Giant Indian bank to fund wind and solar with first green bond 

State Bank of India (SBI), India’s largest and most prestigious financial institution has emerged as a new player in the global green bond market with a USD650million inaugural issuance. 

Fitch Ratings has assigned State Bank of India's note a NS:SBI, BBB-/Stable. 

SBI is rated at 56th in the S&P Global Market Intelligence Report 2018 of the world's 100 largest banks. 

The bond will be used to finance wind and solar energy projects across India:

• 49 Solar Energy projects with a cumulative installed capacity exceeding 1,300 MW
• 32 Wind Energy projects a cumulative installed capacity exceeding 1,300 MW

Indian Issuers Going Global 

The bond was issued out of SBI’s London branch, is Climate Bonds Certified and listed on the Singapore Stock Exchange; continuing a trend that has seen major Indian energy issuers seeking to widen their investor base and listing the Certified bonds on major offshore exchanges including London, Singapore, Berlin and Frankfurt.

The SBI launch was marked by:

• Oversubscription; at USD1.25bn, with 114 accounts participating.
• Geographical distribution; 52% of the bonds were distributed in Asia, 45% in Europe and the Middle East, and 3% in offshore US. 
• Banks accounting for 41%, fund managers 30%, insurance companies 17%, private banks 8% and public sector 4%.

SBI’s Green Bond Framework includes a commitment to support the Indian government’s 173GW by 2022 clean energy target. 

Snapshot on Best Practice

Who’s saying what?

Prashant Kumar, Chief Sustainability Officer State Bank of India:

"Our commitment to sustainable business practices has motivated us to successfully launch SBI's maiden public Green Bond issuance, which was Certified by the Climate Bonds Initiative. We were able to successfully price our Green Bond despite volatile market conditions, and it helped broaden our investor pool in a cost-effective manner."

"Green Bonds are an effective financial instrument for financing clean projects aimed at reducing carbon footprints and addressing climate change across regions.  This inaugural green issuance reflects SBI’s ongoing commitment to sustainable banking."

Sean Kidney, CEO Climate Bonds Initiative:

“SBI has adopted international best practice in this inaugural green issuance and garnered a positive response from international investors. India has an ambitious 2022 clean energy target, infrastructure, development and climate related goals that require capital from global investors. This initial benchmark size green bond from SBI represents the green capital flows of tomorrow, to be replicated and multiplied into the 2020s.” 

“Internationally, other big banks should be looking to follow SBI’s lead. Too many are waiting for green markets to develop rather than taking up the responsibility to develop green markets. Closing the climate finance gap needs more of the top 200 issuing of green bonds, announcing green loan programmes or lifting their support for green underwriting.” 

The last word

India has high levels of green Certification particularly amongst state-based entities and energy producers, including both pure plays like ReNew Power, Hero Future Energies and Azure Power, and those undergoing the brown-to-green transition, like NTPC.  The total Indian green bond market amounts to USD7.2bn. 

IREDA, Axis Bank, Yes Bank, Azure Power Energy, Indian Railway Finance Corp. are all helping develop India's green future. 

The SBI bond is adding to a growing list. Congratulations! 

Till next time,

Climate Bonds.

40 years of experience: Indufor extends expertise to new field: Green Bonds

Climate Bonds Standard Board has approved the Finnish consulting company Indufor as a Approved Verifier under the Climate Bonds Standard & Certification Scheme.

With more than 40 years of experience and recognised as one of the world’s leading consulting companies in forest industry, forest management and bio-solutions, Indufor offers a high quality intelligence and advisory service to their clients. Their experience extends to over 900 projects and studies worldwide.

As an Approved Verifier, Indufor will assess green bond projects' eligibility and compliance wit under the Climate Bonds Standard.

Verifiers play a vital role in the Climate Bonds Standards process. To issue a Certified Climate Bond, an issuer has to get the bond reviewed by an approved 3^rd party verifier. 

The verifier’s role is to ensure that the bond’s features and assets meet the Climate Bond Standard’s environmental and financial guidelines. 

Who’s saying what?

Sean Kidney, CEO, Climate Bonds Initiative

“Indufor are now a new member of the wider group of Approved Verifiers who play a crucial part in the certification process. Their expertise adds another assurance choice in the market for both issuers and investors around the globe. Indufor’s extensive background and reputation in business consulting and resources makes a strong platform for green bond assessments.”

Silja Siitonen, Managing Director, Indufor Oy 

“We are extremely proud to have received the Approved Verifier status by the Climate Bonds Initiative. Indufor is an independent, globally operating consulting company with close to 40 years of experience in the fields of Natural Resources Management, Investment Advisory and Strategic Industrial Development and today we are happy to start supporting our clients in one more field – as verifier of Green Bonds – towards a greener and more sustainable business and environment.”

The Last Word

The pool of Climate Bonds Standard verifiers keeps growing fast as investors looks for quality and best practice and green issuers (including the worlds biggestbanks) adopt Certification.

With Indufor we’re heading towards forty verifiers covering the globe and there's more to come! 

Welcome on board Indufor. 

Till next time

Climate Bonds

Looking for Greenium 

The concept of green premium or a ‘greenium’ emerging in the bond market is an intriguing topic that is slowly gaining attention. 

Green issuers have sometimes pointed to a pricing benefit on an individual bond and Climate Bonds has been undertaking a longitudinal study of primary market pricing since late 2016 that commenced with an initial snapshot paper.

No conclusive trends have yet emerged. 

UCL’s Two Research Papers 

US green muni market performance is an area under study by two senior researchers from University College London (UCL). 

In part, the interest is as a result of increasing momentum in green munis after issuance topped USD11bn in 2017, a new record from the USD7.11bn in 2016. The surge attracted new observers to the green segment. 

UCL researchers Candace Partridge and Francesca Medda have produced two papers, both indicating evidence of a premium for green municipal bonds, via two different methodologies.

The first paper, Green Premium in the Primary and Secondary U.S. Municipal Bond Markets from Partridge and Medda, found that green muni bonds issued in 2017 entered the market with yields 7bp lower than their counterpart vanilla bonds, where each pair of bonds is identical except for the green label. 

The data in this analysis spans the timeframe from January 2015 to October 2017 and both the initial offering yield and the yields in the secondary market were considered. 

They also found that the green bonds in these pairs were sold on the secondary markets with yields of an average of 3bp lower in 2017. 

In the second paper, The Creation and Benchmarking of a Green Municipal Bond Index, Partridge and Medda constructed an index using over 1,200 green and climate-aligned** bonds issued between 2009 and late 2017.  When this index was benchmarked against the S&P Investment Grade Municipal Index, it showed an average annual price return of 4.5% compared with 3% for the S&P. 

The researchers' climate muni index was also broken down into green-labelled only, and sector and state sub-indices, which also showed a trend for higher prices for green and climate-aligned bonds over this time period.

The research suggests investors may be drawn to green munis because they could enable them to implement a sustainable investment strategy: these bonds tend to be highly rated and cover a variety of projects that allow for a well-diversified green bond portfolio. 

Additionally, a trend towards a premium for green muni bonds could translate to lower costs of capital for issuers. This could encourage greener infrastructure projects to fill the project pipeline, ultimately cutting emissions and contributing to more sustainable cities. 

Linking Subnational Action & Green Muni Investment 

While green muni bond numbers are down in 2018 compared to last year, there is also growing interest in green muni investment. This is being boosted in part by the increased focus at subnational level on climate risks and the need to more closely link city and state climate action plans with their borrowing programs, balance sheets and infrastructure development plans.  

California Treasurer John Chiang is keeping up his campaign post the September Global Climate Action Summit to promote green investment and the Green Bond Pledge.

