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Indonesia: IDX in new Partnership with CBI: Meanwhile EBA & PINA sign new MoU with CBI to join forces on green infrastructure investment

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Indonesia: IDX Partners with CBI: Meanwhile EBA & PINA sign new MoU with CBI, join forces on green infrastructure investment

Twin events in Jakarta signal momentum on green finance

 

What's it all about?

Indonesian Bourse Joins Partner Program

The Indonesia Stock Exchange (IDX) has become the first Exchange in Southeast Asia to join Climate Bonds Initiative Partner Program.

IDX are the 6th exchange to partner with Climate Bonds in a diverse grouping that includes London Stock Exchange, Luxembourg Green Exchange, Deutsche Börse, Bolsa Mexicana and Nasdaq Nordics.

Sean Kidney, CEO Climate Bonds Initiative and Tito Sulisto, President IDX sealed the new partnership in Jakarta yesterday, jointly hosting a roundtable discussion for prospective Indonesian green bond issuers.

IDX are now part of of a leading group of exchanges who are committed to playing a greater role in the development of global and national green finance, with a particular focus on green bonds – which reached a record US$155.5bn issuance in 2017, up 78% on 2016 figure of US$87.2bn.

 

Who’s saying what? 

Tito Sulisto, President, Indonesia Stock Exchange:

“IDX will be taking an increasing role in green finance as the market develops, both in Indonesia and across the region. Working with Climate Bonds Initiative gives us a unique opportunity to step up our efforts in this fast-growing market and help to meet Indonesia’s green infrastructure and sustainable investment needs.”

“This partnership will be instrumental in helping to increase engagement with key domestic and regional stakeholders and develop joint initiatives to spur market growth.”

 

Sean Kidney, CEO, Climate Bonds Initiative:

“Indonesia Stock Exchange can play a vital role in bringing policy makers and market participants together, helping to shift investment and capital towards low-carbon assets and green projects in Indonesia. With this partnership we now have a strong foundation to work jointly and promote collaboration, knowledge sharing and the expansion of green finance and green investment.”

 

             

New MoU with EBA and PINA focused on green insfrastructure investment

On the same day green bonds advisory firm PT.EBA Indonesia (EBA), nand Pembiayaan Investasi Non-Anggaran Pemerintah (PINA) signed an Memorandum of Understanding (MoU) with Climate Bonds to cooperate on the promotion of Indonesian green infrastructure investment and in particular green bonds, to international investors.

Yudhi Ismail, President Director, PT.EBA Indonesia and Ekoputro Adijayanto, CEO, PINA Sean Kidney, CEO, Climate Bonds Initiative, signed the MoU in Jakarta on 5 February 2018 at a pre-event ceremony to the 1st Indonesia Securitization Summit

EBA focuses on promoting green bonds & asset securitization in the Indonesian market, PINA focuses on raising capital from alternative sources for the financing of national strategic infrastructure projects.

 

Who’s saying what? 

Yudhi Ismail, President Director, PT.EBA Indonesia:

“Indonesia shares the same infrastructure challenges as many other nations, ensuring all new infrastructure is green and matching investors to the many opportunities that exist. Starting with the coming the 1st Indonesian Securization Summit, our work with Climate Bonds will help generate the investment momentum we need around green infrastructure.”

 

Ekoputro Adijayanto, CEO, PINA:  

“This MoU is another step in achieving our mission to build alternative sources of investment for infrastructure projects that meet national priorities and development goals.”

“We will now work together with Climate Bonds and EBA Indonesia on activities that contribute to increasing finance and international capital for environmentally sound infrastructure.”

 

Sean Kidney, CEO, Climate Bonds Initiative:

“We are excited to launch this MoU in partnership with EBA Indonesia and PINA. If we are to create sustainable economic growth in Indonesia and address the nation’s climate change goals and objectives, we need vast green infrastructure projects. This will require capital from overseas investors as well as domestic finance. The partnership is about getting capital moving into multiple green investments.”

 

The Last Word

Both announcements have generated media interest, if your Bahasa Indonesian is good you can find some coverage hereherehere and here

As a G20 nation, the world’s fifth largest carbon emitter and possessing the world’s fourth largest population at around 260 million, Indonesia achieving its NDC and climate goals definitely counts.

The two agreements announced on Monday in Jakarta are small steps in a much larger and longer process for Indonesia, put them together with recent green finance developments in Japan, Hong Kong, Malaysia, Singapore, Fiji and even far way New Zealand, nations in the Asia Pacific are beginning to stir. 

 

'Till next time 

Climate Bonds 

 

 


气候债券倡议组织与中央结算公司联合发布第二份中国绿色债券市场年度报告,汇丰银行全力支持

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分别于香港和北京发布

2017年中国在绿色债券监管和与国际绿色定义接轨上取得进一步发展,五个新的驱动因素将推动市场实现2020年目标

 

关于什么?

继气候债券倡议组织、中央国债登记结算有限责任公司(中央结算公司)在汇丰银行的支持下于昨天在香港联合发布《中国绿色债券市场2017》报告后,北京发布会于今日举办。本报告总结了中国绿色债券在2017年的发展,聚焦绿色债券发行情况、相关政策制定和市场增长。

2017年,中国发行的绿色债券总额达371亿美元(2486亿人民币),比上一个破纪录的年度增长了4.5%。在中国发行总量中有229亿美元(1543亿人民币)的发行与国际定义接轨,占全球发行总量的15%,这使中国成为2017年世界第二大绿色债券市场。

 

点击下载英文报告Download the English version of the report 

点击下载中文报告

 

 

2017 亮点

  • ​2017年发行118只绿色债券(113只在岸,5只离岸) ;
  • 发行绿色债券371亿美元,其中62%﹐共229亿美元(1543亿人民币)符合国际定义;
  • 共有60.1亿美元(402亿人民币)绿色债券获得气候债券标准认证,包括全球最大银行中国工商银行(ICBC)发行的21.5亿美元等值绿色债券
  • 全年累计最大发行人是中国国家开发银行(CDB),其离岸债券规模为16.7亿美元(合111亿人民币),该只债券也获得气候债券标准认证

监管推动、绿色金融发展和与国际绿色定义接轨

2017年,一系列的政策支持信号和监管措施相继出台,其中包括:

  • 中国证监会向中国上市公司发布了《关于支持绿色债券发展的指导意见》;
  • 绿色金融写入2017年政府工作报告;
  • 第五次全国金融工作会议鼓励发展绿色金融;
  • 中国人民银行和证监会向绿色债券核查机构发布指引;
  • 国务院在广东、贵州、江西、浙江、新疆五省(区)设立试验区,推进绿色金融;
  • 环境保护部等四部委联合发布《关于推进绿色“一带一路”建设的指导意见》,为绿色基础设施带来潜在机遇 。

此外,中国也在努力推进于国内形成统一的绿色债券目录,以及中国与国际市场的绿色债券标准一致化。2017年11月,中国人民银行绿色金融委员会和欧洲投资银行联合发布了一份白皮书,对国际上多种不同绿色债券标准进行了比较,为提升中国与欧盟的绿色金融定义和标准的统一性奠定了基础。

值得注意的是,香港特首2017年施政报告指出,香港特区政府会带头在下个财政年度发行绿色债券。

中国绿色债券市场发展的五个驱动因素:

为应对气候变化,到2020年,全球绿色债券每年的发行量应该达到1万亿美元的里程碑。要在这个过程发挥一定作用,中国在未来三年的绿色债券发行量需要在目前的基础上增长10倍。

报告概述了五个推动未来增长的因素,其中包括:

  • “绿色“一带一路” ;
  • 主权绿色债券发行提速;
  • 促进跨境资本流动,发展绿色债券市场;
  • 香港绿色债券市场发展;
  • 绿色“债券通” 帮助国际投资者投资中国国内市场。

 

各方对报告的评价

券倡议组织首席行官 Sean Kidney:

 “中国的绿色债券发行人基础正在扩大和多元化,同时,绿色债券监管框架也正在完善,主要受到政府强有力的政策信号的推动。”

 “作为世界上最大的绿色债券市场之一,促境跨境资本流动将成为把中国绿色金融推向新高度的驱动因素之一。加快现有投资水平,对于中国到2030年及以后的低碳增长路径及其对国际社会实现气候目标的影响至关重要。”

 “全球金融,投资者和监管机构都将在引导绿色投资上担当重要角色,以实现2020年1万亿美元绿色债券发行量的里程碑,和之后更高的目标。这些绿色资金的大部分将需要流向中国的环境和气候项目。随着中国与国际之间在协调和完善标准上的不断努力,这作为推动绿色投资的基础正在发挥作用。”

中债研发中心主任宗军:

“2017年中国出台一系列文件明确了绿色金融的顶层设计,多次提及大力发展绿色债券,绿色债券已经成为中国绿色金融体系的重要组成部分,受到有关各方的高度关注。2017年中国绿色债券市场稳步发展,绿色债券发行量已达全球的22%。”

“中央结算公司作为中国债券市场的核心金融基础设施,同时也是中国金融学会绿色金融专业委员会的理事单位,在绿色债券市场做出了许多基础性、开创性的工作,探索形成了绿色债券识别归类标准,发布了中国首批绿色债券指数,并首创绿色债券识别归类理念,对于提升中国绿色债券市场透明度,树立绿色债券发行人社会形象,促进绿色经济发展起到了积极作用。我们将践行绿色发展理念,以更为完善和到位的金融基础设施服务为中国绿色债券市场的发展保驾护航,共同推动中国以及全球的绿色发展。”

汇丰大中华区行政总裁黄碧娟:

“为了应对气候变化的威胁,在低碳科技和相关基础建设领域的投资规模是前所未有的。绿色债券自10年前首次推出以来,已成为抵抗气候变化、迈向可持续发展经济的主要融资工具。发行绿色债券是发行人关注并积极应对全球气候变暖的一种体现,从长远来看,也将有助提升发行人的企业估值及改善经营前景,并能够满足越来越多投资者对符合环境、社会及治理原则的投资需求。

“毋庸置疑,发展可持续经济不仅已成为内地的重要政策导向,而且也为相关企业和投资者创造了商机。汇丰致力于成为发行人与投资者的桥梁,协助带动可持续发展的融资项目。香港作为国际金融中心和全球最大的离岸人民币中心,正是担当绿色债券枢纽的理想地点。”

 

结语

2017年绿色债券的增长已经超出了预期,全球发行量达到1555亿美元,其中中国是第二大绿色债券来源国。但是,我们必须关注下一个里程碑,即在2020年达到1万亿美元的发行量。

中国政府持续关注在中央和地方层面面临的环境挑战,继续推动监管创新并推动跨境资本流动,并在保持绿色增长上扮演重要角色。正如巴西、印度、印尼和其他新兴市场国家一样,绿色投资与低碳发展和实现国家自主贡献(NDC)目标是紧密联系的。

中国的进展也是全球在实现2°C目标上的进展。我们在此报告中讨论的未来增长驱动因素,指出了未来中国绿色债券市场的增长点。

点击此处下载中文英文报告

Download the English version of the report 

 

敬请期待下次更新

气候债券倡议组织

 

免责声:本文中的信息不构成任何形式的投资建议,气候债券倡议组织并不是投资顾问。任何涉及其他金融机构或投资产品的信息只作为参考信息之用。任何外部链接只做参考信息之用。气候债券倡议组织及本文其他合作机构对外部网站的内容不承担责任。气候债券倡议组织及其他合作机构均不对任何债券或投资的优劣提供建议、推荐或指导,本文中的信息也不能当作或成为做出投资决策的依据。
   气候债券认证只反映相关债务融资工具募集资金的气候效用。它并不反映相关债务融资工具的信用价值或是否符合有关的国际或国内法律要求。投资决定完全取决于投资者自身。气候债券倡议组织及其他合作机构对基于本文全部或部分内容、或其他气候债券倡议组织公开信息的任何个人或机构的任何投资以及代表任何个人或机构的第三方机构的任何投资概不负责。

 

Germany’s LBBW EUR750m green bond secures Certification under the Climate Bond Standard for Low Carbon Buildings (Commercial)

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Opens up Germany’s vast potential for green issuance on the back of the property sector, and there’s an interesting back story to this one….

 

Germany & green property data: What’s it all about?

In the absence of access to national data on buildings’ energy consumption and emissions production, a proxy has been established by Climate Bonds and LBBW to help kickstart a Certified market now and Certify asset pools originated prior to 2018.

A baseline for Germany is being established by the Climate Bonds Standards & Certification Scheme’s Low Carbon Buildings Criteria Technical Working Group (TWG).

It will develop local benchmarks and emission performance trajectories for German cities to meet the Paris Climate Agreement, while the lack of data on buildings’ performance is hopefully being tackled by government and market actors.

Yes, there is a ‘but’. And it’s an important one we need to highlight.

So, let’s go in parts…

 

The methodology for Certifying low carbon buildings

Our international science-based Low Carbon Buildings Criteria for commercial property are based on local market and climate conditions, and require buildings to be aligned with a low-carbon trajectory.

Using available regional data, a low-carbon trajectory is established by determining the best-performing top 15 percentile of buildings in a city as a starting point, and drawing a linear trajectory to net zero emissions by 2050 from there. You can see how the sliding scale works here.

For a green bond to be Certified by Climate Bonds the underlying asset portfolio has to meet that linear line at the mid-point of the bond’s maturity.

In practice, this means we publish a kilograms CO2 / m2 hurdle rate that will bring us over time – through any given bond’s maturity – to carbon neutral buildings by the middle of this century (2050).

Climate Bonds uses an emissions metric as opposed to an energy metric as this is what’s most relevant for climate change.

 

But in Germany…

In the German context, we found an obstacle to our methodology, which has prevented us from Certifying other German green bonds in the past.

German cities lack databases, which can provide information on the energy consumption and emissions intensity of buildings. This is instrumental in enabling issuers to demonstrate compliance to our Criteria.

In other European countries such as the Netherlands, England & Wales or France, the necessary data is available and has allowed us to establish a proxy and trajectory.

In Germany, the building stock has traditionally been assessed according to building age cohorts, with gradually more stringent energy demand target values since 2007. Even if some buildings comply with international standards such as LEED, BREEAM, EDGE etc. or national performance certificates and regulations like EnEG (Energy Saving Act), EnEV (Directive of the EnEG), the German government lacks a national database that makes this information publicly available.

