Australia & NZ’s low carbon transition will provide extensive opportunities for institutional investors looking to increase portfolio exposure to green and ESG related investment

Our reports present the opportunities pipeline and green finance developments

You’re Invited!

Climate Bonds, with the support of local partners, will be launching in Sydney (28^th August), followed by roundtables in Melbourne (30^th) and Auckland (31^st), two new reports: “Green Infrastructure Investment Opportunities - Australia & New Zealand” and “State of the Green Bonds Market - Australia & New Zealand 2018”. The reports focus on green finance and sustainable investment opportunities in Australia and New Zealand.

The “Green Infrastructure Investment Opportunities - Australia & New Zealand” report is a ground-breaking exploration on green infrastructure pipelines as both countries prepare to implement a low carbon transition.

The “State of the Green Bonds Market - Australia & New Zealand 2018” is a CBI snapshot report of green bond developments in both nations to date.

The report launch Forums are organized by Climate Bonds in partnership with ANZ, CBA, Macquarie Group, NAB, Westpac, and the CEFC, and event partners Ashurst, BNZ, IFM Investors, the Investor Group on Climate Change, Mayne Wetherell, Norton Rose Fulbright, the Principles for Responsible Investment and RIAA.

Register now and join us in Sydney, Melbourne or Auckland, but hurry; spaces are limited!

SYDNEY - main launch (Hosted by Ashurst)

When: Tuesday, 28 August 2018

Time: 2.00pm – 5.00pm, followed by drinks

Where: Ashurst, Ballroom, Level 9, 5 Martin Place, Sydney CBD

RSVP: Register via the Eventbrite page

MELBOURNE Roundtable (Hosted by Norton Rose Fullbright)

When: Thursday, 30 August 2018

Time: 7.45am – 9.15am, over breakfast

Where: Norton Rose Fulbright, RACV Tower, Level 15, 485 Bourke Street, Melbourne

RSVP: Register via the Eventbrite page

AUCKLAND, NEW ZEALAND Roundtable (Hosted by Mayne Wetherell)

When: Friday, 31 August 2018

Time: 8.30am - 10.00am

Where: Mayne Wetherell office, Level 5, Bayleys House, 30 Gaunt Street, Auckland

RSVP: Register via the Eventbrite page

AGENDA

• Investor perspectives on transitioning to green infrastructure and defining green
• Case studies from major investment opportunities
• Climate adaptive and resilient infrastructure investments
• Report launches  

The Last Word

Don’t miss this unique chance to hear from global and local stakeholders on Australia and NZ's green infrastructure opportunities, green finance developments and climate-based investment.

See you there!

‘Till next time,

Climate Bonds

UBS Group AG (UBS) the world's leading global wealth manager, has joined the Climate Bonds Initiative Partners Programme

What’s it all about?

UBS's partnership with the Climate Bonds Initiative will further develop its data capabilities and market-building efforts within green finance and sustainable fixed income and will add diversity and expertise to CBI’s Partners Network.

Swiss giant UBS provides a wide range of sustainable investment solutions to both private and institutional investors. This year it became the first bank to offer a 100% sustainable cross-asset portfolio to private clients, including green bonds alongside other debt and equity instruments.

As part of its unique sustainable and impact investing offering, UBS has focused on filling gaps in the sustainable fixed income market. Its new sustainable portfolio offered private clients diversified exposure to development  bank debt for the first time within a cross-asset framework, while its new development bank bond indices, in partnership with Solactive, are designed to help institutional investors and others access the asset class.

Who’s saying what?
 
Mark Haefele, Chief Investment Officer, UBS Global Wealth Management:

“Partnering with the Climate Bonds Initiative is a natural extension of our commitment to sustainable investing. We are excited to be joining market-building initiatives in green bonds and other areas and helping to create a common framework for the sustainable fixed income market.”

 
Manuel Adamini, Director of Investor Engagement, Climate Bonds Initiative:

“We are delighted to welcome UBS to our Partners Network. UBS Global Wealth Management has been leading the sustainable and impact investment market and contributing to mainstreaming green finance.

We are looking forward to working together to expand green bond markets globally and reinforcing market best practice and green integrity – areas all closely connected to UBS’ sustainable and impact investing objectives.”

The last word

We are proud to welcome UBS to our Partners network!

We are looking forward to joining forces and capitalizing on their wealth of expertise and strong global presence to further develop green finance and grow green bond markets to meet the USD1tn by 2020 milestone.

‘Till next time,

Climate Bonds

The latest Climate Bonds Standard & Certification newsletter is now out and you can download it here.

This newsletter, the first for 2018, brings you all the news from the Climate Bonds Standard & Certification Scheme from the first half of 2018. It is jam packed with stories on green bond taxonomy developments, 2018 certifications and the continuing rollout of Climate Bonds Standard sector criteria – water, bioenergy, forestry, electrical grids – you name it and we’re putting criteria to it.

What’s inside?

You’ll see that the Climate Bonds Certification has continued to grow…

And will get to know our 3 famous Ws:  Who, What and Where are Certified Climate Bonds coming from:

Keep up with us! The momentum of Sector Criteria rollout continues:

The last word

This year we’ll be issuing Climate Bonds Standard & Certification Newsletters every 6 months. Last year we trialled issuing them quarterly, but alongside the rapid rollout of Sector Criteria, it was a bit of a tall order.

You won’t miss any important information with the new half-yearly format though. We are still capturing all the Climate Bonds Certifications, all the Criteria developments and all the news in the green bond standards world, but just reporting on it every 6 months rather than every 3.

In the meantime, be sure to follow us on all social media platforms (Twitter, Facebook, LinkedIn, Instagram) and get the latest updates about the green finance world.

‘Til next time,

Climate Bonds 

Proposals made by the companies will be presented to Brazil’s Green Finance Initiative (BGFI) for a discussion with investors at its next meeting, in September.

What’s it all about?

The Climate Bonds Initiative and CELA (Clean Energy Latin America) hosted last week a high-level meeting to discuss the latest challenges and opportunities faced by the wind and solar energy sectors in Brazil.

The event was held in São Paulo at the GTIS Partners headquarters, last Thursday (16).

Discussing green finance and ideas to attract more investors to the country were representatives from over 10 wind and solar power companies. During the two-hour meeting, they identified the main challenges preventing the expansion of the green finance market in Brazil and the role that could be played by the private and public sector to unlock this potential.

Some of this included the structuring of different aggregation instruments to be issued offshore, adjustments to guarantee requirements, as well as new forms of financial product distribution to allow for a greater investor diversification.

Who’s saying what?

Camila Ramos, Director, CELA

"The meeting today reinforced points that are already being discussed within the Brazil Green Finance Initiative and raised new ideas that will be brought to the group. We feel our ideas are aligned and this is very productive. The next step is to outline a plan of action for the implementation of these ideas, which will have a huge impact on the day to day of these companies that already have a robust project pipeline.”

Marcos Meireles, CEO, Rio Energy

"We have an extremely promising market for green bonds, but we have not yet learned how to attract the big investors. Our market is still in its infancy, it cannot handle so many projects. Unlike what happens abroad where there are lots of money and few projects, here we have plenty of projects and little money being allocated towards green. So we have to attract these investors, educate them about the Brazilian market, with its risks and benefits."

Eduardo Klepacz, Managing Director – Head of Infrastructure Investments, GTIS Partners

“In order for the wind and solar sectors to further access capital markets, we need to adjust existing financial structures. For example, guarantees are a particular challenge and a new culture is needed in the market towards this and in terms of how it will be applicable to the market.”

Felipe Domingues, Director – Brazil Head of Finance, Accounting, Tax and FP&C, EDP Renováveis

"Renewable energy companies are already convinced of the importance of the green certification. Now it is necessary to educate the investor, and I believe that the Climate Bonds Initiative and the Brazil Green Finance Initiative will play an important role in this process.”

Thatyanne Gasparotto, Brazil Country Manager, Climate Bonds Initiative:

“Diversification of Brazil’s renewable energy offer has a huge potential to attract pools of green finance. An important element towards unlocking this finance is to identify current barriers as well as structuring sound financial products in which a wider array of investors, both domestic and international, can invest in. This is our focus for the upcoming meetings.”

The Last Word

We would like to thank all the companies that participate in this important meeting.

We took notes of all your ideas and suggestions. They will be passed to the members of the Brazil Green Finance Initiative and discussed in their next meeting, in September.

‘Till next time,

Climate Bonds

MARKET NEWS

Bloomberg Opinion, How the World’s Governments Are Approaching Earth-Friendly Investing, Nathaniel Bullard and Daniel Shurey

Article analyses tactics of governments, in different regions of the world, aimed at scaling up green finance.

Whether it is national carrots and sticks or local motivations, government-led green bond initiatives are mobilizing billions of dollars every year. In this regard, green bonds are following a path trod by clean energy a decade ago, when many governments around the world took similar approaches to intervention with the renewable energy market.

Bloomberg, Green-Bond Sales Surge Toward Record as Borrowers Burnish Brand, Shelly Hagan

US green bonds are on the rise. Author looks at reasons why corporates decide to issue.

Sales of green bonds by U.S. companies in 2018 have already topped last year and are on pace for a record, according to data from the Climate Bonds Initiative.

Bloomberg Opinion, Green-Bond Market Needs to Get Tough to Blossom, Brian Chappatta

Reflecting on the first decade of green bonds market, author expresses an opinion that certification of green bonds should be compulsory.

The Climate Bonds Initiative is the closest thing to a gatekeeper for the industry. Through its Climate Bonds Standard and Certification Scheme, it provides the option — but not the requirement — for green-bond issuers to verify that they adhere to a set of principle. (…)

The Bond Buyer, For green bond issuers, the purpose is vital, Paul Burton

Author dives into US municipal green bonds market after speaking with experts from the investor side as well as academia.

Green bonds, said Wurgler, are slightly larger than average at the CUSIP level and with slightly longer maturity; they are more likely federally taxable, tracing to issuance around 2010; they are typically new-money revenue bonds associated with specific projects; and a subset, around 7%, has certification from Climate Bonds Initiative or other third parties.

FT Alphaville, An environmental run on the bank, Thomas Hale

Thomas Hale looks at an example of reputational damage and subsequent withdrawal of deposits experienced by banks that participated in the financing of environmentally-harmful Dakota Access Pipeline. He thinks that this aspect of environmental activism is one of the important factors behind a rapid growth of the green finance market.

The topic is critical for any understanding of the new field of green finance, which has exploded over recent years. Around $155bn of green bonds were issued last year, almost double the total in the previous year. Banks have established their own green funding rules and frameworks, alongside those established by NGOs. They have also issued green bonds of their own, which implies calibrating certain assets as green, causing green-ness to ripple through the financial system.

Forbes, Eco-Civilization: Will China Become The World's Climate Savior?, Jake Hayman

Article looks at the Chinese paradox – country that’s world’s biggest emitter is, at the same time, planet’s biggest hope when it comes to reduction of emissions.

In this context the ‘green’ sector in China has boomed: green nergy, green loans, green mortgages, green supply chains, green bonds, emissions trading schemes – the list of policy initiatives, subsidies and incentives is endless. It is expected that China will be ahead of most of the world on phasing out production of petrol cars and it is already leading the way on solar energy and clean technology.