Our recent State of the Market report for 2018 shows that green bonds have been issued from 29 states. That’s over half the Union. 

California and New York state are ahead in 2018, continuing the dominance of 2017, size does matter, but smaller states like Hawaii and Rhode Island are taking their own lead. Rhode Island is in the Top 10 issuers for 2018 to date, with both the State Treasurer and the RI Infrastructure Bank signing the Pledge. 

Increasing green investment to match climate ambitions still remains the challenge.   

The last word

These two UCL papers provide another clue as to where the market and investors may be moving to.

Issuance is yet to reach the density that’s needed but maybe, even a study on these limited volumes, are the UCL researchers on to something?

Our half yearly US Muni report from June looks at the market potential and we'll be having more to say on both green and climate-aligned investment in this space in January. 

‘Till next Time, 

Climate Bonds.

** Definition: Climate-aligned: Municipal bond issuers from the United States, in particular dedicated authorities, agencies, departments and similar divisions with more than 95% of their revenue derived from climate-aligned water, transport, waste, land use and renewable energy operations. 

Investing in Green Building 

Vital in the race to slow emissions growth is the reduction of greenhouse gas produced by the buildings sector. It is essential to support investment in Low Carbon Buildings including retrofits and refurbishments of existing commercial, industrial and residential building stocks and new builds with low carbon footprints. 

Delivering this transition will require deployment of capital. Bonds have a long history of financing large infrastructure investments, and the USD100trillion bond market can play a significant role in funding this rapid decarbonisation in the buildings sector. 

Climate Bonds is hosting two webinars in November to outline the role our Low Carbon Building Criteria (LCB) has in establishing the green credentials of low carbon features of bonds, loans and mortgages in the sector, and alignment with emissions standards and objectives, leverages with the bond market, and specifically, mortgages and building loans; to align the building sector with a low carbon objective. 

Who Should Register?

Webinar #1 is particularly suitable for policy specialists, regulators, NGOs in the sector, green building council representatives and members. 

Webinar #2 is particularly suitable for 2^ndand 3^rd party opinion providers, verifiers, ratings agencies. 

And of course, if you’re a property specialist with a bank or a financier, a corporate developer, asset manager or ESG specialist, you’re welcome at either. 

Two Webinars - Comprehensive Topic Range 

This is a two-stage double Webinar Program. 

Webinar #1

The first webinar will cover the application of the LCB to property investments and alignment, in participation with Climate–KIC. We will focus on the difference between second party and third-party verification standards and how investors are increasingly looking for neutral third-party criteria to assess the climate impacts of their investments.

Date: Wednesday November 13^th

Time: 2:00 pm GMT (3:00 pm BST)

Speakers:

Monica Filkova, Head of Market Intelligence

Cory Nestor, Research Analyst

Register here.

Agenda:

• Green Bond Market overview
• Second party verifications need for third party standards (green definitions)
• Climate Bonds Taxonomy
• Standards & Certifications overview
• Building Criteria introduction
• Climate KIC areas of focus alignment
• Climate KIC Impact Framework alignment 

For Webinar #1 Register here.

Webinar #2

The second webinar will discuss how the Low Carbon Building Criteria can be used by financial institutions and developers to demonstrate the climate credentials of their assets and associated debt financing.  

We will also highlight the difference between second party and third-party verification standards and how investors are increasingly looking for neutral third-party criteria to assess the climate impacts of their investments. 

Date: Tuesday November 20th

Time: 2:00 pm GMT (1:00 pm BST)

Speakers:

Cory Nestor, Research Analyst 

Matteo Bigoni, Certification Manager

Register here.

Agenda:

• Green Bond Market overview
• Second party verifications and need for third party standards (green definitions)
• Climate Bonds Taxonomy
• Standards & Certifications overview
• Building Criteria an in-depth look
• Certification process

For Webinar #2 Register here.

Want to know more? 

Visit our website for the Low Carbon Building Criteria

Also, visit Climate–KIC to keep a track on the latest on Climate related Innovations 

‘Till next time, 

Climate Bonds. 

The sandy shores of Rhode Island go even greener via RIIB: Meanwhile Q3 figures slow: Connecting cities' balance sheets with climate action 

The Rhode Island Infrastructure Bank (RIIB) has become the latest signatory to the Green Bond Pledge, continuing an environmental commitment and green direction that includes the issuance of 6 green bonds to date and the appointment of a Director as Chief Resilience Officer to help facilitate projects addressing climate impacts. 

Momentum from GCAS in October 

RIIB joins the Rhode Island Treasurer’s Office, one of the foundation signatories announced during the September Global Climate Action Summit (GCAS) in San Francisco that saw a slew of international and sub-national commitments around climate action and green finance. Additional Pledge signatories from GCAS included the City of Mexico, California State Treasurer and City of Ashville. 

There was also support for future Pledge signatories in developing their inaugural green bond issuance as one of the proposed activities of the Global Green Bond Partnership (GGBP), another major initiative launched during the Summit. 

The RIIB View 

Jeff Diehl, CEO Infrastructure Bank:

“As the state’s central hub for local infrastructure financing, we finance environmental projects and increasingly we are incorporating resilience into these projects, which already contain green elements." 

"Since its inception almost 30 years ago, the Bank has been an issuer of what are now regarded as Green Bonds. We are supportive of the efforts outlined in the Green Bond Pledge and look forward to continuing our pursuit of a more sustainable and resilient future for Rhode Island.” 

“Today’s pledge underscores our commitment to creating a sustainable Rhode Island economy and environment. As the sole Rhode Island issuer to-date of Green Bonds, the Infrastructure Bank prioritises the implementation and efficacy of green components across its programmes. As a signatory to the Pledge, the Bank is deeply excited to continue these practices and promote industry-wide adoption of green financing vehicles.”

The US Green Muni Market in 2018

Climate Bonds' figures for 2018 issuance at end Q3 show the market has slowed and last year's record of USD11.4bn of municipal issuance may not be surpassed. 

Annual issuance is at USD2.3bn compared to USD6.6bn at the end of Q3 in 2017. The Tax Cuts and Jobs Acts of 2017 have resulted in a drop in refunding issuance volume in 2018 and had an impact on new issuance, a point we noted in our half yearly municipal briefing paper from July and discussed in this recent Bloomberg interview. 

Despite this shortfall we remain confident that the green muni market has significant growth prospects. Put simply, many of the climate and carbon commitments being made by US cities and states through various groups cannot be met without significant greening of balance sheets and public investment programs. We are not alone in a postive view of the green muni sector. In this 8:03 min radio interview, Sean McCarthy, CEO, and Bob Cochran, Chair from leading muni bond insurer Build America Mutual (BAM) give their encouraging insights. 

California and New York still lead on annual issuance as at the end of Q3 2018, congratulations to Rhode Island for making the top 10.  

The largest single issuance so far this year has been the California Infrastructure and Economic Development Bank (Ibank): USD449m, San Francisco Public Utilities: USD408m, New York State Housing Finance Agency: USD286m. 

Both California and New York have strong political leadership on climate action and this has also been replicated in their respective state based pension funds, a point noted by Asset Owners Disclosure Project (AODP) in their 2018 Global Climate Index Pension Fund study. 

On the performance side, new studies are emerging on green muni bond pricing, providing more background for the market and analysts looking at the green muni segment with demand for quality green product remaining strong. 

For larger utilities, the offshore interest in SFPUC’s July USD408m Climate Bonds Certified green water bond is a pointer to investor attitudes outside the US.