Previous green bond issuers have therefore referred to such international labelling schemes wherever possible. For example, BerlinHyp’s first green Mortgage Pfandbrief, issued in 2015, provides comprehensive reporting, which includes charts showing what proportion of the cover pool meets the different levels of building standards.

Detailed information can be found on their dedicated Green Pfandbrief web page.

 

The LBBW bond

In order to Certify the LBBW green bond, Climate Bonds’ TWG and Standards team worked closely with the bank to establish an alternative proxy. In order to calculate the energy demands and emissions performance of the buildings pool, an alternative methodology was applied.

LBBW, supported by specialist advisor Drees & Sommer, looked for a reliable correlation between building age class and energy efficiency. This was evidenced by two studies, Fraunhofer, GfK et al.’s report to the Federal Ministry of Economic Affairs and Energy  ("Energy consumption of the trade, commerce and services (TCS) sector in Germany for the years 2007 to 2010") and "Energy efficiency in retail” published by the German Energy Agency (DENA). This process was overseen, and the results approved, by TWG representatives.

Now confident in that correlation’s robustness, LBBW filtered the distribution of buildings in the pool by building age class to identify a set of properties that could, with a reasonable degree of confidence, be considered to be (at least) among the top 15% performers.

We consider this proxy the best available in current market conditions and a satisfactory test for a refinancing pool for loans originated prior to 2018. 

 

Ongoing Transparency

LBBW has committed to disclosing operational performance data and setting a decarbonisation trajectory for the asset pool that is in line with 2050 carbon neutrality.

Such ongoing performance disclosure and monitoring will ensure the asset pool remains sufficiently climate-relevant to keep meeting our Criteria on an aggregate portfolio level.

This is important, as, apart from the praiseworthy top 15% commitment for new and existing buildings, LBBW also allows for allocations to refurbishments that can theoretically have up to 40% higher energy consumption than comparable new buildings. We would like to see more ambition. So we will also keep an eye on ongoing Certification compliance here…

 

The next step

Still, this proxy will not be available for owned assets or for any financing of loans originating after this issue. Loans originated from 2017 onwards will require operational performance data to confirm qualifications.

 

The Last Word: More buildings data

The Climate Bonds Initiative and LBBW have called on the German government to facilitate public access to the energy performance data of buildings, both commercial and residential. This would allow the establishment of a proxy indicator requirement which would make it as simple as possible to demonstrate compliance with Climate Bonds Low Carbon Buildings Criteria (and a 2050 low emission trajectory), without needing to undertake any carbon or energy accounting.

We are now developing a trajectory based on the proxy used for this Certification, and we hope to be launching an official baseline later this year.

In Germany, 38% of the national energy demand is caused by buildings, and commercial buildings are one of the main CO2 emitters.

In order to achieve Germany’s ambitions climate targets, green buildings need to become a high priority in the sustainability agenda, helping deliver SDG #11 (sustainable cities and communities).

There is strong investor demand and interest in quality issuance by many institutions, so Germany has high potential to become a major market for green property bonds and green Mortgage Pfandbrief.

We now need to propel BerlinHyp’s 2015 pioneering work into more Certifiable bonds, even more prominently flagging green bank lending and refinancing opportunities to international investors. This LBBW Certification is another step in developing this market.

Meanwhile, public sector authorities need to improve the collection and availability of data about buildings’ energy efficiency and emissions for that to become easily scalable.

More data, more green lending in commercial property, less emissions. Simple.

Find out more about the Climate Bonds Certification Scheme on our dedicated page.

 

‘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.

 

Jan Market Blog: Strong start to 2018: GBs from Asia & Norway: Green Sukuk: Sovereigns & Certified Bonds to start the year

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We have made some tweaks to our Market Blog format to make it easier for readers to keep up with the very latest. Click here to see the full list of new and repeat issuers.

And don’t forget! Early bird registration for our March Conference and 3rd Annual Green Bonds Awards closes this week. Details here.

 

Highlights 

  • Five new issuers from Norway, Malaysia, Singapore and Hong Kong in January
  • January trends: Renewable Energy dominates Use of Proceeds; Non-Financial Corporates lead Issuer Types
  • Two more Certified Climate Bonds from Nordex SE & LBBW closed, and Australia’s NAB with a certified green RMBS closing soon
  • February is shaping up as month of the Sovereign green bond with Poland closing its second green bond, and Belgium marketing its first Green OLO

Our ultimate target is to get to USD1tn issuance per annum by 2020. Let’s start by getting cumulative green bond issuance to USD1tn.… and then we’ll move the goalpost!

 

At a glance

Green bond issuance kept up the pace from a strong finish in December, with January’s issuance amounting to USD7.7bn.  This value is 44% lower compared to January 2017 issuance, which was significantly boosted by France’s EUR7bn debut sovereign green bond.

If the big French sovereign bond were excluded from the figures, January 2018’s issuance would be 23% higher than 2017, confirming a healthy start to 2018.

Among the debut deals is the first green residential covered bond of EUR1bn and the first green sukuk of 2018.

Monthly trends show that renewable energy dominates use of proceeds at 52% of allocations, with Low Carbon Buildings / Energy Efficiency at 33%. Non-Financial Corporates take the lead among issuer types.

 

>See the full list of new and repeat issuers here.

 

Certified Climate Bonds

Nordex SE (EUR275m / USD337m)

Germany’s Nordex SE, a global developer, manufacturer and provider of onshore wind turbine systems, issued its second Certified Climate Bond for an amount of EUR275m. Proceeds will be used to partially refinance the Certified Green Schuldscheinissued in 2016 and to finance the development of the Delta400 Wind Turbine series. Both of Nordex’s green bonds obtained Certification under the Wind Criteria of the Climate Bonds Standard.

DNV GL provided the Pre-issuance Verification Report.

 

Landesbank Baden-Württemberg (EUR750m / USD884m)

German lender Landesbank Baden-Wuerttemberg (LBBW) issued the bond in December and we had covered it in our December Market Blog. The bank has now completed the certification process under the Climate Bonds Standards for Low Carbon Buildings (Commercial): more details can be found here. The verification was performed by Oekom.

An energy efficiency assessment was provided by Drees & Sommer.

 

>See the full list of Certified Climate Bonds here.

 

New Issuers

Mudajaya Group Berhad (Sinar Kamiri), Malaysia, issued a MYR245m (USD63m), 18-year green sukuk, the first in 2018 and fourth since Tadau Energy’s first green sukuk from July 2017. Proceeds will finance a largescale 49MW solar photovoltaic plant in Sungai Siput, Perak (Malaysia).  RAM Holdings assigned the green SRI sukuk a Tier-1 Environmental Benefit rating, the highest of three rating levels which indicates that: “Project is an important component of low carbon future and has clear, demonstrable environmental benefits. Project directly contributes towards substantial and sustainable reductions of greenhouse gas emissions.”

Climate Bonds view: We agree.

 

Segi Astana Sdn Bhd, Malaysia, issued a MYR415m (USD104m), 10-year ASEAN Green MTN Facility. Segi Astana is a JV between engineering and construction group WCT and Malaysia Airport Holdings. The bond will finance a property certified as LEED Silver. RAM Holdings assigned the bond a Tier-3 Environmental Benefit rating, the lowest of three rating levels indicating the “project has minimal contributions towards a low carbon future and has minimal demonstrable environmental benefits.”

Climate Bonds view: The market best practice threshold is LEED Gold and what we want to see is more ambition and more Green Buildings achieving best-in-class certification levels.

 

Sindicatum Renewable Energy, Singapore, issued an INR2.5bn (USD40m), 7-year green bond. Parent company Sindicatum Sustainable Resources is a developer, owner and operator of clean energy projects. This is the first international green bond to comply with both the GBP and the new ASEAN Green Bond Standards. The deal benefits from a Sustainalytics Second Party Opinion.

The proceeds will be used to finance a bagasse-cogeneration project. Bagasse is the residue that remains after juice has been extracted from sugar cane. Agricultural waste from sugar mills will be utilised to generate heat and power for use by the sugar mills, with surplus generation to be exported.

Climate Bonds view: The project will exclusively use sustainable biomass, so it complies with the Climate Bonds Taxonomy. Recycling waste productively is a good thing.

 

SpareBank 1 Boligkreditt, Norway, issued a EUR1bn (USD1.2bn), 7-year green covered bond. The company is a Norwegian covered bond issuer jointly owned by the saving banks under the SpareBank 1 brand. The jumbo bond is the largest green covered bond to date. Proceeds will finance mortgages for residential properties built under Norwegian building codes TEK07 (2007), TEK10 (2010) or TEK17 (2017) or energy efficient housing built under older codes, but compliant with an A, B or C EPC rating. Until EPC ratings become available to the issuer, only new properties will be eligible. Multiconsult estimates that 8% of residential buildings in Norway are compliant with the three most recent building codes. The deal benefits from a Second Party Opinion from DNV GL.

Climate Bonds view: Norwegian building codes have made energy efficiency threshold levels progressively more stringent. We like to see green bonds funding buildings with energy efficiency in the top 15% for their location.

 

Swire Properties, Hong Kong, issued a USD500m, 10-year green bond. This is the first green bond in Hong Kong to obtain a pre-issuance certification under the Hong Kong Quality Assurance Agency’s (HKQAA) Green Finance Certification Scheme. For Energy Efficiency, a 10% efficiency improvement is well below the market’s best practice set at 20-30%. However, as noted in Sustainalytics’ second opinion, Swire Properties have already achieved 18.9% energy efficiency improvements (compared to 2001 levels) in its Hong Kong asset portfolio and 32% energy intensity reductions in its Mainland China asset portfolio.

Climate Bonds view: Achieved energy efficiency improvements are commendable, so good work from Swire, but we would prefer to see future energy efficiency improvements in the order of 20-30%.

 

>See the full analysis for each new issuer here, or click on the issuer names above.

 

Repeat issuers – January

  • EIB: SEK1.5bn/USD190m; AUD175m/USD139m (tap); CAD700m/USD563m; AUD750m/USD594m
  • KfW: SEK1bn/USD125m
  • NWB Bank: SEK2bn/USD252m
  • Invenergy: USD64.8m
  • Engie: EUR1bn/USD1.2bn
  • Enel: EUR1.25bn/USD1.5bn
  • Vasakronan: SEK200m/USD25m
  • Mitsubishi UFG: EUR500m/USD621m

New bonds – pending and excluded

We only include bonds with at least 95% proceeds dedicated to green projects that are aligned with the Climate Bonds taxonomy in our green bond database. If issuers do not provide sufficient information on the use of proceeds, the bonds are tagged as “pending”. If and when satisfactory additional information becomes available, we may include them in our database.

  • Hitachi Capital Management China (USD100m) – Excluded: use of proceeds is wide-ranging, including circular economy, sustainable development and quality of life improvement in the region. Insufficient detail available on projects with emissions reductions potential and limited public disclosure.
  • Iberdrola (EUR5.3bn), Green Syndicated Loan – Pending: amendment and extension of existing loan is conditional on fulfilment of a sustainability indicator, which will be independently assessed by Vigeo Eiris.

 

Trends of the month

 

Green bonds in the market

Closed in February:

  • EIB: AUD400m/USD321m (tap)
  • MidAmerican Energy: USD700m
  • Province of Ontario: CAD1bn/USD813m
  • Republic of Poland: EUR1bn/USD1.2bn
  • KfW: SEK5bn/USD632m

In the market:

  • NAB – NRMBS 2018-1: AUD300m/USD233m green tranche (Certified Climate Bond) of AUD2bn / USD1.6bn RMBS – priced, closes 15 February
  • Ligonier Valley School District: USD10m – priced, closes 22 February
  • Kingdom of Belgium – Green OLO roadshow started 8 February
  • Republic of Indonesia – sounding out investors​

NAB’s green tranche in the National RMBS Trust 2018-1 securitisation is a new first for Certification under the Climate Bonds Standard for Low Carbon Buildings. Well done! More on the deal to follow in our next blog.

 

March of the Sovereigns 

February is shaping up as the month of the Sovereign green bond. Poland has closed its second sovereign green bond, while Belgium is marketing its first to investors. Proceeds from Belgium’s Green OLO are expected to fund rail investments

News on an Indonesian sovereign green bond emerged in January. This would be an Asian first. Our Gossip section below covers several other nations mulling their options. 

 

Investor News

Chinese bank ADBC listed on the Luxembourg Green Exchange to improve visibility for its offshore issuance and gain increased investor access.

Lyxor’s Green Bond ETF, launched in March 2017, has cross-listed on Frankfurt’s XETRA. Lyxor’s index ETF tracks the performance of Solactive’s Green Bond Index.

Foresight’s first Italian infrastructure green bond fund completed its first close at EUR70m in January 2017. It is expected to start investing in the first quarter in solar, wind, waste-to-energy, biomass and energy efficiency projects. Foresight is a UK fund manager in the renewable energy sector.

 

Green Bond Gossip

Potential green sovereign issuers keep coming. Expectations for Sweden rose following recommendations of a government inquiry. Hong Kong once again signalled its intention to issue a green sovereign, as we noted last November. The government of Kenya has pushed the floating of its sovereign green bond to the 2018-2019 financial year, while waiting for regulatory frameworks to be put in place.

Is India's first green muni bond on the horizon? Our Mumbai report from  August 2017 gives some of the wider local muni back story. 

 

Reading and Reports

The Climate Bonds Initiative and the China Central Depository & Clearing Co. Ltd (CCDC) just published their China Green Bond Market 2017 report, supported by HSBC.

Here in English. Here in Chinese点击下载中文报告.

If you haven’t read it yet, check out the Executive Summary of the Final Report of the EU HLEG on Sustainable Finance

Our US green muni highlights for 2017. Last year’s record $11.05bn issuance reflects “a growing interest in leveraging green bonds as a valuable tool for States and cities to finance their climate strategies” says Justine Leigh-Bell.

The Jakarta Post  reports Climate Bonds signing a MoU with PINA a part of BAPPENAS, the State Development Planning Authority and PT.EBA Indonesia to promote green infrastructure investment.