Markets Media, Institutional Investors Look To Green Bonds, Shanny Basar

A upbeat story of operating world’s largest green bond fund.

Bram Bos, lead portfolio manager green bonds at NN Investment Partners, said there is “overwhelming” demand for green bonds and there are the first signs of institutional investors in the market.

The Edge Markets, Bonds: Growing need for retail green bonds, Khairani Afifi Noordin

Article cites chief representative for Asia-Pacific at ICMA who stressed a need of increasing availability of green products to retail investors.

There are currently a few mutual funds and exchange-traded funds (ETFs) with exposure to green bonds that are available to retail investors. They include Mirova Global Green Bond fund, Calvert Green Bond fund and VanEck Vectors Green Bond ETF, which tracks the S&P Green Bond Select Index.

Business World, Moody’s expects sovereign green bond issuance to accelerate, Cathy Rose A. Garcia

7 countries have already issued sovereign green bond and Moody’s, in a recent report, predicted that the pace of governmental issuance will be on the rise over coming years. 

Moody’s also said the deployment of sovereign green bond proceeds to a diverse array of projects will support investor demand. This is in contrast to the broader green bond market, where funds are mostly used for energy-related projects.

Governing, Green Bonds Are in High Demand, But Are They a Better Deal?, Liz Farmer

Author of the article questions the price benefit that some municipal bonds issuers to date obtained when labeling their bond as green.

Another factor driving better rates for some green bonds is the reputation and transparency of the government issuer.

Les Echos, Vers un boom des green bonds, Pierre Rondeau

Les Echos on the success story of French sovereign green bond.

L’État français a emboîté le pas de son voisin polonais dès janvier 2017 avec une levée initiale de 7 milliards d’euros sur 22 ans, suivie des Fidji, du Nigéria, de la Belgique, de la Lituanie et plus récemment de l’Indonésie.

elEconomista, Las empresas españolas apuestan por la financiación sostenible

Además, los bonos verdes y los bonos sostenibles emitidos por empresas y administraciones públicas se han empezado a hacer hueco en los mercados financieros, al igual que los créditos sostenibles. En 2017, Climate Bonds Initiative (CBI), cifró en 155.000 millones de dólares las emisiones internacionales en bonos verdes y prevé que en 2018 alcance entre los 250.000 a 300.000 millones de dólares

COUNTRY NEWS

IRELAND

Irish Times, Ireland tipped to jump on ‘green bonds’ bandwagon, Joe Brennan

Irish Times reports on the head of Ireland’s debt agency announcing plans for a sovereign green bond issuance.

Ireland has been tipped to join a growing number of sovereigns raising finance from the sale of “green bonds”, which may command lower interest rates than mainstream debt at a time when the European Central Bank (ECB) is winding down its €2.5 trillion stimulus programme.

The Times, Investor seeks €7.5m for renewable energy, Michael Cogley

In July, also BVP, Ireland’s leading green investment firm, announced details of a planned €7.5m green bond issuance.

BVP, a leading green investment firm, is aiming to raise €7.5 million which it will use to invest in a number of renewable energy projects and companies across Ireland.

INDIA

Fortune India, Green bonds: The $2 trillion opportunity, Ashish Gupta, Prerna Lidhoo

A long piece outlining how green bonds fit into India’s enormous infrastructure needs and climate goals.

Yet, as Bank of America country head and president Kaku Nakhate points out, local markets have still not understood the concept of green bonds as the West has. Thus, India has raised only $6.15 billion from 16 issuances. 

Bloomberg, SBI's Bond Plan Eyed by India Firms Mulling Offshore Return, Anurag Joshi

State Bank of India started a roadshow for a dollar-denominated green bond in a time of uncertainty for Indian offshore bond market.

No Indian company sold offshore notes last quarter, the first time that happened since 2009, as a selloff in emerging-market assets following rate increases from the U.S. Federal Reserve damped investor appetite.

Business Standard, More than $6 bn green bond issues still stuck due to rising interest rates, Anup Roy

Author claims that since debt issuance in India stalled, there are several green bond issuances on hold and awaiting lower interest rates.

Green bonds of huge amounts from India are stuck because of rising interest rates and global uncertainties, even as the country’s largest lender, SBI, is in the process of going through its maiden issue of green bonds of at least $500 million

AUSTRALIA

Australian Financial Review, Australian social impact investment market hits $6 billion, Alice Uribe

Australian ESG market experienced a four-fold increase in less than three years with rapidly growing green bonds accounting for 85% of the $6 billion figure.

Since 2015, Australian public and private institutions have issued over $4 billion in green bonds, with most coming in 2017, compared to the global market with over $US120 billion of certified green bonds issued in 2017, according to the Climate Bonds Initiative (CBI).

Financial Standard, Impact investing reports sharp growth, Harrison Worley

Another Australian publication covers findings of the Responsible Investment Association Australasia (RIAA) research.

According to the report, property and infrastructure investments are the biggest type of investments after green bonds, which RIAA said was responsible for avoiding or abating more than 2.1 million tons of carbon dioxide equivalent.

MOROCOO

Devdiscourse, IFC and Morocco join forces to promote Green, Social and Sustainability Bonds

Guidelines for Morocco’s green bonds market have been released by the country’s capital markets authority.

The new guidelines have been developed by AMMC with advisory support from IFC, and comprise updated guidelines for Morocco’s green bonds market, as well as a new framework for the social and sustainability bonds market, combined into a single reference document.

La Nouvelle Tribune, Un nouveau pas en avant pour la finance durable au Maroc, Selim Benabdelkhalek

L’AMMC (Autorité Marocaine du Marché des Capitaux), avait publié un guide sur les Green bonds, dans la foulée de l’engagement du secteur financier marocain, pris lors de la COP 22, d’encourager le développement du marché des instruments financiers durables.

EGIPT

Al-Monitor, Egypt approves green bonds to boost eco-friendly projects, Menna A. Farouk

In July, Egypt approved a legal framework to issue green bonds to support the financing of renewable energy and clean transportation projects.

“We will unveil regulations and measures necessary for the issuance of green bonds in accordance with the best international applications, as part of a partnership with the International Financial Corporation [IFC] (…)” said Mohammed Omran, head of the Egyptian Financial Supervisory Authority (…)

UK

Business Green, City Minister: 'Green finance has yet to reach its full potential', James Murray

An important speech from the Economic Secretary to the Treasury, in which he expressed an ambition for “green finance” to become simply – “finance”.

Glen, who also serves as City Minister, said the green finance sector was making encouraging progress, citing this week's launch of the largest green bond listing on the London Stock Exchange in the form of a $1.58bn offer from the Industrial and Commercial Bank of China.

COVERAGE OF CHOSEN JULY’S GREEN BOND ISSUANCES

EMPRESA DE ENERGÍA DEL PACÍFICO (EPSA)– Colombia’s first Climate Bond Standard certified green bond.

Latin Finance, FDN, IFC back Epsa green bonds, Mick Bowen

Colombian power unit obtains $146m in local currency, becomes first non-FI to print sustainable securities in the country.

Devdiscourse, IFC and FDN help Epsa raise funding for climate change projects in Colombia

The bond have also been certified with the Climate Bonds Standard & Certification Scheme, which ensures that the projects where the resources will be allocated contribute to the reduction of carbon emissions and the mitigation of climate change.

Renewables Now, Colombia's Epsa to issue green bonds for 185 MW of solar power

The IFC pointed out that Epsa would be the first company in the real sector in Colombia to use this fixed-income financial instrument exclusively for environmental projects or projects related to climate change.

FARO ENERGY – first Climate Bonds Standard certified green bond for solar energy in Brazil.

PV Tech, Faro Energy issues Brazil’s first certified green bond for solar, Tom Kenning

The bond has been verified by Bureau Veritas, an international verification agency, and Certified according to the Climate Bond Standard & Certification Scheme

Energy Live News, First certified solar bond lands in Brazil, Jonny Bairstow

The bond will be used to finance distributed solar power projects across the country – the company says Brazil’s solar market is growing rapidly and green financing solutions are “critical” to enable the market to continue to scale.

NIGERIA SOVEREIGN GREEN BOND – first African nation and fourth country in the world to issue a sovereign GB.

Business Day, DMO to List N10.69bn FGN Sovereign Green Bond on NSE, Cynthia Ikwuetoghu & Jonathan Aderoju

Debt Management Office (DMO) will list N10.69billion, five-year tenor, Federal Government Sovereign Green Bond at coupon rate of 13.48% on the Daily Official List of the NSE on Friday, July 20, 2018.

CNBC Africa, Nigeria should expect more green bonds – Minister

Nigeria’s Minister of State for Environment Ibrahim Usman Jibril says the listing of the 10.69 billion naira, 5-year Sovereign green bond is the first of many to come, as the ministry aims to return to the market before the end of the year.

CNBC Africa, DMO celebrates green bond listing on NSE

An interview with Patience Oniha, Director General of Nigerian DMO.

CITY OF TORONTO

Financial Post, Toronto goes green, raises $300 million and saves on interest by doing so, Barry Critchley

And for the citizens of the country’s largest metropolis, the 30-year, $300-million transaction brings a financial benefit: the yield (3.213 per cent based on a 3.20 per cent coupon) required to clear the market was a tad lower than what a traditional debenture would have cost.

Smart Cities Dive, Toronto issues first green bond, joins food waste initiative, Jason Plautz

Toronto follows Ottawa as the second Canadian city to engage in green financing.

NATIONAL WILDLIFE FEDERATION

Bloomberg, National Wildlife Federation Goes to the Green-Bond Market, Amanda Albright

The National Wildlife Federation is selling about $11 million of bonds Wednesday to refinance a loan that was used to build its headquarters in the Washington, D.C. (…)The foundation’s headquarters, which opened in 2001, is designed to reduce energy usage, bond offering documents say, and uses solar panels to heat its water.

ASIAN DEVELOPMENT BANK’S first euro-denominated green bond

Global Capital, Green currency debuts for supra pair, Craig McGlashan, Lewis McLellan

Asian Development Bank piced up €600 and was able to tighten pricing as it sold a green bond in euros for the first time.

The Asset, ADB prices first euro-denominated green bond, Chito Santiago

The seven-year bond was priced at 99.924% with a coupon of 0.35% per annum payable annually to offer a yield of 43bp.

Modern Diplomacy, ADB Sells €600 Million 7-Year Green Bond to Spur Climate Financing

Proceeds of the green bond will support low-carbon and climate resilient projects funded through ADB’s ordinary capital resources and used in its non-concessional operations.

SARANA MULTI INFRASTRUKTUR (SMI)– Indonesia

Reuters, Indonesia's SMI raises 1.5 trln rupiah in bonds to fund green projects

Indonesia’s Sarana Multi Infrastruktur (SMI), a state-owned infrastructure financing firm, said on Tuesday it had issued a combined 1.5 trillion rupiah ($104.6 million) via green bonds and sukuk, tapping into environmentally-minded investors.

