projects have been available for Climate Bonds Certification for some time, from this point offshore wind and offshore solar projects will be evaluated using this Criteria which are more specific to marine based energy and ecosystem issues.

The IWG was convened specifically for marine renewable energy and provided feedback on the Criteria proposed by the TWG from an industry perspective.

Across the two groups there was representation from leaders and subject matter experts drawn from academic, NGO, issuer, investor and verifier backgrounds.

The Criteria also underwent public consultation.

A big thanks goes to our dedicated TWG & IWG for their instrumental role in developing these Criteria.

Who’s saying what?

Dr. Christine Negra, Versant Vision & Lead of TWG

“For marine renewable energy technologies to deliver on their full potential in a diversified global energy economy, we need scientifically robust Criteria that give investors the confidence to put capital towards pilot and commercial scale deployment.”

“These science-based Criteria deliver that confidence, helping investors to accelerate the global transition toward renewable energy sources, while ensuring that use of bond proceeds are aligned with the UN Sustainable Development Goal calling for sustainable use of marine resources.”

Dr. Andrea Copping, researcher at the U.S. Department of Energy’s Pacific Northwest National Laboratory & TWG member

“Offshore renewable energy has the potential to be a key provider of the energy the economy needs to transition to a lower carbon future. Siting considerations and requirements are extremely important with offshore arrays, more so than for onshore counterparts, and if not properly considered they can affect the success and power generation of the array.”   

Paul Holthus, World Ocean Council (WOC) & IWG member:

“The World Ocean Council is pleased that Climate Bonds Initiative convened the development of Marine Renewable Energy Criteria for green investments. Scaling up marine renewable energy is an important part of the WOC work in support of the Sustainable Development Goals, and was a key topic at the WOC Sustainable Ocean Summit in 2016, as it will be again at this year’s SOS in Halifax in late November.”

“Over the next few years, marine renewable energy generation capacity needs to increase rapidly, and is a focus of the WOC Ocean Investment Platform. The Climate Bonds Initiative Criteria and Certification are a useful tool that developers seeking finance can use to prove the environmental credentials of their projects to investors. Using these Criteria and issuing in the green bond market will help attract new investors to the marine renewable energy sector.”

Mark Robinson, DNV.GL & IWG member:

“We are very pleased to see the Marine Renewable Energy Criteria for the Climate Bonds Standard being finalised for use after a constructive Working Group. These criteria set a benchmark for qualifying Marine Renewable Energy projects in green bonds including consideration of mitigation, climate adaptation and resilience with a focus on disclosure and quantified benefits.”

Anna Creed, Head of Standards at Climate Bonds Initiative:

“Releasing the Marine Renewable Energy Criteria is another step in the ongoing development of the Climate Bonds Standard and suite of Sector Criteria. The engagement and contributions from the TWG and IWG members ensures each new Criteria we launch is robust, comprehensive, has strong environmental credentials and takes into account climate resilience considerations.”

“This gives investors’ confidence in the benefits of Climate Bonds Certification.  We expect to see initial marine renewable certifications in the next six months.”

Why seek Climate Bonds Certification?

Climate Bonds Certification allows issuers to demonstrate to the market that their bond meets industry best practice for climate change mitigation, adaptation and resilience, as well as for management of proceeds and transparency. Marine renewable energy has yet to made up a significant share of the green bond market and commonly accepted best practice or standards are still to be established in this sector.

Certification will signal investors that proper environmental due diligence has been done on the assets they are investing in. It’s a robust and credible way for this new asset type to enter the green bond market.

Other benefits of issuing a Certified Climate Bond include;

• Investor diversification: marine renewable energy issuers should find they attract new investors by certifying
• Greater investor engagement
• Investor stickiness: investors buying Certified Climate Bonds tend to buy and hold
• Strengthened reputation: certifying shows commitment to delivering low carbon infrastructure
• And a freeing up of balance sheets

The Last Word

The race is now on to become the first issuer of a Certified Climate Bond for Marine Renewable Energy.

Will it be offshore wind? Or maybe tidal?

We’re hoping to see a lot of issuance for these renewable energy facilities in the near future.

Also, keep an eye out for further announcements.

We’re expecting to release Water Criteria and Bioenergy Criteria for public consultation before the year’s out. Further developments in the marine sector are also not far off as our development of our respective Fisheries and Aquaculture Criteria continues apace.

And the new Standards 3.0 is on the way as well. 

‘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.

Market Development Moves Forward - $3.6bn in Brazilian Green Bonds - More to Come! 

Edição Brasil: Títulos de Dívida & Mudanças Climáticas - Análise de Mercado 2017

Download in English or Baixe aqui em Português

What’s it all about?

Climate Bonds Initiative has just launched the Bonds & Climate Change: The State of the Market 2017 Brazil Edition report. 

Available in both English& Portuguese, this is our second annual Brazil based report. 

The 2017 Brazil Edition was sponsored by the Inter-American Development Bank (IDB) in partnership with the Brazil’s sustainable finance expert SITAWI and was launched on Wednesday at the São Paulo headquarters of Mattos Filho Advogados, accompanied by a live webcast. 

The Headline Numbers

The Brazilian labelled green bonds market has now reached $3.67bn, led by national companies. 

Brazilian bond issuance in Q1 and Q2 2017 reached a total of $288.4bn, with green bonds accounting for 0.2% (in comparison to the global bond market, green bonds made up 4% of issuance in the same period).

Since the inaugural June 2015  issuance by BRF to September 2017, nine labelled Brazilian green bonds have been issued, five of them in the international market.

Green Bonds Use of Proceeds 

Brazil Edtion 2017 finds domestic green bonds are financing a diverse range of sectors:

• Renewable energy projects accounting for the highest proportion at 42%
• Agriculture and Forestry at 24%
• Water at 13%
• Buildings & Industry at 9%
• Waste & Pollution at 8%
• Transport & Climate Adaptation make up just 2% each, an indicator of the significant headroom for investment in these areas.

Of the nine green bonds issued to date, five have an agriculture or forestry component to them. Internationally this is a very high ratio. 

​

Why the focus on sustainable Agriculture & Forestry?    

• Brazil is the world’s largest exporter of sugar and soybeans,
• 2^nd largest producer of Ethanol,
• 2^nd largest eucalyptus pulp producer,
• 3^rd largest exporter of corn,
• 4^th largest producer of fibre furnish,
• Largest producer of sustainable FSC certified packaging,
• Amongst the top 5 producers and exporters in range of other agricultural product categories. 

This December 2016 presentation from the Agriculture Ministry at our Brazil Investor Forum gives a concise snapshot. A UN FAO study forecasts that Brazil will have to increase its food production significantly to help meet demand from global population growth of the next decades.

Brazil has the world’s largest area of arable land in a single country, so developing best practice in the financing of low carbon and sustainable agricultural and forestry practices has an impact far wider than Brazil. 

Why is Brazil so important?

Brazil is big. In lots of ways. It's the biggest economy in Latin America and 9^th largest internationally.

It's also the 5^th in population and a member of the G20.

Its largest city, São Paulo, is amongst the top 20 global megacities in 2016 and is set to remain at the top in 2030 with an estimated population of almost 25 million.

Who’s saying what?

Justine Leigh-Bell, Director of Market Development, Climate Bonds Initiative

"Brazil has an extraordinary opportunity to be the global engine of low carbon agriculture and sustainable growth. To meet this goal, banks, corporations and governments must work in partnership, on policy and market directions, in developing green finance opportunities and exploring new sources of investment.” 

Gustavo Pimentel, Sustainable Finance Director, SITAWI 

"The Brazilian green finance market should now grow and diversify into sectors. Wind power and sustainable forest management were the low-hanging fruit. We look forward to see issuance for infrastructure, banks and agribusiness.” 

Juan Ketterer, Chief, Connectivity, Finance & Markets, Inter-American Development Bank 

“To leverage private investments needed to bridge infrastructure and productivity gaps in Brazil it is key to further support the development of financial and capital markets. There is a need to attract national and international institutional and impact investors in low carbon investments and investments with high positive social impacts.”

(link is externa

O mercado continua crescendo - US$3.6bi em títulos climaticos emitidos até agora 

Baixe aqui em Português; Download in English.

Sobre o que estamos falando?

Acabamos de lançar a Edição Brasil do nosso relatório anual ‘Títulos de Dívida & Mudanças Climáticas: Análise do Mercado 2017’. Disponível em inglês e português lançado pelo segundo ano consecutivo, o relatório inclui analise do mercado de títulos verdes global e uma seção especialmente dedicada ao Brasil. 

A edição brasileira de 2017 foi patrocinada pelo Banco Interamericano de Desenvolvimento (BID) e traduzida e escrita em parceria com a especialista em finanças sustentáveis do Brasil, SITAWI. O lançamento aconteceu na sede paulista do escritório Mattos Filho Advogados, com transmissão ao vivo pela Internet.

Os principais números

O mercado brasileiro de títulos de títulos verdes já supera 11 bilhões de reais, com empresas nacionais na liderança das emissões.

A emissão de títulos brasileiros no primeiro trimestre e no segundo trimestre de 2017 atingiu um total de US$288,4 bilhões, com títulos verdes representando 0,2% desse total (em comparação com o mercado global de títulos, títulos verdes representaram 4% da emissão no mesmo período).

Desde junho de 2015 (quando a BRF inaugurou este mercado) até setembro de 2017, foram emitidos 9 títulos verdes brasileiros, cinco deles no mercado internacional.

Green Bonds: Uso dos recursos 

De acordo com o ‘Análise de Mercado 2017’, os títulos verdes domésticos estão financiando os seguintes setores:   

• Projetos de energia renovável - 42%     
• Agricultura e Florestas - 24%
• Água - 13%
• Edifícios e Indústria - 9%
• Resíduos e Poluição - 8%
• Transporte e adaptação climática - 2% cada (um indicador da margem significativa para o investimento nessas áreas)

​

Dos nove títulos verdes emitidos até a data, cinco contam com um componente agrícola ou florestal. Comparado com o mercado internacional, esta é uma proporção bastante alta.

Por que o foco na agricultura e silvicultura sustentáveis?

• O Brasil é o maior exportador mundial de açúcar e soja,
• 2º maior produtor de etanol,
• 2º maior produtor de celulose de eucalipto,
• 3º maior exportador de milho,
• 4º maior produtor de fibra,
• Maior produtor de embalagens certificadas FSC sustentáveis,
• Entre os 5 melhores produtores e exportadores da gama de outras categorias de produtos agrícolas.

Esta apresentação de dezembro de 2016 do Ministério da Agricultura no nosso Fórum de Investidores do Brasil dá um instantâneo conciso. Um estudo da FAO (ONU) prevê que o Brasil terá que aumentar sua produção de alimentos significativamente para ajudar a atender a demanda do crescimento populacional global nas próximas décadas.

O Brasil tem a maior área de terras aráveis ​​do mundo em um único país, de modo que o desenvolvimento de melhores práticas no financiamento de atividades agrícolas e florestais sustentáveis ​​e de baixa emissão de carbono tem um impacto que vai além do próprio Brasil.

Por que o Brasil é tão importante?