Sean Kidney in the New Straits Times on Malaysia’s potential to lead green finance in ASEAN.

Green bond: c’è anche l’Italia nel 2017 dei record. L'articolo di Sean Kidney per RiEnergia.

 

Moving Pictures

You can watch our Seven Super Trends for 2018 on YouTube. 1:01secs.

We’ve only just come across this intriguing clip of the potential for fossil free steelmaking from SSAB.  HYBRIT is the term. 2:08secs. Of course, there’s a Swedish version.

The California Treasurers Office has released a new video exploring green bonds and US infrastructure investment in advance of the big Green Bond Symposium in Santa Monica on the 27th and 28th February. Our own Justine Leigh-Bill is participating in the Innnovations Lab & is one of the Conference speakers. 3:48 secs for the Treasurers new clip.

And as an extra treat for Market Blog readers here's our latest Climate Bonds Partner, the Indonesia Stock Exchange (IDX) in Special Dialogue with Sean Kidney. 

At a 23:21secs with a mix of Bahasa & English it's a long haul reflecting the the importance the IDX is placing on green finance. You can skip to 3:26sec, 11:11secs or 17:18secs for the English segments and to see Sean in his best batik shirt. 

That's enough for the first month in what we hope to be a monster 2018! 

 

‘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.

Investor Webinar: China’s Green Bond Market – Investment Trends and Directions Wed 21 Feb 2018 12:00-13:00 GMT

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Investors can hear the latest China green finance developments from Sean Kidney, newly returned from twin launches of our China annual report in Hong Kong and Beijing.

Together with our China specialists, Sean will outline the latest opportunities and investment trends as the market opens up to increased off shore capital.

 

 

 

 

What’s it all about?

“China’s green bond issuer base is expanding and diversifying, while green bond regulatory frameworks are strengthening, driven by strong policy signals from the government. With continued efforts around harmonisation and standards the foundations are there for boosting investment.”

Sean Kidney 9th Feb FTSE Global Markets

 

Webinar:

With 2017 a record USD37.1bn year for China’s green bond market, CBI will help lay out for the findings of the China Green Bond Market 2017 report and the directions investors may see in 2018 and beyond.  

Registration here.   

 

When: Wednesday 21 Feb 2018

London:  1200- 1300 GMT

Beijing /Hong Kong: 1800 - 2100 (GMT + 8)

Brussels: 1300 – 1400 CET

New York: 07000800 EST

 

Agenda:

  • With 62% of China’s green bonds aligned to international definitions in 2017, will the market shift further for investors in 2018?
  • The Five Catalysts for growth identified in China Green Bond Market 2017
  • Regulatory momentum and the longer term outlook for investors
  • Local government finance vehicles, (LGFV) and long tenor bonds
  • Background: the China Green Bonds Investor Forum on 19 March at London Stock Exchange

 

Moderator:

Serena Vento, Co-Head of Partnerships

 

Speakers:

Sean Kidney, CEO

Lily Dai, Senior Research Analyst
Alan Meng, Market Analyst

Q&A for participants

 

To register:

Go here to register, don’t miss this opportunity to hear the latest. 

 

‘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.

 

 

 

Nordic and Baltic Public Sector Green Bonds: First scoping study on the role of the public sector in Northern-European green bond markets

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Climate Bonds Initiative publishes first Nordic and Baltic Public Sector Green Bonds Study, with the support of the UK Foreign & Commonwealth Office

Local government, local government lending agencies and public entities generate almost half of green issuance in Nordic and Baltic states

 

What’s it all about?

The Climate Bonds Initiative has published a comprehensive study Nordic and Baltic Public Sector Green Bonds, exploring the contribution of sub-national public sector entities to green finance in selected Northern European countries.

The study was conducted with the support of the UK Foreign & Commonwealth Office.

The report has a specific focus on the role of local governments, municipally owned companies (MOCs), state-owned enterprises (SOEs), and Local Government Funding Agencies (LGFAs) and along with Scandinavian nations includes Estonia, Latvia and Lithuania in its scope.

 

Public sub-national entities account for 48% of green issuance

The Nordic and Baltic green bond market has experienced steady growth, with 2017 total issuance up 70% compared to 2016 and 11 times higher from market inception in 2013.

The public sector accounts for a large portion of the region’s green bond market, with issuance to date amounting to EUR9.4bn, or 48% of the total.

With the region’s local governments characterised by a high level of fiscal autonomy and LGFAs dominating public lending, the public sector is well positioned to fund climate action at a sub national level through increased green lending and green bond issuance.

 

Opportunities                                                   

At a city or municipal level, domestic issuance in local currency is common, due to low funding requirements. However, the use of green bond programs is on the rise and an increasing number of issuers are listing their bonds internationally. Stockholm’s Läns Landsting and tow other Swedish cities, Gothenburg and Malmö are all repeat issuers on the London Stock Exchange (LSE) and are among 28 Nordic issuers quoted on its green bond segment.

Local Government Funding Agencies (LGFAs) play an essential role, especially in the Nordics, acting as aggregators of funding that would, individually, be too small to enter the market. Their outstanding green bonds are typically benchmark size and listed on the LSE or Luxembourg Green Exchange (LGX).

At present green bonds still represent a very small portion of LGFAs issuance. There is a clear opportunity for them to increase green lending to provide further support for sub-national and city-based climate action.

 

Potential in the Nordics…

Given its bond market size, Sweden is expected to retain its position the largest issuer within the region even as neighbouring countries increase climate-based investment and accompanying green finance activity.

There are also growing expectations for the nation to issue a sovereign green bond, following the recommendations of their green bond enquiry presented to government in January 2018.

In Norway, there is significant scope for local government, energy, district heating and rail companies to increasingly transition lending policies from vanilla debt to green bonds issuance.

The study also identifies the state export credit agency and development fund Norfund as potential green bond issuers.

Helsinki is a potential candidate for the first municipal green bond issuance from Finland and there is also the possibility for Finland’s six largest cities (6Aika) to pool their resources and enter the market as joint issuers.

Several state-owned companies operate in sectors conducive to green based finance and existing bond issuers such as export credit agency Finnvera and development finance agency Finnfund also represent potential candidates.

Denmark’s KommuneKredit provides almost all the country’s public sector financing, which provides a firm foundation for increased green issuance.

There is also conversion potential in the mortgage sector, given that mortgage bonds represent 78% of the country’s outstanding bonds. Railway company DSB is also a potential candidate given its near-term investment plans and the suitability of rail as a green bond sector.

A number of cities and municipalities from Iceland have accessed the domestic debt capital market. Reykjavik’s climate action plans – such as explicit support for electric cars – make it a good candidate for city based green bonds.

The study has identified three other vanilla bond issuers as candidates: Municipal Credit Iceland, the Icelandic LGFA, the Housing Financing Fund and national power company Landsvirkjun, particularly in relation to geothermal power.

A further option could see Iceland issuing a sovereign green bond to provide initial market impetus.

 

…And Baltics

All three Baltic countries have issued green bonds: an impressive achievement given their relative size.

Green bond issuance has come from government-backed energy companies Latvenergo (Latvia) and Lietuvos Energija (Lithuania), clean energy developer Nelja Energia (Estonia) and financial investment company Altum (Latvia).

Lietuvos Energijais’ EUR300m issue is by far the largest green bond from the Baltics, accounting for nearly the whole of the region’s corporate market (EUR306m).

To date no green bond issuance from cities or municipalities has emerged. Potential local government issuers in Estonia, Latvia and Lithuania are on the small side of the scale.

However, the use of an aggregation platform similar to the LGFAs in the Nordics is a possible solution. This would allow larger deal sizes and possibly increased international access. Eurozone membership is also a credit-risk positive for international investors.

The Last Word

While each of the Nordic-Baltic countries presents some unique and differentiating characteristics, the public sector plays an active role throughout the region in supporting and increasing green investments aimed at achieving national climate action goals.

The scoping study shows that there is still significant opportunity for public sector entities to harness green finance to help fund climate-resilient infrastructure and developments at a municipal, sub-national, and national level.

A combination of increased backing by investors, stock exchanges, cost-focused incentives for smaller issuers, and continued use of aggregation to pool funding requirements will also further contribute to market growth.

Download the full report here.

 

‘Till next time,

Climate Bonds

 

 

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

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

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

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

 

The Green Bond Market in the Nordics: Small nations, big contributions: Launch at Handelsbanken's Annual Green Bonds and Sustainable Capital Markets Conference

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Report launch today in Stockholm

First comprehensive overview of all Nordic green bonds issued in each nation since market inception.  

2017 issuance reaches new record. Plenty of headroom for growth.

 

What’s it all about?

The Climate Bonds Initiative has just released its first report examining green finance developments in the Nordic countries. TheGreen Bond Market in the Nordics was launched in Stockholm today at Handelsbanken’s 4th annual Green Bonds and Sustainable Capital Markets conference, co-hosted with Nasdaq Stockholm.

Commissioned by Handelsbanken, the report provides an overview of the region’s green bond market and sets out our analysis by issuer type, financed sectors and countries. It also identifies Nordic issuers of vanilla bonds in industry sectors conducive to green bond issuance and outlines avenues for market development.

 

Nordic countries leading by example

The Nordic countries have evolved in the context of the Nordic Model, which is based on decentralisation and cooperation across countries and municipalities to enhance the effectiveness of service delivery. Against this background, the region was able to position itself at the forefront of integrating environmental and sustainability targets within budgets at a central and local government level.

Nordic banks have been among early movers, the Nordic Investment Bank (NIB), a supranational, and Norwegian state bank KBN Kommunalkredit were among the very first to start issuing green bonds, both debuting way back in 2010.  

Other notable firsts

Several other significant green finance milestones have come from the region: the first green city bond (City of Gothenburg), the first corporate green bond and the first green bond from a real estate company (Vasakronan), and first labelled Green MTN corporate bond programme (Fabege), to note a few.

Gothenburg and Vasakronen were amongst the organisations recognised at our inaugural Green Bond Pioneer Awards in 2016.

Nordic stock exchanges have also contributed to the green bond market’s development. Oslo Bors and Nasdaq Stockholm were the first stock exchanges to introduce dedicated green/sustainable bond segments in 2015.

The region is a leader in the use of external reviews, a contribution to promoting market integrity and best practice at a global scale. Over 98% of outstanding green bonds benefit from a Second Party Opinion (SPO), with the only exception being NIB bonds issued prior to Q3 2014.

More recently, in October 2017, ten Nordic public sector issuers published a Position Paper on Green Bond Impact Reporting. The guide seeks to harmonise the approach to impact reporting to enhance market transparency.

 

The Nordic green bond market in a global context …

  • Despite their relatively small size, Nordic nations rank highly on a global scale, with Sweden at 6th, Norway 16th, Denmark 17th and Finland 20th place by cumulative issuance.
  • The Nordic Investment Bank (NIB) is the region’s largest issuer to date.
  • Nordic nations including supranational NIB, account for 6.7% of global cumulative green bond issue volume and 18.5% of European issuance.

 

…and its regional evolution

  • 2017 global rankings also reflected high levels of issuance with Sweden at 6th, Denmark 16th, Finland 19th and Norway 23rd.
  • Annual issuance broke a new record in 2017 at EUR7.8bn, 64% up from 2016 and 10.5 times higher than the 2013 total.
  • Fifteen new green bond issuers entered the market in 2017.
  • Corporate issuance was boosted by large deals from Danish energy company Orsted and three commercial banks – Nordea, SEB and Swedbank.
  • Swedish property company Atrium Ljungberg, a newcomer to the market became a repeat issuer during the year.

 

Use of proceeds & Issuer sectors

In 2017 Renewable Energy (31%) and Low Carbon Buildings (31%) dominated. Green bond proceeds were also allocated to Low Carbon Transport (13%), Water and Waste Water (7%), Waste Management (8%) Land Use (7%) and Adaption (3%)

Local government, local government funding agencies, government-backed entities, state banks and supranational NIB account for two thirds of overall Nordic green bond issuance. The private sector covers the remaining one third.

There is a clear opportunity for private entities, especially financial institutions, to take up a bigger role in green bond issuance.

 

 

 

Who’s saying what?

Tobias Lindbergh, Head of Sustainable Finance at Handelsbanken DCM:

“There is significant activity and development in the Nordics. Handelsbanken is proud to have contributed in this market for many years, assisting numerous clients on the development of green bond frameworks and further advancing standards in this growing asset class.”

“Nordic issuers and investors are very focused on ESG and green investments and we foresee continued strong growth in the foreseeable future. The time had come for an independent study to be done on the Nordic market and it was important to us that we contribute to such a project.”

“This report provides a basis for further discussion amongst issuers, investors, public entities and policy makers on green finance and sustainable investment.  We are pleased to have been able to support the Climate Bonds Initiative in its production.”

 

Untapped potential

Several sector opportunities for increased green bond issuance have been identified including:

  • Public sector issuers could tap the green bond market for projects such as upgrades, network and capacity improvements for public transport. Rail is easily aligned with a low-carbon transition;
  • Financial institutions could step up their efforts to finance loan pools linked to a wide range of climate-aligned sectors, as well as more targeted deals such as covered bonds and energy efficiency mortgages;
  • Investments in Low Carbon Buildings are expected to keep growing, as current private sector issuers keep returning to market. Housing, specialised real estate and public infrastructure companies are also expected to add scale.
  • Opportunities exist in sustainable forestry with FSC related assets suitable for green issuance.
  • Within the Water and Waste Water sectors there are existing bond issuers who could follow up vanilla bonds with new green issuance. 

 

The Last Word

The Nordic Model has served well as a back drop for the public and private sector driven green investment reflected in Green Bond Market in the Nordics, with subnationals and cities prominent. 

Two Nordic based banks made their the first moves almost a decade ago. As we identify in our Seven Seven Trends for 2018 pressure will increase on the global banking sector to lift green lending.

Internationally, there's a bit of catching up to do, a point made by Christiana Figures during COP23 in Bonn when annual green issuance passed the $100bn mark for the first time. 

Today's report, together with yesterdays release of the groundbreaking Nordic and Baltic Public Sector Green Bonds scoping study, give a comprehensive picture of green investment built in large part at the local level, from the ground up. 