The Jakarta Post, Sarana Multi Infrastruktur issues green bonds and sukuk, Riza Roidila Mufti

SMI president director Emma Sri Martini said the funds obtained from the debt paper issuance would be used to finance various sustainable development goals (SDGs) and sharia-based infrastructure projects in the country.

Indonesia Investments, Sarana Multi Infrastruktur First Indonesian Company to Sell Green Bonds

The green bonds are part of the Indonesian government's efforts to turn the Sustainable Development Goals (SDGs), which came into effect in January 2016, into a success.

Seats filling fast for next week’s triple treat of Australian & New Zealand green finance events.

What's it all about

Australia & NZ’s low-carbon transition will provide extensive opportunities for institutional investors looking to increase portfolio exposure to green and ESG related investment.

Climate Bonds will be launching two major reports in Australia and New Zealand next week focused on green investment.  

Our twin reports discuss green infrastructure opportunities pipelines and analyse green finance developments in both nations.

The “Green Infrastructure Investment Opportunities - Australia & New Zealand” report is a ground-breaking exploration on green infrastructure pipelines as both countries prepare to implement a low-carbon transition.

It's a first of its kind for Australia & New Zealand, identifying nearly 400 projects and assets that could be considered green and qualify for refinancing, additional financing or new financing, in the near- and medium-term future.  

The "Australia & New Zealand 2018 Green Finance Briefing"  is a CBI report analysing the multi-billion dollar green finance and green bond developments in both nations to date.

A big thank you to our Partners

The report launches and associated forums are organised by Climate Bonds in partnership with ANZ, CBA, Macquarie Group, NAB, Westpac, and the CEFC, and event partners Ashurst, IFM Investors, IGCC, Norton Rose, PRI and RIAA.

Our media partner for the events is fixed income specialists KangaNews.

There’s only a handful of seats left for Sydney, Melbourne & Auckland. 

Don't delay - Register. 

SYDNEY Event (Hosted by Ashurst)

When: Tuesday 28 August 2018,

Time: 2.00pm - 5.00pm, followed by refreshments

Where: Ashurst, Ballroom, Level 9, 5 Martin Place, Sydney CBD

RSVP: Register via the Eventbrite page.

MELBOURNE Event (Hosted by Norton Rose Fullbright)

When: Thursday, 30 August 2018, 

Time: 7.45am - 9.15am, over breakfast

Where: Norton Rose Fulbright, RACV Tower, Level 15, 485 Bourke Street, Melbourne

RSVP: Register via the Eventbrite page.

AUCKLAND, NEW ZEALAND Event (Hosted by Mayne Wetherell)

When: Friday 31 August 2018,

Time: 8.30am - 10.00am

Where: Mayne Wetherell office, Level 5, Bayleys House, 30 Gaunt Street, Auckland

RSVP: Register via the Eventbrite page.

Agendas include:

• Investor perspectives on transitioning to green infrastructure investments and defining green
• Case studies from major investment opportunities.
• Climate adaptive and resilient infrastructure
• Report launches 

The Last Word

This is a unique chance to hear from global and local stakeholders on green infrastructure opportunities, green finance developments and climate based investment for Australia and New Zealand. 

See you there!

‘Till next time,

Climate Bonds

AUD10.2 billion in green bonds issued to date

Need for acceleration to address coming climate impacts

Climate Bonds' two newest reports have just been launched in Sydney today.

Green Infrastructure Investment Opportunities - Australia & New Zealand report (GIIO) outlines a pipeline of infrastructure investment in both nations that can be funded via green finance.

It is accompanied by the release of Australia & New Zealand Green Finance Briefing: a full analysis of green investment in both nations to date.

Both reports highlight paths for the two countries’ respective transitions to a low carbon economy, meeting the growing demand for green investment opportunities - including green bonds - and facilitating greater engagement between project owners and developers, and institutional investors including asset managers and superannuation funds.

Australia & New Zealand green finance passes the AUD10bn mark

The reports note the cumulative green bond issuance – Australia: AUD8.3bn (USD6.3bn); New Zealand: NZD2.1bn (USD1.5bn) – for a combined total of AUD 10.2bn in green bond issuance to date.

Despite a challenging policy backdrop, Australia in particular has emerged over the last four years as an example of world’s best practice in market development, with commitment from the major banks and a diversity of green bond issuances including from two state governments, property and tertiary sectors, and also high levels of Certification. New Zealand’s first green issuance was in 2017 but the market is already showing growing potential.

With an overall total of eleven individual issuers [1] from Australia (some of whom are multiple issuers) and two from New Zealand, in Q1-Q2 2018 Australia is the second largest cumulative source of issuance within the Asia Pacific region – second to China and twelfth in overall world rankings – with a total issuance of AUD2.6bn (USD1.95bn). New Zealand reached NZD200m (USD136m) thus far in 2018.

Notwithstanding the positive start, both nations are yet to effectively harness capital allocation to generate the volume of green infrastructure investment required to meet international mitigation and emissions commitments, whilst improving climate adaptation and resilience.  

GIIO Report identifies 400+ projects and assets across four major sectors

Green Infrastructure Opportunities Australia and New Zealand  explores low carbon infrastructure opportunities on a sector-by-sector basis and is a first of its kind for Australia & New Zealand.

Over 400 projects and assets were identified (360 in Australia and 62 in New Zealand) that can be considered green and qualify for refinancing, additional financing, or new financing, in the near and medium future.

The infrastructure investment opportunities explored were based on four sectors. The Climate Bonds Taxonomy (and other international definitions of green) were used to identify eligible green projects under these sectors. Furthermore, to help define the scope and volume of projects, the following filters were also applied:

- Low carbon transport - mostly major projects valued above AUD100m (in Australia) and NZD100m (in New Zealand) 

- Renewable energy - only renewable energy generation facilities above 50MW

- Sustainable water and waste management - mostly major projects valued above AUD50m (in Australia) and NZD50m (in New Zealand)

- Low carbon or green buildings - only Green Star (mostly 6-star rated) certified projects.

The Infrastructure Opportunity: Investor participation and climate targets

There is a growing opportunity for institutional investors to become more active and expand their participation in green infrastructure financing in Australia and New Zealand, building on the impressive foundation established so far, albeit with relatively minor supply of non-bank ASX 100 green issuances to date.

However, the brown-to-green transition from emissions-intensive ‘brown’ infrastructure to cleaner and ‘greener’ assets needs to attract additional support and gain considerable investment momentum in order to meet Paris Agreement goals. Essentially, investing in clean infrastructure is the most effective way to reach Australia and New Zealand’s current climate targets, whilst also preparing for a potential ratcheting up of international emissions goals.

Significantly increasing capital into green infrastructure will spur innovation, broaden the economic base, reduce urban congestion, improve the liveability of cities and support sustainable economic development and social well-being.

The Australia & New Zealand Green Finance Briefing – Points for consideration:

• Large existing potential, particularly in transport and energy for low carbon investment
• Huge opportunity for green RMBS (Residential Mortgage Backed Securities) linked to existing and new building codes
• Green bonds as a source of long-term finance for climate resilient and adaptive water infrastructure, sustainable management and resilient agricultural practices
• Establishing green finance models to support additional recycling, reuse and waste processes
• The role of Australia’s superannuation funds in driving the brown-to-green transition amongst listed companies as they respond to TCFD recommendations and reflect climate risks and opportunities in their forward capex decisions

​

The Asia-Pacific Picture: A regional role in green finance?

Australia and New Zealand also have the potential to be regional leaders in green infrastructure delivery.

Both governments have the capacity and economic conditions to develop a medium-term sequential pipeline of green investment opportunities.

Their financial sectors are well positioned to develop and subsequently export green finance expertise.

Australia in particular benefits from an AUD2.6 trillion national savings pool and is also uniquely placed with superannuation funds and investment managers already having a global presence in infrastructure, debt financing, direct investment and alternative assets.

A robust green domestic market would see Australia poised to become a significant source of expertise and capital flows into the region, responding to opportunity, as ASEAN nations shift towards green finance as a means to meet their intertwined national-development, energy, emissions and climate goals. 

Who’s saying what?

Christina Tonkin, Managing Director, Loans & Specialised Finance, ANZ:

“The Australian and New Zealand green bond markets are representative of global best practice. The markets are underpinned by a diversity of issuance and innovation in use of proceeds, a strong commitment towards transparency, with high levels of international certification.”

“ANZ is working with investors to build confidence in market fundamentals and directions. The scale of green infrastructure investments expected to be made in Australia, coupled with strong investor demand, make the prospects for growth in green bonds bright."

Matthew Walker, Acting Group Chief Financial Officer Auckland Council:

“Auckland Council was very pleased to have issued the first Green Bond by a New Zealand issuer and pave the way for further Green Bond issuance to support the significant investment required in low carbon, climate resilient infrastructure across New Zealand.”

“The strong interest shown by investors in the issue was a very encouraging and positive signal for future green bond issuances in New Zealand.”

“Achieving a sustainable low-carbon future for Auckland and ensuring that our infrastructure is future-proofed, are integral components of the Auckland Plan 2050; our recently refreshed long-term spatial plan for Auckland. Directing capital towards more sustainable climate resilient solutions will be critical to achieving our Auckland Plan 2050 outcomes.”

Andrew Hinchliff, Group Executive, Institutional Banking and Markets, Commonwealth Bank of Australia:

“With record levels of transport infrastructure investment, often overlooked is the importance of the role this new infrastructure plays in reducing emissions and creating a more sustainable environment. Commonwealth Bank recognises this and is proud of its record in financing modern, future proofed transport infrastructure that promotes energy efficiency at its very core. Green bonds, working alongside traditional forms of finance, will ensure the continued funding of energy efficient infrastructure.”

Ian Learmonth, CEO, CEFC:

“As a core investor in Australia’s green bond market, we are seeing growing interest from superannuation funds and managers who want to deepen their exposure to sustainable assets. This is essential if we are to achieve our national emissions reduction goals in the infrastructure sector and beyond.”

“We are confident an increasing focus from underlying investors, along with improved sophistication and understanding of fund managers, and increased diversity of supply, can attract more investor support for this critical investment class.”

Emma Herd, CEO, Investor Group on Climate Change (IGCC):

“Low carbon and green infrastructure will be a defining investment theme of the 21st century. But we must move to realise the opportunity. Investors backing green infrastructure projects in Australia that generate strong, stable and sustainable returns is critical. Developing the real-world solutions which unlock capital and embed low carbon at the heart of investment decisions requires the financial and corporate sectors to step up our ambition and act."

John Pickhaver, Co-Head of Macquarie Capital, Australia and New Zealand:

“There is increasing focus in the infrastructure investment community on the opportunities that green investment brings. Across renewable energy, sustainable transport, green buildings and communities; financial investors, corporates and governments are all looking for ways to facilitate and participate in the transition to a low carbon economy.”

Mike Baird, Chief Customer Officer, Corporate and Institutional Banking, NAB:

“Our goal is to make a positive and lasting impact on the lives of our customers, people, shareholders, communities, and our environment - and our customers are telling us they want to participate in the transition to a low carbon economy.”

“We’re continually developing and offering innovative green finance tools that enable investors to back major renewable energy projects alongside NAB, and we find new ways to support companies that deliver green infrastructure projects around the world.”

