Global Institutions reflect commitment to a 2020s green finance growth agenda

The Climate Bonds Initiative has announced major Sponsors and Media Partners for the 2019 Conference and 4th Green Bond Pioneer Awards to be held in London, March 5 – 7.

Our annual flagship event sees over 800 participants from over 40 nations to share their experiences and debate strategies around scaling up green markets into the trillions. 

Our Sponsors span a wide array of global institutions with worldwide presence.

Thanks to their support, Climate Bonds is able to provide a fee waiver for participants from emerging economies.

From asset managers to banks to law firms to capital market associations, here’s our current list of 2019 Conference and Award Sponsors:

Global Principal Partner

HSBC is one of the largest banking and financial services organisations in the world, with operations in 66 countries and territories. We aim to be where the growth is, enabling businesses to thrive and economies to prosper, and, ultimately, helping people to fulfil their hopes and realize their ambitions.

https://www.hsbc.com/our-approach/building-a-sustainable-future

Gold Awards Partner

Astana International Financial Centre (AIFC) is a financial hub for Central Asia and adjoining regions that aims to develop capital market alongside its key pillars of foundation such as private banking, asset management, Islamic finance, and FinTech in the region. Green finance is one of the strategic directions of the AIFC development and AIFC is committed to make the region more attractive to capital flows in a sustainable and environmentally friendly manner.

http://www.aifc.kz

Premier Partner

Amundi is Europe’s largest asset manager by assets under management and ranks in the top 10 globally. It manages more than 1.470 trillion euros of assets across six main investment hubs. Amundi offers its clients in Europe, Asia-Pacific, the Middle East and the Americas a wealth of market expertise and a full range of capabilities across the active, passive and real assets investment universes.

https://www.amundi.co.uk

Featured Partners

With deep roots in Baden-Württemberg, LBBW is also present in a number of economic and financial hubs worldwide. LBBW provides its services as a mid-sized universal bank to companies, retail and institutional customers and savings banks. As an institution under public law, LBBW is owned by the Federal State of Baden-Württemberg, the Savings Bank Association of Baden-Württemberg and the City of Stuttgart. Having total assets worth EUR 238 billion makes LBBW one of the largest banks in Germany. Like no other bank over the past three years, LBBW has further improved its market position and is consistently holding top positions in the league tables for EUR covered bonds.

https://www.lbbw.de/en

Moody's Investors Service is a leading provider of credit ratings, research, and risk analysis. Moody's commitment and expertise contributes to transparent and integrated financial markets, and the firm's ratings and analysis track debt covering approximately 120 sovereign nations, 11,000 corporate issuers, 21,000 public finance issuers, and 72,000 structured finance obligations.

https://www.moodys.com

ChinaBond Pricing Center Co., Ltd. (CBPC), a subsidiary wholly-owned by China Central Depository & Clearing Co., Ltd. (CCDC), is a benchmark pricing platform built by CCDC in the past decade based on its neutrality and professionalism as a central securities depository. CBPC produced and maintained ChinaBond Yield Curve, Valuation, Index and other data products, which are authoritative pricing benchmarks of the Chinese bond market and fully reflecting the price and risk level of the RMB bond market. In 2016, CBPC has published the first series of green bond index in China cooperated with CBI.

http://www.ccdc.com.cn​ 

https://www.chinabond.com.cn​

Exhibition Partner

Since 1997, corporate issuers have leveraged ISS Corporate Solutions’ (ICS) expertise in corporate governance, executive compensation and sustainability solutions to improve shareholder value and reduce risk. In March 2018, ISS acquired one of the world’s leading sustainable investments research companies, oekom research, now under the banner of ISS-oekom, making ISS a leader in both depth and breadth for global environmental, social, and governance ratings. As an SPO provider, ISS-oekom has so far assisted more than 50 issuers in several sectors in Europe, as well as other established markets worldwide, deploying its strong ESG research capabilities for the benefit of customers.

https://www.isscorporatesolutions.com/

Venue Partners

Ashurst's knowledge and experience in the Green Finance market spans a variety of industries and jurisdictions and covers acting for borrowers, lenders, arrangers and investors across a broad range of financing transactions. This means that they are ideally placed to advise on any aspect of green financing. With a progressive mindset and approach towards problem solving in the rapidly changing business landscape Ashurst are present in 16 countries with over 1,600 partners and lawyers across Asia, Australia, Europe, the Middle East and North America.

https://www.ashurst.com/

As a global top 15 law practice, Eversheds Sutherland provides legal advice and solutions to a global client base ranging from small and mid-sized businesses to the largest multinationals. Clients describe them as creative and well-versed in cutting edge legal work. They shape their advice to the unique circumstances and challenges of each project, and ensure the right people are in the right places to offer insight and certainty – from the day-to-day to the most complex, multijurisdictional matters.

http://www.eversheds-sutherland.com

Pinsent Masons is a leading international law firm with a fast-growing track record of advisory work and thought leadership relating to green finance and climate risk management. Our financial services team advises on product development and distribution as well as fund establishment, consortia building and fund investment.  As a market-leader in the energy, property and infrastructure sectors, we are well-placed to advise the market on the full range of financial transactions involving assets in those sectors and their compliance with ESG benchmarks.

https://www.pinsentmasons.com/

Shearman & Sterling is a global elite law firm that provides legal and industry insight to major corporations, financial institutions, emerging growth companies, governments and state- owned enterprises across the world. They help clients navigate the challenges of today and achieve their future ambitions, partners with corporations, major financial institutions, emerging growth companies, governments and state-owned enterprises, to provide the legal and industry insight needed to navigate the challenges of today and achieve their ambitions of tomorrow.

https://www.shearman.com/

Promotional Partner

ICMAis the trade association for the international capital market with over 550-member firms from 62 countries. It performs a central role in the market by providing industry-driven standards and recommendations for issuance, trading and settlement in international fixed income and related instruments. ICMA liaises closely with regulatory and governmental authorities, both at the national and supranational level, to help to ensure that financial regulation promotes the efficiency and cost effectiveness of the capital market.

http://www.icmagroup.org

Associate Partners

At ABN AMRO, our products and services affect millions of lives, and we are always looking for ways to make things better. Whether by advancing the transition to a circular or sustainable economy, or by helping newcomers on the housing market to borrow the funds they need: we are helping to build a better future. Banking for better, for generations to come: that is our purpose. Within our DCM franchise we advise our clients on making an impact and contribute to a better world through structuring and placing Green, Sustainability and Social Bonds. ABN AMRO was the first European bank issuing a CBI Certified green bond and a proud partner of CBI​.

https://www.abnamro.com/en/

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

Media Partners

IPE - Investment & Pensions Europe is the monthly magazine for those running pension funds in Europe. Since our first issue in 1997, we have built an influential position within the European institutional investor community, and the publication has an average monthly circulation of 10,311 copies, of which 70% is in Continental Europe.

https://www.ipe.com/

Bonds & Loans is the only editorial entity focused on the debt capital markets in emerging markets globally. Subscribed to by over 30,000 emerging market fixed income professionals in the MENA region, Latin America, Sub-Saharan Africa, Europe, US and Asia, we are a trusted provider of news, analysis, and commentary and help illuminate the most significant issues, events and trends impacting Emerging Markets debt capital markets.

http://www.bondsloans.com/

Environmental Finance provides the latest news and in-depth analysis on the funding, financing and investment opportunities and risks arising as the world transitions to a low carbon economy. Our website is updated daily and we send out news alerts each week summarising the latest stories and features that we’ve covered – from green bonds to the carbon markets. We also publish a quarterly magazine which is sent to subscribers as part of their annual subscription. Please register for a free no-obligation trial to explore all the content online for one month.

https://www.environmental-finance.com

Focusing on business-critical news and data, Responsible Investor is the only dedicated news and events service covering responsible investment, ESG and sustainable finance for institutional investors globally. Our broad aim is to be the go-to media platform for this $68 trillion sector; leading strategic, sustainable change in financial markets through thought-leadership, proprietary journalism and community building. In 2019, our digital content will generate more than 1,500,000 page views and we will directly engage with more than 4,500 financial services professionals via our events. If you want to experience the quality and breadth of Responsible Investor’s content before you commit to subscribing you can set up a 28-day free trial with absolutely no strings attached.

https://www.responsible-investor.com

Sustainabonds brings you coverage of the deals and initiatives from the banking sector that are shaping green and social bond markets. Building on years of capital markets coverage in sister publications The Covered Bond Report and Bank+Insurance Hybrid Capital, the Sustainabonds team brings you news and analysis of the key developments in the sector, including initiatives from authorities and industry in Europe and around the globe. Whether issuer, investor, regulator, banker or other interested parties, we hope you will find our publication valuable - sign up for our complimentary bulletins at our website.

https://sustainabonds.com/

Caixin Media is a media group of professional journalists and editors who generate high-quality original content, and are dedicated to providing financial and business news through integrated multimedia platforms, including websites, mobile apps, periodicals, video programs, books and conferences. As a pioneer of China's independent media, Caixin Media is known for its in-depth investigative reporting and is regarded as the most credible Chinese media overseas and an essential reference for the international community to understand China.

https://www.caixinglobal.com/

The last word

We'd like to formally thank all our sponsors for their support. Also, to acknowledge our media partners who will be covering the event and awards. 