We’ll leave the final comment to Sean Kidney:

“Nordic nations have been at the forefront of green bond market development in Europe and worldwide, maintaining a presence in the Top 20 of issuing nations is a significant achievement.”

“Continued policy measures to promote environmental sustainability and low carbon development with support from institutional investors and stock exchanges can help maintain the momentum.”

“In combination with existing public sector green investment directions, more aggregation structures and sovereign issuance, a new phase of accelerated green finance could emerge between now and 2020.”

 

‘Till next time,

Climate Bonds

 

Disclosure: Handelbanken is a member of the Climate Bonds Partner Program. More information is available here

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

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

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

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

 

 

 

 

 

2017 Policy Highlights & Review and Forecasts for 2018

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In 2017 we saw:

The year of the sovereigns and the rise of country level and regional green guidelines;

Targeted incentives increasing support for issuers and public sector issuers leading market growth;

Cross-country and public-private partnerships gaining momentum. 

 

As was foreshadowed at the beginning of the year, 2017 was the year of the sovereigns, marked by a gargantuan EUR9.7bn (USD10.7bn) issuance from France, the first Pacific and island-state issuance from Fiji and the first African sovereign from Nigeria. You can read more in Green Bond Policy Highlights 2017. 

Though we have not yet seen any comprehensive National Capital Raising plans detailing governments’ green infrastructure goals in light of the Paris Agreement, these will emerge as they are tied to countries’ efforts to meet Nationally Determined Contributions (NDCs) and Sustainable Development Goals.

 

The rise of green guidelines

The number of regulations, guidelines and listing requirements for green bonds from finance and environment ministries, regional associations and stock exchanges has grown quickly in 2017.

Domestic guidelines are largely aligned with international definitions, with some differences remaining around the eligibility of projects for the use of proceeds.

Asia is at the forefront of these developments with green bond regulation in China, India, Indonesia, Japan and ASEAN, as well as listing requirements in the Shanghai, Shenzhen and Taipei Stock Exchanges.

 

Preferential treatment for green bonds

New forms of support from policymakers have been implemented in Singapore, Malaysia and China including grant schemes, tax incentives and the fast-tracking of green bonds. These help lower the initial hurdle for new issuers as well as making it more attractive to issue green over conventional debt, in an attempt to boost financing to low carbon and climate-resilient infrastructure.

 

Public sector issuers lead last year’s market growth

Public investments are also the largest contributor to the growth of the green bond market in 2017, with state-backed agencies, central governments, development banks and transport agencies amongst the top issuers for the year. 

 

Cross-country and public-private partnerships 

As foreseen at the beginning of the year, green bonds maintained their momentum on the international finance agenda thanks to increasing collaboration on green finance across countries, such as the UK-Brazil Green Finance Partnership, and between private and public entities like the European High-Level Expert Group on Sustainable Finance and the Chinese Belt and Road Initiative.

 

The Last Word – 2018 and beyond

In 2018, we expect the trend in market growth to continue, and our initial Climate Bonds estimate is for issuance to reach USD250-300bn. The public sector, through sovereign and sub-sovereign issuance and innovative regulation, will increasingly create and shape markets with the milestone of reaching USD1 trillion in green bonds by 2020 growing in prominence as an international green finance objective.

This means more sovereign green bonds, improving taxonomies and definitions of green, greater harmonisation of guidelines from financial regulators and additional policy support to tilt the playing field towards green investments.

Download the full Green Bond Bond Policy Policy Highlights here. 

‘Till next time

Climate Bonds 


Latest Standards Newsletter: Certified Climate Bonds top $30bn, Top10 Certified issuers in 2017: Buildings Criteria rollout: Expansion plans for 2018 and much more!

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Programmatic issuers lead 2017 Top 10 Certifiers, market share grows in a year of record GB issuance

New Standards V3.0 to launch in Q2, Buildings Criteria rollout expands 

Ambitious development program through 2018, new sectors opening up for Certification 

 

We know you have all been champing at the bit to get hold of the 2017 year-end Climate Bonds Standard & Certification newsletter and now the wait is over.

Find it hereIt’s a bumper issue, let's take a look!

 

 

The Rise of Certifications

2017 ended with a surge of Certified issuance, contributing to Climate Bonds Certifications taking a record 14% of the green bond market last year, up from 9% in 2016.

$21.3bn of Certified bonds were issued in the year from a diverse group ranging from the world's biggest bank and largest transport authorities to smaller green building financiers and ABS providers.

Increased adoption of our streamlined Programmatic Certification process (designed for repeat issuers) is reflected amongst many in the 2017 Top 10 charted below. 

Climate Bonds initial forecasting is for green bond issuance to reach $250-$300bn in 2018.

Our goal is for Certified Climate Bonds to make up 20%-25% of this year's market, as more issuers adopt best practice and investors focus on improving the climate impacts of their portfolios.

We want to see the trend line from later in 2017 keep its upward trajectory. 

 

 

Standard V3.0 is coming and Criteria rollouts continue

The new V3.0 of the overarching Climate Bonds Standard is set for launch, updating Standard V2.1 released in January 2017.

Details of V3.0 are inside the newsletter and we'll be announcing the release soon.

Don't miss the various updates on Criteria development, in particular Low Carbon Buildings, where we are expanding the reach into new cities and regions.

More inside.

 

On the horizon 

TWGs and Criteria development will soon begin for Agriculture, Shipping, Energy Distribution Grids & Networks and Information Communication Technology (ICT) over the course of 2018 as we expand the industry sectors availble for certification. 

The full story on our 2018 expansion is in the newsletter here.

 

 

The Last Word - Come and see us at at our March Annual Conference 

Our next Newsletter is due in late April, but we hope to see you at the the Climate Bonds Annual Conference in London March 20th/21st. 

All the Standards and Certification staff will be availble to answer any of your questions and talk you through our 2018 program. 

Let's have a chat! 

'Till next time, 

Climate Bonds. 

New report: GB Pricing in the Primary Market: Q3 2017: Climate Bonds third report in series

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Latest Q3 July-September 2017 study continues long term assessment of green bonds pricing

 

What's it all about?

The Climate Bonds Initiative has just released the “Green Bond Pricing in the Primary Market” report analysing the performance of green bonds at issue July - September 2017.

The report covers USD15.4bn, slightly over half of the combined face value of labelled green bonds issued in the third quarter of 2017.

12 EUR and 7 USD labelled green bonds were analysed on the report.

The detailed methodology is outlined below.

 

 

Highlights from Q3 2017

  • Upsizing at issue added USD2.4bn

  • 47% of green bonds were allocated to green investors

  • Two supranational issuers extended the green bond pricing curve in EUR

  • Green bonds on average achieved larger spread tightening during book-building than vanilla bond equivalents

  • Green bonds achieved at least the same oversubscription as vanilla equivalents

  • Half the green bonds in our sample priced on or inside their secondary curves

  • Green bond buyers cannot automatically expect a new issue premium

  • EUR-denominated green bonds had larger price improvement than corresponding indices after 7 and 28 days

 

Detailed findings:

  • On average, green bonds achieved the same or higher levels of oversubscription than comparable vanilla bonds, according to data from the last two quarters.

  • For the first time, all EUR green bonds in the Q3 sample tightened more aggressively during the book-building process – from IPT to final pricing – than vanilla equivalents. On average, USD green bonds tightened more during the book-building process than vanilla equivalents. These indicators suggest that the green angle could be helping to achieve tighter pricing.

  • Half of the green bonds did not exhibit a new issue premium. This is compared to 40% in the Q2 2017 pricing report and to 60% in the January 2016-March 2017 paper. Green bond investors cannot automatically expect to receive a new issue premium.

  • 47% of green bonds were allocated to green bond investors. The other 53% were allocated to a mixture of investors who specifically target green bonds and those for whom the green label was not relevant to investment decisions.

  • 90% of green bonds tightened 7 days after announcement, 85% after 28 days.  Around half of the sampled bonds tightened more than their corresponding basket after both 7 and 28 days.

  • 79% of bonds tightened by more than their corresponding index after 7 days, and 74% after 28 days.  All Climate Bonds pricing reports points to green bonds, particularly EUR denominated, consistently tightening by larger percentages than corresponding indices in the immediate secondary market.

 

Report methodology

Ninety six (96) labelled green bonds were issued in the course of the third quarter, for a combined face value of USD30.3bn.

This report covers nineteen (19) green bonds from seventeen (17) issuers, amounting to a combined face value of USD15.4bn, or just over half of the total amount issued in the quarter.

The sample is restricted is restricted by currency, not domicile of issuer, and includes green bonds from developed, emerging and frontier market countries. We have included all labelled green bonds meeting a set of parameters to capture the most liquid portion of the market, while trying not to limit diversity of issuer type.

 

Who’s saying what?

Peer Stein, Global Head Climate Finance, Financial Institutions Group IFC:

“Green bonds are one of the fastest growing asset classes within debt capital markets, with increasing interest from emerging markets issuers.  This research will help green bond issuers and investors alike as it sheds more light on pricing dynamics and issuer diversification.”

 

Tony Trzcinka, CFA. SVP and Portfolio Manager, Impax Investment Management LLC:

“This CBI report highlights the continued strong interest from investors in this fast-growing green asset class. It also shows that there is a diverse investor base of both green and traditional investors that are interested in a more sustainable future.”   

 

Max Bronzwaer, Treasurer, Obvion NV:

"The green bonds market has been growing incredibly fast, and now we're seeing interesting developments in pricing. The analysis remains preliminary, but shows close examination is well worthwhile. We hope the paper encourages potential green bond issuers to explore this market."

 

Sean Kidney, CEO of Climate Bonds Initiative:

“With seven quarters worth of data, we are now starting to see evidence of green bonds benefiting both issuers and investors. Meeting increasing investor demand in various markets, while expanding the issuer base will widen the pool available for analysis.”

“If the positive growth forecasts for 2018 are reached we can expect an impact on green pricing. Climate Bonds will continue its analysis and monitoring of green bond behaviour in the primary and secondary market and expand its sample base of green and vanilla performance comparisons.”

 

What’s the back story?

This report is a continuation of our ongoing assessment of green bond pricing. A preliminary Snapshot briefing paper examining Q4 of 2016 was produced for the 2017 Climate Bonds Annual Conference.

The first Green Bond Pricing Report examining eligible green bonds from 2016 and Q1 of 2017 was released in August, followed by a report covering Q2 2017 published in November 2017. 

This and previous reports were prepared jointly by the Climate Bonds Initiative and the International Finance Corporation (IFC). We’ve also had support and funding from ImPax World Mutual Funds, Obvion Hypotheken, and Rabobank. Additional funding was received from the Ministry of Finance of Japan and the Government of the Kingdom of Denmark through the Ministry of Foreign Affairs. A big thank you is due to these organisations. 

 

The Last Word

The pricing performance of green bonds is attracting increased interest as the market grows with a record $155.5bn issued in 2017 and projections ranging up to $300bn at the high end for 2018 increased focus is to be expected. We let the results of this and previous report speak for themselves. As the market grows the concept of a 'greenium' will be further tested. With industry support we'll keep the research and analysis going throughout 2018 and if the forecasts are right there'll be a deep pool to fish from. 

Download a copy here

'Till next time

Climate Bonds

 

 

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

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

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

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

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

 

 

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Nairobi: Kenya Green Building Society and CBI sign MoU: Aim to boost green lending for low carbon climate resilient buildings

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Joint goal to promote low carbon building, green investment & resilience in built environment in Kenya

 

What’s it all about?

The Kenya Green Building Society (KGBS) and Climate Bonds have just signed a new MoU in Nairobi aiming to stimulate take up of Certified low carbon buildings. As demand for green financial products and climate risk disclosure grows, KGBS will work with Climate Bonds to help government and private sector actors take advantage by incorporating green debt into their investment processes and mitigating climate risks connected to their assets.

The core mission of KGBS - the local chapter and emerging status member of the World Green Building Council (WGBC) - is to advocate for, educate toward, and Certify green buildings in Kenya through collaborations with public, private and non-governmental organisations.

 

Who’s saying what?

Elizabeth Wangeci Chege, Chairperson of the Kenya Green Building Society & Regional Vice-Chair of the Africa Regional Network of the World Green Building Council:

“We are delighted to be supporting the Climate Bonds Initiative. We look forward to working in partnership with CBI and its network in driving the property market to deliver a built environment which achieves social, economic and environmental sustainability in Kenya and beyond."

“KGBS will continue to advocate for green buildings which go beyond low carbon footprints to deliver triple bottom line returns, and looks forward to becoming a CBI Approved Verifier for low carbon buildings.”

 

 

Sean Kidney, CEO Climate Bonds Initiative:

“As African cities undergo rapid expansion, the built environment challenge is to keep energy consumption low, energy efficiency high and increase climate resilience."

“Improved design, assessment and verification processes around green buildings helps build trust in new opportunities for expanding green credit markets.”

“This MoU with KGBS represents a new step towards developing investable climate solutions in the property sector that contribute to, as Kenya embarks on its green bond development program through a debut sovereign bond and as single name issuers emerge in the market, the rapid growth in the built environment is ripe for climate resilient investments.”

 

The Last Word

In March 2017, Climate Bonds was signatory with the Kenya Bankers Association (KBA), Nairobi Securities Exchange (NSE) and Financial Sector Deepening Africa (FSD Africa) in conjunction with the Dutch Development Bank (FMO) and the International Finance Corporation (IFC) to a 3 year program to build green bond capability in Kenya & East Africa.

This MoU is aimed more specifically at the green building sector in Kenya and is another step in developing green finance capabilities.

Congratulations to the KGBS! We look forward to working together.

There's lots more green stories to come from Kenya, Blog readers will be kept informed of progress as our partnership grows.

 

‘Till next time,

Climate Bonds

Climate Bonds & Sociedade Rural Brasileira celebrate partnership on new project to develop green finance opportunities for Brazil’s sustainable agriculture industry

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New project will connect green financial opportunities to industry players

Aim to advance implementation of sustainable agricultural practices

 

Senior level representatives of the Climate Bonds Initiative and Sociedade Rural Brasileira (SRB) met key stakeholders today in São Paulo to kick-off the two-year project. The meeting discussed the project's priorities and opportunities to be taken forward by the collaborative partners. Founded in 1919, SRB represents agricultural producers in Brazil.