The last word 

Rhode Island signing the Green Bond Pledge ties into the values and mission of the Infrastructure Bank and how it has been operating for almost 30 years. RIIB has financed numerous green projects and has integrated green solutions into new financing programs. 

We’ll finish with Sean Kidney’s perspective: 

     “Embedding climate adaptation and resilience into new infrastructure projects at a state and municipal level has never been more critical. Scaling up green muni bond issuance is vital to meeting this goal."

     Aligning climate and carbon commitments and ambitions of cities with their longer-term infrastructure and investment plans has become the arena for change in the US.

     By signing the Green Bond Pledge, RIIB is pointing to how this transition can be achieved. They are expanding the space for discussion around matching climate action with finance initiatives at the sub-national level.”

Who will be the next champions of green muni investment? 

Stay tuned to this space for more!

‘Till next time,

Climate Bonds

 環境金融（グリーンファイナンス）促進に向けてのネットワーク立ち上げ

Takada, Sueyoshi, & Tamaki establish Green Finance Network Japan (GFNJ):

High profile multi-stakeholder membership; Strong ambitions 

重要関係者対象組織、グリーンファイナンスネットワーク・ジャパンの公式発表と活動における大望

On 3rd November 2018, Tokyo sees a green finance symposium which will mark the launch of the Green Finance Network Japan (GNFJ). The GFNJ will take on the role of putting Japan amongst the select group of nations who have undertaken green finance initiatives to review and examine options for reform of their financial systems. 

This list includes the EU High-Level Expert Group on Sustainable Finance (EU HLEG), which has morphed into the Technical Expert Group (TEG) -with Sean Kidney amongs its members- the UK Green Finance Initiative (GFI), Hong Kong Green Finance Association (HKGFA), and the Canadian Expert Panel on Sustainable Finance, that has just released its Interim Report, and mulitlateral engagements like the Sustainable Banking Network (SBN) that just published the ‘Creating Green Bond Markets’ report, a joint Climate Bonds and IFC production.

Green Finance Network Japan 

Mr. Hideki Takada Secretary General of GFNJ and a former Senior Policy Analyst, Green Finance and Investment, OECD (Ministry of Finance / Cabinet Secretariat, Government of Japan) shared the news of the pending launch with Climate Bonds: 

“It was my great pleasure to work with Climate Bonds on the green finance and investment agenda during three years’ secondment to the OECD.”

“This agenda is gaining momentum in Japan as well as in the world and I have decided to keep my personal commitment to this theme. As part of my commitment, I have established the Green Finance Network Japan (GFNJ) together with founders Mr. Takejiro Sueyoshi, CEO, Green Finance Organisation Japan, and Mr. Rintaro Tamaki, President, Japan Centre for International Finance (also former Deputy Secretary-General of the OECD).” 

The high-level taskforce has taken on the commitment to dynamize Japan’s finance market towards greater green focus. Some of the first green bonds sprouting from Japan were the environmentally-themed ‘Uridashi’ bonds (being very popular among secondary market and retail investors). 

Japan is also a source of green issuance across a number of sectors with listings on foreign exchanges notably the German, Luxembourg and Singapore bourses. 

The Japan Exchange Group (JPX) has one sustainability-themed listed issue by Japan Investment Cooperation Agency (JICA), released earlier this year. The use of proceeds are dedicated to projects around the world promoting peace, stability and prosperity in the international community addressing JICA’s goals of promoting socio-economic development in the developing world to help achieve the SDGs. 

In 2017 Japan ranked 11th in the world with USD3.3bn issued and at the end of Q3 2018 Japan ranked 13th in the world with USD2.2bn issued.

GFNJ objectives and stakeholders

Mr. Hideki Takada has shared the initial aims of the GFNJ and details of an impressive list of members from government, DFIs, financial heavyweights including Mitsubishi UFJ Financial Group (MUFG) and Mizuho Securities, academia and the OECD. 

The aims of the GFNJ is to facilitate multi-level stakeholders:

• On information sharing on green finance activities of members, by organising events and workshops
• Gathering and sharing of information on global green finance activities
• Providing a platform for connecting Japanese and international stakeholders

 The current provisional list of members for the GFNJ are:

Founders

• Takejiro Sueyoshi: CEO, Green Finance Organisation / Special Adviser to UNEP FI
• Rintaro Tamaki: President, Japan Centre for International Finance / Former Deputy Secretary-General, OECD

Secretary General

• Hideki Takada: Former Senior Policy Analyst, Green Finance and Investment, OECD (Ministry of Finance / Cabinet Secretariat, Government of Japan)

Government Ministries

• Tomoaki Ishigaki: Ministry of Foreign Affairs / Office of the Prime Minister
• Haruhiko Nishimura: Ministry of the Environment
• Aya Nagata: Ministry of the Environment
• Tadashi Shibakawa: Ministry of the Environment
• Naomi Sugo: Ministry of the Environment
• Makoto Yakushiji: Ministry of the Environment
• Satoshi Ikeda: Financial Services Agency
• Jun Takashina: Ministry of Economy, Trade and Industry
• Mayuko Hirai: Ministry of Economy, Trade and Industry
• Kiichi Tokuoka: Ministry of Finance

Private Financial institutions

• Teiko Kudo: Sumitomo Mitsui Banking Corporation
• Amane Yamasaki: MUFG Bank
• Koji Omachi: Citigroup
• Osamu Morishita: Mizuho Securities
• Sachie Ii: Mizuho Securities
• Mana Nakazora: BNP Paribas

Development Financial Institutions

• Megumi Muto: Japan International Cooperation Agency
• Tsutomu Sato: Japan Bank for International Cooperation
• Hiroyuki Kato: Development Bank of Japan

Insurance companies / Institutional investors / Corporates

• Mitsugu Sumiya: Axa Life Insurance
• Hiroshi Ozeki: Nippon Life Insurance
• Masaaki Nagamura: Tokio Marine and Nichido Fire Insurance
• Shizuko Omi: Amundi Japan
• Shigeki Miwa: SoftBank Group / SB Energy

Think tanks / Academics

• Mariko Kawaguchi: Daiwa Institute of Research
• Eiichiro Adachi: The Japan Research Institute
• Akane Enatsu: Nomura Institute of Capital Markets Research
• Akiko Shigemoto: Institute for Global Environmental Strategies
• Yoshihiro Fujii: Research Institute for Environmental Finance
• Tsuyoshi Mizuguchi: Takasaki City University of Economics
• Yukari Takamura: Nagoya University

International organisations

• Masamichi Kono: Deputy Secretary-General, OECD
• Tsuzuri Sakamaki: Senior Policy Analyst, Green Finance and Investment, OECD

The last word

The JPX has mainstreamed sustainability into their objectives and have setup initiatives to support listed companies in adopting ESG practices. Similarly, the Ministry of Environment, Japan (MOEJ) set up Green Bond Guidelines in March 2017 to facilitate issuance however, the on-shore market, like most of global finance, still has a long journey ahead. 

Sean Kidney sums it up: 

“I have been involved with many stakeholders in Japan for some time now. Japan has significant presence in the green sphere and the new commitment towards green and sustainable finance is commendable. The GFNJ is indeed an exciting new initiative and will be a major driver of progress. Messrs Hideki Takada, Takejiro Sueyoshi and Rintaro Tamaki are to be congratulated for taking the lead.”

Follow this space for more developments on GFNJ. 

‘Till next time,

Climate Bonds

Launch-Brazil: State of the Market report; 3^rd meeting of Sustainable Agri Committee; Sustainable Infra for Munis Roundtable brings together market leaders and governments to set 2019 green finance action plan

Setting the pace

It was a Green Finance Triathlon in Brazil last week with three successful events in São Paulo and Florianópolis (the capital of southern Brazil’s Santa Catarina state) where, post the long awaited 2018 presidential elections, over 200 leaders gathered to discuss the future of green finance.