It's now less than two weeks to go till the biggest single green bond event of the year. 

Don't miss out!  Register now. 

Get connected to our social media for updates about the Conference: Twitter, LinkedIn,Instagram& Facebook.

See you in London!

'Till next time,

Climate Bonds

Highlights:

• USD9bn green bond issued in February so far
• Telefónica issues first green bond from the telecommunications sector. Verizon also enters GB market
• Nobina becomes first public transport company from Sweden to enter the market
• Fannie Mae publishes Green MBS deals for January: USD883m
• Japanese rail network operator JRTT returns to the market, set to adopt CBI Programmatic Certification for multiple green issuance

Don’t miss:

• Only a week to go to the Climate Bonds Annual Conference! London, March 5-7. Registrations closing this Friday, register now. Green Bond Pioneer Awards announced Tuesday 5th March. ​ A big thank you to Global Principal Partner HSBC and  to Natixis and all our other valued Conference Sponsors (full list here)
• Hong Kong green bond market briefing
• China annual green bond market report
• Canada green finance market update – coming out this week 
• Japan green finance market report – coming out this week 

​

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

At a glance

As of 22^nd February, monthly green bond issuance totalled USD9bn. 46% came from non-financial corporates, and almost half is attributable to ICT companies: Telefónica (Spain) and Verizon (USA).

Spanish telco debut issuer Telefónica, along with repeat issuer Iberdrola, propelled Spain to the first spot for monthly issuance to date in February, taking 23% of market share. The US and Canada are close runners up. We’ll see how rankings change at the end of the month.

Developed markets (DM) issuance represented the vast majority of volume (82%). On the emerging markets (EM) side, the Republic of Indonesia closed its second green sovereign sukuk of USD750m – accounting for 57% of EM issuance. The Philippines (36%), China (5%) and Iceland (2%) made up the remaining share of EM volumes.

> The full list of new and repeat issuers here.

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

New issuers

Concordia University (CAD35m/USD19m), Canada, issued a 20-year green debenture, becoming the first Canadian university to enter the green bond market. Proceeds will be earmarked to finance the new Science Hub on the Loyola Campus. The building is expected to be 35% more efficient compared to an average non-certified research facility and to receive a LEED Gold certification after construction.

Climate Bonds view: The issuer is a welcome addition to Canada’s pool of issuers, which has already seen two debuts and two repeat issuers closing green deals in 2019. As green bond markets develop investors are increasingly looking for higher levels of transparency and standards. We encourage issuers to develop and publish green bond frameworks and to seek an external review.

JA Solar Japan (JPY 5.3bn/USD48m), Japan, issued a 21-year project bond, which obtained a 'Green 1' Green Bond Evaluation from Japan Credit Rating Agency (JCR). Proceeds will be used for new investments related to the construction of a solar power generation facility in Fukushima.

Climate Bonds view: As of the end of 2018, Japan’s green bond market reached a cumulative total of USD9.65bn with 2018’s issuance volume representing 22% growth year-on-year. This long tenor bond is one of the first out of Japan in 2019.

Look out for a trio of Climate Bonds Japan reports and briefings launching in Tokyo later this week.

Kenedix Office Investment Corporation (JPY2bn/USD18m), Japan, issued a 5-year senior unsecured green bond, becoming the first Japanese REIT to enter the market in 2019. The deal obtained a Sustainalytics Second Party Opinion, as well as a Green 1 Green Bond Evaluation from JCR. The debut deal will refinance the acquisition of two office buildings:

1. KDX Kobayashi-Doshomachi Building located in Osaka, which obtained a 3-star DBJ Green Building certification and a Rank S CASBEE certification;
2. KDX Toranomon 1 chome Building located in Tokyo, which achieved a 5-star DBJ Green Building certification and a Rank S CASBEE certification.

According to the Green Bond Framework, eligible properties must have obtained one of the following certification levels: 3 stars or above in DBJ Green Building certification, B+ or higher rank in CASBEE for Real Estate and 3-stars or above in BELS Certification. Buildings achieving at least 10% energy or water efficiency improvements or other environmentally beneficial refurbishments generating at least 10% improvements are also eligible.

Climate Bonds view: The refinanced properties achieve a good level of green building certifications, with both certified under the highest categories of DBJ Green Building and CASBEE. However, we encourage issuers to finance projects with at least 20% (preferably 25%) of energy / water efficiency improvements.

Nobina (SEK500m/USD54m), Sweden, issued a 5-year senior unsecured green bond, becoming the first Swedish green bond issuer from the public transport sector to enter the market. CICERO provided the Second Party Opinion. The deal is expected to finance electric buses and vehicles powered by biofuels – such as rapeseed oil methyl esters or hydrotreated vegetable oil – as well as charging infrastructure.

Climate Bonds view: Green bond issuance in Sweden kept a strong pace in the first two months of 2019, totalling USD1.2bn.

NorgesGruppen (NOK400m/USD46m), Norway, issued a 5-year senior unsecured green bond – the first Norwegian issuance of 2019. CICERO provided a Second Party Opinion on the issuer’s Green Bond Framework. The net proceeds will be used exclusively to finance and refinance projects and assets in Norway. The framework specifies clean transportation, green buildings and renewable energy as eligible categories. It also allows for up to 15% of the net proceeds to support environmental investments with a positive environmental impact other than direct mitigation of climate change.

Climate Bonds view: The Nordic green bond market continues to expand, with another non-financial corporate issuer. Interestingly, NorgesGruppen is a large food retailer. This deal demonstrates that issuing green bonds is not only possible but important for corporates from different sectors, and certainly so within food retail. Investors are also keen for more issuance from the consumer/retail companies.

RCBC (Rizal Commercial Banking Corporation) (PHP15bn/USD287m), Philippines, issued a 1-year senior unsecured green bond – the largest debut deal from a Philippine green bond issuer. Sustainalytics provided the Second Party Opinion (not publicly available). Proceeds are expected to be allocated to renewable energy, buildings, transport and waste related project. To be eligible, green buildings must either meet recognised standards, such as a minimum of 4 stars in the Philippines BERDE Green Building Rating System, LEED Gold or above or belong to the top 15% of local low carbon buildings. Under the transport category, freight rail infrastructure is eligible only if not dedicated to the transport of fossil fuels.

Climate Bonds view: We welcome yet another green issuance from an ASEAN-based bank, confirming the growth trend from the region.

The BERDE Green Building Rating System is new to us, so let’s put it into context. The scheme is based on a 1 to 5-star rating scheme (5 is the highest) which is calculated from 8 core areas, including energy efficiency & conversion, water efficiency and conversion, green materials and emissions. Sustainalytics notes that the scheme puts more emphasis on water savings compared to LEED, but has less stringent energy requirements than BREEAM. Achieving best-in-class certification levels would provide higher assurance of the buildings’ green credentials.

Reykjavik Energy (ISK3.5bn/USD29m), Iceland, issued a 36-year green bond, benefiting from a CICERO Second Party Opinion. This is the third Icelandic green bond issuer to debut in the market. Proceeds will be used to fund anticipated projects in eight eligible categories: renewable energy (25%), energy distribution and management (25%), carbon capture and storage at its geothermal power plant (5%), sustainable land use and environmental management (5%), clean transportation (5%), sustainable water and wastewater management (20%), circular economy activities that lead to lower lifecycle energy and GHG use (5%), and products and technologies that support smart grid applications (10%).

Climate Bonds view: We are happy to see the Icelandic green bond market expanding to include the second government-backed entity green bond issuer. Reykjavik Energy is an example of a group with quite ambitious environmental targets, with green bond issuance fitting well within these. Despite the focus on energy (especially geothermal), it’s a positive that proceeds are expected to be spent in several different areas, including wider initiatives such as circular economy activities. This suggests the issuer is thinking about its business model holistically and plans to adjust its strategy accordingly.

Rolling Creek Utility District (USD7m), USA, issued a multi-tranche US Muni bond labelled as “Unlimited Tax Bonds, Series 2019”, which obtained a Build America Mutual (BAM) GreenStar designation. Proceeds are expected to be allocated to financing water and wastewater treatment projects and drainage facilities.

Climate Bonds view: The bond has not explicitly been labelled as green by the issuer, but we have accepted the BAM GreenStar designation as a sufficient label, as well as an assurance that the use of proceeds aligns with the Green Bond Principles. The GreenStar designation provides a high-level assurance, without disclosing the details of the selection process of eligible projects, management of proceeds and reporting practices. We strongly encourage issuers to make this information publicly available to comply with best practice transparency standards.

Samhällsbyggnadsbolaget i Norden AB (SBB) (SEK500m/USD54m), Sweden, issued a 5-year senior unsecured green bond, benefiting from a CICERO Second Party Opinion and an E2/64 Green Evaluation from S&P Global. Proceeds will be used to refinance a property portfolio consisting of rent-regulated residential apartment houses in Nordic countries, predominantly Sweden, built between 1900 and 1991, and related investments.

The buildings in this ‘Green Project Portfolio’ are predominately built between the 1950s and 1980s. SBB will make various investments in energy efficiency, with the commitment to reduce the purchased amount of energy (kWh) per heated square meter and year by at least 30% across the portfolio. Other relevant investments may support climate resilience or increase tenant functionalities. SBB might use other measures applicable, such as the installation of rooftop solar units.