Brazil has an extraordinary opportunity to be the world’s engine of sustainable agriculture, food production and clean energy at scale, the source of ideas on a low carbon economy, and a world champion of green finance.

 

           

 

Who's saying what?

Justine Leigh-Bell, Director Climate Bonds Initiative

“Brazil has the potential to be the world’s largest provider of sustainable agriculture products within the next decade. The challenge will be to meet this new economic opportunity without compromising the Country’s natural resource base. This will demand substantial capital investment.” 

“Access to credit markets for many producers, particularly rural producers, remains a challenge, as government programs and incentives are limited. Now it’s time to explore the potential for funds raised through repackaging of bank loans via green bonds and green securitization that will incentivise best practices in the industry.”

“I truly believe that green finance has the potential to deliver substantial portions of the capital required to transform Brazil into a global leader in sustainable low carbon agriculture.” 

 

Marcelo Vieira, CEO Sociedade Rural Brasileira

"It is known that the Brazilian agribusiness is the most sustainable among all the major food producers and still has enormous potential for growth. The challenge now is to seek financing mechanisms for this expansion, and this project is one of the best opportunities to attract international resources at the moment."

 

Dulce Benke, Director Sociedade Rural Brasileira

"The focus of the project is the promotion of sustainable agriculture through the availability, feasibility and support of financing that encourages and recognizes low carbon agriculture." 

 

The Last Word

The project will be officially launched at the end of March, in São Paulo. More news coming soon! 

 

‘Till next time

Climate Bonds 

 

 

       

Climate Bonds e Sociedade Rural Brasileira se reúnem e celebram parceria em novo projeto que desenvolverá oportunidades de financiamento verde para Agricultura Sustentável Brasileira

Novo projeto promoverá oportunidades financeiras concretas para aqueles que implementem práticas agrícolas sustentáveis ​​no país

 

Representantes da Climate Bonds Initiative e Sociedade Rural Brasileira (SRB) reuniram-se com parceiros hoje, em São Paulo, para dar início ao projeto de dois anos. No encontro, foram discutidas as prioridades e as oportunidades que o programa apresentará aos parceiros colaborativos. Fundada em 1919, a SRB representa produtores rurais no Brasil.

Durante o encontro foi ressaltado o potencial brasileiro para se tornar o motor mundial de agricultura sustentável, produção de alimentos e energia limpa em escala. 

 

            

 

Who's saying what?

Justine Leigh-Bell, Director Climate Bonds Initiative

"O Brasil tem potencial para se tornar o maior fornecedor mundial de produtos agrícolas sustentáveis ​​na próxima década. O desafio será encontrar essa nova oportunidade econômica sem comprometer a base de recursos naturais do País. Isso exigirá investimentos substanciais de capital."

"O acesso aos mercados de crédito para muitos produtores, particularmente os produtores rurais, continua sendo um desafio, já que os programas governamentais e os incentivos são limitados. Agora é hora de explorar o potencial de recursos captados através de títulos verdes e securitização verde, instrumentos que incentivarão melhores práticas na indústria."

"Acredito que o financiamento verde tem potencial para transformar o Brasil em um líder global em agricultura sustentável de baixa emissão de carbono."

 

Marcelo Vieira, CEO Sociedade Rural Brasileira

"Sabe-se que o agronegócio brasileiro é o mais sustentável entre todos os principais produtores de alimentos e que ainda tem um enorme potencial de crescimento. O desafio agora é buscar mecanismos de financiamento para esta expansão e este projeto é uma das melhores oportunidades para atrair organizações internacionais recursos no momento."

Dulce Benke, Director Sociedade Rural Brasileira

"O foco do projeto é a promoção de uma agricultura sustentável a partir da disponibilização, viabilização e apoio de financiamentos que incentivem e reconheçam uma agricultura de baixo carbono."

 

E por último…

Voltaremos em breve com mais novidades sobre este projeto. O lançamento oficial está marcado para o fim de março, em São Paulo.

 

Até mais,

Climate Bonds

Announcement: 2018 Annual Conference & 3rd Green Bond Awards Major Sponsors

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Support from major financial institutions underlines growing significance of green finance in meeting climate and sustainability challenges  

 

Annual Conference Partners Announced

The Climate Bonds Initiative is pleased to announce the major Sponsors for our 2018 Annual Conference and 3rd Annual Green Bond Pioneer Awards, being held in the City of London, from 19th - 21st of March.

From banks to trade associations, stock exchanges, asset management companies, here’s our current list of Conference Sponsors in 2018:

 

Gold Conference Partners  

ABN AMRO

Amundi (3rd Annual Green Bond Pioneer Awards)

Citi

Goldman Sachs

London Stock Exchange

Moody’s Investor Service

 

Silver Conference Partners

Berlin Hyp

Luxembourg Green Exchange

TCX

Credit Suisse

 

Exhibition Partners  

ICMA

ERM

 

Network Breaks and Refreshments Partners  

Rabobank

 

We welcome everyone's support!

 

Sean Kidney, CEO, Climate Bonds Initiative:

“Our conference has the forward looking theme of ‘From Billions to Trillions’ highlighting the importance of reaching $1trillion in green finance by 2020 as part of global climate action and meeting Paris Accord goals.”

“The welcome support from our Conference Partners for accelerating green investment opportunities reflects our shared perspective that green finance markets must become larger, deeper, more long term and their development must engage more policy makers and finance sector actors.“  

 

From China to Europe - A Green Finance Week in London!

The 2018 Conference and 3rd Annual Green Bond Pioneer Awards will again be the single largest green bonds event held in Europe. It will be book ended by the China Green Bond Investor Forum at the LSE, bringing Chinese issuers and global investors together and conclude with the 1st UK meeting of the European Green Securities Steering Committee, who will be considering the recent HLEG Report recommendations and responses to the forthcoming EU Action Plan. 

In between there will be 3 days of intensive discussion, with the Green Bond Champions Forum, Specialist Roundtables and the globally recognised Green Bond Pioneer Awards. All registrations include attendance at the Awards.

This year we’re expecting attendees from 50+ nations with an expanded agenda that focusses on market opportunities & green investment growth.

A Fee Waiver is in place for participants from emerging economies. Also, special rate apply for NGOs, take a look.

Learn more on the Conference page here.

 

The Last Word

Big events like this couldn’t happen without some support from industry leaders. We’d like to thank the organisations that have got behind this year’s event and its emphasis on the big picture view on climate finance.

We hope you can come and contribute your own ideas on accelerating green investment.

Seats are filling up fast, don’t wait too long to register.

See you in London!

 

‘Till next time,

Climate Bonds

 

 

PS: Know more about each of our 2018 Conference Sponsors! Here’s their Profiles:

 

ABN AMRO (Gold Conference Partner): It is ABN AMRO’s ambition to be a better bank contributing to a better world. Our products and services have an impact on society and we assume the responsibilities this brings. As such we are convinced that responsible finance and investment is becoming the norm. By investing capital in a sustainable manner, we can make an important contribution to society and the environment. Within our DCM franchise we advise our clients on making an impact and contribute to a better world through structuring and placing Green, Sustainability and Social Bonds. ABN AMRO was the first European bank issuing a CBI Certified green bond and a proud partner of CBI.

Amundi (Gold Conference Partner):Amundi is Europe’s largest asset manager by assets under management and ranks in the top 10 globally. Thanks to the integration of Pioneer Investments, it now manages 1.4 trillion euros of assets across six main investment hubs. Amundi offers its clients in Europe, Asia-Pacific, the Middle-East and the Americas a wealth of market expertise and a full range of capabilities across the active, passive and real assets investment universes. Thanks to its unique research capabilities and the skills of close to 5,000 team members and market experts based in 37 countries, Amundi provides retail, institutional and corporate clients with innovative investment strategies and solutions tailored to their needs, targeted outcomes and risk profiles.

Citi (Gold Conference Partner): For more than 200 years, across 160+ countries and 700+ cities, Citi have connected millions of people who strive to meet some of the world’s toughest challenges and embrace its greatest opportunities. We bring to life our mission of enabling growth and economic progress by making payments, lending money, safeguarding assets and accessing markets for companies, governments and individuals. Society is facing the interconnected challenges of climate change, rapid urbanization and rising wealth inequality. As one of the world's leading financial services companies, Citi addresses these complex challenges through our core finance and investment activities, working to incorporate sustainability principles into everything we do to help ensure business success, improve our operations and contribute to a strong global economy.

Goldman Sachs (Gold Conference Partner): The Goldman Sachs Group, Inc. is a leading global investment banking, securities and investment management firm that provides a wide range of financial services to a substantial and diversified client base that includes corporations, financial institutions, governments and individuals. We are committed to harnessing the markets to further environmental progress and to support opportunities for sustainable economic growth. This commitment to environmental sustainability encompasses each and every one of our businesses, whether through deploying capital to expand clean energy solutions, underwriting green bonds, or structuring catastrophe-linked securities to help clients manage climate-related risks. Our Environmental, Social and Governance Report highlights our commitment to sustainability and describes our work on behalf of our clients and the communities we seek to serve.

London Stock Exchange (Gold Conference Partner): As world leading market infrastructure experts, the London Stock Exchange Group has been supporting investors and issuers in the transition to a low-carbon and sustainable economy for over a decade, developing innovative products and services in close collaboration with clients and thought leaders. London Stock Exchange is now home to a diversified range of green bonds issued in seven different currencies by supranational institutions, local governments and municipalities as well as corporates. In 2017, there has been a 92% growth in green bonds listed on London Stock Exchange and a 78% increase in money raised.

Moody’s (Gold Conference Partner):Moody's Investors Service is a leading provider of credit ratings, research, and risk analysis. Moody's commitment and expertise contributes to transparent and integrated financial markets, and the firm's ratings and analysis track debt covering approximately 120 sovereign nations, 11,000 corporate issuers, 21,000 public finance issuers, and 72,000 structured finance obligations. The rating agency is committed to enhancing the transparency of how ESG factors are considered in its credit ratings and has produced research on the credit implications of the Paris Agreement, carbon transition risk and physical climate change for key sectors. Moody's is a signatory to PRI's statement on 'ESG in Credit Ratings' and has actively engaged in a number of policy initiatives including the Financial Stability Board taskforce on climate related disclosures and the G20 Green Finance Study group. In 2016, Moody’s launched its Green Bond Assessment ('GBA') product and has completed 30 assessments to date. The rating agency maintains an ESG hub, www.moodys.com/esg, highlighting key research on ESG considerations in credit analysis, and the growth and development of green finance globally. 

Berlin Hyp (Silver Conference Partner): 150 years of experience in commercial real estate finance and future-oriented action form the foundation for Berlin Hyp as one of the leading German real estate and Pfandbrief banks. As the issuer of the first Green Pfandbrief, we are a pioneer and have set benchmarks on the capital market. At the same time, we encourage the financing of sustainable real estate. Looking forward towards the future, we want to play an active role in structuring digital transformation in the real estate sector. Internally we plan to optimise and digitalise the existing value creation chain; externally, we want to further develop our business model through strategic partnerships, as well as monitoring trends and proactively implementing them. Innovation results from inspiration.

Luxembourg Green Exchange (Silver Conference Partner): The Luxembourg Green Exchange (LGX), launched by the Luxembourg Stock Exchange (LuxSE) in 2016, is home to almost 50% of all listed labelled green bonds globally. Our windows for green, social and sustainable bonds have so far attracted 142 green bonds, 14 social bonds and 6 sustainable bonds from 43 issuers across the globe. The instruments listed on LGX are contributing to the achievement of 15 of the 17 UN Sustainable Development Goals (SDGs). LGX is the first platform that makes industry best practices for green securities, in particular ICMA Green Bond Principles and the Climate Bond Initiative’s standards, a mandatory requirement. Our goal is to make sure that investors have the right tools to make their sustainability-driven decisions in an informed way.

TCX (Silver Conference Partner):TCX shields international lenders and their local borrowers in emerging and frontier markets from exchange rate volatility. By swapping hard currency funding into a local currency loan, TCX makes debt financing predictable for the borrower. TCX enables lenders to offer the right product, allowing local counterparties to focus on growing their business rather than managing exchange rate risk. In recent years, TCX has also supported bond placements in local currencies.

Credit Suisse (Silver Conference Partner): Credit Suisse AG is one of the world's leading financial services providers and is part of the Credit Suisse group of companies (referred to here as 'Credit Suisse'). As an integrated bank, Credit Suisse offers clients its combined expertise in the areas of private banking, investment banking and asset management. Credit Suisse provides advisory services, comprehensive solutions and innovative products to companies, institutional clients and high-net-worth private clients globally, as well as to retail clients in Switzerland. Credit Suisse is headquartered in Zurich and operates in over 50 countries worldwide. In September 2017, Credit Suisse announced the establishment of a global Impact Advisory and Finance department (IAF) reporting directly into the Chief Executive Officer. IAF’s mandate includes the facilitation of new, at-scale green finance projects and initiatives for the benefit of our wealth management, institutional and corporate clients. Further information about Credit Suisse’s engagement in green bonds can be found at www.credit-suisse.com/greenbonds.

ICMA (Exhibition Partner):ICMA is the trade association for the international capital market with over 530 member firms from 60 countries, including banks, issuers, asset managers, infrastructure providers and law firms. It performs a crucial central role in the market by providing industry-driven standards and recommendations for issuance, trading and settlement in international fixed income and related instruments. ICMA liaises closely with regulatory and governmental authorities, both at the national and supranational level, helping to ensure that financial regulation promotes the efficiency and cost effectiveness of the capital market.

ERM (Exhibition Partner): ERM (Environmental Resources Management) is a leading global provider of environmental, social, health, safety, risk and sustainability related consultancy services. ERM has worked with many of the Global Fortune 500 companies and is the largest adviser to the finance sector; working with investment and commercial banks, development finance institutions, pension funds, private equity and asset managers. ERM is committed to providing consistent, professional, technical advice and our extensive international presence (160 offices) and sector experience combines global reach with an understanding of local sensitivities and regulation. ERM CVS (Certification and Verification Services) is a wholly owned subsidiary of ERM. Operating in over 50 countries, we deliver independent, accredited, performance-focused certification, verification and assurance services.   We are approved as a Climate Bonds verifier, bringing expertise in climate-related project validation and verification; data verification, financial accounting and assurance; with deep technical experience across the range of the sectors included within the CBI.