The good news? Green finance is set to be a big theme for Brazil in 2019.

To kick us off, the Brazil Agriculture Subcommittee had their final meeting of the year at Pinheiro Neto Advogados HQ on Wednesday in São Paulo to set the strategy for the year ahead.

Convened by CBI and Sociedade Rural Brasileira, the meeting set an action plan for the target sectors including:

• soybeans
• coffee
• sugar cane
• livestock

Building off of this year’s activities, the plan will involve building capacity in green investment pipelines that are in line with best practice globally, defining different financial products that will help deliver the necessary capital flows to eligible producers and a policy roadmap that will help foster market growth in sustainable agribusiness.

The Committee feeds directly into the high level forum with investors under Brazil’s Green Finance Initiative (BGFI).

Continuing the sprint, on Thursday we launched the Portuguese version of the Climate Bonds annual flagship market report ‘Bonds and Climate Change State of the Market 2018' report, at Mattos Filho Advogados HQ, in São Paulo before a 100+ strong audience.

The Brazil edition was accompanied by a dedicated brifing paper on Brazilian agriculture. The report reflected that increasing investment flows into sustainable agriculture at scale provides an opportunity to help limit the country’s future emissions while cementing its role as a major global exporter of sustainable agricultural products.

Spinning towards the south of Brazil we visited Florianópolis, where delegates from municipalities across the state of Santa Catarina gathered with business leaders on Friday to debate the challenges and solutions for channelling private capital flows to finance sustainable infrastructure projects in the urban landscape.

Fiscal recovery for the States will be the greatest challenge in attracting much needed capital, but with the support of Federal Government and development banks, along with successful PPP models and local funds for leverage, there are opportunities to bring to market in the near future.

We’re out of breath, let’s see what others are saying?

Milton Mentem, CEO, Ecoagro: 

"We are living interesting times where there is an increasing interest in financial tools such as CRAs and a whole new government perspective, with market unlocking especially regarding the bioenergy and forest sectors. I believe we'll see a lot more green issuances in 2019."

Thiago Silva, Treasury Finance Manager, CTEEP:

"Brazil has an enormous renewable energy potential, but to become a major global power in the sector the country should look into green investments. Companies in the industry must take advantage of the demand that increasingly conscious and climate-minded investors are giving to green projects and attract this capital profile to their investment portfolio."

Bruno Tuca, Partner, Mattos Filho Advogados:

"Brazil has great potential to flood the international Market with green financial products and what is interesting to note by discussing with Brazilian green issuers that came to market recently is that the effort and cost to label a security are minimal, so this potential should be soon be unlocked."

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

"All the discussions we've had this week were incredibly enriching and most importantly encouraging in light of the recent changes in Brasilia. The market is ready to move and green finance remains a priority for the private sector.”

“It is clear that Brazil will need to find new ways to tap international capital to help meet national climate and development goals. Increasing domestic green bond issuance is an obvious way to diversify the investor base and attract increased off-shore capital into sustainable agriculture and infrastructure."

The finish line

We’ve gotten to the end of our green finance triathlon with the knowledge that Brazil is ready for change and new beginnings. The nation has huge potential for providing institutional investors with the long term quality green investments they desire. The year ahead will be vital to building investor confidence in the national green finance agenda.

At the end of 2018, Brazil’s climate aligned bonds outstanding totalled USD11.3bn, with labelled green bonds accounting for USD4.1bn, or 37%. There's room for so much more!

A wave of green issuance is predicted for 2019 in Brazil, with investments coming from all types of sectors: from water and sanitation to energy to transport and especially, in light of the discussions we’ve been part of all last week, in agribusiness.

To see more on our work with local stakeholders go to our Brazil page. (English/Português)

See you soon,

Climate Bonds

400+ projects & assets that will help Australia meet its Paris Goals – Can they be financed? Are Green Bonds the answer? 

Climate Bonds is hosting two webinars to discuss our recently launched 'Green Infrastructure Investment Opportunities - Australia & New Zealand' report. 

The GIIO report is a first of its kind for Australia and was jointly sponsored by ANZ, CBA, the CEFC, Macquarie Group, NAB and Westpac.

A Green Finance Agenda

The webinars will highlight the possible paths for Australia to finance its low carbon transition and the increased engagement arounf green finance required between the public sector, project owners, asset managers and superannuation (pension) funds. 

Speakers will also discuss the 400+ infrastructure projects and assets identified in the report that are considered green and qualify for refinancing, additional financing or new financing, across four major sectors:

• Low carbon transport 
• Renewable energy 
• Sustainable water & waste management 
• Green buildings sectors 

The webinars come in the wake of the just announced record size AUD1.8bn NSW TCorp Certified green bond that includes two of the major low carbon transport projects on the 400+ infrastructure list. 

Webinar 1 – Australasia/US audience

Date: Tuesday 20^th November

Time: 10:30am – 11:30am AEDT, Tuesday

China: 07:30 – 08:30 CST (20^th November, Tuesday)

USA EST: 18:30 – 19:30  (19^th November, Monday)

USA PST: 15:30 – 16:30  (19^th November, Monday)

Register here

Webinar 2 – European audience

Date: Tuesday 20^th November

Time: 11:30am – 12:30pm GMT, Tuesday

Europe: 12:30pm – 13:30 CET

China: 19:30 – 20:30 CST

Australia: 22:30 – 23:30 AEDT

Register here

Speakers:

• Bridget Boulle: Climate Bonds Head of Global Trends
• Kristiane Davidson: Report Lead Author and Climate Bonds Consultant 
• Haran Siva: Climate Bonds Senior Advisor – Australia

In the meantime, read our recent reports focusing on Australia & NZ:

• Green Infrastructure Investment Opportunities - Australia & New Zealand report​​

• Australia and New Zealand Green Finance Country Briefing​

• Our comprehensive report launch Blog Post or Media Release

Look out for Climate Bonds Webinars between now and Xmas. Low Carbon Buildings, CBI Green Definations & Taxonomies, Green Bond Pricing and EU TEG update and more to come. Our Twitter feed always has more details. 

‘Till next time, 

Climate Bonds 

Another big Chinese bank comes to market with a green offering 

Multiple projects: pollution control, clean energy, ecological protection and climate change adaptation

Agricultural Development Bank of China (ADBC) has issued another benchmark size green bond in acccordance with their 'ADBC Green and Sustainability Bond Framework'. 

As reported the bond was 3.4 times oversubscribed with 58% allocated to European investors.   

The EUR500m bond is their first issued in EUR and is proposed to list across Hong Kong Stock Exchange, Luxembourg Stock Exchange and China Europe International Exchange. 

ADBC is the only agricultural policy bank in China. The bank aims to function with sustainable development capabilities, working to channel financial services to 5 sectors: national food security, poverty alleviation, agricultural modernisation, integrated urban and rural development and nationwide regional development strategy. 

Previous ADBC green issues include a CNY6bn (USD863bn) in Dec 2016, we covered it in our Market Blog at the time.  

Second Party opinion is jointly provided by Centre for International Climate and Environmental Research Oslo (CICERO) and International Institute of Sustainable Development (IISD). 

It's labelled a Green and Sustainability Bond, aiming at climate change and linking to UN SDGs. CICERO and IISD have categorised ADBC's green bond framework as ‘dark green’ and the sustainability bond framework rated as ‘medium green’. 

Third-party report was provided by CECEP Consulting Co., Ltd. who have had an increasingly active presence in the Chinese market post the 2016 Beijing G20. 