Climate Bonds view: Nordic and in particular Swedish issuance continues to grow. A significant portion of this has been in real estate, and this bond provides another example of retrofits on existing building stock.

Shandong Water Affairs Development Co. (CNY400m/USD59.5m), China, issued a 5-year green bond, benefiting from a Second Party Opinion (not publicly available) from Golden Credit Services. The proceeds will be allocated to five projects: the development of a wastewater treatment plant and four integrated water projects, which include the construction and operation of urban and rural water supply and drainage, ecological wetland construction, river treatment, sewage treatment, sludge treatment and disposal, water reuse, brackish water desalination, inter-regional water transfer, urban industrial water supply and drainage, drinking water (centralized water supply), etc.

Climate Bonds view: We consider the intended use of proceeds for this issuance to be aligned with our Taxonomy. Investments in sustainable water management and tackling water pollution are a priority area for the Chinese government.

Stora Enso (SEK6bn/USD604m), Finland, issued a 3-tranche senior unsecured green bond (longest-dated bond: 5 years), benefiting from a Sustainalytics Second Party Opinion. Proceeds will be earmarked to finance projects under sustainable forestry, renewable energy, water, waste, energy efficiency and renewable / low carbon / eco-efficient product technologies and processes.

Eligible renewable energy projects include power generation from biomass and waste products, as well as related renewable energy infrastructure. Energy efficiency projects are expected to meet a 20% improvement threshold and cannot be related to operations running primarily on fossil fuels. In its Green Bond Framework, Stora Enso states that “where appropriate, the use of proceeds may be used to finance operating expenditures related to the projects (e.g. forest management, R&D) and will be tracked on a project or portfolio basis.”

Climate Bonds view: The debut of the first Finnish forest products company in the green bond market is a promising development, given the country’s potential for financing green assets in the land use sector. Bioenergy sources from by-products are aligned to the Climate Bonds Taxonomy.

Operating expenditures and R&D raise a red flag as they are not aligned to the Climate Bonds Taxonomy and therefore should make up no more than 5% of the proceeds allocations to be eligible for inclusion in the CBI Green Bond Database. As the issuer has committed to tracking funding going to these project types, we will keep monitoring reporting to ensure the share doesn’t exceed the 5% threshold.

Telefónica (EUR1bn/USD1.14bn), Spain, issued a 5-year senior unsecured green bond – the first green deal from a telco. Telefónica is expected to use the proceeds to finance and refinance, in whole or in part, existing and future projects that promote energy efficiency and the reduction of GHG emissions within its own operations and those of its clients.

Climate Bonds view: There has been very limited green bond issuance from the ICT sector, so it’s definitely a step forward to see a large green bond come to market. Vodafone was the first telecoms provider to release a green bond framework, and CBI expects issuance in the sector to increase in 2019 which will also benefit investors looking to diversify their green and ESG based portfolios.

Verizon Communications Inc (USD1bn), USA, issued a 10-year senior unsecured green bond, benefiting from a Sustainalytics Second Party Opinion. The proceeds will fund investments in renewable energy, energy efficiency, green buildings, sustainable water management and biodiversity and conservation.

Climate Bonds view: The breadth of project categories that Verizon has listed suggests it is viewing its activities holistically, which we see as positive.  The US corporate market continues to lag in green issuance compared to its size and significance. High profile issuance like this should be seen as a signal by others.

New issuers issued prior to February 2019

Japan Housing Finance Agency (JHF) (JPY10bn/USD91m), Japan, issued a 20-year green bond in January 2019. Its bond scheme was selected as a pilot project by the Ministry of the Environment of Japan (MoEJ) under its Pilot Project for Green Bond Issuance. The alignment of pilot projects to Japan’s Green Bond Guidelines 2017 is checked by MoEJ and its contractors – in this case, E&E Solutions and JCR.

Eligible assets are limited to mortgages on newly constructed Flat 35S housing, which covers low-carbon houses with primary energy consumption level 4 or higher or thermal insulation performance level 4, as well as houses with an approved energy efficiency improvement plan, and each asset is verified by an inspection agent, certified by JHF. The pool of mortgages their debut green bond refinances were originated in autumn 2018.

Climate Bonds view:JHF is a government-backed agency, which acquires mortgages from originating banks and refinances itself in the bond market by issuing RMBS securitisations or bonds. Similar to Fannie Mae in the US, it plays a key role in financing residential properties in Japan and can leverage its position to promote investment in energy efficient buildings.

Its Flat 35S is a fixed-rate mortgage product, which provides financial incentives for high-quality, energy-saving and earthquake-resilient housing.  In addition to the green bond, JHF’s two recent RMBS deals (Series 140 and Series 141) include Flat 35S collateral, so we would hope to see more green issuance from JHF going forward.

The energy consumption level and insulation performance level are graded from 1 to 5, where Level 5 is the best in terms of energy-efficient performance and Level 1 is the worst. Level 4 corresponds to the current national energy efficiency standards, and Level 5 is 10% better. Consequently, the housing financed with the green bond is among the most energy efficient in Japan, which is aligned with the Climate Bonds Taxonomy.  However, we encourage all issuers to make information on the assets financed by a green bond publicly available for market transparency.

Jiangsu Guoxin Investment Group Limited (CNY1bn/USD149m), China, issued a 3-year green bond in January 2019, benefiting from a Lvrong Green Finance Second Party Opinion (not publicly available). The bond finances the construction of a pumped storage power station equipped with six 250,000 kW mixed-flow reversible water pump turbine generator sets, with a total capacity of 1.5m kW. The annual power generation capacity of the power station is 2.007bn kWh, and the annual pumping capacity is 2.676bn kWh.

Climate Bonds view: Pumped-storage hydroelectricity allows energy from intermittent sources (such as solar and wind) and excess electricity from continuous base-load sources to be saved for periods of higher demand. The Ministry of Land and Resources approved a total of 1.96km² of construction land for the project, which gives a power density of at least 756.98w/m². The facility is contributing to a grid which has at least 20.3% share of intermittent renewables and since they’ve used Lvrong Green Finance conduct assessment on social and environmental risks we consider the intended use of proceeds to be aligned with our definition of green.

Repeat issuers

• AC Energy: USD75m (tap) – Certified Climate Bond
• AC Energy: USD110m – Certified Climate Bond
• BBVA: EUR35m/USD40m
• CGN Wind Energy: CNY1bn/USD147m - issued in January 2019
• Canton of Basel Stadt: two tranches for a total of CHF200m/USD200m
• CPPIB (Canada Pension Plan Investment Board): EUR1bn/USD1.1bn
• Fannie Mae: USD883m issued in January 2019
• Iberdrola: EUR800m/USD905m
• Jernhusen AB: SEK150m/USD16m
• Klovern: SEK200m/USD20m (tap); SEK400m/USD44m (tap)
• Los Angeles County Metropolitan Transportation Authority: USD419m – Certified Climate Bond
• New York MTA: USD191m – Certified Climate Bond (Programmatic Certification process)
• NIB (Nordic Investment Bank): SEK2bn/USD221m
• NRW.BANK: EUR500m/USD572m
• Province of Québec: CAD800m/USD606m
• Republic of Indonesia: USD750m
• Société du Grand Paris: EUR50m/USD44m – Certified Climate Bond (Programmatic Certification process)
• Solar Mosaic: two tranches for a total of USD260m
• Zhejiang Deqing Rural Commercial Bank: CNY200m/USD30m - issued in January 2019

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 (SDGs) overall and see many links between green bond finance and specific SDGs, in particular, SDGs 6,7,9,11,13 and 15, the proportion of proceeds allocated to social goals needs to be no more than 5% for inclusion in our database.

Examples of social goals without a clear climate angle are supporting museum visits for children or financing social housing, but not necessarily energy efficient properties nor for such upgrades. Social projects with a climate angle – e.g. social housing upgrades to improve energy efficiency by 25% or more – will be treated as green bonds and analysed accordingly.

Green bonds in the market

• Korea Western Power: CHF200m – closing February 27
• Snam: EUR500m – closing February 28
• Contact Energy: NZD100m, Certified Climate Bond (Programmatic Certification )– closing March 1
• Oregon Wisconsin School District: USD12.3m – closing March 1
• FYI Properties - closing March 5
• Tokyo Tatemono - closing March 15  

Investing News

The Kenya Capital Markets Authority (CMA) and Nairobi Securities Exchange (NSE) have launched new Green Bond Guidelines and Listing Rules, a further step in the Green Bond Programme established in 2017, whose partners include Central Bank of Kenya, Kenya Bankers Association, NSE, CMA, Climate Bonds Initiative, Financial Sector Deepening Africa and Dutch Development Bank, FMO. (NTV Nation TV news report is here. 1m:58secs.)

Spain’s Socialist government announced a EUR47bn public investment plan on Wednesday to tackle climate change over 10 years, which would be partly financed by issuing green bonds.

Australia’s Prime Minister, Scott Morrison, announced an AUD2bn extension to the country’s Climate Solutions Fund, aimed at ensuring Australia meets its 2030 emissions reduction target by partnering with remote Indigenous communities, small businesses and farmers.

South Africa set to introduce a carbon tax in June starting at ZAR120 per tonne of carbon dioxide, although various free allocations reduce the effective rate to ZAR6-54/t, depending on the industry.