Rabobank (Breakfast, Refreshments Partner):Rabobank is a cooperative bank from the Netherlands that aims is to be a leading bank in the field of food and agri worldwide. It provides international financial services operating on the basis of cooperative principles, offering retail banking, wholesale banking, private banking, leasing and real estate services. As a cooperative bank, Rabobank puts customers’ interests first and serves approximately 8.7 million individuals around the globe. Rabobank is committed to making a substantial contribution to welfare and prosperity in the Netherlands and to feeding the world sustainably. With nearly two million members, Rabobank has strong agricultural roots and an unparalleled knowledge in the food and agri industry. Measured by Tier 1 capital, Rabobank Group is one of the world's largest financial institutions.

 

Disclosure: Some of the organisations mentioned in this communication are Climate Bonds Partners. A list of Partners is available here

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Market Blog #2/2018: Three new Sovereign GBs: More on NAB Certified RMBS; Green Bond Pioneer Awards coming soon!

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Highlights:

  • Indonesia’s Sovereign GB is Asia’s first, while Tropical Landscape Finance Facility is Indonesia’s first green bond issuer. Hong Kong announces world’s biggest Sovereign program
  • Belgium’s green OLO generates strong investor demand and becomes second largest sovereign green bond
  • More on NAB’s Certified green RMBS tranche
  • US Muni debut from Pennsylvania with Ligonier Valley School District’s green bond
  • February trends: practically all proceeds allocated to Renewable Energy and Low Carbon Buildings; Sovereign issuance takes the lead among issuer types

>Click here to see the full list of February’s new and repeat issuers

 

At a glance

February started off slowly and monthly green bond issuance totalled only USD4.4bn, 44% lower than January and 37% below February 2017’s total. Some big deals announced towards month’s end and to settle in early March, put the trend back on track to achieving, and possibly exceeding, last year’s equivalent monthly figures.

February also saw three new issuers, which is fantastic, but repeat issuers accounted for 95% of the month’s volume with development banks EIB and KfW contributing 22%. Renewable energy and Low Carbon Buildings are still the most prominent use of proceed sectors, accounting for 56% and 43% of issuance respectively.

The march of the Sovereigns continues.  Poland’s repeat sovereign issuance represents 29% of the February's green bond volume. Indonesia and Belgium’s sovereign green bonds add up to USD6.5bn, or the equivalent of 50% of March 2017’s total issuance. Hong Kong’s ambition to become Asia's green finance hub were boosted by their budget announcement of the world’s biggest sovereign green bond program.

Lastly, the Climate Bonds Conference, Europe’s largest single green bond event kicks off in less than two weeks. Will you be joining us? And don’t forget the coveted Green Bond Pioneer Awards, now in their 3rd big year.

 

>See the full list of new and repeat issuers here.

 

 

Certified Climate Bonds

NAB RMBS tranche (AUD300m/USD233m)

The National Australia Bank (NAB), one of Australia’s ‘big 4’ banks, issued AUD2bn Residential Mortgage-Backed Securities (RMBS). The securitisation includes a green tranche of AUD300m (USD233m). The green bond is Australia’s first to obtain Certification under the Climate Bonds Standard for Residential Low Carbon Buildings. The certification is a confirmation of Australian markets' commitment to best practice standards in green bond issuance.

DNV GL provided the Pre-Issuance Verification Statement.

 

 

New issuers – February

Pennsylvannia's Ligonier Valley School District (USD10m), issued a 15-year bond, the first green muni from the state. The USD10m Series A (Green Bond) is part of a USD13.8m deal which will finance the School District’s initiatives under its Energy Efficiency Project, according to the prospectus. Of the USD16.7m of identified improvements, USD13.6m have associated quantifiable energy consumption benefits, according to Moody’s. The projects are largely consistent with the energy efficiency and sustainable water and wastewater management categories of the GBP, but given that not all project components have a quantifiable positive benefit, the district elected to take a conservative approach and only label USD10m as green bonds. The green bond was awarded a GB1 rating by Moody’s.

To calculate the expected energy consumption savings, LVSD’s partner Constellation Energy Group generated a consumption baseline through a review of the district's current utility bills, and then compared expected energy generation to the baseline. Beginning in March 2021, 12 months after expected project completion, Constellation will start issuing annual reports with the actual energy and financial savings by project component.

Climate Bonds view: Well done to the Keystone State in its green muni debut. The multi-tranche deal structure provides a template for issuers who may wish to finance a variety of projects, but not all would qualify for a green label. We also view positively the promise to report annually on actual energy and financial savings relative to an established consumption baseline. We’re looking to USD20bn from the US green muni sector this year, this bond is a small but welcome start.

Foncière Inéa (EUR100m/USD123m), a French real estate company, issued a green private placement bond, a first from a mid-sized French issuer. Proceeds will be allocated to the acquisition of certified commercial buildings close to public transport. The deal benefits from an SPO from Vigeo Eiris (not publicly available).

Climate Bonds view: Having reviewed the eligibility criteria outlined under the green bond framework (not publicly available), we are satisfied that the placement is in line with the Climate Bonds Taxonomy and the building certification level is aligned with the higher end of industry practice.

Indonesia’s TLFF I Pte Ltd (USD95m), a financing vehicle for the Tropical Landscapes Finance Facility, issued a 15-year multi-tranche sustainability bond deal, as part of a USD350m project. The TLFF project is a JV between France’s Michelin and Indonesia’s Barito Pacific Group. Proceeds will finance a sustainable rubber plantation on heavily degraded land in the Jambi and East Kalimantan provinces of Indonesia. The plantation will cover 34,000ha out of 88,000ha, while the remaining land will be used for conservation, aquaculture, land restoration and smallholder plantations, including bamboo, cocoa, coconut, coffee, palm and rubber. The deal benefits from a USAID guarantee and the issuer obtained a Vigeo Eiris second party opinion.

Climate Bonds view: There are social components to this issue, but the sustainable agriculture basis combined with conservation of nature corridors for endangered species and the planned restoration of degraded land fit in with the Nature Based Assets category of the Climate Bonds Taxonomy.  Sustainable land use appears to be the prevalent use of proceeds and we would hope to see this confirmed in future reports.

 

 

New Issuers – priced in February, settled in March

Kingdom of Belgium (EUR4.5bn/USD5.5bn) closed a 15-year Green government bond (OLO) on 5th March. This is the country’s first green OLO and the second largest sovereign green bond issued to date after the French Green OAT bond in January 2017. The proceeds will finance primarily clean transport (85%) with EUR2.2bn to be invested in domestic passenger trains for the benefit of SNCB and railway projects, according to the Belgian Debt Office.

Eligible categories under the Green OLO Framework also include living resources and land use, renewable energy, circular economy and energy efficiency, as well as related federal state expenditures that can contribute to meeting Belgium’s climate policy objectives. In its SPO, Sustainalytics recognises the importance of government incentives in driving emission reductions in the public and private sectors, especially through energy efficiency improvements, and expresses a positive view regarding such expenditures.

Climate Bonds view: We agree with Sustainalytics’ view that it makes sense to fund supportive government incentives and would hope to see evidence of their impact on GHG reductions in future reporting. For energy efficiency renovations in buildings, we note that communicating threshold levels in the framework would contribute to its transparency and clarity, albeit this is not so crucial for now given the focus on transport.  

Republic of Indonesia (SGD1.65bn/USD1.25bn) closed a 5-year green sovereign sukuk on 1 March. This is the first Asian sovereign green bond and the second Indonesian green bond. Proceeds can finance eligible projects under a wide range of categories, according to the green bond framework.

In the second party opinion CICERO identifies concerns on several fronts regarding eligible projects. For instance, CICERO awarded the Green Buildings category a “Light Green”, stating that the type of building certification does not ensure energy efficiency improvements since “it is possible to achieve a Bronze or a Silver Greenship certificate with no energy efficiency credits.” For Sustainable Management of Natural Resources, CICERO expressed concerns that some projects may involve deforestation, assessing this category as a “Light to Dark Green”.

Climate Bonds view: We agree with CICERO that there are potential concerns and would like to see more clarity and transparency around all investment projects in future reporting. Now that the bond has been issued, ministries and agencies can apply for funding, so it remains to be seen which projects will be shortlisted and approved. We would also like to find out what share of proceeds are ultimately allocated to projects that do not align with the Climate Bonds Taxonomy – such as social programs (e.g. public health management, food security), rerouting roads, green tourism and R&D investments.

 

>See the full list of new and repeat issuers here.

 

 

Repeat issuers

February:

  • CACIB: INR440m; TRY9.5m/USD2.5m; TRY6.8m/USD1.8m
  • EIB: AUD400m/USD321m
  • Fabege AB: SEK1bn/USD122m
  • KfW: SEK5bn/USD632m
  • MidAmerican Energy: USD700m
  • Midpeninsula Regional Open Space District: USD50m
  • Province of Ontario: CAD1bn/USD813m
  • Republic of Poland: EUR1bn/USD1.2bn

March to date:

  • Modern Land (China) Co: USD350m
  • Province of Québec: CAD500m

 

 

New issuers – previously pending

If issuers do not provide sufficient information on the use of proceeds, the bonds are tagged as “pending”. If and when satisfactory additional information becomes available, we may include them in our database.

Eidsiva Energi (NOK750m/USD94m), a Norwegian energy company, issued a 6-year green bond in October 2017. Proceeds will be allocated to wind and hydro power projects, energy efficiency projects related to district heating, connection of renewable energy to the grid, transmission and distribution network upgrades, and smart grids. Fossil fuel energy generation projects are excluded. The deal benefits from a CICERO SPO.

Climate Bonds view: The bond was placed on Climate Bonds’ Pending list at issue while we obtained further information on Norwegian hydro power plants. Based on information provided by CICERO, we have concluded that the deal meets our inclusion criteria.

Östersund Municipality (SEK800m/USD96m), Sweden, issued a 5-year green bond in November 2017. Proceeds will be allocated to projects of municipality owned companies Östersundhem AB and Jämtkraft. In its SPO CICERO notes that the issuer expects proceeds to fund primarily renewable energy and energy efficiency in buildings, although the framework covers a wide  range of categories. The criteria for eligible building projects cover (a) FEBY, a Swedish Passive House standard, Svanen, the Nordic Swan Ecolabel awarded to energy-efficient small houses, flats and pre-school buildings, and Miljöbyggnad Silver as well as (b) major renovations which lead to a reduced energy use of at least a 35% per m2Atemp per year.

Climate Bonds view: This is another bond from the booming Nordic public sector, the subject of a recent Climate Bonds report. The bond was placed on Climate Bonds’ Pending list at issue while we considered possible investment in hydro power plants and the production of hydrogen from electrolysis or other residual flows. We have now concluded that the deal meets our inclusion criteria. We further note positively the promotion of a passive house standard and the minimum 35% energy use reduction required for refurbishments.

 

 

New bonds – pending and excluded

We only include bonds with at least 95% proceeds dedicated to green projects that are aligned with the Climate Bonds taxonomy in our green bond database. Though we support the Sustainable Development Goals overall and see many links between green bond finance and achieving specific SDGs, the proportion of proceeds allocated to social goals needs to be no more than 5% for inclusion in our database. Nonetheless, well done to ANZ & the other issuers looking to address SDG based finance.We'll have more to say on the links between green bonds and SDGs soon. 

  • ANZ (EUR750m/USD938m) – Excluded: SDG bond with 39% of proceeds allocated to sustainable development project categories, including healthcare, education, socio-economic advancement and empowerment.
     
  • City of Barcelona (EUR35m/USD43m) – Excluded: sustainability bond with proceeds allocated to categories including socioeconomic advancement, affordable housing and employment generation.
     
  • Community of Madrid Spain (EUR1bn/USD1.2bn and EUR48m/USD54m) – Excluded: sustainability bonds with proceeds financing a wide range of project categories, including affordable housing, education, healthcare.
     
  • Guangzhou Yuexiu Group (RMB2bn/USD314.5m)– Excluded: aligned with PBOC green bond guidelines but excluded as 60% of proceeds will be allocated to working capital. The other 40% will be allocated to finance a paper recycling facility, wastewater treatment and a timber plantation, which is not FSC certified.
     
  • Iberdrola (EUR5.3bn/USD6.5bn) – Excluded: labelled green syndicated loan, which benefits from a Vigeo Eiris review. Excluded as proceeds will finance the company’s general sustainability program rather than specific categories that align with the Climate Bonds Taxonomy.
     
  • World Bank (IBRD) (USD350mSEK1.2bn/USD150m) – Excluded: sustainability bonds with use of proceeds financing healthcare projects in Argentina and Switzerland, waste management in six urban districts in China, water and sanitation infrastructure improvements in India and coral reef rehabilitation support in Indonesia.
     
  • Fulcrum Sierra Biofuels LLC (USD150m) – Excluded: labelled green US Muni bond issued in October 2017 and added to our pending list while waiting for a prospectus to be made publicly available. The bond is being excluded due to insufficient information on the bond use of proceeds.
     
  • Virginia Small Business Financing Authority (USD40m) – Excluded: labelled green US Muni bond issued in December 2017. As no prospectus or other documents specifying use of proceed allocation has been made publicly available, the bonds is being excluded due to insufficient information.

 

 

Trends of the month

 

Green bonds in the market

  • California Infrastructure & Economic Development Bank: USD449.2m – priced, closes 8 March
  • Prologis European Logistics Fund: EUR300m – priced, closes 15 March
  • Brookfield Renewable Partners: USD350m note received a green evaluation score of E1/90 from S&P Global Ratings
  • Growthpoint Properties (property development) is set to issue their first green bond on 9 March – and become the first corporate green bond issuer in South Africa

 

 

Investing News

Generali Group, the largest Italian insurance company, announced it will divest from coal companies and increase green investments by EUR3.5bn by 2020.