O Brasil é grande, de muitas maneiras. É a maior economia da América Latina e 9ª maior, internacionalmente.

É também o 5º maior no ranking populacional, além de ser membro do G20.

Sua maior cidade, São Paulo, está entre as Top20 megacidades globais em 2016 e deverá permanecer no topo em 2030, com uma população estimada em quase 25 milhões.

Quem disse o quê?

Juan Ketterer, Chefe de Conectividade, Finanças e Mercados do Banco Interamericano de Desenvolvimento

"Para alavancar investimentos privados e conectar infraestrutura às lacunas de produtividade no Brasil, é fundamental apoiar o desenvolvimento dos mercados financeiro e de capitais, atraindo organizações nacionais e internacionais para investimentos em projetos de baixa emissão de carbono e alto impacto social.”

Justine Leigh-Bell, Diretora de Desenvolvimento de Mercado para a Iniciativa de Ligações Climáticas

"O Brasil tem uma extraordinária oportunidade de ser o motor global da agricultura com baixa emissão de carbono e do crescimento sustentável. Para atingir esse objetivo, os bancos, corporações e governos devem trabalhar em parceria, políticas e orientações do mercado, desenvolver oportunidades de financiamento verde e explorar novas fontes de investimento."

Gustavo Pimentel, Diretor Gerente da SITAWI

"O mercado brasileiro de títulos verdes agora deve crescer e se diversificar em setores. A energia eólica e o manejo florestal sustentável foram apenas o começo. Estamos ansiosos para ver emissões para infraestrutura, bancos e agronegócio."

Nossa última palavra

Existe uma oportunidade significativa para financiar a expansão da agricultura de baixa emissão de carbono em escala, aumentar a diversificação de fontes de energia renováveis e desenvolver infraestrutura resiliente para atender a um novo padrão econômico no país.

Desde o relatório de 2016 até agora, o mercado começou a mudar.

Com o apoio do Conselho Brasileiro de Finanças Verdes e signatários da Declaração de Títulos Verdes do Brasil, estamos positivos sobre o crescimento nos próximos 12 meses.

Baixe aqui em Português.

Download in English.

Até mais,

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.

Invitation

You’re are cordially invited to a working discussion on climate resilience investment, focusing on resilience bonds, resilience banks, and resilience funds. 

Breakfast will be provided.

Background

As global attention shifts to the implementation of the Paris Agreement, climate action is increasingly focused on climate resilience as a means of climate adaptation.

This discussion will bring together key stakeholders for a discussion of emerging instruments and institutions poised to drive resilience investment forward.

The meeting will start with a brief presentation on resilience bonds, resilience banks, and resilience funds and then move into broader discussion including other promising opportunities for financing resilience.   

Event Details:

Where: Natural Resources Defense Council, 1152 15th St. NW, Washington DC

When: Monday, 16 October 2017 7:30-9:00 AM

How to get there: Closest Metro stations are McPherson Square on the orange/blue lines and Farragut North on the red line.

Agenda:

7:30-7:45 Introductions

7:45-8:00 Brief overview presentations on resilience bonds, resilience banks, resilience funds

8:00-8:50 Discussion

8:50-9:00 Takeaways and Next Steps

RSVP: Limited Seats 

Please RSVP to Doug Sims, dsims@nrdc.org and Lisa Copland, lcopland@nrdc.org.  

Spaces are limited, please register as soon as possible.

You will receive a confirmation of attendence. Any enquiries please contact Doug Sims. dsims@nrdc.org

Event Organisers 

A joint event hosted by the Natural Resources Defense Council (NRDC), the Climate Bonds Initiative (CBI), and the Global Adaptation and Resilience Investment Working Group (GARI).

We hope you can join us. 

'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.

Madame/Monsieur,

Nous avons le plaisir de vous inviter à l’évènement de HSBC: LE DEVELOPPEMENT DURABLE: UN IMPERATIF GENERATEUR D'OPPORT UNITES D'AFFAIRES, le jeudi 19 octobre à 18h, au siège de HSBC France 109, avenue des Champs-Elysées, 75008 Paris.

Water Consortium Moves to Next Phase in Climate Bonds Standard Water Criteria Development

60 Day Public Consultation Period Opens 16^th October

Webinar Dates Announced for 25^th October and 20^th November

On behalf of the Water Consortium, the Climate Bonds Initiative has released Water Criteria Phase 2 Nature-based and hybrid water infrastructure for public consultation. 

The Water Criteria are a key component of the science-based Climate Bonds Standard and Certification Scheme - a screening tool for investors, development banks and governments, which allows them to easily prioritize climate and green bonds with confidence that the funds are being used to deliver climate change solutions.

Water Criteria Phase 2

Water Criteria Phase 2 has a focus on nature-based and hybrid water infrastructure such as wetlands and watersheds including for purposes as water collection, storage, treatment and distribution, flood protection and drought resilience.  

The Phase 2 Criteria aims to:  

        I. Certify water infrastructure that are compatible with a 2°C trajectory

        II. Ensure these assets and the surrounding ecosystem are adaptive and resilient to a changing climate.

You can find more details and Criteria documentation on our Water Page.

Please send all comments to Lily Dai Senior Research Analyst (Lily@climatebonds.net).

60 Day Public Consultation Period

16^th October 2017 – 14^th Dec 2017

Webinar Details

Webinar 1: Wed 25 Oct 15.00 - 16.00 BST (UK Time)

Register here.

Webinar 2: Mon 20 Nov 16.00 - 17.00 GMT (UK Time)

Register Here:

Water Consortium Presenters will be:

Anna Creed– Head of Standards Climate Bonds Initiative

Dr John Mathews – Alliance for Global Water Adaptation (AGWA)

Additional Consortium Presenter (TBC)

These webinars will cover:

Introduction to Phase 2

Development Process

Q&A

These sessions will be recorded and sent out to all those who have registered.

Learn more about Nature-based and hybrid water infrastructure:

REGISTER FOR THE FIRST SESSION Wed 25^th Oct

REGISTER FOR THE SECOND SESSION Mon 20^th Nov

Water Criteria Consortium and Criteria Development

Partner organisations in the Water Consortium are Climate Bonds Initiative, Ceres, World Resources Institute, CDP and the Alliance for Global Water Adaptation (AGWA) which is supported by Stockholm International Water Institute (SIWI).

Criteria development is supported by the Consortium together with a Technical Working Group (TWG) that is led by Lead Specialist Dr John Mathews and includes additional water expertise through representation from other NGO’s, industry experts and water authorities. An Industry Working Group (IWG) also provides support by reviewing and assessing the criteria development. 

A list of TWG and IWG members can be found it here.

Don’t forget to register!

'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.

ICBC is the world’s biggest bank and it’s also the world’s biggest listed company. When they issue their inaugural green bond and it's Climate Bonds Certified, we think it's news worth repeating.

And when India’s state-owned energy agency IREDA does the same, we think that’s good news as well.

Also in the news; New York State HFA & MTA taking the streamlined Programmatic Certification path again as they forge ahead on issuing green.

Plenty more in this month’s Market Blog, so let’s jump straight in...

New Issuers

A reminder of our new format to help readers keep up with the volume of green bonds emerging.

New issuers in Table 1, repeat issuers in Table 2, with a link back to our original blog posts.

Repeat issuers

Certified Climate Bonds

Industrial & Commercial Bank of China (ICBC) – USD2.1bn

The world’s largest bank, ICBC issued its first green – a One Belt One Road Green Climate Bond.

If that formal name for the bond doesn’t send you a message you’re not paying attention.

We covered the story as it broke, and the ramifications of this bond are worth a quick look.

It’s worth noting a few extra points – Global Capital reports the bond was issued in three tranches: a EUR1.1bn 3-year floating rate note, a USD450m 3-year floating-rate note and a USD400m fixed rate note. All tranches were oversubscribed - with the EUR1.1bn tranche receiving EUR1.8bn in orders! Pricing was tighter than expectations.

In another coup for the Luxembourg Green Exchange (LGX) they’ve snared this plum listing.

See the Green bond framework, verifier’s report and CICERO second opinion here.

IREDA – INR19.5bn (USD300m)

IREDA, India’s state owned energy development agency just issued their inaugural Climate Bonds Certified green Masala bond, after their green bond debut in March 2017.

It is the first green Masala bond to be listed on the London Stock Exchange. The bond was certified against the Solar and Wind Criteria of the Climate Bonds Standard.

EVI provided the verification document.

More information is available in our recent Blog Post.  

This may be a good time to note the recent comments from Secretary of the Ministry for New and Renewable Energy Anand Kumar that India will meet its ambitious 175GW of renewable energy by 2022 target. 

This will require significant domestic and offshore investment.

Corporate

Mexico City Airport Trust 

Grupo Aeroportuario de la Ciudad de México issued their second green bond, raising a whopping USD4bn in two tranches. The deal achieved the highest grade of GB1 in Moody’s Green Bond Assessment rating. Sustainalytics provided the second party opinion.

Eligible projects to be financed include: LEED-certified low carbon buildings, renewable energy as well as waste and water management.

The first bond was issued in late 2016 at the time a record USD2bn. You can read more on our positioning on our "Big End to September" 2016 Blog Post here. 

SSE – EUR600m (USD716m) 

This is the largest UK green bond issue to date, topping the recent Anglian Water£250 million Green Bond and is a first for British energy company SSE.

According to the green bond framework, eligible projects fall under renewable energy:

• Production: onshore wind farms; offshore equity investments where equity investments are joint ventures agreements with other parties – e.g. Beatrice Windfarm
• Transmission: onshore transmission network infrastructure.

This debut bond will refinance part of the issuer’s GBP1.1bn onshore wind portfolio in the UK and Ireland, including:

• Completed projects in the last 2 years: Slieve Divena 2 (19MW), Strathy North (67MW), Galway (64MW), Tievenameenta (35MW), Dunmaglass (94MW) and
• Projects under construction to be finalised in next 2 years: Bhlaraidh (108MW), Leanamore (18MW), Clyde Extension (173MW), and Stronelairg (225MW).

DNV GL provided the second opinion.

Proceeds going to offshore renewable energy are quite easily included as green. The inclusion of equity investments is something we don’t see a great deal of – it does raise the potential for double counting if more than one owner refinances the same project. However, SSE have stated that only the equity share will be reported on.

Energy transmission infrastructure is straightforward in this case. As its offshore generation the transmission lines are fully dedicated to renewable energy.

In other cases, it can be more difficult – particularly if new transmission lines will enable new renewable energy to be built but are not necessarily fully-dedicated – not the case here, but a difficult area to quantify and something that our academic network is contemplating.

Reporting on allocation will be provided once, one year after issuance. All proceeds will refinance projects and therefore the full amount raised will be allocated immediately which is why they have committed to reporting just once.

Underwriters: BBVA, Santander, Barclays, NatWest.

Where are the UK Corporates?

The UK has not been a large source of green bond issuance to date. While the City of London GFI and LSE are working hard to establish London as a green finance hub, banks and corporates have largely been MIA on domestic green issuance. Unilever and EIB in 2014, TfL and KFW, in 2015, the same names re-appear, then Belectric and the list starts to flag after that. 