The strategy and governance indicators of the PRI’s climate risk indicators, based on TCFD guidelines are to become mandatory for the organisations 1600+ signatories to report on from 2020.

Climate risk, or "natural disaster risk" in the wording of Japan's Financial Services Agency (FSA), is one of several strategic priorities as it seeks to ensure the stability of the financial system.

The Church Commissioners for England and other institutional investors have welcomed a position statement from commodities giant Glencore significantly strengthening its commitment to combat climate change.

Members of the European Parliament are planning to add a controversial ‘non-sustainable’ category to the EU’s Taxonomy of Sustainable Economic Activities.

European Union lawmakers struck an agreement on green public procurement rules for new buses, requiring local authorities purchase a minimum share of 24% to 45% by 2025 of clean vehicles running on gas or electricity by 2025 and 33% to 66% by 2030, depending on a country’s population and GDP.

Green Bond Gossip

The Egyptian government aims to issue between USD250m and USD500m of debut green bonds this year.

The Kenya Electricity Generating Company (KenGen) is looking into issuing raising funds through green bonds later this year.

Following approval of its bookbuild by the Securities and Exchange Commission (SEC), Access Bank Plc is set to issue the first corporate Certified Climate Bonds in Africa.

Japan Railway Construction, Transport and Technology Agency (JRTT) is returning to the market with a benchmark size offering.

Renew Power Limited is preparing the issuance of a USD denominated senior secured Certified Climate Bonds through a Restricted Group consisting of certain subsidiaries of the company.

Readings & Reports

International targets to cut emissions and limit climate change will be missed due to rises in deforestation and delays in changing how humans use land, a new study warns.

UK steelmakers and university experts are teaming together on a seven-year research programme aimed at boosting the productivity of the steel sector by championing carbon capture techniques and minimising industrial waste streams.

McKinsey & Company have recently published perspective pieces on how the energy transition will unfold and on recycling and the future of the plastics industry.

Climate Bonds reports:

• China annual green bond market report
• Hong Kong green bond market briefing

Only a week to go to the Climate Bonds Annual Conference! London, March 5-7. Register here.

4^th Green Bond Pioneer Awards announced Tuesday 5^th March at the evening event.

A big thank you to HSBC, Natixis and all our Conference Sponsors – see the full list here.

‘Till next time,

Climate Bonds

Beijing Launch of 3rd Annual Report on Green Bonds and Green Finance

Joint Climate Bonds & CCDC report, supported by HSBC

气候债券倡议组织与中央结算公司联合发布第三份中国绿色债券市场年度报告 汇丰全力支持

Climate Bonds Initiative and China Central Depository & Clearing Co. Ltd (CCDC), with the support of HSBC, have launched the China Green Bond Market 2018 report, analysing the key developments in the world’s second-largest market, focusing on green bond issuance, policy development and wider market growth.

This is the 3rd annual report in an ongoing series from Climate Bonds and is available in English and Chinese.

这是气候债券倡议组织发布的第三份年度报告，包括英文版(EN)和中文版(CN)。 

At a glance

Total green bond issuance from China reached USD42.8bn (CNY282.6bn), representing a 12% increase year-on-year, cementing the country’s position as the second largest green bond market in the world.

The year saw improving quality of green bonds with fewer of them financing non-aligned projects and a significant improvement in the transparency of Chinese green bonds.

Major Chinese banks including the world’s largest, ICBC, issued certified green bonds reflecting a commitment to international best practice in green investment markets.                                         

Report highlights:

• USD42.8bn (CNY 282.6bn) green bonds were issued in 2018, of which USD31.2bn (CNY210.3bn) aligned with international definitions
• Internationally-aligned green bonds from Chinese issuers account for 18% of global issuance
• At USD9.6bn Industrial Bank Co. Ltd. was the second largest green issuer in 2018 globally, behind US-based Fannie Mae at USD20.1bn
• 86% of green bonds benefited from at least one external review
• Low-carbon transport was the single largest theme
• 11% of 2018 issuance was Climate Bonds Certified, including benchmark size issuance from ICBC London Branch, Bank of China, London and Tokyo Branches, China Construction Bank and Industrial Bank Co. Ltd.

Catalysts for scale

China is expected to accelerate growth in green finance market through ramping up policy support and further regulatory development.                                                                                

The report outlines three broad catalysts for growth including:

• Deepening of the green securitisation market
• Growing green bond issuance at the local level
• Further opening up of China’s green bond market

Who’s saying what?

Liu Fan, Vice President, China Central Depository & Clearing Co. Ltd. (CCDC): 

“In 2018, with the green development concept taking root and becoming a common practice, as well as market-related institutional arrangements continued to improve, China's green bond market advanced steadily in the direction of standardisation. China is still the second largest green bond market globally in 2018.”

“CCDC, as the core financial infrastructure of the China bond market, and the executive committee member of the China Green Finance Committee, has contributed to the China green bond market in terms of laying foundations and innovation. This included establishing the ChinaBond Green Bond Index Series, and collaborating with CECEP to build a green bond environmental impact disclosure benchmark system.”

“All these steps have played a positive role in improving the transparency of the China green bond market and promoting the development of green economy. We will continue to implement the green development concept, and to safeguard the development of the China green bond market through the enhancement of financial infrastructure services.”

The last word

We'll leave the final comment to Sean Kidney: 

“China has been the global leader in regulatory measures to support green finance. The rest of the word has a lot to learn; Europe is catching up as are ASEAN and Latin American nations.” 

“The nations that are leading on green finance now have an opportunity to work together to drive capital on a global basis to achieve Paris climate goals and other urgent environmental objectives.” 

“Institutional investors in Europe, North America, Japan and even Australia have also indicated an enthusiasm to work with governments and regulators on sustainable finance and addressing environmental challenges.” 

“Taken together these directions can help funnel green investment in the 2020s to where the climate and low carbon growth priorities lay. China, with its green finance leadership, has created an enormous opportunity for investment both domestically and along the Belt and Road. This report reflects the scale of that opportunity." 

‘Till next time, 

Climate Bonds 

Download the English version of the report here.

Download the Chinese version of the report 点击下载中文报告.

First Japan Green Finance Report, more activity forecast in 2019 

Climate Bonds lifts collaboration with new Green Bond Issuance Promotion Platform

JRTT issues first Japanese Climate Bonds Certified Green Bond  

Inaugural Japan State of the Market report 

Last week’s Japan Green Bond Symposium, organised by Ministry of the Environment, Japan (MOEJ), formed the backdrop for the launch of Climate Bonds' inaugural  'Japan green finance state of the market - 2018' report, 'Financing Low Carbon Buildings' and ‘Taxonomies to Identify Green Assets' briefing papers. 

All three are designed for the 'Green Bond Issuance Promotion Platform', operated by the Institute for Global Environmental Strategies (IGES) with support from MOEJ.

The Reports

Japan – Green finance state of the market 2018 presents a detailed overview of the Japanese green bond market. With USD9.7bn in cumulative issuance, Japan is 10^th in global country ratings and 2^nd in Asia-Pacific after China.

2018 annual issuance was at USD4.1bn, 22% up on 2017 figures. The annual figure places Japan 12^th in the 2018 country rankings and represents 42% of cumulative issuance since market inception in 2014 when Development Bank of Japan entered the green bond market with a sustainability bond.

The report analyses developments in sectors with green growth prospects including low carbon residential property, transport, forestry and paper, manufacturing and the public sector. 

Buildings and Energy dominate cumulative use of proceeds with over a third allocated to Buildings.

Buildings lead on use of proceeds at 35%

Top 5 issuers account for two-thirds of issuance

• 91% of all green bonds have an external review at issuance, and all outstanding bonds issued prior to November 2019 have post-issuance reporting in place.
• EUR denominated bonds are the most popular currency at 45% of issuance followed by USD at 28% and JPY at 26%.
• Benchmark size deals of USD500m or more or equivalent comprise less than a quarter of deal count but account for almost 2/3^rd (64%) of issuance.
• Real estate financing is an area with high green issuance potential. Other areas include transport and sustainable forestry/paper products, as exemplified by the table of top 5 climate aligned issuers (companies that generate 75% or more of their revenues from climate-aligned business lines).

Top 5 Japanese climate aligned issuers include 3 in transport sector 

Notes: Data as of 30/06/2018. * Sustainable land use includes certified forestry and related products, e.g. pulp, paper and packaging.

'Financing Low Carbon Buildings' ​and 'Green Market Taxonomies' were prepared specifically for the Platform. Designed to provide local issuers and investors with the latest global analysis and information from Climate Bonds. All three publications were developed with support from the Institute for Global Environmental Strategies (IGES) and will be translated into Japanese.

The Platform 

Launched in May 2018 with little fanfare, the Green Bond Issuance Promotion Platform provides information related to green bonds, policies, research, and MOEJ’s support programme for domestic issuers. 

Climate Bonds has been collaborating with MOEJ by providing market data and green bond information for the Platform since launch.

The platform also carries some information on domestic green bond issuance to date and Climate Bonds also published a comprehensive table of Japanese issuance in late in 2018. 

Sean Kidney on Japan 

“Japan, the world’s second-largest bond market, has been bubbling green since last year. Ministry of the Environment’s enthusiasm and efforts in promoting guidelines and making it easier for stakeholders to tap into this market is a highly commendable example of the pivotal role public policymakers have in supporting green innovation and market development.” 