ADBC not ABC 

Not to be confused with the Agricultural Bank of China (ABC), ADBC is a policy bank. 

The term ‘policy bank’ might not mean much to our non-Chinese audience but it is an important distinction. In 1994 the Chinese government established three policymaking banks, each of which is dedicated to a specific lending purpose. Agricultural Development Bank of China (ADBC), the China Development Bank (CDB) and the Export-Import Bank of China (Exim Bank) make up the trio. 

The Last Word 

This bond is the latest in the growing trend of green issuance from giant Chinese banks we’ve seen in 2018. Large deal sizes, offshore listings and strong demand from global investors has marked the previous offerings. 

We’ll keep you updated as other major issuances emerge. 

‘Till next time,

Climate Bonds.

A step-by-step guide to support RMB denominated green bond issuance by foreign issuers

Annual issuance of green bonds globally soared from USD11 billion in 2013 to more than USD161 billion in 2017.

Chinese based issuance has played a big part in this growth, beginning in late 2015 with the Agricultural Bank of China issuing a green bond in London.

Since then the market has grown rapidly. With total issuance of USD60.9bn as of October 2018, China is now the world’s second largest green bond market.

However, these bonds primarily fund domestic assets. So far, only a few green panda bonds have been issued to take advantage of domestic Chinese investor appetite for offshore green assets and opportunities.

The green panda opportunity

China’s green bond market, with clear rules, active market players, and supportive investors and policymakers, offers a great opportunity for foreign green bond issuers.

Green panda bonds could be a source of capital for overseas green bond issuers who are looking to diversify their investor base. Domestic investor appetite for green assets could help fund the investment needs of Latin America’s transition to a low carbon and climate resilient economy. 

To support and facilitate international issuers entrance into the Chinese green bonds market, the Climate Bonds Initiative in partnership with the Inter-American Development Bank (IDB) have just published the ‘Green Panda Bond Handbook’.

The Handbook seeks to provide an overview of RMB-denominated green bond (green panda bond) issuance process and facilitate overseas issuers’ participation in the Chinese domestic green bond market.

It provides a step-by-step guide for prospective issuers and an overview of Chinese regulators and actors. Chinese policymakers are keen on facilitating investment in green assets and the Handbook launch is supported by the People’s Bank of China Shanghai.

Read the Handbook in English now.

 点击下载中文版报告 (Chinese version). 

Shanghai launch event

The 'Green Panda Bond Handbook'launch event, organized by the Inter-American Development Bank, the People’s Bank of China and the Climate Bonds Initiative, held today in Shangai, was aimed at providing opportunities for national development banks as potential green bond issuers from Latin America to showcase their green bond pipelines and attract investment through direct conversations with Chinese investors.

A representative group of National Development Banks from Latin America and the Caribbean, including the Brazilian Development Bank (BNDES) and the National Mexican Bank of External Commerce (BANCOMEXT), have joined other Chinese banks and relevant Chinese green bond market stakeholders on an Issuer-Investor Roundtable, discussing green bond issuance barriers and best practice.

Who’s saying what?

Jin Penghui, Executive Vice-President, People’s Bank of China:

“The launch of this guide and the issuance of Green Panda Bonds demonstrates the efforts of China to fulfil the commitment of opening up the Chinese bond market. China is now vigorously promoting green development, showing its willingness to make a contribution in protecting global environment and resources.

The PBoC has supported the development of the Chinese green bond market and have made great efforts in external cooperation and institutional regulation, striving to create a sound environment for more and better panda bonds to come.

Since its birth, Panda Bonds have been an important tool for cross-border use of RMB. We hope in the future there will be more innovative tools to promote the financial cooperation between China and Latin America.”

Juan Antonio Ketterer, Division Chief – Connectivity, Markets and Finance Division, IDB:

“This has been a very successful meeting that will set the basis for a step up of the green bond markets and contribute to attract more investments in climate projects for the LAC region.

We thank our hosts, the People’s Bank of China, the representatives of the Chinese financial institutions present in the meeting, CBI, and last, but not least, the group of National Development Banks of Latin America and the Caribbean that have joined us for the occasion.”

Sean Kidney, CEO, Climate Bonds Initiative:

“We have worked together with the Inter-American Development Bank on the Green Panda Bond Handbook to provide guidance to international issuers wanting to tap into the booming Chinese green bond market.

The Shanghai launch brought together the People’s Bank of China and other leading Chinese banks, LATAM development banks and potential Chinese investors. All the participants recognise that diversifying green capital flows and developing investment markets between LATAM and China with green panda bonds is an important part of building new climate finance solutions.”

The last word

In order to meet urgent climate action targets, green finance at scale is needed.

China’s green bond market has seen a steady-fast growth since its inception in 2015. Governments and policy makers are incentivizing investment in green assets and investors’ appetite is evident.

LATAM issuers can tap into this market and raise capital for their green projects bringing them one step closer to meeting NDCs and Paris targets.

Learn more about how to issue a green panda bond.

Download the Green Panda Bond Handbook now.

点击下载中文版报告 (Chinese version).

'Till next time,

Climate Bonds

Collaborative approach to green capital growth and attracting infrastructure investment

Caption:  (Partnership handshake from left) Zephia Ovia (Vetiva), Olumide Lala (Climate Bonds Initiative), Damilola Ajayi (Vetiva) and Oyelade Eigbe (Vetiva)

Vetiva Capital Management Limited (Vetiva) and Climate Bonds Initiative have signed a new partnership agreement with the goal to develop a liquid green and climate bond market in Africa. 

Vetiva has previously worked on a number of cross border transactions including a dual listing on the Nigerian and London Stock Exchanges, listed GDRs for Nigerian Companies and international capital raising transactions.

This new collaboration is in-line with Vetiva’s commitment to make the African continent more attractive to capital flows, in a sustainable and environmentally friendly manner, necessary for long-term infrastructure projects.

The announcement was made at a signing ceremony in Lagos with Olumide Lala Africa Markets Programme Manager, representing the Climate Bonds Initiative.

Who’s saying what

Mr. Damilola Ajayi, Group Executive Director Vetiva:

“Our engagement with Climate Bonds Initiative is on a basis of a shared vision to not only channel long-term funding into Africa, but to do so whilst addressing the challenges posed by climate change.”

“It is our firm belief that Africa is positioned to lead the climate change conversation globally whilst deepening the continent’s capital markets, and this collaboration is a step in the right direction.”

Ms. Justine Leigh-Bell, Deputy CEO and Director of Market Development, Climate Bonds Initiative:

“Nigeria is uniquely placed to have one of the largest pension fund schemes in Africa that if presented with attractive sustainable investment opportunities has the potential to drive the future development of the Nigerian economy.”

“This partnership with Vetiva Capital is a positive and encouraging first step to having investors in the Africa region help drive the demand for climate related investments.”

The last word

Nigeria is leading Africa on green finance at present, issueing the first Climate Bonds Certified Soverign Green Bond, in 2017, now foreshadowing a second sovereign issuance.

In July, FMDQ OTC Securities Exchange, FSD Africa and Climate Bonds launched a green bond market development programme with local stakeholders in a step-by-step rollout process.

The announcement with Vetiva Capital Management marks the latest stage of our local engagement and joint activities in Nigeria.

‘Till next time

Climate Bonds. 

Oct-Nov 2018 is the biggest yet! ING Certification sets record: SGP goes Programmatic for Paris' grand expansion and Westpac - World’s First Green Deposit plus more!

Three big Certifications – Three big backstories 

A surge in overall Climate Bonds Certifications in the last two months; behind the billions there are some backstories worth a closer look for Blog readers. 