The UK doesn’t even rate in Climate Bonds list of Top 15 green issuing nations (counting supranationals as one group) from 2005 to 2017.

Could the Anglian Water and now this SSE issuance be the new green shoots we’ve been looking for?

Klabin – USD500m 

Brazilian paper and pulp producer, Klabin just issued their inaugural green bond. This is the 9^th Brazilian green bond to be issued.

Eligible projects fall under:

• Sustainable Forest Management:
  
  • FSC-certified new planting and replanting activities
  • restoration of native forests in degraded land and biodiversity conservation
• Renewable Energy, such as biomass recovery boilers
• Clean Transportation: acquisition of locomotives and train wagons to replace trucks transporting pulp; extension of existing railway lines
• Energy Efficiency: facilities upgrade and equipment optimizing energy consumption such as efficient electric engines, valves and  pumps
• Waste Management: wastewater treatment, reusing and decreasing waste
• Water Management to reduce water consumption and increase reuse
• Eco-Efficient and Circular Economy Adapted Products, Production Technologies and Processes such as eco-responsible packaging
• Adaptation: biological control such as a pesticide substitute, fire risk prevention activities.

Wow, there is a lot to take into account! It’s difficult to unpack the greenness of each area until reporting on selected projects is published. However, there are no red flags and the framework appears robust, including the sustainable forest management category comprising only FSC-certified activities.

Second opinion provided by Sustainalytics.

Klabin reinforces the trend of Brazilian green bonds having a more prevalent agriculture or forestry component than their peers.

There’s a bigger sustainability story to watch here considering Brazil's pivotal role as a global supplier of agricultural and forest products. 

Brazilian’s green bonds use of proceeds

Source: Climate Bonds Initiative, Bonds and Climate Change: The State of the Market 2017 – Brazil Edition.

We’ve just launched our 2017 Brazil Edition State of the Market Report in both English& Portuguese. There’s a lot more inside.

Underwriter: BAML, Citi, Itau, Morgan Stanley, Santander.

Tenaska, Private placement – USD400m 

Unlisted Californian independent power producer, Tenaska just issued their first green bond to refinance their 150MW Imperial Solar Energy Center West project.

Proceeds of the $400m private placement will be used to refinance capital and operational expenditures related to the acquisition, development, operation and maintenance of a PV solar power plant including engineering, legal, and project management costs.

Sustainalytics provided the second opinion which is good practice as private placements rarely have an external review.

Co-placement agents: Morgan Stanley, MUFG Securities and BNP Paribas.

Icade – EUR600m (USD716m) 

French real estate company Icade successfully issued their inaugural green bond, almost 3x oversubscribed.

According to the green bond framework, proceeds will be used to finance or refinance:

• Investments in construction and/or renovation of Green Buildings meeting all three eligibility criteria:
  
  • A minimum level of HQE ‘Very Good’ and/or BREEAM ‘Very Good’ certification
  • Distance to public transport under 400m (defined as either bus, train, tram, metro, river shuttle, or private bus shuttle)
  • Existing or planned set up of a Green Lease Committee “Comité Bail Vert” with its tenants, with a specific action plan regarding energy, carbon, waste and water*
• Energy efficiency and energy transition projects, according to the following criteria:
  
  • Equipment achieving a minimum improvement of 20% in energy savings and/or 20% CO2 emissions reduction
  • Renewable energy production projects such as solar, wind or geothermal
  • Eco-mobility projects including electric vehicle charging stations and any infrastructure promoting the use of low-carbon transport solutions in urban areas, such as electric vehicles and bicycles.

Icade have placed strong minimum certification hurdles for buildings to be eligible, a very positive marker that puts them in line with best practice to date for green bonds for buildings.

For energy efficiency projects, a specific threshold relating to energy or carbon is a good step towards ensuring projects make deep cuts rather than marginal improvements.

We note, however, that 20% is not enough to meet the Climate Bonds Standard, which requires improvements of 30-50% depending on the life of the bond.

The allocation of the bond’s proceeds will be audited by PwC on an annual basis.

Sustainalytics provided a second-party opinion.

Underwriters: BNP Paribas, Credit Agricole CIB, HSBC, Natixis, Société Générale.

Well done Icade!

A general note about differing green building certification schemes

For green buildings, certification scheme varies widely in intent and strategy. This means that schemes such as HQE, BREEAM, and LEED (focused on energy) and the Climate Bond’s Building Criteria (focused on emissions) are not directly comparable. 

Many schemes cover a range of broad “green” categories, including water use efficiency, healthy building materials, ease of access to public transport, that are weighted differently.

The Climate Bonds Low Carbon Buildings Criteria relies on tracking the emission performance of an asset against a local (city/regional) baseline to determine the ‘greenness’. As city and regional data is not always available, some existing schemes can be used as temporary performance proxies. Initial analysis has determined that assets achieving LEED Gold and Platinum are Climate Bonds Certifiable.

Other schemes, such as HQE and BREEAM will require additional analysis to determine whether their requirements meet the standards of the Buildings Criteria.

*"Green lease" is the name given to an environmental annex imposed by the Grenelle II.

According to this annex, the tenant and the owner will have to communicate to each other all useful information relating to the energy consumption of the rented premises. The tenant will allow the owner to access the rented premises to conduct works to improve energy performance.

The "green lease" is part of the range of actions aimed at increasing the energy efficiency of buildings by 20% by 2020 compared to the end of 2006.

Hanjin International – USD300m 

South Korean-based Hanjin International issued their first 3-year green note at the end of September, backed by policy bank Export-Import Bank of Korea. Proceeds will exclusively refinance the debt associated to the deconstruction and the construction of the Wilshire Grand Center building in Los Angeles, which opened to the public in June 2017. It is expected to be awarded a LEED Gold level.

Sustainalytics provided the second party opinion.

Underwriters: BNP Paribas, Daiwa, Goldman Sachs.

Tus-Holdings Co., Ltd., Private placement – RMB350m (USD52.5m) 

China based Tus-Holdings Co, is the former Tsinghua University Science Park Centre (TusPark Centre), responsible for developing, constructing, operating and managing TusPark.

TusPark is the largest university-initiated science park in the world, home to 1500 multinational R&D headquarters and domestic innovation enterprises.

All bond proceeds will be used to finance a solar farm developed by a Tus-Holdings’ subsidiary.

It’s a private placement and, while it is best practice for all bonds to disclose information publicly, it is quite common to have limited availability of information for private placements.  As the proceeds will go to solar projects, this is fairly easy defined as green so we’ll include it, but will continue to track further disclosure.

Underwriter: Great Wall Securities.

Second opinion provided by CCXI (not publicly available).

CECEP Wind-Power Corp – RMB500m (USD75m) 

CECEP Wind Energy is a subsidiary of China Energy Conservation and Environmental Protection (CECEP) - a key partner that Climate Bonds has been working closely with. This RMB500m (USD75m) inaugural issuance will be exclusively used to refinance 17 wind farms, which are expected to deliver the following environmental impacts:

• Energy generation 1m TCE/a
• CO2 reduction 2.8m t/a
• SO2 reduction 22k t/a
• NOx reduction 343 t/a

Underwriter: Zhongtai Securities.

Second opinion provider: CECEP Consulting (the document is not publicly available).

Municipalities/Cities

Santa Monica Public Financing Authority – USD68.5m 

Santa Monica has issued its first green bond to finance the construction of a city services building and its related improvements. The project is expected to be completed by April 2020.

The building’s design is intended to meet the Living Building Challenge certification (LBC). According to the prospectus, LBC certification exceeds LEED platinum standards. It requires actual, rather than anticipated, performance demonstrated over twelve consecutive months. Components include ‘Net Zero Energy’ and ‘Net Zero Water’.

We haven’t come across this certification scheme previously but from initial research it seems to have high performance criteria.

In particular, the fact that certification is based on actual building performance similar to the Climate Bonds Low Carbon Buildings Criteria makes it a strong positive. Further, if it does indeed exceed LEED Platinum certification standard, this would certainly meet the requirements for the standard.

Underwriter: Morgan Stanley.

Region Skåne – SEK1.2bn (USD136m) 

While this green bond was issued in October 2016, we have just recently come across it.

Region Skåne is the southernmost county of Sweden. Its green bond framework includes the following eligible categories:

• Low carbon buildings
  
  • New constructions with at least 25% less energy use per m² than required by applicable regulations and preferably a minimum silver Miljöbyggnad certification
  • Major building renovations leading to a reduced energy use per m² of at least 25%

• Energy efficiency: measures leading to improvements of at least 20%  
• Clean transportation: non-fossil public and cargo transportation
• Adaptation: adaptation measures in buildings and infrastructure 
• Renewable energy: wind, solar, geothermal, bioenergy and biogas from waste

As noted earlier, building certification schemes are not easily comparable. The Swedish Miljöbyggnad scheme is commonly used by Swedish issuers and covers a broad range of climate and other metrics.

In its external review, CICERO notes the following with regard to the Silver certification:

"It is a strength that Region Skåne requires additional energy requirements to the regulations. However, in a low carbon 2050 perspective the energy performance of buildings, is expected to be improved".

This is aligned with Climate Bonds’ view.

We note that there are potential pitfalls in using biogas and bioenergy. However, the majority of the energy sourced is locally produced, primarily from food waste. The second opinion notes that peat is not eligible.

As nearly a year has elapsed since the issuance, we are looking forward to seeing the green bond reporting.

CICERO’s second opinion on the issuer’s green bond framework is available here.

Underwriter: SEB.

Province of Jujuy – USD210m 

Jujuy has just become the second Argentinian region to issue a green bond.

Jujuy will use its debut green bond proceeds for the development of its 300MW Cauchari solar park project, expected to be completed in May 2018. Proceeds may be used towards capital and operational expenditures allocated to the acquisition, development, operation and maintenance of the park. The full list of eligible expenditures is available here.

The province was awarded the project during the first national renewable energy tender offer of the RenovAr program in 2016.

The plants will be built on 600 hectares in the Cauchari Salt Flat at 4,000 meters above sea level. The panels will be supplied by Shanghai Electric.

The issuer will provide annual disclosure on its website until proceeds are fully allocated. Jujuy has committed to measure the net annual installed capacity in MW and the estimated CO2 annual emissions avoided.

Sustainalytics’ second opinion can be found here.

Underwriter: BCP.

Commercial Banks

Hypo Vorarlberg – EUR300m (USD360m) 

Austrian commercial bank Hypo Vorarlberg issued its first green bond, becoming the second Austrian issuer to date.

Proceeds will finance mortgage loans or investment in residential (98% allocation) and commercial (2%) buildings. The green bond framework states that buildings are eligible if:

• They meet the State of Vorarlberg energy efficient building criteria and therefore have received residential building subsidies or
• Have not yet received but fulfil criteria (below).

This is based on the State of Vorarlberg’s residential building subsidies which are provided for the construction of residential housing (new, conversions or additions). To obtain a subsidy, stricter energy consumption than the minimum standards of the Austrian federal standard have to be achieved (more detailed in the green bond framework).