Left: Sean Kidney's address to the Green Bond Symposium,

Right: Presentation to Mr Takashi Kitamura, Chair of Japan Railway Construction, Transport and Technology Agency (JRTT) marking the first Climate Bonds Certified green bond issued in Japan.

“There is a significant need to invest in climate resilient and adaptive infrastructure from both the public sector and corporate issuers. The latest announcement from Japan Railway Construction, Transport and Technology Agency (JRTT) of a Certified green issuance is welcome leadership from the public sector.” 

“We see the Green Bond Issuance Promotion Platform playing a positive role in assisting other public and corporate issuers in developing their green bond programmes.”

The last word

Japan has been relatively slow to the green bond market, a point noted by longtime green finance observers like Keith Mullin, and business media, while Responsible Investor is pointing to a rise on ESG activity, in part led by the giant Government Pension Investment Fund (GPIF). This movement will in time increase domestic demand for a quality green product.  

In November 2018, Green Finance Network Japan (GFNJ) was launched and on March 1 MOEJ’s Green Bond Symposium saw widespread participation from companies, local municipalities, institutional investors and other stakeholders. 

There’s also plenty of scope for large domestic climate aligned issuers, particularly in transport, to shift their bond offerings along the spectrum into green issuance. 

2018 saw a quiet, but an identifiable gathering of momentum around green investment that should see Japan remaining in the top 10 of global issuers at the end of 2019.

We expect an increase in activity, possibly some surprise issuers, and we’ll have some more to say later in the year. 

‘Till next time

Climate Bonds. 

2nd Report in a long-term market analysis 

Climate Bonds Annual Conference 2019 will be the launch platform for the second Post-issuance reporting in the green bond market report - an analysis of all green bonds issued up to November 2017. The report is prepared with support from HSBC, Amundi, and IDB. 

The first installment of the series was published in June 2017 reviewing green bonds issued up till April 2016. 

Post-issuance reporting on UoP is a core component of Climate Bonds Standard. It is also incorporated in the Green Bond Principles (GBP) and the Green Loan Principles (GLP). 

The Report

Post Issuance Reporting in the Green Bond Market sheds light on issuer practices on the level of adoption and quality of post-issuance reporting. It also covers the disclosure of both UoP and environmental impact metrics across issuer types, sectors and regions. 

The research universe encompasses 1,905 bonds from 367 issuers with a combined value of USD281bn – issued up to Nov 2017. The volume is 76% larger than the first report.

Compared to the previous report – in which reporting was defined in the context of UoP only (not including impacts) – the share of reporting fell from 74% to 38% by bond count and from 88% to 79% by amount. However, this drop is driven by Fannie Mae, as it does not provide UoP reporting. Excluding Fannie Mae from current figures, the proportion of reporting would be 77% by bond count and 87% by amount, i.e. in line with previous findings. 

The practice of green bond impact reporting is also analysed separately and in-depth for the first time.

Availability of UoP reporting

Two-thirds of issuers provide post-issuance UoP reporting and almost half of issuers report on both proceed allocations as well as impact metrics. 

UoP reporting covers almost 80% of issued amount, while two-thirds of issued amount is covered by both UoP and impact reporting.

Issuers generally follow through on their reporting commitments: 93% of green bonds where issuers committed to reporting (UoP and/or impacts) at issuance, did in fact report. 

A third of the bonds where there was no commitment also had reporting in place. 

Larger issuers and larger deals tend to report. The reporting percentage based on amount issued is significantly higher than by number of issuers. Conversely, smaller deals, such as those issued by US Munis, generally have a lower level of post-issuance reporting. 

26 out of 45 countries in our research dataset have reporting levels of 90% or more. These include most of the largest green bond markets. China has the highest level of reporting, which is linked to a large number of bank issuers that are required to report on green bonds quarterly.

At the time of issuance, Climate Bonds screens bonds to determine alignment to eight basic categories in the Climate Bonds Taxonomy. Post-issuance disclosure generally confirms that funds were indeed allocated to assets aligned to CBI’s Taxonomy. However, actual allocations were higher for Waste and Land Use.

The figure below reflects information available at issuance and actual allocations as reported post-issuance. 

There are also 338 bonds with unallocated proceeds of USD50bn in total. 57% of these, accounting for USD27bn, was more than two years old as of October 2018. This suggests some issuers are slow to deploy funds and do not conform with the GBP on this point. 

Top 10 UoP Reporting quality score

To assess the quality of reporting, Climate Bonds developed a scoring methodology based on variables related to information access and clarity, granularity, and reliability. 

The scale ranges from 0 to 25 points, with issuers scoring between 5 and 25 and a third scoring above 20 points. 

The top 10 reporters based on this assessment are ranked below and reflect good quality reporting spans, both regions, and issuer types.

Table 1. Top 10 Issuers UoP Quality 

Impact reporting

More than three-quarters of issuers provide some form of impact reporting – that is, reporting which aims to provide quantifiable insights into the environmental effects of green bond financing. 

However, only 15% of reporting is produced in accordance with an established impact reporting framework: we considered the IFI Harmonized Framework or the Nordic Public Sector Issuers Position Paper. Several issuers have developed their own methodologies. Others have used the UNFCCC’s Clean Development Mechanism or the Natural Capital Protocol.

Table 2 Impact Reporting 

Diversity of Metrics 

There is also little uniformity: more than 200 metrics are being reported by issuers. The most common ones relate to greenhouse gas (GHG) emissions, energy savings, energy generation capacity, water or waste treatment capacity and air pollutant reductions. 

The buildings sector is the only one in which measuring intensities is more common than measuring absolute / relative reductions, for example, of GHGs, energy, water and waste. 

Most of the data is actual or measured. Most impact is disclosed on an absolute basis, with only a fifth of reporting including changes relative to a baseline. Most issuers report at programme level rather than at bond or project-level.

10 best practice reporting recommendations

To improve reporting availability and quality, we have gathered a set of best practice recommendations:

• Make information easy to find.
• Provide comprehensive reporting.
• Report regularly and consistently.
• Display information clearly with graphics, benchmarks, comments.
• Obtain post-issuance external reviews to confirm allocations and verify impact disclosure.
• UoP: Disclose the funded projects, both at- and post-issuance.
• Impacts: Disclose methodologies and specify if metrics are estimated or measured.
• Impacts: Report absolute emissions reductions and relative to a specified benchmark level.
• Impacts: Provide project-level reporting with bond and programme-level summaries.
• Deliver on reporting commitment.

The last word

Post-issuance reporting has a pivotal role in ensuring the integrity of the green bonds market. Both UoP and impact reporting for green bonds are widely regarded as fundamental. 

The market is moving quickly and tracking UoP is a method to ensure projects and assets are following green guidelines. 

UoP forms the basis of any green instrument. As long as UoP are allocated to green assets and projects (assets & projects following set 2-degree compliant scientific criteria) any type of instrument can be green. Climate Bonds Standard Certification places UoP at the centre of our Certification framework. 

 We’ll be providing more insights as the market grows and once again thank our sponsors HSBC, Amundi, and IDB for providing their support for the report.

‘Till next time,

Climate Bonds

Recognition for global leadership, best practice and innovation in green finance

Focus on emerging economies & small nations’ climate action achievements

Global leadership in green bond issuance and green finance development has again been recognised by Climate Bonds at the 4^th Annual Green Bond Pioneer Awards (GBPA), announced before an international audience on the eve of the 2019 Climate Bonds Annual Conference in London.

The GBPA are the premier annual recognition of achievement by organisations, financial institutions, governments and individuals who have demonstrated leadership through pioneering initiatives and green issuance, providing best practice examples of climate resilient and low carbon investments in a diverse range of nations and markets.

This year’s awards include expanded focus on emerging economies & smaller nations’ climate action achievements – with recipients from ASEAN, LatAm and Africa – reflecting the critical importance of accelerating climate resilient investments in sustainable infrastructure and the broadening of cross border capital flows to support low carbon economic growth.

The 2019 event recognises pioneering issuers and green finance actors with Awards and Certificates of Recognition categories.