Spanish bank BBVA recently pledged to direct EUR100bn to finance green and sustainable projects by 2025, including through the potential issuance of sustainability bonds.

The Green Climate Fund has committed to direct an additional USD1.09bn towards mitigation and adaptation projects in developing countries.

Natixis repackaged France’s sovereign green OAT into a green structured note of EUR7bn (USD8.6bn).

 

 

Lots of Green Gossip

The Belgian Debt Agency announced that the newly issued green OLO is expected to grow to USD10bn by 2022 through subsequent taps.

Moody’s assigned a Green Bond Assessment of GB1 (Excellent) to Lebanese bank Fransabank SAL’s USD60m debut green bond, expected to close in March.

Moroccan Al Omrane group recently announced their plan to issue green bonds amounting to up to 1 billion dirhams (USD272m). Issuance of the bonds is expected to start in July.

Lima Stock Exchange (BVL) Chairman Marco Zaldivar announced that Peru is set to launch its green bond guidelines in March.

After receiving positive investor interest for Ghana’s planned sixth Eurobond, Finance Minister Ken Ofori-Atta stated the country’s interest in issuing green bonds.

During the announcement of Hong Kong’s Fiscal Budget 2018-2019, Financial Secretary Paul Chan Mo-po proposed the launch of a green bond programme with a ceiling of HKD100bn (USD12.8bn). The government also announced the introduction of a Green Bond Grant Scheme to subsidise issuers that qualify under the Green Finance Certification Scheme, recently launched by the Hong Kong Quality Assurance Agency.

 

 

Reading and Reports

CBI recently released the “Green Bond Pricing in the Primary Market”  report, which analyses the performance of green bonds issued in Q3 2017.

In case you missed it, our latest Quarterly Newsletter covers the expansion of our Standards program to cover new sectors eligible for green bond certification through 2018.

Look for some big announcements over the next month. 

 

 

Moving Pictures

You can watch our top 5 policy highlights for 2017 here (0:44secs).

Take only 0:45secs to hear our CEO Sean Kidney talk to EFNTV on how Sweden is at the forefront of sustainability.

For your weekend viewing, watch an up close 36:50secs of Sean Kidney speaking in depth on Financing Solar PV with Debt Capital from the recent Making Solar Bankable conference in Amsterdam.

And don’t miss our 60sec Super Trends for 2018 from early January. We’re pleased to see some of them coming to fruition already.

 

‘Till next time,

Climate Bonds

 

#CBI18 Conference: Haven't registered yet? There's still time! And don't forget the big Roundtables on the 21st March

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Just over a week to go till the Climate Bonds Conference & 3rd Annual Green Bond Pioneer Awards. There’s still time to register.

And here’s some of our Specialist Roundtables on the big issues that are worth a second look.

 

What’s it all about?

Tuesday 20th March is the day of Plenaries and Breakouts and Tuesday night are the Pioneer Awards.

Wednesday 21st March will see Specialist Roundtables being held throughout the City of London. 

 

Some are now filled to capacity and some we’ve moved to new venues.

These are ones are worth a second look:

 

8:30-11:00 Roundtables: 

Currency hedging for emerging markets (moderated by Ruurd Brouwer, TCX)

Training: How to issue a green bond; how to verify

 

12:00-14:30 Roundtables: 

The Paris 1.5°c target - What it means for green bonds

Roundtable on aggregation solutions in emerging markets

Roundtable on climate risk for fund managers, in conjunction with the PRI

 

15:30-18:00 Roundtables: 

International developments on standardisation and green definitions

 

Speakers include: 

Christophe McGlade, IEA

Michiel Schaeffer, Climate Analytics

John Ward, Vivid Economics

Sir David King (formerly UK Government Special Advisor on Climate Change)

Anderson Caputo Silva, World Bank

Cedric Rimbaud, UNESCAP

Segei Strigo, Amundi AM, to mention a few.

 

Don't miss it!

Check the Full Agenda. You can register here. The NGO discount is still open.

 

See you then!

 

‘Till next time

Climate Bonds

 


Netherlands’ third biggest asset manager PGGM becomes a Climate Bonds Partner: Welkom!

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Giant Dutch pension asset manager PGGM is the latest global investor to join the Climate Bonds Partner Programme.

 

What’s it all about?

PGGM is the third largest asset management firm in the Netherlands* with EUR 218 billion** AUM and has been active in the green bonds space for many years, building an overall green bonds exposure of more than EUR 1 billion.

A long term advocate for good corporate governance and leading exponent of responsible investment, PGGM is a member of the Principles for Responsible Investment (PRI), supports the Sustainable Development Goals (SDGs) and works on a cooperative basis on sustainability and ESG based investment issues.

The partnership will see both organisations working together on green finance and climate investment projects. PGGM manages investments and services on behalf of Dutch health industry pension fund PFZW and intends to half the CO2 footprint of the assets of PFZW between 2015 and 2020. In that same period PGGM is mandated to grow impact investments to EUR 20 billion. Green bonds are an important part of this aim.

 

Who’s saying what?

Ido de Geus, Head of Fixed Income, PGGM

“At PGGM, we believe in a future in which not only finances are in good shape, but also living conditions for generations to come. We thus actively seek a climate impact through our investments, not as an add-on, but as part of our core business.”

“Teaming up with the Climate Bonds Initiative is a great opportunity for PGGM to promote climate change action by backing green bond issuance. We are keen to see more issuance across sectors, regions and currencies, including emerging markets and products other than plain vanilla.”

“Stronger market breadth and depth will not only satisfy our need for diversification – it will make it easier to find climate investments that match our fiduciary duties. It will also help to raise the private capital that’s so urgently needed for the global transition to a low carbon economy.”

 

 

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

“The Netherlands is a booming green bonds market (reaching the 7th largest issuer spot in 2017) and has already displayed great climate finance leadership and innovation.”

“PGGM has an important Dutch and international presence and has been active in the green bond and SRI market for many years. We are proud to be joining forces to help promote sustainable investments and climate finance solutions in the Netherlands, Europe and beyond.”

“2018 will be the year of further market maturation, spurred by sovereign issuance in developed as well as emerging markets and harmonisation of market guidance and standards. We will see a stronger linkage between green investment, climate targets and SDG goals. As a large investor of patient capital, PGGM is well paced to work jointly with Climate Bonds on our 2020 and longer-term goal to build deep and robust climate finance markets globally.”

 

 

The Last Word

We welcome pensions-based PGGM to our Partner network. Partners assist in developing climate finance solutions, market development committees and help define policy agendas for national, regional and sector-based programs.

PGGM’s international perspective and presence across investment markets will be invaluable as we extend our development programs in OECD and emerging economies.

Welkom, PGGM!

 

'Till next time,

Climate Bonds

 

 

Contact PGGM Communications

Maurice Wilbrink

+31 30 277 1500

Maurice.Wilbrink@pggm.nl

 

 

* Based on IPE Top 400 (2017)

** As at 31 December 2017.

 

Report: Korea Climate Bond Market: Overview & Opportunities: Launch in Seoul & Climate Bonds Annual Conference in London

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First analysis on Korea’s green bond markets shows ROK is well positioned to be growth driver in Asian green bond markets

 

What’s it all about?

The Climate Bonds Initiative just released today its first report exploring Korea’s green bond market and proposing recommendations to policy makers, banks and market actors to take advantage of potential growth opportunities.

The study was commissioned by SK Securities and will be launched in London during the Climate Bonds Annual Conference 2018.

(Kwangyul Peck, Sean Kidney & Serena Vento at the 2018 Climate Bonds Annual Conference at the London Stock Exchange)
 
Korea’s positioning in the global green bond market

Korea Export-Import Bank (KEXIM) was the first issuer to come to market in 2013 and the only repeat issuer to date, accounting for 46% of total issuance. 2017 has seen two new issuers: Korea Development Bank and Hanjin International, signalling increased engagement within Korea’s governmental institutions and corporations.

Korea’s green bond market is still small compared to the global context, with only six green bonds coming from four issuers and totalling USD2.05bn to date. The country’s market characteristics provide an opportunity of climbing further up the ranks.

However, when analysing the Asia-Pacific region, Korea is the fifth largest cumulative issuer after China (USD47.7bn), India (USD6.6bn), Japan (USD6.1bn) and Australia (USD4.6bn). In the last six months, green bonds have also emerged from New Zealand, Fiji, Indonesia, Malaysia and Singapore.

 

Market & policies grow supportive of climate action

The government’s commitment to a 37% GHG emissions reduction by 2030, combined with the country’s emission trading scheme implemented in 2015, provide a policy environment that can effectively support the further development and expansion of the country’s green bond market.

Korea’s overall bond market size, one of the largest worldwide, financial system stability and strong industrial economy, issuance from key state-backed institutions, strong climate commitments and a large local investment market are hallmark factors that make Korea a prime candidate to lead new regional and global growth in green and climate bond issuance.

 

 

Report recommendations: The road ahead

  • Strategic issuance from sovereign or public entities to mobilise the scale and liquidity needed to encourage trading and facilitate price discovery.
  • Development of national green finance guidelines to promote best practice, raise awareness, and build investor confidence.
  • Provision of tax incentives for investors in domestic green bonds.
  • Strong market signals from central banks to encourage market development.
  • Advocate for scale-up of green bond issuance to engage investors and ensure that investments meeting their criteria are available.
  • Support market standards to strengthen transparency around green projects and facilitate decision making on future infrastructure investment.

 

Who’s saying what?

Kwangyul Peck, Senior Advisor, SK Securities:

“Our support for the Korea Climate Bond Market report is a reflection of the partnership between SK Securities and the Climate Bonds Initiative and our joint goal of growing climate based investment in Korean financial markets. The report gives stakeholders, market participants and regulators a valuable resource to help stimulate debate as we position for the future.”

 

Sean Kidney, CEO Climate Bonds Initiative:

“There are vast investment opportunities to implement climate resilient infrastructure both domestically and in the wider region. The capital re-allocation to meet climate and emissions targets must be accelerated. The report points to the policy shifts in support for green finance can help create the investment momentum needed in the region.”

“Korea’s bond market has grown at a rapid pace to become one of the largest in the world. The Korea Climate Bond Market report demonstrates how some of this scale and development could be replicated to stimulate domestic investment in climate and green based finance.”

 

The Last Word

A total universe of USD18bn outstanding bonds that are not labelled as green but are financing projects/assets aligned with a low carbon transition has been identified for Korea.

The country’s growth potential could be even greater, since this measure doesn’t capture financial institutions and property, which could become important issuers of green bonds in the future.

Current barriers such as lack of awareness from both issuers and investors have to be overcome for Korea to reach its full potential.  

Blog readers will have noted our references to a wave of new policy announcements, green guidelines and green issuance from the SE Asia and Pacific nations in the last six months.

This report, our first on Korea, lays a new marker for the domestic discussions over where the ROK wants to be positioned as green finance markets grow across the region. 

Download now.

 

'Till next time,

Climate Bonds

 

 

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Climate Bonds Announces 2018 Green Bond Pioneer Award Winners

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International leadership in green finance has again been recognised at the 3rd Annual Green Bond Pioneer Awards (GBPA), announced before an international audience as one of the highlights of the Climate Bonds 2018 Annual Conference, in London.

The Awards are in recognition of organisations, financial institutions and government bodies and individuals who have led the development of green finance and green bond markets in the past year and through their pioneering initiatives and issuance have provided positive examples of climate resilient and low carbon investment. 

 

Green Bond Pioneer Awards by Category:

  • Largest Single Bond to a Trillion Market - Republic of France
  • Largest Overall Issuer to a Trillion Market - Fannie Mae
  • New Products - Green Sukuk - Tadau Energy
  • New Countries Taking Green Bonds Global - Tadau Energy (Malaysia)
  • New Countries Taking Green Bonds Global - Republic of Fiji
  • New Countries Taking Green Bonds Global - Gen-I Sonce (Slovenia)
  • New Countries Taking Green Bonds Global - First Abu Dhabi Bank (UAE)
  • New Countries Taking Green Bonds Global - Repower (Switzerland) 
  • New Countries Taking Green Bonds Global - CDL Properties (Singapore) 
  • New Countries Taking Green Bonds Global - La Rioja Province (Argentina)
  • New Countries Taking Green Bonds Global - Lietuvos Energija (Lithuania)
  • New Countries Taking Green Bonds Global - Federal Government of Nigeria
  • New Countries Taking Green Bonds Global - CMPC (Chile)
  • New Countries Taking Green Bonds Global - Contact Energy (New Zealand) 
  • First Climate Bonds Certified Green Loan Program - Contact Energy
  • Largest Certified Climate Bond - NY MTA
  • Largest External Reviewer - Sustainalytics
  • Green Bond Regulator 2017 - Securities and Exchange Board of India (SEBI)
  • Green Bond Regulator 2017 - China Securities Regulatory Commission (CSRC)
  • Green Bond Champion 2017 - Anthony Requin
  • Green Bond Champion 2017 - Dr Ma JunChina

 

Certificates of Recognition

A series of organizations have also been granted Green Bond Pioneer Certificates of Recognition as part of the 2018 Awards, encompassing the first corporate bonds and first sub-sovereign bonds in selected nations and stock exchanges who have introduced green listing guidelines during 2017.

 

Green Bond Pioneer-Certificates of Recognition

  • First Corporate bonds in countries - Finland - Fingrid
  • First Corporate bonds in countries - Poland  - Bank Zachodni
  • First City/sub sovereigns in countries - Denmark - KommuneKredit 
  • Exchanges introducing new listing guidelines in 2017 - Borsa Italiana
  • Exchanges introducing new listing guidelines in 2017 - Taipei Exchange
  • Exchanges introducing new listing guidelines in 2017 - Johannesburg Stock Exchange

 

Comments from Award and Certificate winners:

Aiyaz Sayed-Khaiyum, Fijian Attorney-General and Minister Responsible for Climate Change

“Fiji is proud to accept this prestigious award for being the first emerging market to issue a sovereign green bond to help tackle the impacts of climate change. As President of COP23, we represent the interests of all climate- vulnerable nations, as well as our own people.”