In effect, this means that eligible buildings must achieve the following performance:

• Residential buildings with subsidies: 45kWh/m² maximum energy consumption - equivalent to class B
• Residential buildings without subsidies: 50kW h/m² maximum energy consumption
• Commercial green buildings with a maximum energy consumption of 20kWh/m²: class B, for buildings constructed up to 2012 and LEK-Wert of 25 for buildings after 2013 (LEK-Wert is a measure of the thermal quality of the building envelope).

Great that there are maximum energy consumption thresholds in place!

How stringent are they? This is hard to assess without having background knowledge on energy consumption norms within the residential and commercial buildings sector.

It would be useful to have something to compare these metrics against like average energy consumption in buildings across Europe or Austria. In the absence of this, they have provided an equivalent certification level (Class B) of the Austrian Institute for Structural Engineering.

Again, to assess the stringency, a bit more information is needed about how this compares to other standards. We note that the proposed go from Class A++ to Class G, meaning Class B is the 4^th most stringent of the nine classes.

Reporting will be made available on the bank’s investor relations page. It will include a description of the energy features of the buildings financed (for example C02 emissions, heat demand) as well as the amount of C02 avoided (compared to similar buildings in Austria).

Well done Hypo Vorarlberg!

Oekom’s second opinion in German on the issuer’s green bond framework (English).

Underwriter: ABN Amro, DZBK, Erste, HSBC.

Huishang Bank – RMB1bn (USD154m) 

Headquartered Hefei City, Anhui Province of China, the bank serves local economy and SMEs in that region. The RMB1bn (USD154m) issue will support the province to green its resource intensive industrial structure. All proceeds will be used for “Environmental Restoration” projects, including land restoration and water quality recovery through drainage works and silt removal in completed mining sites.

Projects financed by this bond aim to reclaim an ex-mining land area of more than 2,500ha by methods such as hydraulic filling in granular soils caused by mining, and recover a water area of more than 2,000ha by replenishing and cleaning surface water and ground water.

These projects will focus on completed or abandoned mining sites which is generally a good thing although the techniques being employed are technical and not easily assessed. Land Use Criteria are still being developed by Climate Bonds’ Standards Team and mine reclamation in general still needs to be examined.

Underwriter: GuotaiJunan Securities, China Construction Bank, China Merchandise Bank, GF Securities.

Second opinion provider: EY.

Bank of Dongguan – RMB2bn (USD306m) 

Bank of Dongguan operates as a regional bank in Guangdong Province of China.

The proceeds of its very first green bond will go to:

• Clean Energy: Wind farm in Qingyuan City, Guangdong Province
• Pollution Prevention and Control: include construction and improvement of sewage plants and drainage pipelines, 15 projects to be financed
• Clean Transport: purchase of LNG buses
• Adaptation: include waterway dredging, four projects to be financed.

There is an ongoing discussion about the role of public transport powered by fossil fuels in a transition to a low carbon economy. This was included in deliberations by the low carbon transport working group. In the end, most bus transportation is included, even that powered by fossil fuels. This is because although fossil fuels like liquefied natural gas (LNG) do not guarantee low emissions of all pollutants, emissions are measured on a per passenger basis making them much lower emissions than many other forms of transportation. In the future, these criteria will likely become more stringent as efficiency improves and as electric and alternative fuel buses diffuse.

Dredging is a difficult area, as we have noted before, because this activity can lead to both positive and negative environmental outcomes depending on the specific projects. We will look into this in more detail as reporting becomes available.

Underwriter: China Securities, China CITIC Bank.

Second opinion provided by EY.

Nanhai Rural Bank (NRC Bank) – RMB300m (USD45m) 

NRC bank is based in Foshan City, Guangdong Province of China. Guangdong is one of the five pilot zones to promote green finance launched by the State Council earlier this year.

The proceeds will be used to finance 41 projects divided in 4 categories under PBoC’s Green Bonds Endorsed Project Catalogue:

• Pollution prevention and control: include urban sewage and drainage construction and improvement (10 projects)
• Resources conservation and recycling (19 projects)
• Energy saving: include investment in industrial efficiency equipment, efficiency improvement of industrial process and green buildings (8 projects)
• Ecological protection and adaptation (4 projects).

Although specific numbers of projects have been disclosed under each broad category, there is no detailed information on types of those projects. We include this bond for now, but more careful research will be carried out when further disclosure is available in the future.

In the Ecological Protection and Adaptation category, PBoC’s green bond catalogue includes mostly projects in soil and water loss control, ecological protection of forests and prairies, and also allows national park and national geological park to be financed.

Underwriter: CMS.

Second opinion provided by CECEP Consulting.

China Development Bank– RMB5bn (USD751.5m)

Although it’s the 3^rd green bond issued by the China Development Bank this year, it’s the country’s first retail green bond! RMB600m (USD90.2m) out of the total RMB5bn (USD751.5m) bond will be available to individual investors on the OTC market. Proceeds are going to:

• A sewage processing improvement project in Xiangyang City
• Aquatic ecological restoration projects for 2 rivers in Xiangan City and Jingmen City.

The projects aim to remove contaminants from the water and improve the ecological resilience in the drainage area. Expected environmental impact:

• Biochemical Oxygen Demand (BOD) reduction: 365 t/a
• Chemical Oxygen Demand (COD) reduction: 6,091 t/a
• Suspended solids reduction: 5,785 t/a, etc.

River restoration is broadly positive so it’s great that this is happening. However, while the figures provided are useful, they would be far more useful with some additional context.

This could include as what the natural or safe level of BOD for a river is and whether these projects will bring the rivers to such levels. This is the direction the green bond market should be going in.

Underwriter: Bank of Hangzhou, Jiangnan Rural Commercial Bank, Hengfeng Bank, Bank of Nanjing, Zhongyuan Bank.

PwC provided the second opinion.

Sveaskog – SEK1bn (USD126m)  

This is the second green bond issued by Sweden’s largest forest owner. The green bond framework states that the net proceeds will wholly or partly finance a selected pool of FSC certified forest and forestry related investments, projects and assets to promote a low carbon and climate resilient growth through sustainable forestry and its related operations.

Sveaskog will provide annual reporting until the bond matures, including a description of FSC projects/assets financed as well as disclosure on R&D investments.

DNV GL provided the second opinion.

Underwriter: Danske Bank.

Pending inclusion

Meggle’s Green Schuldschein – EUR50m (USD58.7m)

German dairy producer Meggle issued a green Schuldschein in September. The EUR50m (USD58.7m) will be used for already-implemented investments in the production.

Due to the lack of available information on the nature of the projects refinanced and their climate benefits, it is currently not possible to include this as a green bond.

We therefore hope to see more transparency in the annual green reporting published by the issuer at which point it may be considered for inclusion. To be continued…

Vigeo EIRIS provided the second opinion (not publicly available).

State of Lagos – NGN27bn (USD75m)

The State of Lagos issued their inaugural green note in August. News articles report that the NGN27bn issuance is the first tranche of a wider NGN50bn environmental and social impact investments plan. The State will use the capital raised to support solid waste management projects falling under the “Cleaner Lagos Initiative”, including increasing citizens’ awareness and training on waste disposal practices.

There is currently no green bond framework in place or external review making it difficult to assess the project’s environmental or climate impact. In particular, we are not able to ascertain whether or not the eligible projects will include landfill projects (which are not eligible under the Climate Bonds Taxonomy).

We look forward to reading the annual green bond reporting as well as any quantitative indicators of the waste reduction impact achieved.

Eidsiva Energi – NOK750m (USD93.7m)

Norwegian energy company Eidsiva Energi issued their debut green bond. According to the press release, proceeds will be used to finance any of the eligible categories included under the issuer’s green bond framework. However, this is not publicly available.

This bond is currently pending approval until more detailed information is available to confirm the green alignment of the eligible categories.

Should the annual green bond reporting disclose the specific technology and energy project(s) financed by the bond, we would have sufficient information to include the bond.

Underwriter: SEB.

Green Bonds Gossip and News Bites

The Astana International Financial Centre (Kazakhstan) is planning to issue a green bond within a year.

Berlin Hyp is planning its 4^th green bond.

Quantum Solar Park has issued its inaugural Green SRI Sukuk of MYR1bn. More in our next market blog!

Massachusetts Bay Transportation Authority issued its inaugural Sustainability Bond. It look like a green transport bond from here.

We are seeing more stories mentioning green bonds coming out of Italy. Stay tuned.

Latvian development finance institution Altum plans to issue a E20m green bond.

Reading & Reports

Towards A Green Finance Network by the European Banking Federation outlining recommendations to facilitate growth of green finance, including the development of a common European taxonomy. 40+ pages must read.

UNEP Finance Initiative launched their Guide to Banking and Sustainability, providing a clear definition of what a sustainable bank looks like and laying out practical steps for bank practitioners to follow to be successfully recognised as sustainable.

This one of three Green Progress Reports from the G20 Green Finance Study Group (GFSG) underlines that green finance is gaining momentum and consolidating its presence within financial and capital markets.

Bonds & Loans have just released their “Sustainable Finance Emerging Markets Special Report 2017” with a Foreword by our CEO Sean Kidney.

Moving Pictures

Take 4:25 secs to watch the UN Sec Gen Antonio Guterres call for action on the Sustainable Development Goals and the 2030 Agenda. He wants to end “unproductive and unrewarding” finance and redirect investment to creating a better world for all, which he noted, includes climate finance.

Don’t miss our short video clips (1:30secs) introducing our latest report 'The State of the Market 2017' in English, francais, Deutsch, italiano & español from our next generation of green finance advocates. Watch them on our YouTube channel here.

That's all for now.

'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.

Market

The Economist, What makes bonds “green”

The Economist explains what standards issuers can apply to their investments when issuing a green bond.

The Centre for International Climate and Environmental Research in Oslo (CICERO), a Norwegian climate research institute, is one of the largest providers of external review on green bonds; certification by the Climate Bonds Initiative (CBI), an NGO, is another option.

Financial Times, Green bond funds struggle to put capital to work, Jennifer Thompson

Fitch report findings showed that some green bond funds with tight investment criteria struggle to find fixed income products to invest in.

There is no shortage of green bonds being issued but funds that apply the most stringent criteria would struggle to find investible options, said Sean Kidney, chief executive of the Climate Bonds Initiative, a UK-based non-profit that promotes investments that combat climate change.

Investments & Pensions Europe, Fitch: Green bond fund sector prospects 'far from certain', Susanna Rust

I&PE also highlights challenges ahead of green bonds funds underlined in the Fitch report. 

It cited the example of a green bond issued by Repsol, a Spanish oil and gas company, in May, which was shunned by some investors due to concerns about the compatibility between the company’s business and environmental goals.

Bloomberg, Largest Green-Bond Fund for Emerging Markets Nearing $2 Billion, Emily Chasan, Brian Eckhouse

Much better green bond funds’ news coming from IFC and Amundi.

The World Bank’s International Finance Corp. and European asset manager Amundi SA are targeting year-end to raise $2 billion for what is expected to be the world’s largest green-bond fund dedicated to emerging markets.

The Australian Financial Review, Why Tesla snubbed the 'green bond' label, keeping the fledgling market small, Emily Chasan

Tesla disappointed the green bonds market after issuing a perfectly “green” 1.5 bn bond without marking it so. It’ll be however included in our climate bonds universe.