Andrew Eagles, New Zealand economist and CEO of the New Zealand Green Building Council: 

“Clever, sustainable, pollution-busting investment is growing, because it makes good sense financially, economically, and for the environment. Some say that this is the future of finance, but the growing flow of investment suggests that the future is already here.”

“This report has arrived at just the right time. Low-carbon investments are increasingly popular, and investors are now searching for third party independent certification to authenticate sustainability claims. We’re currently seeing a surging wave of interest in Green Star, a trusted verification scheme for healthy, resilient buildings.”

Lyn Cobley, Chief Executive, Westpac Institutional Bank:

“Westpac recognises that climate change is an economic issue as well as an environmental issue, and banks have an important role to play in assisting the Australian and New Zealand economies transition to net zero emissions. Increasing green bonds, green loans and green underwriting is a vital part of the mix, as is supporting new issuers to come to market.”

Sean Kidney, CEO, Climate Bonds Initiative:

“Banks are involved in many financial activities and it’s vital that they are successful in the role of stimulating green investment and climate finance. The major Australian banks have done just that, leading international best practice, making benchmark size green bond issuance and supporting new issuers to market. Globally, to meet the growing climate finance and resilience challenges, more of the top 200 banks should follow this example.”

“It’s also time for Australia and New Zealand corporates to signal their brown-to-green directions and enter the market.”

“Institutional investors need to back new green offerings and work more actively across the finance sector and with policy makers to turn the plethora of opportunities identified in the GIIO report into long-term national pipelines of investable low carbon infrastructure projects.” 

More GIIO reports to come!

GIIO Australia & New Zealand is the second in a series of reports from Climate Bonds Initiative that commenced with GIIO Indonesia in May 2018.

More reports investigating green infrastructure investment opportunities in SE Asian nations and other regions are planned for 2019-2020.

Download now: Green Infrastructure Investment Opportunities - Australia and New Zealand

Download now:Australia and New Zealand Green Finance Briefing

‘Till next time,

Climate Bonds

P.S.: Acknowledgement & Thank You

Production of Green Infrastructure Opportunities Australia and New Zealand has been jointly sponsored by ANZ, CBA, the CEFC, Macquarie Group, NAB and Westpac.

During development, Climate Bonds Initiative consulted with key Government bodies, industry, financial sector, peak bodies, NGOs and other stakeholders - in partnership with Australia’s four major banks, also BNZ, Macquarie Group, Mayne Wetherell, Clean Energy Finance Corporation (CEFC), IFM Investors, Investor Group on Climate Change (IGCC), PRI, and RIA. 

Contributions were also made by the Australian Water Association, Green Building Council of Australia, GRESB and New Zealand Green Building Council (NZGBC).

We’d also like to thank our Event Partners Ashurst, IFM Investors, IGCC, PRI and RIAA, and our Media Partner, KangaNews for their support. 

GIIO Report Lead author: Kristiane Davidson

Co-authors: Rob Fowler, Kingsley Kwadwo, Oteng-Amoako, Laurent Buzenet Drogba, Andrew Whiley and Cymroan Vikas.

We’d like to thank all of the organisations and individuals from Australia and New Zealand who assisted in preparation of the reports.

Public Comments Sought on Latest Sector Criteria

Consultation Open till Oct 3rd. Send us your feedback!

Where can I find the Criteria?

There are 3 documents available for review, depending on how much detail you are interested in:

1. A summary of the Criteria
2. Criteria document containing the full requirements of the Criteria
3. Background document containing the full requirements and the background research

Send all comments to Katie House or join one of our webinars to have your questions answered live – details and registration below.

What’s it all about?

Climate change is exacerbating the challenges faced by the agricultural sector, negatively affecting crops in many regions. Increases in temperatures, rainfall variation and the frequency and intensity of extreme weather events coupled with the rising demands for food are increasing the pressure on the global agriculture system.

Agriculture is also contributing a significant share of the greenhouse gas (GHG) emissions – 17% directly through agricultural activities and an additional 7% to 14% through land use changes. Various technical solutions exist that underscore the potential of the agriculture sector to be part of climate change mitigation and adaptation solutions.

One of these solutions is larger scale use of protected agriculture, which enable full or partial control of the micro-climate surrounding plants, allowing for optimization to plant requirements and protection from different environmental, biological, and climatological elements all factors in  improving production.

Compared to open-field crop production, more precise and efficient use of nitrogen-based fertilizers in greenhouses ensures that a much higher percentage of the fertilizer reaches the plant, decreasing waste, lifting productivity, and significantly lowering emissions of nitrous oxide, a powerful GHG.

This is an extension of the previous development work the work on various Criteria under the broad heading of Land Use that has seen rollouts over 2017-2018 that include Forestry and Land Conservation & Restoration. 

Why Mexico?

Mexico has seen dramatic growth and geographic expansion in the use of protected agriculture with greenhouse-based production rising from 790 hectares in 2000 to over 23,000 hectares in 2015, representing a compounded 25% annual growth rate over this period.

Future growth in horticultural greenhouses in Mexico will be influenced by the demand in the US market (the destination for an estimated 80% of greenhouse-based production) as well as the trade policy context.

These drivers have been complemented by business strategies focused on high-value export products, public recognition of the associated employment and foreign earnings benefits, and government subsidies designed to assist farmers in increasing their productivity and reducing their vulnerability to severe weather and numerous pathogens.

The Mexican government has also specified greenhouses and other forms of protected agriculture as part of their strategy to mitigate GHG emissions and to respond to chronic water stress and increased frequency of severe weather events.

Investor demand and green bonds

Investor interest in protected agriculture is likely to rise given increasing recognition of the growing demand for food produced in a sustainable and resilient manner.

Green bonds represent a viable financing strategy for horticultural greenhouse projects (e.g. installation, operation, maintenance, decommissioning). Investment opportunities need to be calibrated to specific geographic and sub-sectoral contexts with consideration of success factors such as socio-economic conditions, tenure arrangements, market access, and so on. These Criteria are specific to the Mexican context.

The Criteria

The Protected Agriculture Criteria aims to provide a clear, robust and science-based screening process to identify low carbon and climate resilient protected agriculture investments that are aligned with a 2°C target and address the conservation and sustainable use of land.

This means promoting

i) GHG mitigation through reduced emissions or increased carbon sequestration; and

 ii) adaptation to climate change and facilitate increased climate resilience in the systems in which they are located.

The development of a widely-recognised set of Criteria will reduce transaction costs and improve transparency, ultimately encouraging more investment in this sector.

How long is the consultation period open for?

Public Consultation will start on September 3^rd and close on October 3^rd 2018. Please send your comments to Katie House.

Webinars

To hear the details of the Criteria and ask your questions live, join our webinar on:

Monday 17th September at 3pm (UK)

Register here.

Speakers:

• Lawrence Pratt
• Enrique Nieto, IDB
• Ujala Qadir, Climate Bonds Initiative

Where can I find out more?

Review the requirements of the Protected Agriculture Criteria are available here.

‘Till next TIME,

Climate Bonds

The Climate Bonds team will be in the Americas, Europe & Asia this month.

We'll also have a big team at GCAS in San Francisco talking up green finance and the Green Bond Pledge. 

And don't our Director of Market Development, Justine Leigh-Bell speaking at Moody's 3rd Climate Week Briefing as part of CWNYC. It's one of the highlights of Climate Week.

You can register here. 

September 2018 Events

'Till next time,

Climate Bonds

Highlights:

• USD3.3bn bonds issued from 20 issuers in August
• Certified Climate Bonds account for almost half of monthly issuance
• First green loan from a Singaporean issuer
• 2^nd green bond from a Canadian city and 2^nd from the shipping sector

​​
Don't miss:

• The 400+ assets and projects that could push Australia and New Zealand to their Paris targets. Climate Bonds latestGreen Infrastructure Investment Opportunities Report delves down under.
• California Treasurer signs up to the Green Bond Pledge as part of new green finance push from world’s ‘5^th biggest economy’.

Coming up:

• Climate Bonds is releasing updated versions of the Climate Bonds Taxonomy and the Green Bond Database Methodology later in September. The new taxonomy is part of ongoing upgrades to the Climate Bonds Standard & Certification scheme.

Go here to see the full list of new and repeat issuers in August.

August at a glance

The pace of green bond issuance slowed down in August reaching just USD3.3bn – or 58% below 2017 monthly figures.

On a brighter note Certified Climate Bonds contributed to almost 50% of issuance volumes, with deals coming from Australian, US Muni and Brazilian repeat issuers: Monash University, NAB, New York MTA, San Francisco Public Utilities (SFPUC) and Rio Energy. Both MTA & SFPUC use the streamlined Programmatic Certification process for their repeat issuance. NAB’s EUR750m Certified SDG green bond was the largest deal of the month, accounting for 27% of the total.

Developed markets drove issuance both by volume and by number of deals, accounting for 80% and 65% of August’s figures respectively. Emerging market issuance by number of deals surpassed 2017’s monthly share: 30% compared to 8%. China accounts for over a fifth of bonds in the month, all from financial and corporate new issuers. Brazilian Rio Energy’s second Certified Climate Bond makes up 5% of the share. The remaining 5% comes from South Korean debut issuer Lotte Property & Development.

2018’s August figures saw a surge in financial corporate and local government issuance, which accounted for 33% and 30% respectively, compared to just 17% and 1% in 2017’s monthly issuance. ABS deals, which were the main driver of volumes in August 2017, have not appeared in this year’s monthly total. However, this is expected to change once Fannie Mae publishes its August deals.

> The full list of new and repeat issuers here.

> Click on the issuer name to access the new issuer deal sheet in the online bond library.

New issuers

Bank of Jiujiang (CNY1bn/USD145m), China, issued a 3-year green bond, which benefits from a Deloitte assurance report (not publicly available). The proceeds will be used for 7 proposed projects with wide coverage in energy, water and waste management, including solar projects to provide affordable electricity, recycling of disposed batteries, as well as the production of lithium-ion batteries for energy storage purposes. The proceeds will also cover wastewater treatment and increase resilience by improving the city’s drainage infrastructure. It is worth mentioning that the proposed cogeneration project intends to generate electricity and heat using biomass such as rice straw and bark.

Climate Bonds view: These projects would be expected to result in increased climate resilience at city level and reduced carbon emissions from using alternative generation sources. We are supportive of deals that cover an extensive range of environmental projects and are pleased to see the issuer has included detailed disclosure on both estimated proceeds allocation and environmental impact from each project. The proposed cogeneration project satisfies our requirement for using bioenergy as an alternative to fossil fuels.

City of Toronto (CAD300m/USD231m) issued a 30-year green debenture, becoming the second city in Canada to issue green bonds after City of Ottawa (November 2017). The debut deal will finance sustainable transport projects and related infrastructure, such as electric, hybrid and public transport systems.

The Green Bond Framework includes a wider range of eligible project categories: renewable energy, green buildings, water management, waste management, adaptation/resilience and eco-efficient and/or circular economy principles integration. Buildings are required to meet at least a Toronto Green Standard Tier 2, LEED Gold certification or an equivalent standard/certification scheme level. Energy efficiency improvements to existing buildings are eligible, including for private buildings through the Home Energy Loan Program, Hi-rise Retrofit Improvement Support and similar initiatives where the City provides loans for energy efficiency retrofits.