We profile ING Groep N.V., Société du Grand Paris & Westpac. 

Biggest Certified Bond Yet

It’s the largest ever Certified bond issued to date! Dutch based financial giant ING Groep N.V. came to Market in early November with a (EUR1.5bn and USD1.25bn) USD3bn equivalent offering. 

Certified under the Low Carbon Buildings, Solar, Wind and the newer Marine Renewables Criteria of the Climate Bonds Standard. 

ING’s leadership is beginning to steer their EUR600bn lending portfolio towards the Paris Agreement 2-degree target. ING are one of five large EU banks who launched the Katowice Commitment at COP 24: an effort to align their lending activities to Paris goals. 

SGP Adopts Programmatic Certification for Paris Metro 

The October EUR1.75bn (USD2.01bn) Certified green bond from the French state-owned Société du Grand Paris (SGP) is the first in a ten year EUR35bn expansion of the Paris rail network, with 200kms of new lines and 68 new stations; one of the largest infrastructure projects in Europe. 

SGP have adopted the streamlined Programmatic Certification (PC) path for future green issuances that will help fund stages of this long-term upgrade of the city’s rail system. 

Already adopted by 10 other issuers, PC simplifies the certification process for large or repeat green bond issuers whilst maintaining the science based rigour and investor assurance of our Standard. 

Westpac’s World First 

Westpac Australia is the third noteworthy Certification; announcing the launch of the world’s first Green Tailored Deposit product. It’s medium term (1-5 years) with a minimum transaction amount of AUD1m with underlying investments meeting the Climate Bonds Standard and has garnered interest from some high-profile municipalities looking for green investment opportunities. 

Already a Programmatic adopter and repeat green issuer, Westpac are again leading the global banking crowd. Expect more retail products with solid green credentials to become the norm in the next few years. 

Watch the Australian space for more market innovations and progress on green infrastructure. 

Some other Certified Bonds

Here are some of the other Certifications in October-November. Repeat Programmatic Certified issuer New York HFA makes an appearance and NSW Treasury Corporation debuted with an Australian record issuance as the third Australian sub-sovereign behind Victoria and Queensland to go certified green into the market. 

Also notable is the ongoing march of giant Chinese banks along Certification path. 

Industrial Bank Co., Ltd (IB) and the Tokyo branch of the Bank of China (BoC) join the Industrial and Commercial Bank of China (ICBC), China Construction Bank (CCB) and China Development Bank (CDB) in the full list of certified issuers. 

Certifications Oct-Nov 2018 

* Westpac Green Deposit details can be foundhere and Westpac Certification details are availablehere.

The last word

In anticipation of growth, much of 2018’s focus has been taken up by calls, some informed (and some others not so informed) for improved market standards, generating healthy discussion and debate about the future directions of green investment. 

While that has taken place some issuers are simply following best practice in green and getting on with making a market. But looking at where we’ll land at the end of 2018, clearly not enough. Too many banks and corporates are yet to act. 

Meanwhile… with the SR15 Report highlighting some grim scenarios and other reports pointing to global emissions on the rise; 2018 marks an all-time high in global carbon emissions.

A little less emphasis on talking green and sustainability and a lot more emphasis on issuing green in 2019 is the response we want from global finance and business. 

‘Till next time, 

Climate Bonds 

SGP adopts Programmatic route for EUR35bn Paris rail expansion

Series of certified green bonds for ongoing project funding 

The largest transport infrastructure project in Europe 

State-owned project developer Société du Grand Paris (SGP) is undertaking the largest low carbon transport development in Europe with expansion to the Paris rail network including 200km of new lines, 4 new metro lines and 68 new metro and commuter stations in addition to the existing 400km network. 

The giant ten-year multi-stage EUR35bn infrastructure project will see SGP use a combination of tax and borrowing via an ongoing series of Climate Bonds Certified green bonds. 

The project is emblematic of the large-scale low carbon transport development needed in the urban concentrations of today and the megacities of tomorrow, particularly in emerging economies.

Société du Grand Paris’(SGP) first bond under Programmatic Certification

SGP has adopted the Climate Bonds Programmatic Certification; designed for large and repeat issuers. The first certified bond to date is a whopping EUR1.75bn (USD2.01BN), issued in October 2018 for a tenor of 10yrs. 

A second, smaller certified bond is already in the pipeline as part of the Programmatic process. 

Climate Bonds Initiative awarded pre-issuance Certification for this series of bonds under the Low Carbon Transport Criteria in October 2018. 

The SGP Plan

Green Bonds- A Bridge to SDGs

In an increasing trend amongst green issuers, the green bond framework released SGP has also identified the project as contributing to SDG goals 8,9,11,12,13,15. 

Climate Bonds analysis from June has identified the SDGs that will benefit the most from increased green bonds issuance and SGP’s Green Bond Programme is a prime example of green bonds bridging SDGs in practice.  

Our special SDG Briefing Paper has more on this critical connection between green finance and sustainable development. 

What is Programmatic Certification?

Programmatic Certification (PC) is a streamlined process for Issuers who plan to issue multiple green bonds over an extended period, against a large portfolio of eligible assets and projects.

PC shares the same rigor as the basic Climate Bonds Certification process under the Climate Bonds Standard and provides the same assurance, however it frontloads some of the procedures so that they are done only once in the beginning of the overall bond issuance programme.

This simplifies the process for the issuer but maintains the existing integrity of Certification under the Climate Bonds Standard and associated assurance for investors. 

Uptake since Inception 

The Programmatic process was launched in January 2017 as part of the Standard V2.1 upgrade to our umbrella standard. 

In the intervening 20 months, 10 major Issuers have moved across to the new Certification process. 

The last word 

Programmatic Certification is designed for sovereigns and sub-sovereigns, banks, large corporations, public authorities and utilities in transport, energy, water and waste, cities and municipalities.

Multiple issuers with existing debt programmes and asset pools looking for a process to support an ongoing series of green bonds. 

In SGP’s case, their Programmatic Green Bond Programme may match the decade+ life of the giant Paris project. 

Is Programmatic for You? 

To find out more, visit our Programmatic Certification page, download the Powerpoint Guide from the bottom of the page or contact Rob Fowler Head of Certification or Matteo Bigoni Certification Manager for a personal briefing. 

‘Till next time,

Climate Bonds

NY HFA on the Top of the Programmatic Certifiers - Multiple Green Bonds Using Streamlined Route 

11 Green Bonds and Counting 

New York State Housing Finance Agency’s (HFA) 11^th green bond issuance has confirmed its position amongst Programmatic Certifiers. The USD188m, 35 year tenor Certified bond is the latest in their program, financing construction of energy efficient buildings built in accordance to the US ENERGYSTAR® energy efficiency standards and thereby qualify under Low Carbon Buildings Criteriaof the Climate Bonds Standard.

The bond program is part of HFA’s environmental commitments to propagate green building in the affordable housing sector, aligned with standards that will promote a timely transition to a low carbon economy.

An Early Programmatic Adopter 

HFA commenced an active green issuance program in December 2016 when Governor Cuomo announced their first Climate Bonds Certified bond of USD45.1m under the Low Carbon Buildings Criteria. 

The state-owned agency is committed to delivering on a low carbon economy with the help of its Green Bond Program. New York was the first state to adopt the Climate Bonds Certification for affordable housing in the US. HFA has subsequently adopted our Programmatic Certification which is ideally suited to large multiple green issuers seeking to streamline their green bond Certification process. 

In 2018 alone, HFA issued 5 Certified bonds all through the Programmatic route. ​The full list is below: 

Other Adopters  

In the US, large green issuers to adopt Programmatic Certification for their green bond programs other than HFA are San Francisco Public Utilities Commission (SFPUC), the giant New York MTA and Los Angeles MTA. 