Costs to certify an offering as green can vary significantly. Sean Kidney, chief executive and co-founder of the Climate Bonds Initiative, estimates annual certification costs at between $US18,000 and $US41,000. Tesla choosing not to label its bond green was a "missed opportunity" for a fledgling sector hungry for another marquee name, he said.
 

Reuters, Emerging climate bonds boom, but are they really green?, Claire Milhench

Reuters stresses concerns over the green value of some “green bonds” issued by emerging economies.

China accounts for over two-thirds of total emerging market green issuance and a fifth of the global tally, even though it is classed as the world’s bigger polluter by carbon emissions. It issued $23 billion of green bonds in 2016, up from just $1 billion in 2015, according to the Climate Bonds Initiative.

International Financial Law Review, Primer: green bonds

A well-prepared guide — backed by quotes from market players.

There is no consensus on an official definition of green bond. According to Climate Bonds Initiative chief executive Sean Kidney what matters when considering if the bond is green is what it’s going to be used for (use of proceeds), not the issuer.

ReCharge, ‘A transition to a low-carbon economy has to see fossil fuels finance green energy’, Anamaria Deduleasa

An interview with chief executive of the Climate Bonds Initiative.

‘If we’re going to make a transition to a low-carbon economy, we have to see fossil-fuels money to finance green. We would welcome oil and gas companies-issued green bonds, as long as those bonds are used to finance assets that are relevant in the transition period. But this requires ambition.’

Bonds & Loans, Exchanges Play a Crucial Role in Developing the Sustainable Finance Market

An interesting and in-depth interview with Robert Scharfe, CEO of the Luxembourg Stock Exchange, that has over half of world’s green bonds listed on it.

“Industry self-regulation, so far, has worked tremendously well. We consider frameworks like the Green Bond Principles and the Climate Bonds Standard, developed by the Climate Bonds Initiative, as best practice in the market.”

Bonds & Loans, Emerging Market Regulators Make Strides Building Green Bond Momentum

Another worthwhile article from Bonds & Loans.

Growing support for market-driven policies aimed at facilitating green issuance has created important wins for the sustainable finance segment, especially in emerging market countries like China, India, and Mexico.

RenewablesNow, OVERVIEW - Green bonds mid-year summary 2017

RenewablesNow republishes our summary of developments in the green bonds market in the first half of 2017.

The investor-focused not-for-profit organisation expects issuance to increase over the rest of the year and possibly exceed the current CBI estimate for 2017 of USD 130 billion. In 2016 issuance stood at USD 81 billion.

Environmental Finance, The prospects for green bonds and green sukuk in the Middle East

Check out the sukuk discussion that took place at Environmental Finance roundtable.

"I am an investor and I will accept having less coupon – I would say between five and 10 bps – from a green sukuk issuer if it trades like a regular sukuk in the market" - Mohammad Awad Al Duwailah, Kuwait Finance House

Establishing an official European green bond standard

Global Capital, EU panel calls for European green bond standard, duty of sustainability, Jon Hay

This is music to the ears of many green bond specialists. “Every man and his dog is saying ‘just tell me what is green’,” says Sean Kidney, chief executive of the Climate Bonds Initiative, an NGO that promotes green bonds, based in London.

Investment & Pensions Europe, HLEG recommends ‘enhanced’ ESG role for European supervisors, Susanna Rust

The European Insurance and Occupational Pension Authority could in future include environmental, social and governance (ESG) risks in its stress tests of pension funds, the European Commission-appointed High Level Expert Group (HLEG) on sustainable finance has suggested.

Pensions & Investments, European Commission group recommends more ESG disclosure, Sophie Baker

The group made a number of other early recommendations, including the introduction of an official European green bonds standard for green asset classes, as well as labels for sustainable and responsible investing and sustainable strategies.

Law360, EU Plans New Labels For Green Bonds To Boost Investment, Richard Crump

Commission Vice President Valdis Dombrovskis said improved labeling of financial products will be required to fund the transition to a low-carbon economy as part of global efforts to combat climate change.

Bloomberg, The Coming Backlash to 'Greenwashing' of Bonds, Luca Morreale

The group says labels could be an effective response to investor complaints on the lack of standards in the market.

Foreign language media coverage

Maxpress, Brasil já se estrutura para cumprir metas climáticas, afirmam líderes do setor produtivo

A China, atual líder na emissão desse tipo de título, atingiu o patamar de US$ 36 bilhões em 2016, volume que o Brasil pode alcançar caso comece a estruturar projetos de longo prazo. “Temos uma carteira de ativos naturais incomparável com qualquer outro país”, disse Thatyanne Gasparotto, gerente de relacionamento do CBI.

Börsen Zeitung, Nachhaltig sowie umweltgerecht leben und wohnen

Schließlich wächst am Kapitalmarkt die Nachfrage nach nachhaltigen Wertpapieren seit einiger Zeit stark. Nach Angaben der Climate Bonds Initiative hat sich das Neuemissionsvolumen an Green Bonds - ökologischen Anleihen - im Jahr 2016 mit 81 Mrd. US-Dollar im Vergleich zum Vorjahr nahezu verdoppelt.

China

Euromoney, Green means go for Chinese regulators, Morgan Davis

Slowdown of Chinese issuance in 2017, role of regulators, standards, coal-green bonds and more – all that covered in an insightful article from Euromoney.

Like the PBoC/EIB initiative, the CBI is also working on developing standards for green financing, including policy recommendations for the PBoC and collaborating on principles of responsible investment with the Asset Management Association of China.

South China Morning Post, Policy support, higher standards seen boosting China’s green bonds market, Karen Yeung

SCMP with positive outlook for the Chinese green bonds market.

But China’s determination to address environmental challenges – such as air, soil and water pollution – and to encourage greater capital flows into green projects, are likely to improve investor confidence and the performance of green bonds, analysts said.

The Market Mogul, How Green Bonds Could Develop China’s Fixed Income Sector, Ivan Draganov

Green bonds can be a driving force for development of the fixed-income sector in China that now accounts only for 11 percent of the total household and corporate debt.

Developing a green bonds market in China could be a sustainable solution, while further helping the country to attract Foreign Direct Investments (FDI) and establishing China as a leader of the climate-change movement.

South China Morning Post, Chinese accountants see rising demand for ‘green’ certification work in wake of food scandals, Enoch Yiu

Tong noted that there are two internationally recognised green bond standards – one issued by the International Capital Market Association, and the other by Climate Bonds Initiative.

Climate Bonds Standard Certified Bonds

REC

At the beginning of the summer, the Rural Electrification Corp of India (REC) issued a certified Climate Bond for USD 450m. See what the media were saying.

Business Green, India's agency for rural electrification raises $450m with first green bond, Michael Holder

India's state-owned Rural Electrification Corporation (REC) has raised $450m for climate-friendly projects through its first ever green bond, which was admitted to trading on the London Stock Exchange.

Dawn, Green bonds become increasingly popular, Anand Kumar

“This certified bond will help bring green energy to rural Indian villagers and clean power to where it’s needed most,” said Sean Kidney, CEO and co-founder of Climate Bonds Initiative. “It’s another step towards the nation’s 2022 renewable energy target.”

Bonds & Loans, India’s Rural Electrification Corporation Debuts a US$450mn Green Bond

Notably, the green bonds have been certificated by the Climate Bond Initiative (CBI), while the “Green Bond Framework” formulated by REC has been verified by KPMG.

Money Control, India's Rural Electrification Corporation lists Green Bond in UK

It was 3.9 times oversubscribed on the final order book and secured strong international investor interest (…).

Energy Infra Post, Rec Raises USD 450 Mn Through Green Bonds

“REC has become the first Indian PSU to issue USD green bonds and raised USD 450 million from international markets,” REC said in a statement.

Energy World, Rural Electrification Corporation of India launches first Green Bond in London

The state-owned company, which finances and promotes power sector projects in India, will use the proceeds of the Climate Bonds Initiative certified green bond to finance environmentally friendly projects across India.

India Today, REC raises USD 450 mn through green bonds

It said that the bonds have been issued at a yield of 3.965 per cent. 

Clean Technica, Rural Electrification Corporation Of India Lists $450 Million Green Bond At London ISM, Saurabh Mahapatra

The green bond has a maturity of 10 years with an annual yield of 3.965 per cent.

Azure Power
India’s Azure Power Energy issued its inaugural green bonds certified under the Climate Bonds Solar Criteria.

Bonds & Loans, Azure Power CEO on Building Green into Corporate DNA

“We certified the bond through the Climate Bonds Initiative, and there was nothing particularly cumbersome for us in going through that process, in part because much of what was being asked for in terms of data and disclosure were things we already voluntarily do.”

The Economic Times, NYSE-listed Azure Power raises $500 million from sale of bonds, Mohit Bhalla

The sale of bonds by Delhi-based Azure Power — (…) — is said to have attracted bids for $1 billion, or two times the size of the offering.

PV Magazine, India: Azure Power to issue $500m solar green bond, Ian Clover

“The transaction is aimed at financing Azure Power’s existing and future eligible solar power projects, which promote sustainability, while optimizing financial costs and diversifying sources of funding,” said Azure Power CEO and chairman Inderpreet Wadhwa.

PV Tech, Azure Power to issue US$500 million solar green bond, Conor Ryan

Azure Power had also - been assigned an SP 1A rating - the top credit rating - by the ICRA, one of India’s leading rating agencies.

RenewablesNow, India's Azure Power to issue USD-500m solar green bond

The bond, which has been certified as “green” by the Climate Bonds Initiative, matures in 2022.

The Hindu Business Line, Latham & Watkins advises on $500-mn Azure Power Green Bond Offer

Azure Power is a leading solar power producer in India with a portfolio of over 1,000 MWs across 18 states.
 

GreenTechLead, Azure Power Energy to issue green bond

The company is offering the bond to eligible yield investors who have a specific mandate or portfolio for buying green bonds.

Cape Town

In July Cape Town issued a Climate Bonds Standard certified green bond (4 times oversubscribed!). Here are media reports.

Business Day, Cape Town’s first green bond auction nets R1bn, Bekezela Phakathi

The City of Cape Town’s first green bond auction exceeded expectations during a closed bidding process on Wednesday.

Eyewitness News, City of CT raises R4.3bn with 'green bond', Lindsay Dentlinger
Certified by the Climate Bonds Initiative, it's been awarded a GB 1 rating by Moody's.

BizNews, Investing in green bonds: Cape Town raises R1bn to boost eco-friendliness, Alec Hogg

(…) they went through an accreditation process through the Climate Bonds Initiative, which basically involved adhering to set criteria applicable to their various sectors.

Eyewitness News, City of CT to use money raised from green bonds for climate change projects, Lindsay Dentlinger

The city will use the money to buy electric buses, introduce energy efficiency measures in its buildings as well as introduce water management initiatives.

Contact Energy

Kiwi firm Contact Energy has launched an NZD1.8bn Green Loan Borrowing programme certified under the Climate Bonds Standard.