Green Bond Pioneer Award Recipients:

• Largest single bond to a trillion market – Kingdom of Belgium
• Largest emerging markets bond to a trillion market – Industrial Bank Co. Ltd.
• Largest new issuer to a trillion market – Kingdom of Belgium
• Largest new emerging markets issuer to a trillion market – Republic of Indonesia
• New products – digital green bond – Verbund AG
• New products – green convertible bond – Sumitomo Forestry Co
• New products – loan portfolio green notes – National Australia Bank
• New countries taking green bonds global – Landsvirkjun (Iceland)
• New countries taking green bonds global – TLFF I Pte Ltd (Indonesia)
• New countries taking green bonds global – Fransabank SAL (Lebanon)
• New countries taking green bonds global – Bank Windhoek (Namibia)
• New countries taking green bonds global – EDP (Portugal)
• New countries taking green bonds global – Republic of Seychelles (Seychelles)
• New countries taking green bonds global – TMB Bank (Thailand)
• New countries taking green bonds global – Atlas Renewable Energy (Uruguay)
• Largest Certified Climate Bond – ING
• Largest emerging markets Certified Climate Bond – ICBC London Branch
• Largest new Certified Climate Bond issuer – Société du Grand Paris
• Largest new emerging markets Certified Climate Bond issuer – State Bank of India
• Largest external reviewer – CICERO Shades of Green
• Largest Approved Verifier for Certified Climate Bonds – Sustainalytics
• Largest green bond underwriter – Crédit Agricole CIB
• Largest emerging markets green bond underwriter – Bank of China
• Green bond taxonomy harmonization – EU TEG on Sustainable Finance
• Green bond champion 2018 – Chrissa Pagitsas
• Green bond regulator 2018 – Autorité des Marchés Financiers
• Green bond listing venue 2018 – Luxembourg Stock Exchange
• Green bond development bank 2018 – IFC
• Green finance collaboration 2018 – Amundi Planet Emerging Green One Fund
• Green bond framework 2018 – Fannie Mae
• Green bond reporting 2018 – SNCF Réseau

Certificate of Recognition Recipients:

• Landsvirkjun for issuing the first public sector green bond from Iceland
• Republic of Indonesia for issuing the first public sector green bond from Indonesia
• National Treasury Management Agency for issuing the first public sector green bond from Ireland
• Auckland Council for issuing the first public sector green bond from New Zealand
• Republic of Seychelles for issuing the first public sector green bond from the Seychelles
• SID Bank for issuing the first public sector green bond from Slovenia
• KBC for issuing the first financial corporate green bond from Belgium
• Fransabank SAL for issuing the first financial corporate green bond from Lebanon
• Prologis European Logistics Fund for issuing the first financial corporate green bond from Luxembourg
• BBVA Bancomer for issuing the first financial corporate green bond from Mexico
• Bank Windhoek for issuing the first financial corporate green bond from Namibia
• BBVA for issuing the first financial corporate green bond from Spain
• TMB Bank for issuing the first financial corporate green bond from Thailand
• WDP for issuing the first non-financial corporate green bond from Belgium
• Empresa de Energía del Pacífico (EPSA) for issuing the first non-financial corporate green bond from Colombia
• TLFF I Pte Ltd for issuing the first non-financial corporate green bond from Indonesia
• EDP for issuing the first non-financial corporate green bond from Portugal
• B.Grimm Power for issuing the first non-financial corporate green bond from Thailand
• Atlas Renewable Energy for issuing the first non-financial corporate green bond from Uruguay
• Santiago Exchange (Chile) for introducing green bond guidelines
• Bolsa de Valores de Lima (Peru) for introducing green bond guidelines
• New York State Housing Finance Agency for being the most frequent Certified Climate Bond issuer in 2018
• ABN AMRO for being the first to issue a Certified Climate Bond under the newly released Marine Renewable Energy Criteria of the Climate Bonds Standard
• Bank of China for being the first to issue a Certified Climate Bond under the newly released Water Infrastructure Criteria of the Climate Bonds Standard
• Westpac for launching an institutional green deposit scheme to finance assets which meet Climate Bonds Certification requirements
• BBVA for being the first issuer to publish an integrated SDG framework for green, social and sustainability bonds
• Société du Grand Paris for their programmatic green bond issuance framework
• Sustainalytics for providing external reviews to the largest number of new issuers

Comments from Award and Certificate Recipients

Vincent Meriton, Vice-President of the Republic of Seychelles:   

“We are delighted to hear that our efforts in bringing the world’s first sovereign Blue Bond to market have been recognised by this Green Bond Pioneer Award. As custodians of globally significant biodiversity, the Republic of Seychelles has been at the forefront of developing novel financial solutions to support our plans for strengthening climate resilience and adaptation.”

“The proceeds from the Blue Bond will greatly enhance our efforts by enabling a transition to sustainable fisheries that both contribute to, and benefit from, climate resilient systems. We would like to thank our investors and the many partners who assisted us with this transaction, and our local partners in bringing bond proceeds to the ultimate beneficiaries, the Seychellois people.”

“Finally, we thank the Climate Bonds Initiative for this prestigious award.”

Alexander De Croo, Deputy Prime Minister - Minister of Finance & Development Cooperation, Kingdom of Belgium:

“The issuance of a Belgian Green bond has been an excellent opportunity for the Kingdom to demonstrate its strong commitment towards addressing global environmental challenges and raise awareness and funds to support its climate and environmental policies. A topical subject, judging by the nowadays climate marches in Belgium and worldwide.”

“Undoubtedly, this sizeable Green OLO has been a catalyst in further developing the Green Bond market globally and in particular in Belgium, where it paved the way for other public and private issuance and stimulated the growth of Green Belgian investor demand as witnessed by the arise of several Green Funds.”

Xinjian Chen, Vice President, Industrial Bank Co., Ltd. (CIB):

“We take pride in receiving this prestigious award from the Climate Bonds Initiative. Being one of the largest green bond global issuer and the largest from China, Industrial Bank commits to its sustainable development concept of "practicing social responsibilities and construct a good relationship where human being coexists with the nature, environment and society harmoniously.

Industrial Bank’s first offshore green bond offering, which is a milestone for us, marks the endorsement by the international community for our 12-year efforts in “integrating social and environmental obligations into profitability”. Such praise will encourage us, as well as other financial institutions, in taking our path to green development. Together we shall accelerate the transition of Chinese and world economy to a more sustainable and prosperous direction.”

Olivier Guersent, Director General, DG FISMA, European Commission:

"The European Commission is committed to ensure that the financial sector can play its part in the transition towards a sustainable economy. To this end, the Commission adopted an Action Plan on Financing Sustainable growth and presented three legislative proposals in 2018.

The Commission has also established a Technical Expert Group on Sustainable Finance. Today's award recognised the role that the Technical Expert Group plays in assisting the Commission to deliver on its Action Plan, including linking the EU taxonomy to an EU Green Bond Standard."

Tatsumi Kawata, Director & Managing Executive Officer, Sumitomo Forestry Co., Ltd.:

“We are deeply honoured to receive this award. We strongly believe that the green convertible bond, which we issued in September 2018, will lay the foundation for diversifying investors and further expanding and accelerating ESG investments.We are committed to maintaining an awareness of environmental issues in all our corporate activities to realize a sustainable and prosperous society.”

David Jenkins, Head of Sustainable Finance, National Australia Bank:

“NAB is delighted to receive this Green Bond Pioneer Award for Product Innovation. We recognise that climate change is a significant risk and a major challenge for the global economy and society. As a global provider of financial products and services, we seek to play a key role in financing the transition to a low carbon economy. We are focused on actively helping our customers through this transition, by seeking to innovate across all of our key sectors and markets.

This Award is a great recognition for the work our people have done over many years, from issuing Australia’s first Certified Climate Bond for NAB in 2014 and most recently arranging Australia’s largest ever green bond for NSW Treasury Corporation. We look forward to continuing to contribute to the development of the market for green and sustainable financing, and to continuing our partnership with the Climate Bonds Initiative.”   

Rafnar Lárusson, CFO, Landsvirkjun:

“Iceland is the land of renewable energy, with 100% of our energy generation coming from renewable sources. Having been the first Icelandic issuer of green bonds, we at Landsvirkjun are very honoured to receive this recognition for our efforts in promoting green energy as one of the most important ways to fight climate change.

The successful issue confirms investors’ support and appetite for green financing and we are excited to be a part of a rapidly developing Green Bond market – a market which continues to grow, both in importance and size.”

Claire Hobbs, Chief Treasurer, Bank Windhoek: 

“As a member of Capricorn Group, Bank Windhoek aims to become the Green Financier of choice for sustainability projects in Namibia and the countries in which the Group operates. As the only locally owned commercial bank in Namibia, Bank Windhoek shares the responsibility to protect our country for future generations by actively contributing to and facilitating the transition to a low-carbon and climate resilient economy.

As such, the Bank seeks sources of funding for its green lending activities by raising funds in the debt market through a local green bond issuance, from which the proceeds are used to finance eligible green projects and assets throughout Namibia. We thank CBI and the GBPA committee for this recognition of our green finance efforts.”

Miguel Stilwell de Andrade, CFO, EDP:

“Sustainability is a core part of EDP’s DNA and continuing to grow while meeting the challenges of sustainable development is a commitment we have with our stakeholders. As such, Green Bonds are a key instrument to align EDP’s financial policy with its strategy and we thank the Climate Bonds Initiative for this recognition.”

Carlos Barrera, CEO, Atlas Renewable Energy:

“It is an honour for Atlas Renewable Energy to have received the Green Bond Pioneer Award and international recognition from our peers. We believe in the growth opportunities for Latin America’s renewable energy sector and are proud to be a part of the industry’s development throughout the region.

Atlas Renewable Energy always strives to differentiate itself by raising the bar and finding innovative ways to partner with prestigious financial institutions in order to bring the most reliable financial structures to our projects.”

Hans Biemans, Head of Sustainable Markets, ING:

"Climate change is an unparalleled challenge for our world. Financial institutions have a significant role to play in tackling these issues and green bonds are a vital step towards meeting the goals of the Paris Agreement. This is just one part of ING’s strong Sustainable Finance portfolio and we are committed to continually developing sustainable finance initiatives. Climate Bonds Certification signals to the market and both institutional and retail investors that we support best practice and robust standards in green finance.”