Internationally, French transport authority Société du Grand Paris (SGP) is the latest to take the Programmatic track for its extensive ten-year multi-stage EUR35bn infrastructure upgrade to the Paris rail network, funded in large part by a long-term series of green bonds.

Some of the other large issuers using Programmatic include the French rail network operator SNCF Réseau and consistent green finance innovators in the banking sector, NAB & Westpac from Australia. Case studies can be found here. 

The last word - HFA & Climate Leadership 

HFA is a prime example of sub-national climate action, using repeat green bonds to finance low carbon building development, while ensuring their investment program is aligned with Paris climate goals, following a science-based Standard. 

Programmatic Certification process fits well against HFA’s multiple issuance objectives and best practice environmental commitments. 

In 2019, passing double figures in green bond issuance marks a public authority or corporation as a global leader. 

We look to a future where brown-to-green transition has mainstreamed repeat green bond issuance into business plans and balance sheets. 

Closing the climate finance gap requires muliple issuance to become a commonplace stage, built into the greening of an organisation's bond issuance program. 

We're not there yet. There's some catching up required from banks and the large corporate emitters, 2020 looms and too many are still to issue their very first green bond. 

In the meantime, well done HFA. with their 11th. 

Find out More – Resources and Contacts

Programmatic Certification is designed to support accelerated green issuance from large institutions with existing debt programs for raising capital for suitable green asset pools. 

To find out more, visit our Programmatic Certification page or download the PowerPoint Guide and the FAQs pdf from the bottom of this post.

The full list of Programmatic Issuers is here and you can read Case Studies of Programmatic issuers though this link.

Or simply contact Rob Fowler Head of Certification or Matteo Bigoni Certification Manager for a personal briefing. 

Climate Bonds Certified USD152 million Taxable Municipal Green Bond Offering

Development of Transit Center to become new regional transportation hub connecting the Bay Area

During the week of February 4, 2019 the City and County of San Francisco is bringing an estimated USD152 million of 30-year green bonds to market to fund a portion of the Salesforce Transit Center.

A Preliminary Official Statement (POS) which details the “AA+” Fitch rated Special Tax Bonds, Series 2019A and Series 2019B, has been made available to investors.

The proceeds of the Series 2019B (Federally Taxable - Green Bonds) will be used to finance green projects as part of the development of the Salesforce Transit Center, the new regional transportation hub.

This new facility is expected to achieve at least a LEED Silver certification due to its sustainable design features, and its related facilities, including the Salesforce Park and Train Box. 

A new Rooftop Park and ‘Train Box’

The 5.4 acre park located on the Salesforce Transit Center’s roof, is a 1,400-foot long elevated public park that includes an outdoor amphitheatre, gardens, trails, open grass, children’s play space, a restaurant, and a café. The Salesforce Park serves as a 'green roof' or 'living' roof for the Salesforce Transit Center, providing shade to ground-level sidewalks and a biological habitat for flora and fauna and public open space.

The park also acts as an insulator for interior spaces by moderating heat in warm weather and retaining heat during cool weather. As a biological organism itself, the park helps to capture and filter exhaust in the area and helps to improve the air quality of the neighborhood.

The Train Box was built to accommodate the planned Downtown Rail Extension to extend Caltrain tracks from their current terminus to the Salesforce Transit Center. The bottom level will be the Train Station Platform and have three passenger platforms that will accommodate six train tracks for Caltrain and the California High Speed Rail. The lower concourse, will serve as the passenger connection between the Transit Center and the Train Station Platform and will include retail, ticketing, and bike storage.

Second Certified Muni Bond for City and County of SF

The 2019B Bonds have been Certified by Climate Bonds under the Low Carbon Land Transport Criteria of the Climate Bonds Standard which demonstrates to investors that the project financed is expected to contribute to a sufficiently stringent emissions reduction trajectory.

This represents the second issuance of green financing for the Salesforce Transit Center.

Stifel is the senior managing underwriter for the Bonds, with RBC Capital Markets, LLC and Siebert Cisneros Shank & Co., LLC serving as co-managers.

San Francisco and the Green Bond Pledge

In September 2018 San Francisco hosted the Global Climate Action Summit (GCAS), where the Global Green Bond Partnership (GGBP) was launched with founding members including World Bank, IFC, EIB, Climate Bonds Initiative, Ceres, ICLEI, GCoM and LEDS GP.

The basic role of the GGBP is to support efforts of sub-national entities such as cities, states, countries, corporations and private companies, and financial institutions to accelerate the issuance of green bonds.

GGBP members will also seek to engage with and provide technical assistance to Signatories of the Green Bond Pledge, supporting the development process around inaugural green issuance.

San Francisco was one of the inaugural issuer signatories of the Green Bond Pledge, committing to establishing a green bond strategy to finance infrastructure and capital projects, supporting climate resilience and the reduction of greenhouse gas emissions.

The Last Word

California has consistently been at the top of the US muni green bond league tables with San Francisco, SFPUC, SF BART and ​Los Angeles MTA (LA MTA) all contributing via Climate Bonds Certified bonds. 

SFPUC, SF BART and LA MTA have also adopted the streamlined Programmatic Certification process for large and repeat green issuers.  

As more cities take sub-national leadership roles, climate action will increasingly be connected to debt capital raising plans and infrastructure investment.

The City and County of San Francisco is already amongst the leaders; backing the Green Bond Pledge and issuing multiple green bonds.

Well done!  

‘Till next time,

Climate Bonds

Image Credits: Images courtesy of Transbay Joint Powers Authority/ TJPA.org

"Lack of standards is not a hinderance to green bond issuance. Pressure on corporates to finance transition will intensify," writes Sean Kidney

Two fundamentals of the climate battle are on stark display for 2019. The October 2018 release of the IPCC SR15 report has exploded any faint illusions that the world still has the comfort of decades to take decisive action on climate. 

There is also a plethora of reports estimating the levels of climate finance in green infrastructure needed through the 2020s to influence outcomes to 2050-2060. The 2018 Climate Bonds annual green bonds issuance figure of USD167.3 billion reflects that the climate finance gap is nowhere near to being bridged. 

Time is running out and investment is still lagging. 

In early 2017 Christiana Figures, CDP Founder Hans Joachim Schellnhuber & four other climate leaders called for USD1 trillion in green finance by 2020 as part of Mission2020’s six climate milestones. Two years later, taking into account private climate-based investment, it seems the main actors in the global financial system are yet to demonstrate the level of capital ‘adaptation’ Ms Figueres defined as a performance measure.

Yet 2019 does offer some brighter prospects. The EU Technical Expert Group (TEG) on Sustainable Finance has maintained its cracking pace. China continued its steps towards greening its financial system. Mexico, Morocco, Nigeria and ASEAN have introduced green bond guidelines. The UK is acting on its Green Finance Taskforce recommendations to enhance London’s burgeoning role as a green finance hub.

The Expert Panel on Green Finance in Canada is working towards its final report and, in Australia, investor and ESG groups have sidestepped political inertia and are forming a Sustainable Finance taskforce. The low-profile central bank-led Network for Greening the Financial System hands down is first comprehensive report in April 2019. 

This regulatory momentum will have an effect in 2019, with the EU TEG offering the best prospect of immediate change. Medium term, TEG outcomes may also provide additional guidance for green frameworks in Africa and along with the EIB’s work, enable further harmonisation with China. 

Despite the backdrop of regulatory movement, a lack of green standards or an integrated global structure was often cited by some commentators in both NGOs and investment sector as a rationale, or even a justification for tardy issuance and slow progress in private sector green investment. 