Climate Bonds view: This is the third Canadian new issuer in 2018, taking the country’s pool of green bond issuers to 16. Setting a minimum energy efficiency threshold for existing buildings upgrades would further strengthen the eligibility criteria.

The formation of the Canadian Expert Panel on Sustainable Finance, similar to the EU HLEG and UK Green Finance Taskforce, is a positive indicator that policy change and hence additional growth could be on the way.  

Chongqing Kangda Environmental Protection Industrial Co., Ltd CNY360m(USD52.7m) , China, issued a 15-year green ABS, secured on wastewater treatment receivables. CCX provided the green assessment certification and rated the deal as G-1 (not publicly available). More specifically, the deal securitises the next 15 years’ worth of receivables from 5 subsidiaries of Chongqing Kangda Environmental Protection Industrial Co., Ltd. The proceeds will be used to construct new and to upgrade existing wastewater treatment stations for its subsidiaries. The investment targets the reduction of local pollution, an improvement in the surrounding environment and a reduction in water usage.

Climate Bonds view:This is the first green ABS deal in Chongqing, which expands the market. We also favour deals which use green revenues and assets as security to finance investment in green assets: this deal couples refinancing with a commitment to additional green asset financing. We hope to see comprehensive post-issuance reporting and more information being disclosed. For instance, it would be helpful to understand how treated water is used and whether recycled water is used for irrigation and industrial purposes rather than treated, potable water.

Hebei Xingtai Rural Commercial Bank (CNY250m/USD36m), China, issued a 5-year green bond, which benefits from a Dongfang Jincheng Credit Management Co Second Party Opinion (not publicly available). The proceeds will be used in three main categories. Resource efficiency covers the construction of high-efficient facilities, reductions in the consumption of energy, water, raw materials and other resources for unit products or services, recycling and the utilization of biomass resources. The transport category includes construction and operation of railways, urban rail and other infrastructure. Measures such as infrastructure construction to mitigate the adverse effects of climate change on economic and social development come under adaptation and resilience.

Climate Bonds view:We welcome the issuance of this deal as it promises to allocate proceeds to categories that generate positive environmental impact. While we support this green bond, we would like to see detailed information being disclosed by the issuer regarding both proposed proceeds allocation and estimated environmental impact. We also hope to see that the issuer will establish a comprehensive post-issuance reporting system that tracks the allocation of proceeds and impact reporting.

Ho Bee Land (GBP200m/USD256m) issued a green bridging loan - the first green loan from a Singaporean issuer, and the first green bridging loan. Sustainalytics provided the Second Party Opinion. The bridging loan will finance part of the acquisition of Ropemaker Place, a commercial building located in London. The property has obtained a LEED Platinum pre-certification and a BREEAM excellent certification.

Climate Bonds view:This is the fourth Singaporean green bond issuer to enter the market, and the second in 2018 after Sindicatum Renewable Energy, taking the country’s cumulative issuance to USD887m.

Japan Excellent (JPY4bn/USD36m), Japan, issued a 10-year green bond, which benefits from a Sustainalytics Second Party Opinion. Proceeds are entirely allocated to buildings which obtain the top three levels of third-party certifications such as: 3, 4 or 5 stars under the DBJ Green Building Certification or B+, A or S rank under the CASBEE Certification.

Climate Bonds view: Green building certifications are an important indicator of a property’s green credentials. However, we encourage JEI to adopt more ambitious standards to provide substantial environmental impacts. Disclosure of key environmental parameters is essential to quantify environmental impacts, and perhaps create more stringent standards compatible with a 2-degree scenario. For this reason, we encourage companies to provide quantitative indicators to support disclosure of detailed impact reports.

Lotte Property & Development Co (USD200m) issued a 3-year senior unsecured green bond, becoming the first South Korean green bond issuer from the real estate sector. The deal benefits from a Sustainalytics Second Party Opinion. Proceeds of the deal will be allocated to commercial buildings and transport infrastructure. Commercial properties are eligible if they have been constructed/refurbished in 2017 or after and have obtained a LEED Gold or equivalent certification. The projects must also contribute to the improvement of professional conditions of low-income workers. Eligible projects under the transport category include pedestrian, public bicycle and public bus infrastructure.

Climate Bonds view: This is the fourth green bond from a South Korean issuer this year taking the country’s total for 2018 to USD1.8bn, which already represents a 73% increase on the country’s issuance in 2017.

Mitsui O.S.K. Lines (MOL) (JPY5bn/USD45m), Japan, issued a 5-year senior unsecured green bond. In a very new area for green finance, this is the second issuer from the shipping sector into the market after Nippon Yusen Kaisha (NYK) in May 2018. As with NYK’s green bond, proceeds will finance and refinance LNG-fuelled ships, LNG-bunkering ships, ballast water management systems and SOx scrubber systems. Under its Green Bond Framework, MOL has committed to ensure the financed vessels will not be used to transport products that relate to controversial activities, including, but not limited to, coal, tar sands and oil shale.

Additionally, Upgraded Propeller Boss Cap Fins (PBCF) and the Wind Challenger Project are also eligible under MOL’s. According to the issuer, the upgraded PBCF is expected to yield 5% energy savings compared to vessels unequipped with the technology. The Wind Challenger Project is a research project led by the University of Tokyo focused on the development of wind propelled ships through the use of a rigid sail system. MOL aims at deploying the technology on cargo-carrying vessels to achieve up to 50% energy savings.

Climate Bonds view: We are pleased to see that the issuer has quantified the level of emissions reductions expected for each eligible project and committed to providing annual impact reporting based on operational data. Investing in the Wind Challenger Project is a positive step towards incorporating renewable technologies in vessels. So is the commitment to not transport fossil fuel products other than LNG on the LNG bunkering ships.

As we pointed out for NYK’s green bond, switching to LNG-fuelled vessels is not enough to comply with a 2-degree decarbonisation trajectory in the long-run. However, the projects financed by the deal are currently the lowest-emission asset option until other renewable fuels become commercially viable. It is nonetheless important to ensure the vessel design is flexible enough to avoid fossil fuel lock-ins in the future. Our special briefing provides more information on our decision to include bonds financing LNG-fuelled ships and LNG-bunkering ships in our database.

Qingdao Guoxin Development Group Co., Ltd. (CNY1.45bn/USD212m), China, issued a 5-year green private placement. Proceeds will be allocated to LEED Gold certified green buildings. In addition, these projects will adopt advanced energy-saving technologies and use environment-friendly building materials.

Climate Bonds view: We are pleased to see the projects have been awarded LEED Gold. Even with limited information disclosure for this private placement, we still acknowledge the potential environmental benefits that this deal could bring to the local community. We hope that the issuer will make proper use of the proceeds and we would like to see a higher level of information disclosure and relevant post-issuance reporting.

State of Michigan (USD149m) issued a 7-tranche US Muni green bond (longest dated bond: 5 years) labelled as “Environmental Program Bonds”. The deal will finance environmental and natural resource protection programs, including: land remediation and redevelopment of contaminated sites, protection and improvement of water quality, pollution prevention, lead contamination abatement, reclaiming and revitalising community waterfronts, state park infrastructure improvement, enhancement of local recreational opportunities, and remediation of contaminated sediments in lakes, rivers and streams.

Climate Bonds view: The State of Michigan’s debut Environmental Program Bonds were issued in June 2016 and the issuer came to market once more in September 2017. However, we had not picked up the issuer prior to its 2018 deal due to the less typical bond label. Earlier this year we expanded the scope of labels we consider for green bonds.

TMB Bank (USD60m) issued a 7-year private placement in June 2018, becoming the first Thai issuer to enter the market. Proceeds will finance solar, waste to energy, biomass and bagasse projects. To be eligible, biomass projects exclusively use sustainable biomass feedstocks.

Climate Bonds view: The deal had previously been classified as pending due to insufficient information on proceed allocation. Information provided by the IFC, sole investor in the deal, confirmed that the eligibility categories are aligned with the Climate Bonds Taxonomy.

Wuxi Huaguang Boiler Co (CNY265m/USD39m), China, issued a three-year green ABS in July. The deal is secured on revenues from the heat and power supply services of its subsidiary Huilian Co., which operates a combined power plant in Wuxi city. The proceeds will be used for two waste to energy projects, including the Gongzhuling refuse incineration project and the Leping refuse incineration project. Specifically, the Gongzhuling project is estimated to deal with 800 tonnes of daily household waste from Gongzhuling city and surrounding areas.

In comparison, the Leping refuse incineration project is designed to have the same capacity. In addition to building boilers, the Leping project also plans to build 10 waste stations and other supporting facilities.

Climate Bonds view:We support such green bond issuance since it has multiple benefits of reducing household waste, generating clean energy as well as improving air quality due to reduced carbon emissions. However, we would like to see more disclosure about relevant information such as bond prospectus. We also hope the issuer will closely monitor this deal and publish timely post-issuance reporting.  

Repeat issuers

• San Francisco Public Utilities: USD408.2m - Certified Climate Bond
• Fabege AB: SEK700m/USD76.8m; SEK300m/USD32.9m
• Monash University: AUD116m/USD86m
• NAB: EUR750m/USD878m
• New York MTA: USD207m - Certified Climate Bond
• Rio Energy (Copacabana Geração de Energia e Participações S.A): BRL12m/USD30.9m - Certified Climate Bond
• Sindicatum Renewable Energy: PHP1.1bn/USD20m
• State of Michigan: USD149m
• Vasakronan: SEK550m/USD60.4m; SEK100m/USD11m; SEK700m/USD76.8m
• World bank: INR80m/USD1m

Pending and excluded bonds

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 (SDG) overall and see many links between green bond finance and specific SDGs, the proportion of proceeds allocated to social goals needs to be no more than 5% for inclusion in our database.

In this issue of our market blog we provide a more extensive list of social / SDG / sustainability bonds that have been excluded from our green bond list in 2018.

Green bonds in the market

• Willhem AB: SEK800m, closing September 3
• Vasakronan: SEK750m, closing September 4
• SSE: EUR650m, closing September 4
• KBN: AUD450m, closing September 5
• City and County of Honolulu Series 2018F, 2018E, 2018D, 2018C, closing September 5
• Ricoh Leasing Company: JPY10bn, closing September 7
• Independent Administrative Institution Japan Student Services Organization: JPY30bn, closing September 7 (social bond)
• Macquarie University: AUD250m, closing September 7 (sustainability bond)
• Deutsche Hypo: EUR500m, closing September 10
• Mitsui O.S.K. Lines: JPY5bn, closing September 10
• Massachusetts Clean Water Trust: Series 21, closing September 12
• Encevo SA: EUR250m, closing October 2018
• UmweltBank: up to EUR40m green bond
• UGE International: green project bond
• Business Venture Partners (BVP): EUR7.5m
• State Bank of India: Certified Climate Bond

Investing News

The Hong Kong Green Finance Association announced it will host the Green Finance Forumand an inauguration ceremony to officially launch the Association on 21 September.