Institutional Asset Manager, Contact Energy secures Climate Bonds certification

Sean Kidney, CEO Climate Bonds Initiative, says: "This NZD1.8 billion (USD1.3 billion) Green Borrowing Programme from Contact Energy includes one of our single largest Certifications to date and is a significant global boost for best practice standards in green finance. (…)

RenewablesNow, New Zealand's Contact Energy certifies debt instruments as green

All of the company's geothermal assets, excluding Ohaaki power station, qualify to be included as eligible green assets, while its hydropower stations could not be included yet as Climate Bonds Initiative is still to release hydropower criteria.

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.

Big stories of certified bonds from ICBC and IREDA in the past month made a lot of media headlines. You are now unlikely to find a green finance media report that does not include a mention of green bonds. Here are some of the top stories we selected for you.

Market

Euromoney, Deal flow can turn back the tide of climate change, Chris Wright

Author says there is no way to address climate change without the significant role of private capital. He stresses investors’ focus on a simple product that is clear on risk and return.

The clearest example of this idea in action is the success of the green bond market. A decade after the first issue by the European Investment Bank, annual issuance hit $81 billion under the Climate Bonds Initiative’s definitions and $92 billion by other measures in 2016, $23 billions of it from China.

Euromoney, Can finance save the world’s vulnerable nations?, Chris Wright

Another Euromoney’s article in September with a similar overtone: to successfully combat climate change, sustainable projects must be packaged in a manner attractive to private capital.

And the key to that is to build something scalable. Green bonds are the first wave of this idea: using an existing structure that everybody understands and tagging on green intentions for the funds once raised.  Next, asset-backed structures will be absolutely indispensable, and they will be aided in their growth by technology that allows us to receive and interpret data on a large scale very quickly. 
 

Bloomberg, Big Oil Becomes Greener With Progress in Cutting Pollution, Anna Hirtenstein

Bloomberg’s article sends a positive message about oil behemoths cutting emissions as well as growing competitiveness of renewable energy opposite fossil fuels.

“The Paris agreement has been extraordinarily successful in establishing a new consensus,” Kidney said. ‘‘There’s a sense of future certainty developing which is influencing decision-making in the corporate sector.”

Financial Times, Going green is good for business, Naina Lal Kidwai

The article by sustainability chair of the Federation of Indian Chambers of Commerce & Industry leaves no doubt that green investments are good for companies’ bottom line.

There’s ample evidence that renewable energy and energy efficiency are booming sectors for business. In 2016, 190 of the Fortune 500 companies together saved close to $3.7bn through their collective renewable energy and energy efficiency initiatives. (…) The profitability of doing right by climate is increasingly clear.

Bloomberg, Evidence Mounts for Green Bonds Outperforming Conventional: HSBC, Anna Hirtenstein

Evidence gathered by HSBC shows that investors sell green finance products in the secondary market at profit.

“Our analysis suggests there is value in green bonds for bond investors,” wrote Michael Ridley, a green bonds and corporate credit analyst at HSBC who co-authored the report. This may dissipate in the future if there’s a sharp rise in supply, he said.

Bonds & Loans, Why Green Sukuk Could be a Growth Driver for Islamic Finance, Bashar Al Natoor

Author analyses potential for green financial products on the Islamic finance playground.

Green Sukuk funding and environmentally sustainable infrastructure projects, such as the construction of renewable or clean energy projects, could appeal to both Sukuk investors and conventional environment-focused investors (…).

South China Morning Post, How Islamic finance is helping fuel Malaysia’s green growth, Victoria Kwakwa

World Bank regional vice-president for East Asia and Pacific for SCMP shares insight into Malaysia’s green sukuk initiative.

To close this huge infrastructure gap, we need more options for investment financing. It would be better yet if these options adhered to our principles of sustainable development, particularly given the spectre of climate change. A tall order, but not impossible.

Global Capital, Bonds set to play big role in Lat Am green investment boom, Olivier West

An in-depth story of up to date development, prospects, challenges and main players in the Latin America green finance space.

“If local markets grow, Lat Am becomes a powerful regional story,” says Justine Leigh-Bell, [director of market development at the Climate Bonds Initiative in London]. “It is not only good for national development policy, but it attracts the right form of capital into each country.”

Global Capital, HKEX eyes Green Bond Connect, says CBI, Noah Sin

Global Capital and Global RMB reveals Climate Bonds Initiative is in talks with the Hong Kong Exchange about expanding the recently launched Bond Connect trading link to overseas investors.

The Hong Kong Exchange is in talks with Climate Bonds Initiative to launch a Green Bond Connect, an initiative to help Bond Connect investors identify Chinese bonds that meet the international standards of green investments, Sean Kidney, CEO at CBI, told GlobalRMB in Beijing.

Nasdaq, Climate Bonds Initiative in talks over 'Green Bond Connect', Thomas Blott

And more on that from Nasdaq…

Sean Kidney, CEO of the CBI, told IFR he was hopeful the scheme, dubbed Green Bond Connect, would launch later this year. He said that the CBI was also in talks with parties on the mainland, including the People's Bank of China.

CityWire Private Wealth, Goodbye to greenwashing, Ishika Mookerjee

A look at certification of Asian green bonds on page 36 of CityWire magazine.

The Climate Bonds Initiative has been providing green certificates to issuances around the world in accordance with its published standards for the quality of the green asset and the issuer’s ability to track and report the use of proceeds. It recently got the green light to certify green bonds in China.

Market Realist,What drives the green bonds returns

A clear message about benefits of investing in green bonds in an insightful report from VanEck and Market Realist.

A new study by the Climate Bonds Initiative is the first to take an analytical approach to studying whether or not a green bond “premium” exists. The conclusion? It depends. Some green bonds have priced inside the issuer’s yield curve, some priced on it, and others have priced above.

Structured Credit Investor, 'Substantial' green ABS volumes eyed

An interesting insight into green securitization across various sectors.

Many of those at the forefront of promoting the current market for green bonds anticipate it to morph into a much larger one for green ABS within the next decade or so. "One of our medium-term objectives is to build on the current interest in green bonds to create appetite for ABS," confirms Kidney. "That will be a critical growth market for us."
 

Bonds & Loans, Beyond Green Bonds, Sustainability Certification Brings Broader, Deeper Benefits

An interview with Head of South American Markets at Vigeo Eiris – an approved verifier for Climate Bonds Standards programme.

In emerging markets, Vigeo Eiris supported the first green bond issued out of the Middle East, by National Bank of Abu Dhabi, several green bond issuances in Morocco, and has provided CBI certifications of green bond issuances in several markets including Brazil. 

The Market Mogul, A New Trend: The Modern Day Relationship Between Millennials and Investing, Tiaan Coetzee

Worth-reading article in which author shares his observation of the investment habits of millennials, who - while reluctant to invest in general – are predominantly interested in “sustainable investing”

The priorities held by those Millennials who do decide to invest are far from those held by generation X or the baby- boomer generation. No longer is the act of investing only for financial returns; a lot greater emphasis has been put on socially responsible investments.

The Actuary, WCA’s 2017 Phiatus award recognises green credentials

Nick Silver, the co-founder of the Climate Bonds Initiative, was awarded Worshipful Company of Actuaries (WCA) Phiatus award for his efforts to create a market for green investments.

In its first three years the initiative comprised just Nick and Sean, but has now established more of a presence and influence, growing to 50 members of staff. 

Thomson Reuters Foundation, China and India take different roads to green Asia’s infrastructure, Adela Suliman

Green finance agenda of China and India examined.

India and China, Asia’s two economic heavyweights, have taken starkly different approaches to how the region could green its infrastructure, a conference at London’s Asia House heard this week.

CityAM, The new emerging markets? Report says green finance will become "core element of global capital markets", William Turvill

Author presents outcomes of the TheCityUK and Imperial College Business School report, that predicts a huge role of green finance in the global capital marketplace with a leading role of the UK.

As well as highlighting UK’s strong position in the green bond market, with 14 listed on the London Stock Exchange last year alone, the report also drew attention to the work of the Green Investment Bank.

The Australian, Kangaroo bonds alternative to a lacklustre stock market

Author outlines the advantages of adding bonds to investors’ portfolios in the volatile market conditions and advises taking company’s ESG practices into account when making an investment decision.

Ouattara said investors were increasingly aware that if a company exhibits strong ESG practices, it is more likely to provide financial performance in the long term — and this applies to debt paper as well as equity.

Clean Technica, Record $56 Billion Green Bonds Issuance Witnessed In H1 2017, Smiti

Clean Technica summarizes data presented in Climate Bonds Initiative mid-year summary.

The global green bonds market has scored yet another record issuance during the first half of 2017. A record $56 billion was issued during the first six months of the year while the second quarter saw issuance of $30 billion, the Climate Bonds Initiative reported.

RenewablesNow, Global green bonds overtake 2016 total

RN reports on great news we shared with our blog readers in September – a month that saw green bonds issuance in 2017 overtake 2016 total. More here.

The record 2016 green bonds total of USD 81.6 billion has been surpassed and there are 94 days left to reach the CBI's longstanding USD-130-billion forecast for 2017.

Börsen-Zeitung, Green Bonds sollten Einfluss auf das Klima haben

Green Bonds sind eine der wachstumsstärksten Nischen im Finanzmarkt. Viele Marktteilnehmer argumentieren für die rasche weitere Expansion des Green-Bond-Marktes, um den Klimawandel aufzuhalten.

China

South China Morning Post, Going green: the changing face of corporate finance, David Broadstock

The author of the article stresses the fact that green finance that stormed China in recent months means companies face growing pressure to rethink workforce’s skillset. He however concludes that extra effort and cost associated with shifting to socially responsible business model does pays off. Green bonds investments are the perfect example.

It is the simplicity of green bonds, and their similarity to traditional financial products, that drives their appeal. There is little distinction between green and regular (or black) bonds. Since corporations frequently issue black bonds to help raise capital, they are familiar with the instrument.

The Telegraph, Capacity building key to growth of Chinese green financing, Wu Xiaobo

Ma Jun, chief economist of the research bureau of the People’s Bank of China has called for capacity building to scale up green financing, that he considers a part of Chinese national strategy.

Mr Ma also called for capacity building in the development of green financing products. He gave examples of how insurance products for green projects, asset-backed securities and carbon-emissions-rights collateral products could play a positive role in green financing, and urged banks, insurance, securities and asset management companies to do more research.

Shanghaiist, China is now looking to build nearly 300 'eco-cities' across the country, Máté Mohos

Chinese cities are facing a shift towards green urban development.

This is all made possible by China's move towards "green bonds" which have been supported by the China Securities Regulatory Commission (CSRC) since March. The bonds are aimed at helping regional governments finance "eco-cities" and other environmental-friendly projects.

China Briefing, Eco-Friendly Investment Opportunities in China: The Rise of Green Bonds, Maurizio Mazzoni

To solve its environmental issues, China needs the private capital to be in play – green bonds present a solution.

Green bonds will help businesses empower R&D departments financially, potentially allowing the Chinese market to become one of the most eco-friendly in the world.

Climate Bonds Standard Certified bonds

Indian Renewable Energy Agency (IREDA)– read more

Bloomberg, India’s Renewables Agency Lists Green Masala Bond In U.K.

The Indian Renewable Energy Development Agency has launched a new green masala bond on the London Stock Exchange's new International Securities Market to raise funds to finance renewable energy projects across India.