I reject that premise.

These calls overlook ICMA’s 2018 update of the Green Bond Principles (GBP), incorporation of SDG factors and the welcome development of the Green Loan Principles. 

They overlook that Climate Bonds has undertaken a year-long development process to expand our science-based Standard and sector Criteria. We’ve updated our Taxonomy (which has formed part of the EU TEG deliberations) and in March we’ll release the Standard Version 3.0, a complete overhaul of our umbrella guidance for Certification.  

Commonality and harmonisation is coming, but it’s not here yet.

However, use of proceeds disclosure and transparency are now expected by investors. Both ICMA and Climate Bonds schemes are embedded in market practice. The ‘lack of standards’ rationale for slow growth and non-issuance will struggle to see the year out.  

Against the ticking clock that SR15 loudly amplified, pressure comes from all quarters that climate and green investment must increase. The predictions of annual issuance for 2019 ranging from USD140bn to a high of USD300bn will be measured against the high bar of that first trillion in annual investment. That continues to be the big benchmark that banks, insurers and corporates must deliver. By end 2020 the public scrutiny on those who aren’t investing in green and contributing will be sharper. 

In the interim, investors are pushing harder on the world’s largest emitters. The Climate Action 100+ initiative, one of the projects that form the ‘Investor Agenda’, has established a straight line of corporate governance engagement between a USD32tn coalition of institutional investors and the 160 largest global emitters. The Investor Agenda itself is a collective investor action project with a broad climate agenda. 

Speeding the brown-to-green transition is one of the end points of the engagement. This must mean attention moving from risk assessments and statements of intent to the actual capex plans of big emitters, their borrowing programmes and balance sheets. The December investor letter to EU power industry generators, grid operators and distributors reflects this coming focus, calling for capital expenditure plans 'compatible with the Paris Agreement’ and, in time, with a zero-carbon economy. Metals, mining, the chemical and cement industries will also face similar calls in the future. 

Brown-to-green transition in practice means large companies straddling both brown and green assets, and the sooner investor pressure results in greener capex, the better. 

Inevitably, the first green issuances from the high-carbon emitters will be greeted with the ever-present cries of ‘greenwashing’. Civil society is right to be sceptical, but such a development could trigger a positive debate in 2019. 

Should the world’s 200 largest banks await the perfect regulatory framework before issuing green product? The world’s biggest bank– the Industrial & Commercial Bank of China (ICBC) and its counterparts, Bank of China, Industrial Bank of China and Construction Bank of China – have all issued benchmark-size Climate Bonds Certified green bonds, and other top 100 banks in Australia, Canada and Europe have also issued green. The answer is clearly no.

More banks will lead out on green bonds, green loans, mortgages and green deposit products in 2019 and those that don’t, will in time, face institutional investors and civil society framing the green investment question as fundamental to their licence to operate. 

A banking sector that collectively can still hold trillions in brown investments around the world but can’t make its vital contribution reaching the first trillion of green should expect no less. 

Nation states as sovereign issuers of green bonds also have a role. Already, Kenya, the Netherlands and Egypt have foreshadowed 2019 green issuance, joining the sovereign green club. Yet gaps remain amongst G20, OECD and EMEA nations. Politicians are right to urge more from the private sector, but they need to deliver their own Treasuries and Finance Ministries along the way. 

This year will see a strengthening of grass roots calls for more nations to act. We are not on track to limit temperature growth under 2 degrees but are on track to reach 3 degrees or more.

The impacts already in the planetary system are worse than we thought. The trillions needed through the next decade to support low carbon growth paths in China, India, Africa and LATAM are not yet in sight. What’s really at stake in 2019 is not so much a calendar issue, it’s whether we cruise or accelerate into the 2020s. 

-----------------------------------------

Sean Kidney is CEO of the Climate Bonds Initiative and sits on the EU Technical Expert Group (TEG) on Sustainable Finance.
This is an edited version of a feature article first published in Investment and Pensions Europe (IPE) Green Finance section of February 2019 magazine. The original can be
found here. 

Till next time, 

Climate Bonds 

Let's talk green trillions into the 2020s: Green deals, green finance, green investment and green markets.

Emerging economies, green growth paths, green cities, infrastructure and energy projects on the agenda.

Only 3 weeks away! London, March 5-7, the largest green bonds event of the year.

What's new: 

Final Call for Green Bond Boot Camp  Registrations: Training and development day 5th March.

Voting now closed for 4th Green Bond Pioneer Awards, dont forget the Awards Reception evening 5th March Guildhall.

Here's the latest from our pool of Speakers: 

Daniel Klier, Group Head of Strategy and Global Head of Sustainable Finance at HSBC​ 

Daniel oversees HSBC's global strategy and Sustainable Finance divisions. He is a Young Global Leader at the WEF, chairs the Sustainable Finance Working Group at the Institute of International Finance (IIF) and is a member of the UK Government Green Finance Task Force and the European Business Leaders’ Council. 

 

 

 

Maria Tapia, Lead Climate Change Specialist, Inter-American Development Bank

An expert in climate finance, Maria Tapia is the Coordinator of the Climate Innovative Solutions team in the Climate Change Division at the Inter-American Development Bank. As Lead Climate Change Specialist, she champions all efforts to bridge private sector capital to sustainable infrastructure projects and climate change financing.

Looking forward to seeing you in London!

Go to the Conference website for details.

Follow our Twitter for more announcements.

Don’t miss the opportunity. Register Now. 

‘Till next time,

Climate Bonds.

We’re looking for a Policy Manager.  

Here's the key points: 

Job:                             Policy Manager

Location:                    London Bridge (Central London)

Salary:                        NGO Competitive  

Position:                    Full Time

Closing date:              Friday 15th March 2019

Please follow the link for full PD: https://www.climatebonds.net/get-involved/jobs/policy-manager​ 

Till next time 

Climate Bonds 

Japan Railway Construction, Transport and Technology Agency (JRTT) in first Certified benchmark size green issuance 

Nikkei is reporting that JRTT will go to market with a Climate Bonds Certified green bond, part of a shift towards sustainability finance. This certification will be a first for the giant rail agency, who are responsible for the construction and maintenance of Japan’s world famous high speed ‘Shinkansen’ rail network and other express lines and domestic routes. 

The bond will fund rail infrastructure improvements and network upgrades. DNV GL Business Assurance Japan has provided the Verification Report, available in English and in Japanese and the linkage/contribution is to SDG 9-Industry Innovation and Infrastructure, SDG 11-Sustainable Cities & Communities and SDG 13-Climate Action.

Climate Bonds has previously noted that green bonds are a bridge to achieving key SDGs, our briefing is available here. 

We understand that this issuance is the first in a series that may ultimately total up to JPY117bn (USD1bn) and JRTT will follow the Climate Bonds streamlined Programmatic Certification process, developed for large and repeat issuers with ongoing green finance programs. 

We can confirm pre-issuance Certification has been granted by the Climate Bonds Standard Board under the Low Carbon Transport Criteria.  

The last word 

JRTT made their first green bond move in February 2018, with our June 2018 Market Blog carrying details. This latest development is confirmation that the agency is adopting international best practice in green issuance, joining the ranks of other major rail operators including NY MTA, SNCF and SGP who all have Certified green bond programs. 

Congratulations to JRTT! 

We’ll keep you posted as more details emerge. 

‘Till next time 

Climate Bonds

PS: Want to know more about green bonds in Japan? Check out our special November 2018 post on the launch of the Green Finance Network Japan and don't miss our comprehensive Japan State of the Market report launch, due for publication next week.