California becomes the first state to pledge to use green financing to combat climate change as Treasurer Chiang commits to Green Bond Pledge.

The UK government announced it will co-fund a new Green Finance Institute with the City of London Corporation to champion sustainable finance in the UK and abroad.

World Bank to fund the five-year ‘Punjab Green Development Programme’, aiming at supporting priority green investments in both the public and the private sectors.

The IFC and the State Bank of Pakistan have signed an advisory agreement to support green banking in Pakistan.

Malaysia’s BIB Investment Management launched the world’s first ESG sukuk fund.

The Philippine Securities Exchange Commission approved the green bond framework for local retail offerings under the Association of Southeast Asian Nations (ASEAN) initiative.

Dublin has been selected as the European hub of the Financial Centres for Sustainability (FC4S) network. The Climate Bonds Initiative is a partner of the FC4S network.

Green Bond Gossip

Sunrun is planning its second Solar ABS securitisation.

Sumitomo Mitsui Trust Bank has obtained a Sustainalytics second party opinion for its green bond framework.

NordLB plots first ‘really green’ covered bond under Luxembourg law.

Hitachi Zosen plans to issue JPY5bn in green bonds in September to finance the construction and management of waste-to-energy plants.

Urja Global to raise USD500 million via green bonds for financing renewable energy projects and e-rickshaws.

Texas officials are considering partnering with private sector to design a new type of bond to finance USD15bn worth of storm-resilient infrastructure.

The State Agency for Energy Efficiency and Energy Saving of Ukraine is looking to develop Ukraine’s green bond market to finance energy efficiency projects.

Reading and Reports

The latest IFR Green Financing Roundtable report discusses recent developments in green finance and outlines the next steps that need to be taken as issuance becomes more widespread.

CoLTI, a Russian national infrastructure investor association, has recently published their quarterly review: Sustainable Developments and Green Investments (for Russian speakers).

The latest podcast from Bulletin with UBS puts green bonds in the spotlight.

Rienergia has published a series of articles (in Italian) exploring the future of coal in Europe, with a focus on Poland, Germany, France and the UK:

• La Polonia, l’Europa e il dilemma del carbone
• Quale futuro per il carbone in Germania?
• Francia: l’era del carbone sta finendo
• UK: dal carbone all’energia pulita senza passare dal gas
   

Climate Bonds Reports

The Green Infrastructure Investment Opportunities Australia & New Zealand report identifies projects and assets that could be considered green.

The Australia & New Zealand green finance country briefing analyses the countries’ green bond issuance to date and identifies potential growth areas.

Moving Pictures

California, first state to sign the Green Bond Pledge to fight climate change: KKFX TV report 1:53secs.

Watch how these plastic eating caterpillars could help save the planet.

Take 1:18 mins to discover which country is ready for an electric car revolution.

Watch how Pakistan, China, India and African countries are creating new forests.

‘Till next time,

Climate Bonds

In Brussels on Monday 17^th September?

Have time to spare in the morning?

Join us for an exclusive, pre-launch preview of the Climate Bonds Taxonomy: a guide to climate aligned assets & projects, kindly hosted by Burson, Cohn & Wolfe.

This is a special opportunity for EU based issuers, investors, verifiers and regulators to attend a pre-launch briefing on the updated Climate Bonds Taxonomy, prior to the official launch at Climate Week in New York.

Spaces are limited, please register your interest and we’ll confirm your place.

Details

Venue:             Burson, Cohn & Wolfe, 37 square de meeûs, 1000 brussels

When:             Monday 17^th September 2018, 10am – 12pm

10am: Registration

10:30am - 12pm: Briefing on the new Climate Bonds Taxonomy

Presenters:    Sean Kidney, CEO, Climate Bonds Initiative

                        Katie House, Senior Research Analyst, Climate Bonds Initiative

Reserve your place here.

What’s the Taxonomy?

The Climate Bonds Taxonomy identifies the assets and projects needed to deliver a low carbon economy and gives screening criteria consistent with the 2-degree global warming target set by the COP 21 Paris Agreement.

The new version been developed based on the latest climate science including research from the Intergovernmental Panel on Climate Change (IPCC) and the International Energy Agency (IEA), and has benefited from the input of hundreds of technical experts from around the world.

The Climate Bonds Taxonomy can be used by any entity looking to identify which assets, activities and associated financial instruments, are compatible with a 2-degree trajectory. 

Can’t make it to Brussels?

Don’t worry, there will be other opportunities to hear about the Climate Bonds Taxonomy including:

• Official launch at New York Climate Week
• London Briefing
• Japan Seminar
• Webinar Program

Stay tuned to the Climate Bonds Blog and our Twitter feed @climatebonds for details of all the above!

‘Till Next Time

Climate Bonds

More announcements to come during week of climate action in San Francisco 

What’s it all about?

Australia’s Local Government Super (LGS) and Luxemburg Green Exchange (LGX) join the U.S. State Treasurers of California, New Mexico and Rhode Island, the Cities of Asheville and San Francisco – California, King County – Washington, and financial firms Global New Energy Finance and R3 Returns, as founding signatories to the Green Bond Pledge. As founding members, these institutions and organisations are displaying leadership amongst cities and the finance sector. 

Launched earlier in 2018, the Green Bond Pledge is a declaration that all bonds financing long-term infrastructure and capital projects need to address environmental impacts and climate risk. 

It asks cities, county and state governments, and corporations to account for climate risk when designing future infrastructure and capital projects and consider financing them with green bonds. 

The announcement of initial pledge supporters was made at the Sustainable Infrastructure Green Bonds and Green Finance Roundtable jointly convened by CERES and Climate Bonds, around an agenda of practical action to accelerate subnational based green investment and green bond issuance. 

Who’s saying what?

Sean Kidney, CEO, Climate Bonds Initiative 

“Green finance and infrastructure are now the critical areas for mainstreaming of climate action and embedding of adaptation and resilience into investment decisions and the built environment.” 

“The foundation signatories are to be congratulated. By signing the Pledge, they are opening another path for much needed linkage between sub-nationals and corporate climate goals and their financial balance sheets and investment plans.”

Doug Sims, Senior Adviser, Green Finance and Natural Resources Defense Council

“Cities bear a big burden from the impacts of climate change, which they can transform into opportunities by investing in green energy and sustainable infrastructure. That’s why green bonds for   infrastructure are one of the most rapidly growing financial asset classes in the world. Signing the Green Bond Pledge signals to residents and the market that a city is making the connection between    climate action and community prosperity.”

Peter Ellsworth, Director, Investor Network, Ceres

“The Green Bond Pledge commits companies and communities to financing major infrastructure and capital projects with climate resilience and environmental impacts in mind. Green bonds are attracting investors who are looking for investments that represent long term value–projects that will produce good financial returns as we move into the low carbon economy that is our future.”

“These founding signatories are major cities, counties and U.S. states who are leading the way.”

The Last Word

The Green Bond Pledge reinforces the goals of the Paris Agreement. It is based on the premise that public and private sector bonds financing long-term clean infrastructure need to incorporate mitigation, adaptation and resilience to climate impacts.  

The Pledge is a joint initiative developed by international climate finance and sustainability groups including the Climate Bonds Initiative, Mission2020, CERES, CDP, Citizens Climate Lobby, California Governor’s Office, CaliforniaTreasurer’s Office, Global Optimism, NRDC and The Climate Group.

Further announcements on the Pledge and on green finance are expected during the Global Climate Action Summit (GCAS), which will see more than 4000 participants meet between the 12th and 14th September in San Francisco to around the goal to “Take Ambition to the Next Level’’ on climate action. 

Stay tuned for more and follow @climatebonds for the latest from San Francisco. 

‘Till next time,

Climate Bonds

Mexico City’s Secretary of Environment, Tanya Müller García, broke the news today at the Global Climate Action Summit (GCAS) in San Francisco

La Secretaria de Medio Ambiente de la Ciudad de México, Tanya Müller García, he hecho el anuncio en la Cumbre Global de Acción Climática (GCAS) en San Francisco

What’s it all about?

Mexico City is the latest city to sign the Green Bond Pledge. The announcement will be made at the Global Climate Action Summit (GCAS) in San Francisco, by Mexico City’s Secretary of Environment, Tanya Müller García, during the High-Level Session ‘Local Climate Solutions: Financing the Transition’ on Thursday 13th September. 

With a population of over 9 million, Mexico City is the largest municipal signatory to date and the commitment is a further example of CDMX’s leadership in climate action and green finance. 

The Green Bond Pledge seeks to have cities, public authorities and world’s largest corporates commit to increased use of green bond finance to ensure new infrastructure meets the challenges of climate change, and is low carbon, adaptive and resilient and contributes to the accelerated low carbon transformation of the economy. 

Founding Signatories include the U.S. State Treasurers of California, New Mexico and Rhode Island, the Cities of Asheville and San Francisco – California, King County – Washington, San Francisco Public Utilities Commission (SFPUC), Australian pension fund; Local Government Super (LGS), Luxembourg Green Exchange (LGX), and financial firms; Global New Energy Finance and R3 Returns.

Who’s saying what?

José Ramón Amieva Gálvez, Head of Government of Mexico City:

"Climate change is of anthropogenic origin, and undoubtedly one of the biggest and most urgent challenges facing humanity. Cities are part of the problem, as they consume a large proportion of the energy produced globally and are responsible for about four fifths of carbon dioxide (CO2) emissions in the world." 

"One of the main challenges to accelerate climate action at the local level is access to international funding sources for city-scale mitigation projects.” 

“As a signatory of the Green Bond Pledge, CDMX supports the rapid growth of a local green bond market and will strive to issue, when appropriate, green bonds to finance infrastructure, mitigation and climate resilience projects." 

Sean Kidney, CEO, Climate Bonds Initiative:

"Mexico City and its wider metropolitan region is on track to become one of the world's megacities by 2030, so scaling up low carbon infrastructure investment in transport, energy, water and waste to match that growth is vital."

"A city of this size signing the Pledge is a significant development in sub-national climate action, and an example of green finance leadership for other cities in LATAM to follow."

Mark Watts, Executive Director, C40:

"Mexico City is a strong climate leader committed to delivering on the highest ambition of the Paris Agreement. Its innovative use of green bonds shows how these financial instruments can help transform their ambitious climate change strategy into a reality on the ground."

The Last Word

With 625 million people, Latin America has the largest urban population in the world. Mexico alone has 105 million residents living in cities, equivalent to 80% of its total population. Mexico City, the fifth largest city in the world, and São Paulo, the fourth, combined have more than 50 million habitants, and are set to be the Top 11 megacities by 2030. By signing the Green Bond Pledge today and commiting to a sustainable development, CDMX demonstrated once again it's leadership in climate action and green finance (CDMX was the first city in Latin America to issue a green bond) which is vital to achieve the goals of the Paris Agreement, and furthermore, grow LATAM's green finance markets.

The Green Bond Pledge reinforces the goals of the Paris Agreement. It is based on the premise that public and private sector bonds financing long-term clean infrastructure need to incorporate mitigation, adaptation and resilience to climate impacts. 