LiveMint, IREDA lists 5-year Green Masala Bond in UK, Aditi Khanna

The new green bond is certified by Climate Bonds Initiative, an international, investor-focused not-for-profit, which helps build robust and transparent assurance frameworks around green bond investment.

The Asset, IREDA prints lowest yield green Masala bonds, Chito Santiago

The Indian Renewable Energy Development Agency Limited (IREDA) garnered a strong investor demand when it priced on September 28 a 19.5-billion-rupee (US$300 million) green Masala bond at the lowest yield for any such issuance so far by an Indian issuer.

The Hindu Business Line, IREDA raises $300 mn via Green masala bonds at LSE, K R Srivats

London Stock Exchange is now the largest Masala Bond centre globally with 42 Bonds listed in total with an equivalent of over $ 6 billion.

Hindustan Times, Indian renewable energy agency's green ‘masala bond’ raises $300 mn in London, Prasun Sonwalkar

The green ‘masala bond’ on London Stock Exchange’s International Securities Market is certified by Climate Bonds Initiative, an international, investor-focused not-for-profit that helps build robust and transparent assurance frameworks around green bond investment.

PV Tech, Indian renewables financing agency raises US$300 million on London Stock Exchange, Tom Kenning

In a release, CBI said that the IREDA deal achieved the tightest ever yield in a public masala issuance, having been oversubscribed at 1.74x across 49 accounts - the highest in the masala space this year.

PV Magazine,  India’s IREDA lists $300 million bond on London Stock Exchange, Sraisth

The new issuance is the fourth green bond to be listed by an Indian issuer on the London Stock Exchange.

Outlook India, India's renewables agency lists Green Masala Bond in UK, Aditi Khanna

IREDA provides financing for hydro, wind and solar energy projects, new and emerging technologies and for bio energy sectors.

The Industrial and Commercial Bank of China (ICBC) – read more

Global Capital, European Investors pile into ICBC’s €1.8bn green bond, Morgan Davis

The Industrial and Commercial Bank of China raised €2bn-equivalent from its three tranche offshore green bond debut, making it one of the largest green bond deals from a Chinese bank.

The Asset,European accounts flock to ICBC’s inaugural green bond issuance, Darryl Yu

Industrial and Commercial Bank of China’s (ICBC) Luxembourg branch on September 29 priced a US$2.15 billion equivalent debut green bond in three tranches, attracting strong interest from Asian and European accounts.

RenewablesNow, ICBC issues inaugural green bond

The One Belt One Road (OBOR) Green Climate Bond is the first green bond with Climate Bonds Certification for the Chinese bank, the Climate Bonds Initiative (CBI) said on Thursday.

Cape Town– read more

Bonds & Loans, CASE STUDY: Cape Town Wins Race to Issue Africa’s First Municipal Green Bond

The City of Cape Town successfully placed ZAR1bn in new green bonds this Summer to fund a raft of sustainability initiatives in the city, proving once again that cities are a natural fit for sustainable finance instruments. (…) The bond was accredited by Climate Bonds Initiative as compliant with its core use of proceeds criteria. 

Climate Bonds State of the Market Report 2017

Responsible Investor, New CBI report sets out market target of $1trn by 2020, Daniel Brooksbank

Kidney was speaking at a Climate Week event in New York at which he presented the latest ‘State of the Market’ report on green bonds, which identifies an $895bn universe of ‘climate-aligned bonds’ (of which $221bn are labelled green bonds). That is up by $210bn on the 2016 number.

Institutional Asset Manager, Green and ‘climate-aligned’ bond universe now stands at USD895bn outstanding issuance

The 2017 report has a particular focus on cities, with ten case studies identifying existing best practice green city bonds and also opportunities for new city based green bond issuance. 

Renew Economy, Policy uncertainty is blocking investment in low carbon assets, Emma Herd

Australian investors are interested to invest in low carbon assets. What they need is policy signals, supporting frameworks and scalable deals.

The large allocation to fixed income can be explained by the dramatic growth in green bonds. This looks set to continue with the latest Climate Bonds Initiative State of the Market 2017 report finding that US$895 billion in climate aligned bonds have now been issued globally, up from US$3bn in 2012.

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.

Fiji’s Prime Minister & President of COP23 Frank Bainimarama announces green bond issuance just weeks away from the start of Bonn Climate Conference

Year of Sovereign Green Bonds gets a south sea boost!

The sovereign green bond market has just reached a new milestone with the announcement of Fiji’s FDJ100m (USD50m) issuance.

Fiji comes in a very respectable third in the race for sovereign green bond issuance, won by Poland with a EUR750m issuance in late 2016, and soon followed by France’s impressive EUR7bn.

According to the World Bank announcement:

“At the request of Fiji’s Reserve Bank, the World Bank and the International Finance Corporation (IFC), a member of the World Bank Group focusing on private sector, provided technical assistance to assist the government in issuing a sovereign green bond. This collaboration took place under a broader, three-year Capital Markets Development Project supported by the Australian Government.”

Fiji’s green bond is aligned with the Green Bond Principles and the use of proceeds will support the construction of climate resilient infrastructure, as well as the country’s NDC targets of achieving 100% renewable energy and abating 30% emissions by 2030.

Congratulations!

PM Frank Bainimarama, who will be chairing COP23 in November, stated Fiji wants to set an example by proving green bond markets can be created in climate-vulnerable developing countries.

“By issuing the first emerging country green bond, we are also sending a clear signal to other nations that we can be creative and innovative in mobilizing funds.”

He intends on making access to climate finance a key focus in this year’s COP.

Fiji now holds the title of first Pacific nation sovereign issuer, first emerging economy issuer and the first from the Southern Hemisphere.  

Global leadership can come from any nation, big or small.

Who’s next?

Nigeria has its sovereign green bond in the pipeline, and is set to become the first African sovereign issuer.

With COP23 now in sight and President Macron’s Climate Summit due in December, we could expect to see more sovereign green bond issuance announcements before the end of 2017... We think there should be.

Fiji’s green bond is an important step in encouraging emerging economies to search for innovative ways to finance the fight against climate change and ensure a sustainable future.

It should also give some food for thought amongst some other nations, there’s plenty of time & two big events left this year to provide a perfect backdrop.

‘Till next time,
Climate Bonds

P.S: Surprised at the Fiji announcement? You have haven’t been following the Climate Bonds Twitter account.

Back in June, then September and just a few days ago we gave you the hint….

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.

International Public Consultation is now open for the Water Criteria Phase 2

Draft investor guidance for water bonds infrastructure under the Climate Bonds Standard

What’s it all about?

The Climate Bonds Initiative has released Water Criteria Phase 2 nature-based and hybrid water infrastructure for public consultation on behalf of the Water Consortium.

The Water Criteria lay out the requirements that water infrastructure assets and/or projects must meet to be eligible for inclusion as a Certified Climate Bond, and allow investors to more easily categorise and prioritise water infrastructure projects against climate impacts and climate resilience factors.

Two-phase development process

Phase 1 Criteria cover engineered water infrastructure and were released by the Water Consortium to the market in October 2016.

Phase 2 Criteria have a focus on nature-based and hybrid water infrastructure, such as wetlands and watersheds including for purposes as water collection, storage, treatment and distribution, flood protection and drought resilience. The Phase 2 Criteria aim to: 

• Certify water infrastructure that are compatible with a 2°C trajectory​​
  ​
• Ensure these assets and the surrounding ecosystem are adaptive and resilient to a changing climate             

The Water Consortium

Water Phase 2 Criteria have been developed throughout 2016 and 2017 by a Technical Working Group (TWG) and Industry Working Group (IWG), convened by the Climate Bonds Initiative. With Ceres, CDP, the World Resources Institute (WRI) & the Alliance for Global Water Adaptation (AGWA), the organisations act in collaboration as a Water Consortium. AGWA is supported by the Stockholm International Water Institute. 

You can find more details and the Criteria documentation on our Water Page.

Want to learn more? Register for a Webinar

The Climate Bonds Initiative is running two one-hour webinars to introduce the Criteria and explain the development process on the 25^th October and 20^th November.

Webinar 1: Wed 25 Oct 15.00 - 16.00 BST (UK Time)

Register here.

Webinar 2: Mon 20 Nov 16.00 - 17.00 GMT (UK Time)

Register here.

Consortium Comments

John Matthews - Water TWG Lead Specialist, AGWA Representative

“From my perspective as the lead of a global network focused on implementing freshwater resilience, the launch of credible evidence-based criteria for the long-term investment in ecosystems and hybrid infrastructure marks an enormous advance for the water and finance communities.”

Karen Yacos - Director, Water infrastructure, Ceres Water Program

“Recent, monstrous hurricanes in the U.S. underscore the critical need for widespread application of nature-based solutions to ensure that future water infrastructure is resilient and able to withstand growing extremes in weather. These criteria will help drive investment into innovative solutions urgently needed by municipalities around the world.”

Cate Lamb - Head of CDP Water Program

“Nature-based solutions offer us a range of exciting ways to work with ecosystems in order to adapt to and mitigate climate change effects, while improving sustainable livelihoods and protecting natural ecosystems and biodiversity. The development of the Water Criteria associated with these interventions provides us with an opportunity to scale up their implementation and strengthen their impact in mitigating some of the world’s most pressing challenges.”

Todd Gartner - Senior Associate for the World Resources Institute’s Food, Forests & Water Program

“Phase 2 of the CBI Water Criteria Standard will help investors, bond issuers and water customers have confidence that water infrastructure projects consider the benefits of hybridized natural and built systems, enhance water security and ensure resilience in the face of climate change.”

Sean Kidney - CEO Climate Bonds Initiative

“Promoting investment in climate resilient water systems within the natural and built environment is a vital part of wider climate action. The expansion of our Water Criteria is a reflection of the significance of water across ecosystem sustainability and its position at the core of social and economic development.”

What’s the process from here?

The Water Phase 2 Criteria will now undergo a 60-day period of public consultation, investor and industry comment closing at 17:00 GMT on the 14^th December 2017.

Once public consultation is complete, feedback will be considered before a final draft is submitted to the Climate Bonds Standard Board for final approval. After Board approval, bonds financing nature-based and hybrid water infrastructure will be able to use the Criteria to apply for Climate Bonds Certification.

The Consortium will then announce a release of the consolidated Water Criteria incorporating Phase 1 and Phase 2.

Want to Comment?

All the Phase 2 Criteria documentation are on our Water Page.

Please address your comments to:

Senior Research Analyst lily@climatebonds.net

The Last Word

Increased investment in climate resilient water systems in both the natural and built environment is integral to climate action and environmental sustainability.

A quick look at SDG Goal No 6 Clean Water & Sanitation gives a great snapshot of the current state and global importance of water issues.

There’s a long way to go yet on investment in water. Don’t forget, you can find out more at our October or November webinars.

And a very big thank you to our TWG and IWG members and to the other organisations in the Water Consortium for their efforts and support in the development process.

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.

A definite Pacific flavour this month with CEO Sean Kidney starting off in Japan, busy in Bonn and Brussels and Cairo before finishing the month in Seoul and Hong Kong.