Mr. Ruixiang Han, General Manager of ICBC London Branch & CEO of ICBC London Plc:

"We are honored and proud to have received this award acknowledging our ongoing commitment to sustainable finance. As the largest bank in the world, ICBC recognizes the great responsibility that comes with that position and cherishes the opportunity we have to lead, grow and innovate in this field.

This bond, issued by a Chinese Bank, launched out of London and underpinned by investments across the world illustrates the global nature of our sustainable funding program. We look forward to working with our partners and investors to enhance our green offering as a core part of our responsible banking program."   

Etienne Oberthür, Head of Funding & Treasury, Société du Grand Paris:

“Société du Grand Paris is very proud to receive this award from its peers. It is the recognition of our strong commitment towards the green bonds market, being 100% green and of the teamwork and cooperation to align our funding policy with our low carbon sustainability strategy.

The Grand Paris Express, Europe’s largest ongoing infrastructure project, is critical to achieving the emissions reduction targets set in the Paris Agreement and will contribute to the development of the market overall with EUR35bn of expected liquidity by 2030, at the completion of the new 200 km automated metro network around Paris.”

Uros Acko, Head of Treasury, SID Bank d.d., Slovenia:

“SID Bank is honoured to receive a recognition for the first public sector green bond from Slovenia by the Climate Bonds Initiative. We are pursuing innovative ways with the aim of promoting a green economy and encourage other local issuers and investors to commit to sustainable investments and the development of a green bond market.”

Chrissa Pagitsas, Vice President, Fannie Mae:

“Nine years ago, we created innovative financing solutions that incorporated energy and water efficiency into traditional mortgage lending and launched our Green Bonds program. Green Bonds serve as more than an excellent investment vehicle – they are designed to target significant environmental, social, and financial benefits.

We are very proud that our growing and transparent Green Bond Program is attracting investors from around the world and we would like to thank the Climate Bonds Initiative for their recognition of our work.”

Bob Mann, President & Chief Operating Officer, Sustainalytics:

“Sustainalytics is honoured to be recognized as the largest approved verifier for Certified Climate Bonds by the Climate Bonds Initiative. The increasing momentum around sustainable finance activities is exciting, with more diverse issuers releasing green bonds and showing innovation in the use of their proceeds. We are delighted to support the dynamic growth of the sustainable finance market.”

Antoni Ballabriga, Global Director of Responsible Banking, BBVA:

"This triple recognition is a boost to our Pledge 2025, BBVA’s sustainable development and climate change strategy. We have to mobilize resources on a larger scale to achieve the impact we need. Financing through green bonds should continue to grow. They will become increasingly important for investors with a long-term low carbon strategy."

Robert Scharfe, CEO, Luxembourg Stock Exchange:

“At LuxSE, we take pride in our forward-looking mindset. Our efforts to streamline green finance go beyond continental frontiers and aim at opening new doors for both potential issuers and investors. LGX is the wall of fame for issuers of sustainable financial instruments such as, among others, the world’s leading development banks. International investors appreciate having both: the easy access to almost half of the world’s listed green bonds, and the wealth of sustainable information linked to them, all gathered in one single place.

I am thrilled that CBI recognizes our efforts and thank all our issuers for having supported us so far.”

Alzbeta Klein, Director for Climate Business, IFC:

“Over the last four years, IFC has helped 15 banks issue green bonds worth over US$1.6 billion, nearly all of which were first-time green bond issuances. In March 2018, we partnered with leading asset management company Amundi to launch the Amundi Planet Emerging Green One, the world’s largest green bond fund dedicated to emerging markets, committing $256 million to provide first-loss capital to crowd commercial investment capital for climate projects.

The recognition by the prestigious 2019 Green Bond Pioneer Awards as the Green Bond Development Bank of the Year is a testament to the difference IFC has made in steering capital markets towards a ‘green’ trajectory.”

Frederic Samama, Deputy Global Head of Institutional & Sovereign Clients, Amundi:

“Amundi was proud to have been selected by IFC after a worldwide competition to implement this innovative solution to finance a transition towards a green economy into emerging markets. And Amundi is very pleased to have brought the proof of concept by having launched the largest ever green bond fund and being deploying more than $2bn into Green Bonds in Emerging Markets. We thank CBI and the committee for this recognition of our Fund.”

Matthew Walker, Chief Financial Officer, Auckland Council:

“With billions of dollars being invested in Auckland’s infrastructure over the next decade, it is important to show a direct line between green financing and the environmental and social outcomes being delivered. We’re proud to be the first council in New Zealand to issue green bonds as part of our commitment to create a climate-ready, zero emission Auckland.

We are thrilled to receive recognition from Climate Bonds Initiative for our efforts to demonstrate that green bonds can be a great investment for both investors and ratepayers.”

Christian Nickels-Teske, SVP, Head of Treasury, Prologis:

"We are thrilled to be recognized as a Green Bond Pioneer by the Climate Bonds Initiative. PELF's two green bond issuances in 2018 demonstrate our commitment to ESG and to supporting projects which benefit our customers, investors and the communities in which we work and live. We look forward to investing further in sustainable initiatives and are pleased to have established this important relationship with the green investment community."

Ruth Anne Visnauskas, New York State Homes and Community Renewal Commissioner:

“New York State is proud to receive this recognition for our Certified Climate Bonds, which are financing sustainable and energy efficient affordable housing developments for low- and moderate-income New Yorkers across the State. Governor Cuomo is leading our nation with his commitment to taking meaningful action against the effects of climate change and ensuring that these initiatives protect underserved communities.

In 2018, the New York State Housing Finance Agency issued more than $609 million in Certified Climate Bonds to create or preserve 2,885 affordable homes. We thank the Climate Bonds Initiative for the honour and send our congratulations to our fellow awardees.”

Lyn Cobley, CEO, Westpac Institutional Bank:

“This is a great example of Westpac’s customer driven innovation. The new green tailored deposit delivers an innovative solution for customers seeking an independently certified green investment product.

Westpac has long recognised that climate change is one of the most significant issues we face as a society. We know it will impact the long-term prosperity of our economy and we are committed to playing a leading role in supporting the transition to net zero emissions”.

Harald Francke Lund, CEO, CICERO Shades of Green:

“We are honored to receive this award for being the largest second opinion provider in the green bond market last year.  2018 was a great year for CICERO. We celebrated our ten-year anniversary as an external reviewer by launching a new company, CICERO Shades of Green. We also continued to improve our second opinion methodology by adding to our shading a governance score. With practical approaches we aim at bringing more transparency into the growing green bond market.”

Jose Antonio Martínez V, CEO, Santiago Exchange:

“The Santiago Exchange is absolutely engaged in bringing the best practices and international ESG standards to the Capital Markets in Chile, as part of our commitment to the Global Compact Principles and the Sustainable Development Goals of the United Nations.”

“Therefore, in accordance to our Sustainability Policy, the creation of the Green and Social Bonds Segment in Chile is part of a set of sustainability initiatives we have been undertaking over the last few years to enable issuers to raise capital and investors to finance projects that generate more a sustainable market, economy and country, as the creation of the Dow Jones Sustainability Index Chile and MILA Pacific Alliance, the Sustainable Reporting Guide For Issuers, and the Responsible Investment Guide for Investors and Market Agents.”

Tom Ceusters, Director for Treasury Market Operations, IFC:

“IFC continues to be at the forefront of stimulating the development of the green bond market. We launched our program in 2010 and were the first to issue a USD1bn benchmark green bond in 2013. To date, we have issued 139 green bonds in 16 currencies for around USD9bn.

IFC is committed to being an active issuer, anchor investor and advisor in the green bond market. We continue to work on enhancing transparency and integrity through our work on green bond partnerships including the executive committee of green bond principles of which we are a founding member.”

Antoine Rose, Sustainable Banking, Crédit Agricole CIB:

"Crédit Agricole CIB is very proud to be recognized by the CBI as the largest Green Bond underwriter. This is a testimony of our constant commitment to this market during the last decade. We want to thank all our clients for their trust during this journey. We are convinced that this market will be key to shift the trillions to the environmental transition, and we will keep on working relentlessly to serve this goal.”

Sean Kidney, CEO, Climate Bonds Initiative:

“The 2019 Green Bond Pioneer Awards congratulate the organizations, institutions and governments who are taking the lead on mobilizing green finance, to create and attract climate investment whilst building market confidence.

We are seeing emerging economies stepping up their efforts and taking active regional roles, demonstrating much needed leadership.

To reach the vital goal of the first trillion in annual global green finance will need an increased focus on capital flows to emerging economies into the 2020s. The recipients of the 2019 Awards are at the forefront of this climate finance challenge. We thank these pioneers for demonstrating to the world that green finance is the tool to get us there.”

The last word

Congratulations to all Award and Certificate recipients! With a special call out for applause to those individuals and organisations from emergining economies and smaller nations who've moved forward in 2018.

Every action to advance on climate, big or small, counts. 

As Fijian PM and COP23 President Frank Bainimarama put it during 2017, "We are all in the same canoe."

'Till next time

Climate Bonds 

Background to the GBPA

The Awards recognize Pioneers who, through their actions have demonstrated the potential of green bonds, energised the market and by positive example have called investors, governments and business to action.

Launched in 2016 in partnership with the London Stock Exchange Group, the Green Bond Pioneer Awards are the recognised as the foremost international green bond specific accolades. Visit our site for further information on last year’s ceremony. 