The Pledge is a joint initiative developed by international climate finance and sustainability groups including the Climate Bonds Initiative, Mission2020, CERES, CDP, Citizens’ Climate Lobby, California Governor’s Office, California Treasurer’s Office, Global Optimism, NRDC and The Climate Group.

‘Till next time,

Climate Bonds

******

La Ciudad de México se suma a el Compromisso de Bonos Verdes

El anuncio fue hecho hoy en el CGAC (GCAS) en San Francisco, California

¿De que se trata eso?

El Gobierno de la Ciudad de México se suma al Compromiso de Bonos Verdes (Green Bond Pledge). El anuncio sera hecho en la Cumbre Global de Acción Climática en San Francisco, por la Secretaria del Medio Ambiente de la Ciudad de México, Tanya Müller García, durante la Sesión 'Soluciones Climáticas Locales: Financiando la Transición'. 

Con más de 9 millones de habitantes, la Ciudad de México es el signatario municipal más grande hasta la fecha y el Compromiso es un ejemplo más del liderazgo de CDMX en acción climática y finanzas verdes.

El Compromiso de Bonos Verdes es una iniciativa con el fin de apoyar el rápido crecimiento del mercado de bonos verdes y el establecimiento de bonos verdes en la ciudad, la cual sea consistente con estándares globales, con el fin de financiar proyectos de mitigación al cambio climático.

Signatarios incluyen el Tesorero del Estado de California, Nuevo México y Rhode Island, Ciudad y Condados de San Francisco y Asheville, Condado del Rey – Washington, Comisión de Servicios Públicos de San Francisco (SFPUC), Fondo de pensión australiano Local Government Super (LGS), Bolsa Verde de Luxemburgo (LGX) y las firmas financieras Global New Energy Finance y R3 Returns.

¿Quién está diciendo lo qué? 

José Ramón Amieva Gálvez, Jefe de Gobierno de la Ciudad de México:

“El cambio climático de origen antropogénico, y sin duda uno de los retos más grandes y urgentes que enfrenta la humanidad. Las ciudades son parte del problema, ya que consumen una gran proporción de la energía producida globalmente y son responsables de cerca de cuatro quintas partes de las emisiones de bióxido de carbono (CO₂) en el mundo.”

“Uno de los principales retos para acelerar la acción climática a nivel local es el acceso a fuentes internacionales de financiamiento. Como signatario de lo Compromiso de Bonos Verdes, CDMX apoya el rápido crecimiento de un mercado de bonos verdes local y se esforzará por emitir, cuando corresponda, bonos verdes para financiar proyectos de infraestructura, mitigación y resiliencia climática.”

Sean Kidney, CEO, Climate Bonds Initiative:

"La Ciudad de México está a camino de ser una de las megaciudades del mundo en 2030, por lo tanto, escalar la inversión en infraestructura sostenible es vital para hacer posible la transición a una economía de bajo carbono. Firmar el Compromiso de Bonos Verdes es un desarrollo significativo en la acción climática subnacional, y un ejemplo de liderazgo de finanzas verdes para otras ciudades en LATAM a seguir."

Mark Watts, Executive Director, C40:

"El Gobierno de la Ciudad de México es un fuerte líder climático comprometido a cumplir con la mayor ambición del Acuerdo de París. Su uso innovador de bonos verdes muestra como estos instrumentos financieros pueden ayudar a transformar su ambiciosa estrategia de cambio climático en una realidad.”

La última palabra

Con 625 millones de habitantes, América Latina es la región que tiene la mayor cuantidad de habitantes urbanos en el mundo. Solamente México cuenta con 105 millones de residentes citadinos, equivalentes a 80% de la población total. CDMX es la quinta mayor megaurbe en el mundo, abajo de Sao Paulo (la cuarta), y juntas tienen más de 50 millones de habitantes. El liderazgo de CDMX en acción climática y finanzas verdes - CDMX fue la primera en América Latina en emitir bonos verdes - es indispensable para alcanzar los objetivos del Acuerdo de París.

El Compromiso de Bonos Verdes es una declaración que refuerza los objetivos del Acuerdo de París. Se basa en la premisa de que los bonos del sector público y privado que financien proyectos de infraestructura y capital a largo plazo deben abordar e incorporar los riesgos e impactos climáticos

El Compromiso de Bonos Verdesfue desarrollado y diseñado por grupos internacionales de financiamiento climático y medioambientales, incluyendo la Climate Bonds Initiative, Mision 2020, CDP, Ceres, Citizens Climate Lobby, la Oficina del Gobernador de California, la Oficina del Tesoro de California, Global Optimism y The Climate Group.

Hasta la próxima,

Climate Bonds

You’re Invited: Join us at Climate Week in New York, Monday Sept 24th for the Global Launch of the State of the Market 2018 at HSBC's Finance for Global Change Forum.

A Climate Bonds Boost to the Beginning of Climate Week. Release of Major Report and New Taxonomy  

Climate Bonds CEO Sean Kidney will present findings of the Climate Bonds influential ‘State of the Market 2018' report, the flagship international review of green finance, green bonds and climate aligned investment progress. 

Climate Bonds Director of Markets Justine Leigh-Bell will follow up on the Friday unveiling of the revised Climate Bonds Taxonomy Guide, a full update based the latest climate science and clean technology definitions.

Invitation 

Event: HSBC Finance for Global Change Forum, including global launch of ‘Bonds and Climate Change: the State of the Market in 2018’ report & Climate Bonds Taxonomy Guide

Where: The New York Public Library, The Edna Barnes Salomon Room 476 Fifth Avenue New York, NY 1001

When: Monday, September 24th, 2018 @ 1:30- 5:30 pm Eastern Time

Key Agenda Times 

Registration & Coffee: 1:30pm - 2:00 pm

Opening Remarks: 2:00 pm

State of the Market Launch (incl. Taxonomy): 4:45 -5:15 pm

Cocktails & Refreshments: 5:30-7:00 pm.

Climate Bonds Representatives: Sean Kidney, CEO 

                                                        Justine Leigh-Bell, Director Market Development

Registration via Email: Please RSVP here.

Background

This is the 8th Annual Bonds & Climate Change State of the Market Report from Climate Bonds Initiative, first produced in 2012 and now regarded as the authoritative annual international analysis of green finance.

This is also HSBC’s fourth year hosting a Sustainable Finance events during Climate Week in New York.

The 2018 Report

• Reviews the global green and climate aligned investment universe
• Identifies key sector and regional market opportunities
• Outlines the paths for investment markets to reach the $1trillion by end 2020 green finance milestone

Don’t miss your chance to start Climate Week in New York with a Climate Bonds boost! 

Spaces are limited!

To register email here.

‘Till next time,

Climate Bonds

PS: Early Bird UK: London State of the Market Launch : Save the Date: Will be 8:30am-11:30 Tuesday 2^nd October: Agenda is here, more details to come.

Disclosure: ‘Bonds and Climate Change: the State of the Market in 2018’ report is commissioned by HSBC, who are also a Climate Bonds Partner. 

A full list of Partners can be found here.

Hong Kong University Business School World 1st Academic Partner; Joint Project to Develop New Green Finance Programme

What’s it all about?

Climate Bonds Initiative (CBI) and Faculty of Business and Economics, The University of Hong Kong (HKU Business School) have reached consensus on joining hands to provide training on green finance for students in Asia. 

This first ever academic collaboration between CBI and one of the world’s leading academic institutions was announced at a press conference in Hong Kong today. This announcement marks a joint commitment of both parties in bringing green finance education to young talents.

Read full Media Announcement               查看新聞稿              查看新闻稿

In an additional development, HKU Business School has also joined Climate Bonds Partners Programme, becoming the first CBI Partner in Hong Kong and the first academic partner in the world with whom CBI is developing a programme specific to green bonds which will be included in the academic curriculum. 

Collaboration between CBI and HKU Business School consists of the following elements:

1. Introducing green finance to the Undergraduate Curriculum of HKU Business School
2. Offering Internship Programmes for students of HKU Business School
3. Undertaking joint events to promote green finance

Who’s saying what?

Prof. Hongbin Cai, Dean, HKU Business School:

“HKU Business School and the University are at the forefront of promoting awareness of climate change and taking actions against a worsening climate. We are consciously incorporating important issues related to climate change, ethics, and leadership into our teaching, research, and knowledge exchange programmes. In the past few years, we have held large activities on campus to discuss environmental and climate issues including corporate social responsibility and green bonds.”

“Leveraging the strength and network of CBI, an international and authoritative non-profit organisation that mobilises green bond markets, we plan to offer new courses to undergraduate students to increase their understanding and contribution to this area. We believe the collaboration will help nurturing business talents with global perspective, not only in the financial and business arenas, but also in sustainable development of the world.”

Sean Kidney, CEO, Climate Bonds Initiative:

“In recent years, we have seen extreme weather conditions occurring in Asia and the rest of the world consistent with the scientific predictions. Sadly, we have lost the initial battle, to avoid climate change. Lying ahead of us is the next battle - to stop runaway climate change with its catastrophic impacts. This is the battle that the younger generations will be called forth to fight in the coming decades.”

“The HKU Business School is looking to the future in educating prospective leaders in the region on the importance of mitigation, adaptation and climate-resilience. Harnessing green capital, building knowledge and skills around green finance is crucial to mobilising the public and private investment required to meet the urgent climate challenge we all face.”

The last word

Under the Memorandum of Understanding (MoU) agreed between the two organisations, CBI and HKU Business School will work together and raise awareness in the Asian region on the wider agenda of achieving a low-carbon and climate-resilient economy, and also, complement the work of the Hong Kong government in filling the local talent gap.

It's a world first project. We welcome this new education and training opportunity and HKU Business School to our Partner Program. 

Read full Media Announcement               

查看新聞稿            

查看新闻稿

‘Till next time,

Climate Bonds.

Sao Paulo sees green investment pipelines from Brazil energy and agri companies presented to investors; Financing for low carbon investment moves forward 

What’s it all about?

Members of the Brazil Green Finance Initiative (BGFI), representing over BRL1.3trillion in assets under management, and special guests, gathered yesterday at the Zurich-Santander Seguros e Previdência headquarters in São Paulo to review green investment portfolios, presented by business leaders of the Agriculture and Energy sectors in Brazil. 

Among the companies present at the meeting were Eletrobrás, Faro Energy, Athon Energia, Bunge Ltd and Rio Galhão Agrícola. 

The first Certified Green Bond for solar energy in Brazil, issued by Faro Energy, featured highly in the meeting as being a benchmark issuance for the solar sector. Other items on the agenda included technical discussions on financial product requirements to enable green investment allocations, particularly by  institutional investors.

In partnership with Sociedade Rural Brasileira,we also welcomed members of the BGFI Agriculture Subcommittee to a forum at leading environmental advisers Pinheiro Neto Advogados in São Paulo. Discussion focussed on finance requirements for the development of low carbon agriculture practices and existing financial instruments for the agri sector. 

The BGFI Agriculture Subcommittee was launched in March with the objective to identify and advance financial solutions that allow the mobilisation of capital for sustainable projects in the Brazilian agricultural chain.

Who’s saying what?