Meanwhile other team members are addressing events and moderating panels on green bonds and climate finance in 11 cities on 3 different continents.

Don’t miss the chance to meet Sean, or Sandeep and if you're in Sydney, say hello to Bridget.

Don’t be shy, look for climate bonds staff at any of the the events below, we love to meet green finance enthusiasts!

And best wishes to the UNFCCC, Fiji and all participants at COP23! 

‘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.

Pictured from left: Robert Scharfe, CEO Luxembourg Stock Exchange; Nicolas Mackel, CEO Luxembourg for Finance; Huang Changqing, China’s Ambassador to the Grand Duchy; and Chen Fei, general manager of ICBC Luxembourg.

Final details have emerged on Industrial and Commercial Bank of China’s (ICBC) inaugural green bond issuance, listed yesterday on the Luxembourg Green Exchange

Investors respond positively to 'One Belt One Road Green Climate Bond' milestone with best-in-class assurance features

The Bond

The final amount is USD2.15bn, issued in three tranches of EUR1.1bn, USD450m and USD400m with 3 and 5-year tenors. The ICBC statement received by Climate Bonds notes that the ‘One Belt One Road Green Climate Bond’ marks the biggest single tranche in EUR-denominated green bonds by a Chinese issuer.

European investors took over 70% in two 3-year tranches in EUR and USD, with a diversity of investors including ESG based investors, sovereign funds, insurance companies and corporates.

Use of proceeds will be dedicated to financing and refinancing the four eligible categories initiated by ICBC globally in:  

• renewable energy,
• low carbon and low emission transportation,
• energy efficiency,
• sustainable water and wastewater management.

Best Practice all over

As befits the biggest bank in the world, ICBC has set the bar at the ‘best in class’ level for future big-ticket issuance by other global corporates. 

We think it’s worthwhile listing what this looks like:

- A Green Bond Framework reflecting the latest on international and local standards

- Certification from the Climate Bonds Initiative

- A Second Opinion from CICERO with a “dark green” rating

- Verification Reporting from Beijing Zhongcai Green Financing Consultants acting as Climate Bonds Approved Verifier. 

- Beijing Zhongcai Green Financing Consultants providing external evaluation assurance against Chinese standards

The Last Word

There’s three points we’d like avid blog readers to consider.

Firstly, in this statement, ICBC has once again signalled its longer term green finance intentions:
 

 "…Green credit has been a long-term strategy for the Bank, and the Bank has been committed to building a leading international player in green credit with a good international reputation by actively practicing the principles of 'green development' and 'green finance.'”

We pointed to a similar statement from ICBC in our late September Blog outlining the initial features of this 'One Belt One Road Green Climate Bond'. ICBC is already the largest green bond underwriting bank in China.

Secondly, China’s green finance market is still just getting started. This recent interview by Ciaxin Global with Professor Wang Yao, head of the International Institute of Green Finance (IIGF) at Central University of Finance and Economics in Beijing, gives a short sharp exposition on China’s growth ambitions in light of the Paris Accords and US recalcitrance on climate cooperation.

Lastly, ICBC has walked the walk, we await others.

Our Climate Bonds forecast is for $130bn in green bond issuance for 2017 and we are strongly backing the $1trillion by 2020 green finance milestone.

COP23 is just over 10 days away, President Macron’s Paris Climate Summit in December, the California Treasurers Green Bond Forum in February 2018, Governor Jerry Brown’s Global Climate Action Summit in September 2018, and COP24 in Poland, all offer platforms for announcements on climate investments or new green bond issuance.

It’s ‘game on’ for the global finance sector, banks and corporates. ICBC, the world’s biggest bank – and the planet’s largest publicly listed company – issuing Certified, verified, multibillion-dollar green bonds means niche product is gone, mainstream is now.

Two years after Paris, investor statements at big global events are gradually becoming passé. Investment announcements at big global events (or in between) are beginning to reflect what really counts.

‘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.

On 7^th November with WWF we’re holding a side event on sovereign green bonds

Come and hear about present and future issuers:WWF PandaHub, Bonn Zone COP23

The Green Sovereign Story

Poland led the way, France and Fiji followed by stepping up on sovereign issuance. Nigeria has signalled their intentions. Who’s next to take the lead?

This 2^nd day COP side event will focus on the importance of sovereign issuance. Speakers will explore the potential for green sovereign bonds to assist developed and emerging economies address climate change and NDC goals. 

Invitation

Where: WWF PandaHub, Bonn Zone COP23, Platz der Vereinten Nationen 1, 53113 Bonn.

When: Tuesday, 7^th November 2017 11:30AM-12:45PM

How to get there: The Bonn Zone is located adjacent Rheinaue Park, within the main conference venue.

Moderator: Justine Leigh-Bell, Director of Market Development, Climate Bonds Initiative.

Speakers: Government Representatives from France, Fiji, Kenya & Nigeria (TBC)

Event Organisers: An event organised by the Climate Bonds Initiative and hosted by the World Wildlife Foundation (WWF).

Agenda

11:30-11:40 Introduction by WWF

11:40-11:50 Overview on the importance of sovereign green bonds: Justine Leigh-Bell, Director of Market Development, Climate Bonds Initiative

11:50-12:20 Remarks by representatives of Government Treasuries from France, Fiji, Kenya and Nigeria

12:20-12:40 Audience Questions

12:40-12:45 Concluding Remarks

We hope to see you there!

‘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.

First day of COP23; first green bond from a UK bank, financing and refinancing green residential mortgages

What’s it all about?

UK based Barclays PLC has just announced successful pricing of a EUR500m green bond. Proceeds will be used to finance and refinance mortgages on residential mortgages on properties in England and Wales based on the overall carbon intensity of the underlying property. Demand reached EUR1.85bn, a 3.7x level of oversubscription.

The bond aligns with their Green Bond Framework and has received Certification under the Low Carbon Buildings Criteria of the Climate Bonds Standard. Carbon Trust provided a second opinion. 

All up, an example of international best practice in green issuance.

Who’s Saying What?

Tushar Morzaria, Group Finance Director, Barclays

“This issuance is an exciting step and complements Barclays’ existing involvement in the well-established green bond market. It will help us diversify our investor base, attracting interest from the growing group of environmental, social and governance (ESG) investors." 

"Today’s announcement also reflects the efforts of our Green Banking Council, which is committed to the development of innovative products and services that support our clients and customers in their transition towards a low carbon and sustainable future.”

Claire PerryMP, Minister of State for Climate Change and Industry

“The Government recognises the potential for the UK to cement its position as a global hub for investment in clean growth, and this is why we set up the Green Finance Taskforce with Barclays as a member."

"Today’s announcement is an exciting moment for the UK market in demonstrating global leadership in the green finance sector and it’s great to see the first green bond for the UK market, using UK assets.”

Sean Kidney, CEO of Climate Bonds Initiative

“Barclays has taken a lead among UK banks and FTSE 100 companies with this innovative Certified green bond that is an example of international best practice standards."

"The UK green bond market has been slow to develop, lagging many G20 and EU nations. This new Barclays green bond should trigger more global banks and FTSE companies to act and initiate their own green bond programs into 2018.”

The Last Word

We’ve lamented the lack of domestic green bonds emanating from the UK. EU nations, emerging economies, Canada and Australia appear in our top ten green bond issuing nations from 2005 to June 2017. One prominent country doesn’t.

In our previous October Market Blog analysing the record SSE issuance we again asked “where are the UK corporates” noting that they (SSE) and privately owned Anglian Water stood alone as recent UK green issuers.

Barclays has in part answered that question with an issuance that should help open up the domestic market for green mortgages and provide some impetus for those FTSE companies still dragging their feet.

A €500m green bond is the perfect way to end the first day of COP23.

‘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.

Quarter 3 reflects strong growth and new market entrants

Overview

The green bond market has kept its strong pace in Quarter 3 2017, reaching a total of USD27.7bn from July to September.

On September 28^th, the total amount of green bonds issued in 2017 ytd (USD83.2bn) overtook last year’s total issuance of USD81.6bn.

We covered the big moment in our Blog Post here.

Lots of new issuers

The top sources of issuance were:

• Mexico - USD4bn
• China - USD3.9bn
• France - USD3.3bn
• U.S. - USD2.8bn
• India - USD1.9bn

Mexico was a surprising addition to the number one spot, after issuing no green bonds in Q1 or Q2 this year. 

Big firsts came during Q3, with 52% of issuances being from first-time issuers. First ever green sukuk and inaugural green bond from Malaysia with Tadau Energy (USD58.5m), along with a debut from Lithuania (Lietuvos Energija – USD342.5), brought further geographic expansion and diversity in financial instruments to the market.

24% of new issuers were from China and 18% from the U.S. Read more in the Q3 Report here.

Key figures

• Second largest quarter of issuance EVER
• Total USD27.7bn bringing the 2017 total to USD85.2bn
• 75 green bond deals
• 65 new issuers representing 52% of issuances
• Green Bond transactions accounted for approximately 2.7% of global bond market transactions
• Top 5 largest issuers of Q3: Mexico City Airport (USD4bn), Engie (USD1.5bn), EIB (USD1.4bn), Asian Development Bank (USD1.25bn), TD Bank and Greenko equally placed (USD1bn each)

​

Underwriters League Table

The Q3 table shows Citi, HSBC and JP Morgan taking top spots for Q3, with JP Morgan being the biggest mover from the combined Q1/Q2 table.*    

Amongst the familiar faces, Canadian based TD Securities and RBC Capital Markets make a debut and National Australia Bank makes an appearance in the #15 position. 

Download the full Q3 report here.

We got our fingers crossed that in the wake of COP23 we'll reach the easily achievable $130bn forecast. 

‘Till next time,

Climate Bonds

P.S: Previous Market Update Reports:

Green Bonds Mid-Year Summary Q1Q2 2017 available here. 

Green Bond Highlights for 2016 available here. 

*The League table data is produced via a collaboration between Climate Bonds and Thomson Reuters. Information on Thomson Reuters methodology and data is set out at the conclusion of the report.

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.

Proceeds to energy efficient buildings: Initial details emerge in public announcement

What’s it all about?

In a first for a public/municipal entity in Switzerland, the Canton of Geneva has announced it will issue green bonds to finance green buildings in the health and medical research sectors including a university medical centre, a general hospital and a maternity hospital.

According to the media statement this issuance echoes the Climate Plan adopted by the Canton in 2015, notably in terms of GHG emissions reduction up to 2030; they have also set up an environmental management system for procurement, energy, waste and transport. 

A dedicated green bond section will be created on the Canton Finance Department's website. Use of proceeds will be disclosed to investors and annual performance reporting will be undertaken.

Vigeo Eiris (a Climate Bonds Approved Verifier) has provided the second opinion.

Further details are not confirmed at this stage, but to finance projects of this size and nature, issuance would have to be at least several hundreds of millions CHF or equivalents.

The Last Word

From the media statement it looks like the Canton sees an opportunity to position Geneva as a centre of green finance. So we’ll add them to our list of aspiring green finance hubs that now runs to London, Paris, Frankfurt, Luxembourg and Casablanca amongst others.

For Blog readers who can master their French, you can read the full media statement here.

We’ll keep you posted as more details emerge.

‘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.