“With this bond, we are sending a clear signal that size and relative economic strength is no barrier to embracing innovative ways to raise finance for climate adaptation, as well as those mitigation measures that are relatively easier to fund. This award recognises that Fiji is leading the way with an innovative response to climate resilience building and it is good to see other emerging economies taking a similar path.”

 

Ibrahim Usman Jibril, Minister of State for Environment, Nigeria 

“Nigeria take pride in being the first African country to issue a sovereign green bond and the forth in the world. Today’s event marks a unique and historic day in the efforts of Nigeria in tackling climate change. It further reinforces Nigeria’s re-emergence as a major player in the international climate regime and President Muhammadu Buhari’s strides in moving Nigeria to a low carbon economy.

The issuance of a green bond by Nigeria delivers on program 47 of its economic recovery and growth plan (ERGP), in addition to meeting the expectations of Article 2 of the Paris agreement. This places progress on the NDCs targets in sight and lays the foundation for expansion of the FGs issuance program on a recurring basis.”

 

 

Joseph Lhota, MTA Chairman, NY MTA

“The MTA is encouraged to see a strengthening market for Certified Climate Bonds.

Receiving recognition by the Climate Bonds Initiative for providing 9 million customers a day with efficient, low-carbon transportation acknowledges the MTA's successful efforts in being a leader in reducing greenhouse gases.”

 

Brigitte Krapf, CFO Repower AG, Switzerland

“I am very happy and honored to receive this award on behalf of Repower and the great team involved in this matter.

This success is a clear statement that investing in renewable, green energy is not only responsible and far-sighted, but also smart and forward-looking portfolio management.” 

 

 

Jeffery Hayward, Executive Vice-President & Head of Multifamily, Fannie Mae

“This acknowledgement of our Green Financing business by The Climate Bonds Initiative is an exciting development.

Fannie Mae is committed to transforming the multifamily market by helping each owner realize their property’s full financial and environmental potential.”

 

 

Anthony Requin, Chief Executive, Agence France Trésor

“Following the Paris agreement in December 2015, France decided to keep with the pioneering spirit by issuing the Green OAT 1.75% 25 June 2039, an inaugural 22-year green bond for €7bn, which was the largest benchmark green bond ever issued at the time of its issuance.

We are delighted that the ground-breaking nature of this operation has been recognized by Climate Bonds Initiative; it is consistent with AFT’s long-standing culture of innovation.”

 

 

André Sayegh, FAB Deputy Group CEO and Head of Corporate & Investment Banking, First Abu Dhabi Bank

“We all share a responsibility to act on climate, and the finance sector in particular has an important role to play through developing climate-based investment. We were therefore very proud to launch the MENA region’s first green bond last year, which was a landmark transaction for the bank. This award-win is a fantastic achievement that demonstrates how the bank is pursuing innovative solutions to conduct our business responsibly and support the country’s sustainability commitments. FAB is dedicated to implementing progressive practices which set new standards for the industry, and we hope that this recognition will give encouragement to wider efforts in the UAE and the region to accelerate the global transition to a more sustainable future.”

 

Ignacio Goldsack, CFO, CMPC

“For CMPC it is an honor to receive this recognition and to be the first Chilean corporation to issue a green bond in the international markets. 

It reflects our strong commitment as a company with a sustainable long-term view of our business.

Also, it is a unique opportunity to communicate to the market how relevant is this topic in the execution of our strategy.”

 

Susanna Lim, Chief Executive Officer of Tadau Energy

“We are honoured to receive the recognition as the Issuer for the world's first Green Sustainable Responsible Investment Sukuk.

We will continue to build clean, green and sustainable projects globally.”

 
 

Mr Kwek Eik Sheng, Group Chief Strategy Officer, City Developments Limited (CDL)

“With the urgent need to tackle climate change and to decarbonise our infrastructure and operations, green financing is certainly opening alternative financing streams for businesses to step up on climate action.”

“CDL is honoured to have kick started the green bond issuance by a listed Singapore company in April 2017 and has seen two more green bonds issued by others subsequently. We believe that the connection between finance and sustainability is the way forward and hence there will be stronger interest and uptake in tapping on green financing. Collaboration and resources are key for businesses to contribute to global sustainable development.”

Michael Jantzi, CEO, Sustainalytics

“Sustainalytics is honoured to receive this prestigious award from the Climate Bonds Initiative, a global leader in mobilising capital for climate change solutions. The global green bond market has experienced significant growth over the past few years, and we are delighted to have supported the market’s expansion by providing issuers with credible external reviews.

We look forward to continuing to play a key role in the further development of the green bond market.”

 

Mr. Gregor Lojk, Finance Director of GEN-I, d.o.o.

“All of us at GEN-I would like to thank the Climate Bonds Initiative for its recognition of our strategy, which enables our clients to invest in sustainable green assets, while securing sources of financing through green bond instruments.”

“GEN-I is a promoter of initiatives and best practices in Slovenia and the wider region in the area of green energy solutions. We thus consider it our duty to raise awareness about innovative financial instruments, as well. The award will help us pave the way to remaining the leading supplier of residential solar plants in Slovenia and to becoming the first choice for our clients in e-mobility solutions. In this way, we will fulfil our commitments in the area of sustainability and play an active role in the transition to a low-carbon society.”

 

Philip Chen, Chairman, Taipei Exchange

“We are extremely grateful and proud to receive this certificate. The Taipei Exchange spares no effort to promote the green bond market, aiming to point up the core concepts of economic development and environmental protection simultaneously.”

“In the future we will keep striving forward to encourage development and environmental conservation among enterprises. We hope to provide our development experience as well to contribute to the global green bond market."

 

Akshar Sewkuran, Bonds Specialist - Primary Markets/Capital Markets, Johannesburg Stock Exchange

“In September 2017, we launched the JSE Debt Listing Requirements for Green Bonds to support the transition in Africa to a low-carbon, green economy that aims to secure jobs and investment in the future. In doing so, we were able to build bridges between green investors and issuers that saw the first CBI Certified sub-sovereign come to the market and the first green corporate bond. “

“The impacts of climate change are already happening. It is our responsibility to make a leading contribution to developing green bond markets to the promotion of South Africa's climate resilient future as well as for being at the forefront of the financial sector's response to climate change. We are very grateful for the recognition of our initiative and that our efforts have been recognized in these Green Bond Pioneer Awards.”

 

Pietro Poletto, Global Head of Fixed Income Products and Co-Head of Equity, Funds & Fixed Income – Secondary Markets at Borsa Italiana

"We are delighted to win the Green Bond Pioneer Award for the category “New listing guidelines”. The introduction of green bonds on Borsa Italiana’s ExtraMOT PRO confirms our commitment towards the growth of sustainable finance in Italy.”

“The green bonds market is reaching new targets globally, with over $156bn raised in 2017 across the world. Our offering will improve access for issuers and transparency for investors and highlights the development of London Stock Exchange Group and Borsa Italiana as a key international hub for Green Finance.”

 

Darius Kašauskas, Member of the Board and Finance and Treasury Director at Lietuvos energija

“The Company’s performance during the last few years demonstrated to investors the reliability and financial strength of Lietuvos Energija. Being strong and seeing this exceptional interest, we took a chance to diversify the Lietuvos Energija Group’s debt portfolio at most advantageous conditions.

This successful début and the Green Bond Award we just received from Climate Bonds Initiative builds up a strong reputation of Lietuvos energija on the international financial markets.”

 

Sean Kidney, CEO, Climate Bonds Initiative

“This year’s Pioneers directly reflect the diversification and depth achieved in international green bond markets in 2018. They mark the organizations and individuals who are amongst the new leaders of global finance, creating new markets, mobilizing the green capital urgently needed to address climate change, build climate resilience and finance low carbon infrastructure.“

“The companies, institutions, municipal authorities and individuals recognised in the 2018 Awards (and the previous awards) are all pointing to the direction that financial market actors, banks, issuers and investors must take in the critical period to the end of 2020. The 2018 Pioneers deserve widespread acknowledgement and congratulations.”

 

 

The Last Word

Well done to all the recipients that have helped made 2017 a record-breaking year in green finance and green bond issuance worldwide.

More photos from the special evening coming soon!

 

'Till next time,

Climate Bonds

 

Sovereign GBs, Case Studies from 2017/18:The 7 Steps to Issuance:New Climate Bonds Paper

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The 7 Steps to Sovereign Issuance-We look at all the SGBs to date

What’s it all about

This Briefing Paper is the latest in a new series of Climate Bonds publications analysing contemporary developments in the green bond market. The focus is on sovereigns, a new issuer in the green bond space, and their key role in growing local markets and meeting national climate targets.

Annual Conference Launch

The paper was launched at the Climate Bonds Annual Conference as part of a Green Sovereigns: How-to sessions that included Justine Leigh-Bell from Climate Bonds, Anne Leclerq from Belgium Treasury, Elise Calais, AFT France, Philip Brown, Citi & Aaron Levine, IFC, Fiji.

 

What’s in the Briefing Paper?

  • Case studies of sovereign green bonds since Poland’s issuance in December 2016. Sovereign bonds from Poland, France, Fiji, Nigeria and Belgium are profiled. At a sub sovereign level green issuance from the Australian State of Victoria, North Rhine Westphalia in Germany, California and Ile De France are also examined.
  • The benefits of issuing a sovereign green bond, including providing strategic direction, attracting new investors, creating domestic green markets, mobilising private capital and leading on the international stage.
  • A detailed step-by-step guide on how to issue

 

Who’s saying what?

Mr. Piotr Nowak, Undersecretary of State, Ministry of Finance: Poland

“It is always difficult to be the first and set a precedent. Poland decided to take a responsibility and did its very best to a close successful transaction. Now it can serve as an example to other Sovereigns that Governments can efficiently finance their environmental projects on green bond market.”

 

Frank Bainimarama, Fijian Prime Minister and President of COP23 announcing the Fijian Sovereign

“The Fijian people, along with every Pacific Islander, live on the front lines of climate change and we are proud to set an example to other climate-vulnerable nations by issuing this green bond to fund our work to boost climate resilience across Fiji.”

“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 and create win-win outcomes for countries and investors in adapting to the serious effects of climate change.

 

Diletta Giuliani, Climate Bonds Senior Policy Manager & Lead Author

“Sovereign green bonds can be a tool to help nations develop their green finance markets, increasingly recognised as a core component of achieving NDC and SDG commitments.”

“For nations looking to boost domestic markets and encourage banks and other issuers to act, a sovereign green bond can provide scale and liquidity to the market, encourags trading and facilitate price discovery for other green bonds.”

 

Seven steps to issue a sovereign green bond

The process of issuing a sovereign green bond is similar to that of issuing a standard green bond. However, there are some additional steps to consider, given the more complex organisational nature of governments, the type of expenditures they can entail and their debt’s benchmark role in domestic capital markets.

The Briefing Paper outlines the seven basic steps and provides detailed examples of how countries have done this so far:

1. Engage governmental stakeholders

2. Establish a green bond framework

3. Identify eligible green budget items

4. Arrange independent review

5. Issue the green bond

6. Monitor and report

7. Repeat

 

The Last Word

Want more? The IFC has last week released a new report marking lessons from Fiji’s historic making move in being the first emerging economy to issue a sovereign green bond. Well done to the IFC for their support to the island nation. 

We’d like to see more work by MDBs to back emerging nations in green issuance.

Who’s next to Issue?

Hong Kong has already set the bar high, foreshadowing the world’s largest green sovereign program. Other countries are regularly mentioned as new market entrants. 

We won’t go any further except to repeat part of CEO Sean Kidney’s comment from early January when we announced the global record $155.5bn green bond issuance figure for 2017.

“Following the initial sovereign issuance from France, Fiji and Nigeria, the door is open for G20 and OECD countries to act on individual sovereign issuance in 2018 and provide stakeholder or supranational support for similar initiatives and market development in emerging economies.”

Or as COP23 President and Fijian Prime Minister Frank Bainimarama puts it:

“We are all in the same canoe”

‘Till next time,

Climate Bonds 

Acknowledgements: The Briefing Paper was written by Diletta Giuliani and Beate Sonerud with support from the Climate Bonds Team. Our thanks to the Polish Ministry of Finance, the French Treasury, the Nigerian Ministry of Environment and Mr Nick Robins for their input to the publication.

 

 

Landesbank Baden-Württemberg (LBBW) becomes a Climate Bonds Partner

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One of the largest banks in Germany, LBBW takes another step in supporting best practice in green finance

 

What’s it all about?

Landesbank Baden-Württemberg (LBBW) is the latest financial institution in Germany to join the Climate Bonds Initiative Partners Program. Partners assist in developing climate finance solutions in local markets and help define policy agendas for national, regional and sector-based programs.

LBBW offers a full array of business services across Germany, while also drawing on extensive regional roots. In December 2017, LBBW issued its first green bond, a EUR750 million commercial real estate Climate Bonds Certified green bond. Certified as climate-mitigation and climate-resilience relevant against a pool of low-carbon commercial buildings and upgrades, this transaction further opens up Germany’s vast potential for green issuance on the back of the property sector.

 

Who’s saying what?

Dr. Ricken, Member of the Board of LBBW:

"LBBW is proud for having received the Climate Bonds Certification for our inaugural best practice Green Bond transaction and for the recognition of our contribution to broader market development. We are looking forward to working together with CBI in a partnership - sustainability is a key strategic target for the Board of LBBW and Climate Bonds Initiative provides excellent guidance and know-how in mainstreaming sustainable finance solutions."

 

Manuel Adamini, Director, Investor Outreach & Partners Programme:

“We are pleased to be officially joining forces with LBBW. Their first commercial real estate Climate Bonds Certified green bond has set an example for Germany’s property sector. With LBBW now also becoming a Climate Bonds Partner, we can work together on driving the German green finance market in the best practice direction.

“With the support of committed actors such as LBBW, low carbon buildings in Germany will be in alignment with a 2⁰C global warming scenario and meet international standards.”

 

The Last Word

Given the ambition of Germany’s climate policies and its economic and financial strength, the country needs to increase its climate action and green finance plans in order to meet its NDCs.

LBBW already showed leadership in the low carbon buildings sector driving the market towards international best practice.

This partnership is another example of the commitment of German actors to have the country on the race to become Europe’s green finance leader.

 

‘Till next time,

Climate Bonds

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