John Liu, CIO, Zurich-Santander Seguros e Previdência:

"The success of today's meeting proves that we must persist in bringing together all the important actors of this market. The investors left here today much more enlightened as to the qualities of green bonds and the pipeline of projects in the Energy and Agriculture sectors."

Leopoldo Barreto, COO, Sulamerica Investimentos:

"We know the investor community still struggles to differentiate the value of a green bond. However, we see that this reality is changing. Today's meeting contributes to the breakdown of this paradigm."

André Dabus, Director for Infrastructure and Utilities, Marsh:

"There is no doubt that to reduce the infrastructure gap in the country there has to be investment. Investment needs financing and risk mitigation should not be ignored. The insurance industry is one of the alternatives. I believe green bonds are the main tool to generate this competitive advantage for projects.”

David Taff, CEO, Siemens Participações:

“We know there are great difficulties in financing infrastructure and green bonds can give a sustainability stamp to the process, which is a great differential. This helps in attracting investors, diversifying the investor base and also in terms of reputation.”

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

"Having the companies and investors at the same table today was evidence that Brazil’s agenda for green finance is gaining serious traction. The BGFI is proving to be a valuable platform for Brazil’s stakeholders to engage and take action on driving the development of a local green bond market.”

“The market is gaining a better understanding about green finance, and the opportunities this presents in terms of new investments across key sectors of Brazil’s economy and the important role of transparency and disclosure processes that investors are increasingly demanding.” 

The last word

Climate Bonds Initiative will continue our support for the development of the Brazilian market, engaging companies in identifying exciting pipeline of green projects that we can connect to local and international investors, who are eager to learn about business opportunities in Brazil.

Stay tuned for our upcoming release of the Brazil State of the Market 2018; a detailed analysis of the market that will provide an analysis of investment needed to finance Brazil’s low carbon growth in Renewable Energy, Infrastructure, Agriculture and Forestry. 

Exciting times!

Climate Bonds

Climate-aligned universe indicates huge potential for the green bond market

Sean Kidney launches major CBI report at the HSBCFinance for Global Change Forum in New York

Annual global analysis of climate finance and green investment

Climate Bonds Initiative’s flagship ‘Bonds and Climate Change State of the Market 2018' report will be launched today at HSBC’s Finance for Global Change Forum, one of the first events to kick off Climate Week NYC.

The State of the Market (SOTM) report provides an analysis of the labelled green bond climate-aligned and universe, highlighting investment opportunities to finance climate-aligned assets within the following climate themes: clean energy, low carbon transport, water management, low carbon buildings, waste management and sustainable land use.

This year’s report also provides an in-depth analysis of the diverse bond structures that have been used in the green bond market, as well as an update on the latest policy developments.

Read the full report now.

The headline numbers

While previous SOTM reports focused on identifying fully-aligned issuers that derive >95% of revenues from ‘green’ business lines, this year we expanded the scope to include strongly-aligned issuers that derive 75-95% of revenue from green business lines. 

Separate research was conducted on fully-aligned US Muni agencies to identify their total outstanding unlabelled bonds.

This year’s dataset includes climate-aligned and green bonds issued after 1st January 2005 and before 30th June 2018*. 

*more information on the research’s methodology can be found on page 2 of the report.

Green bonds: Key findings

• USA, China and France are top three countries for labelled green bond issuance, followed by Supranationals, Germany, Netherlands, Sweden, Spain, Canada and Mexico
• Fannie Mae is by far the largest green bond issuer with USD37.7bn of outstanding aligned volume, followed by the EIB – USD26bn and Kreditanstalt fuer Wiederaufbau (KfW) – USD15.2bn
• If we exclude development banks, the French Republic Government Bond OAT takes the second place in the larget issuer league table at USD12.2bn, followed by Engie SA (USD7.8bn)
• Top sectors for green bond issuance are: Multi-sector (USD179bn), Energy (USD90bn) and Buildings (USD70bn)
• 498 green bond issuers with USD389bn of outstanding bond volume accounts for 32% of the climate-aligned universe

The green label is an important tool to finance climate-aligned assets and projects

The green bond label is and will remain an essential tool within the fixed income space for both investors and issuers. For issuers, it can provide much-needed finance for low carbon assets while also signalling sustainability aspirations and enabling access to a wider investor base. For investors, the label enables easy identification of green fixed income products as well as enhanced transparency of the projects being financed and their impact.

The universe of bonds from ‘pure-play’ issuers highlighted throughout this report indicates that there is huge potential for the growth of the labelled green bond market.

Opportunities for fully-aligned entities to issue green bonds exist all across the world

Focus on green bond’s diversity of deal structures

The introduction of solar ABS and PACE ABS as new funding instruments designed specifically to refinance large pools of small green loans and leases initiated a green securitisation market, which has gained prominence with Fannie Mae Green MBS.

Private placements have accompanied public bond issuance since 2010 and have been instrumental in supporting the introduction of green bonds in emerging markets or to tap into foreign investors.

Green Schuldschein, sukuk, covered bonds, hybrids and MTN programmes all play a role in developing green finance  against unique national or regional market backdrops. (Read more on green bond structure diversity on pages 22-27 of the report.)

Key findings: Overall universe

• Climate-aligned bond universe: 869 issuers with USD1.2tn outstanding, plus USD250bn outstanding bonds from US Muni fully-aligned issuers
• EUR denominated bonds account for 26% of the overall universe, with USD316bn outstanding and are closely followed by USD denominated bonds – USD314bn
• Almost a quarter of the universe is AAA-rated by international and/or local credit rating agencies and 84% of the USD1.2tn universe is investment grade
• 5 to 10-year tenors are most common

​

Key findings: Sectoral overview

• At USD532bn outstanding, transport is the largest theme in the climate-aligned universe at 44%, followed by energy at 23% and multi-sector at 15%
• Energy has the highest number of climate-aligned issuers (292) while the buildings sector has the largest number of bonds outstanding (1,843)
   

The last word

The report identifies a universe of USD1.45tn climate-aligned bonds, made up of USD389bn in green bonds.

This points to a large universe of unlabelled bonds financing green infrastructure, implying a huge potential for a larger and even more diverse green bond market.

However, there is still a long way to go. Global emissions remain on track to exceed 2 degrees of warming and USD90tn of investment in climate projects is needed by 2030.

If we are to successfully combat climate change, global green finance needs to reach USD1tn by end 2020 and grow each year of the new decade.

Download the report now.

'Till next time,

Climate Bonds

Creating Green Bond Markets, Insights Innovations and Tools from Emerging Markets released in Washington 

Focus on stakeholders, green finance progress, preparations for harmonisation and market expansion

New Green Bond Market Development Toolkit to assist nations in growing domestic markets and green investment  

Green bond policy in emerging markets

Creating Green Bond Markets, Insights Innovations and Tools from Emerging Markets has been released today by the IFC-facilitated Sustainable Banking Network (SBN). The research, conducted by IFC and Climate Bonds, is drawn from examination of thirteen country and regional green bond frameworks; twenty-two SBN members surveyed, and nine interviews with regulators, stock exchanges and banking associations. 

It reflects strong market-based action, with policy leadership taking place among emerging markets to drive capital to investments and assets with environmental and social benefits.  

New regulations and market-level guidance is enabling rapid growth and innovation in green bond issuance, vital to achieve both global climate targets and the (SDGs). In emerging markets, as of June 2018, China is the largest issuer with USD57.1bn in issuance, followed by Mexico with USD6.7bn and India with USD6.6bn.

Market scale, issuer and investor diversity, standards and most importantly, the acceleration of these numbers is now the next stage in development.

New Green Bond Toolkit

The report incorporates Green Bond Market Development Toolkit; a major step forward to assist SBN members in developing robust domestic green bond markets.

The Toolkit includes the following:

• Common Objectives
• Self-assessment and Planning Matrix
• Roadmap with Common Milestones
• Capacity Building Needs Assessment

Together these spell out the particular steps emerging economies can take to encourage issuance and investment of green bonds. The emerging consensus highlights alignment with international good practices and approaches, as well as efforts to harmonise definitions of what is 'green'.

Common objectives for market development

A total of 13 country and regional green bond frameworks were reviewed for the report and 22 SBN members surveyed and/or interviewed. Most countries report carrying out careful studies of international best practice and extensive consultation within their institutions and with market participants to develop national green bond guidance.

All the national and regional guidance reviewed in the report has some level of substantive consistency with, or direct reference to, international guidelines as provided by the Green Bond Principles (GBPs) and the Climate Bonds Standard.

Roadmap with Common Milestones

Who’s saying what?

Jamie Fergusson, Manager IFC Sustainability Leadership Team, host of SBN Secretariat:

“Green bonds are paving the way for a rich ecosystem of sustainability-themed financial products by igniting policy and regulatory reform, sector wide dialogue, and market evolution."

“This report empowers emerging markets’ regulators with decision making tools to design more sustainable financial markets.”

Sean Kidney, CEO Climate Bonds Initiative:

“Green capital formation is a vital factor in funding of climate mitigation, adaptation and resilience measures in emerging economies and to close the climate finance gap.”

“The report provides a new platform for regulators, banks, investors and other stakeholders to support the development of robust domestic market frameworks and growth of new green bond driven investment.”

The Sustainable Banking Network

Representing 35 countries and over USD43tn (more than 85%) of banking assets in emerging markets, the Sustainable Banking Network (SBN) is the leading global knowledge and capacity building platform comprised of financial regulators and banking associations committed to collectively advancing sustainable finance. Established in 2012, IFC serves as Secretariat and technical advisor to the Network.

The report was guided by the SBN Green Bond Working Group members and observers from 21 countries and 30 organizations, including the International Capital Market Association (ICMA).

The Working Group is co-chaired by the Latin American Banking Federation (FELABAN), the Morocco Capital Markets Authority (AMMC) and the Financial Services Authority of Indonesia (Otoritas Jasa Keuangan, OJK).

The last word

Following from the release earlier this year of the SBN Global Progress Report, SBN members have shown again that it is possible to unite a wide array of countries in support of sustainable finance; in this case, to accelerate green bond market development with a collective ambition and a consistent approach.

Achieving the right balance between delivering quality products and allowing flexibility for issuers is cited by several SBN members interviewed as a major challenge.  Respondents highlighted the need to establish and maintain credibility within local green bond markets in order to build investor confidence and ensure that positive impacts are achieved.

The risk of ‘greenwashing’ was mentioned by a number of interviewees. The need for adopting consistent and tight green definitions also emerges; however, references to both Green Bond Principles and the Climate Bonds Standard are a positive foundation. 

Global trends including development of the EU Taxonomy and the harmonisation efforts between China and EU on definitions of green are signalling the direction of travel.

Climate finance long since has joined the frontlines of climate action. Emerging economies: China, India, Brazil, the cities of today and megacities of tomorrow in Asia, Africa and LATAM are the frontlines, where the trillions in green capital must flow, building resilient infrastructure and financing new low carbon development models.

The report, a six-month long undertaking, gives the members of Sustainable Banking Network a new platform for green market expansion.

It puts the emphasis on action in emerging economies, squarely where it’s needed most.

Download: Creating Green Bond Markets, Insights Innovations and Tools from Emerging Markets

Till next time,

Climate Bonds