About the 2019 Awards: Climate Bonds convened a buy-side advisory committee to provide guidance and support in both the research and winner selection process. The responsibilities of the committee covered the following areas:

• Provide feedback on proposed categories for subjective and non-subjective awards
• Give input into the proposed metrics for picking winners
• Review and discuss the proposed winners, based on Climate Bonds' research
• Provide advice on new/alternative categories

Committee members**

• Erin Bigley, AB Global
• Wilfried Bolt, PGGM
• Julien Foll, AXA IM
• Felipe Gordillo, BNPP AM
• Greg Hasevlat, Pax World / Impax AM
• Tess Evans-Rong, Affirmative IM
• Richard Sherry, M&G IM
• Michaela Seimen, UBS Global Wealth Management
• Bill Sokol, Van Eck
• Francesca Suarez, Mirova
• Marcelo Otávio Wagner, Brasilprev Seguros e Previdência

Previous Green Bond Pioneer Awards:

Additional details of 2016 Inaugural Award and Certificate recipients are here.

Additional details of 2017 Award and Certificate recipients are here.

Additional details of 2018 Award and Certificate recipients are here.

**The Committee do not endorse or promote any of the bond issuances nor make any recommendation as to the advisability of investing in such bonds. It is possible that the respective parent organisations behind members of the panel may have previously purchased or may currently hold some bonds issued by award recipients in client accounts or underlying portfolios.

Highlights:

• February issuance reaches USD13.8bn, a 40% year-on-year growth
• OP Corporate Bank is first from Finland to enter GB market
• Dutch company LeasePlan enters GB market with benchmark issuance for EVs
• Repeat deals from QTC, Renew Power and SGP under Programmatic Certification

Don’t miss:

• The first Green Bonds State of the Market report
• The second review of Post-issuance reporting in the green bond market
• The first Japan green finance state of the market 2018
• The annual updates for China and Canada
• City of Santa Fe in firsts for New Mexico with muni water bond
• UBank Australia targets millennials with Climate Bonds Certified green term deposit product
• Interviews from Climate Bonds Conference 2019: Kazakhstan, Australia, ADB and more...

Go hereto see thefull list of new and repeat issuers in February

At a glance

Monthly green bond issuance in February reached USD13.8bn, up 40% year-on-year against 2018 figures.

Non-financial corporates have been particularly active: nearly a third (30%) of February issuance accounts from them. Telecommunications firms Telefónica (Spain) and Verizon (USA), along with Finnish debut forestry sector issuer Stora Enso made up nearly two-thirds (63%) of non-financial corporate issuance.

On the financial corporate (bank) side, repeat issuer BNP Paribas boosted the numbers with a EUR750m bond. First-time entrant from Finland, OP Corporate Bank, contributed with an inaugural EUR500m transaction. The two banks accounted for nearly half (48%) of the month’s financial corporate volumes.

Sovereigns comprised the next largest issue type with 18% of February issuance. The drivers were Republic of France’s EUR1.7bn tap of its Green OAT and Indonesia’s second sovereign green sukuk (EUR750m).

By comparison, the prevalent issuer types for February 2018 were ABS (28%) followed by sovereigns at 19% while financial and non-financial corporate issuers, taken together, captured only 18% of the market.  

In terms of geographical market share, USA climbed up to the top spot with 22%, spurred by Fannie Mae’s MBS issuance. France captured 19% of the market and came in second largely driven by the tap of the sovereign green bond. Canada took third place with a 17% share. Spain was the only other country whose issuance exceeded USD2bn, and this placed it fourth in the monthly rankings with a 14% market share. The like-for-like comparison for February 2018 shows USA at 36%, followed by Poland (18%), Canada (12%) and Germany (9%).

Issuance from developed markets (DM) constituted 90% of volume, up from 61% in 2018. February 2019 emerging markets (EM) issuance was spurred by the Republic of Indonesia’s second green sukuk, which represented over half of EM issuance, whereas, in February of 2018, Poland’s second green sovereign bond made up 92% of EM issuance.

> The full list of new and repeat issuershere.

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

New issuers

FYI Properties (USD227.8m), USA, a financing vehicle of the National Development Council for Washington State IT facilities, issued 20-year US Muni green bond in the beginning of March. The proceeds refinanced a development in the Washington State Capitol Campus in Olympia. The project achieved a LEED Platinum rating and comprises the design, construction and furnishing of a six-story office block and associated wings, a large data centre and parking garage.

Climate Bonds view: The properties achieved a high-level of green building certification, which is an obvious plus. However, we strongly encourage issuers to set up clear tracking and reporting systems, as well as to seek external reviews in-line with market best practice.

Hitachi Capital Corporation (JPY10bn/USD89m), Japan, issued a 21-year project bond, which obtained a Green Bond Assessment (GA1) from R&I Japan. Proceeds will be used for new investments related to the construction of a solar power generation facility in Fukushima, Japan.

Climate Bonds view: It’s positive to see issuers disclosing the share of proceeds financing new projects versus refinancing in pre-issuance documents. We encourage other issuers to follow suit to increase transparency of proceed allocations.

Konan Ultra Power (JPY110m/USD1m), Japan, is a public-private sponsored regional power producer, established in Konan City, Shiga Prefecture. The company issued a 15-year deal earmarked for rooftop solar installations at two logistics facilities and LED installation at four schools, all in Konan City.

The Green Bond Assessment (GA1) provided by R&I discloses clear and detailed characteristics of the financed projects - such as a number of panels, annual power generation and number of LED lamps – as well as some expected impact metrics, including annual CO₂ emission reductions. The company is also committed to reporting on key metrics related to use-of-proceeds and impact annually through its website.

Climate Bonds view: The company is a welcome addition to Japan’s pool of green bond issuers. The granularity of information presented in the Green Bond Assessment demonstrates the issuer’s commitment to comply with best practice disclosure.

LeasePlan (EUR500m/USD560m), Netherlands, issued a 30-year senior unsecured green bond in early March. LeasePlan is Mobility- or Car-as-a-Service (“MaaS”, “Caas”) provider, and the proceeds will solely finance the acquisition of battery-powered electric vehicles (BEVs). Sustainalytics provided a Second Party Opinion for the bond.

Climate Bonds view:The benchmark issuance from LeasePlan is an encouraging development, as it indicates a commitment from the automotive industry to address climate change. The benefits in LeasePlan’s case extend to their sharing economy-focused business model. In-line with best practice, the firm has also obtained an external review and expressed its commitment towards post-issuance reporting, including impact metrics.

OP Corporate Bank (EUR500m/USD570m), Finland, issued a five-year, benchmark-sized bond that includes a number of eligible sectors including wind, solar, hydro, waste-to-energy, non-fossil fuel energy efficiency, green buildings, pollution prevention, sustainable water management and low-carbon transport. “Eco-efficient and/or circular economy adapted products, production technologies and processes” are a specific sub-category. Sustainalytics provided a Second Party Opinion.

In its annual Green Bond Report, the issuer will include the amount of net proceeds allocated to each eligible sector, a description of the types of businesses and projects financed, the origination timeframe and maturity profile of the loans by sector, as well as the balance of any unallocated proceeds. Indicative environmental performance indicators have been listed in the framework.

Climate Bonds view: To date, there has been limited green bond issuance from Finland despite a healthy demand for Nordic green debt, as evidenced by the participation of more than 100 investors in OP’s debut GB. As one of the largest corporate lenders in the country, OP has set a precedent for other Finnish banks.

OP’s green bond framework is robust and covers a broad set of sectors. The issuer’s commitment to detailed reporting (including several environmental impact indicators for each eligible sector) is a positive sign. We hope to see a similar level disclosure from other Nordic issuers going forward.

Oregon School District (USD45m), USA, issued a US Muni green bond with a 20-year tenor in early March. The District is currently designing a new elementary school to serve its growing student population. It will be the first “net zero” school constructed in the State of Wisconsin. The school will use a combination of building energy efficiency and on-site energy generation so that over a one-year period there is no net carbon released into the atmosphere to operate the building.

Climate Bonds view: The construction of the first net-zero carbon school in Wisconsin is a commendable effort, as is the issuer’s commitment to reporting on the use-of-proceeds and environmental indicators of the bond. Obtaining external reviews and verification to align with best practice in the market is encouraged.

Renewable Japan (JPY7.9bn/USD71m), Japan, a developer and operator of photovoltaic (PV) power plants, issued a 22-year green bond. Proceeds are expected to be allocated to the construction of a PV power plant in Noboribetsu City, on the Japanese island of Hokkaido. The status of the proceeds allocation and reduced CO₂ emissions by project will be disclosed once a year in the issuer’s CSR report or company website.

Climate Bonds view: This is the 3rd Japanese issuer from the renewable energy sector to debut in the green bond market in 2019, taking this year’s pool of new entrants to five at USD318m. Don’t miss our recently published Japan green finance state of the market 2018 report for a detailed overview of the Japanese green bond market.

New issuers issued prior to January 2019

Nanjing Pukou Construction Group Co., Ltd. (CNY1bn/USD148m), issued a green private placement bond under its CNY2.3bn (USD340m) green PPN (private placement note) programme, registered with the National Association of Financial Market Institutional Investors in 2018. The deal is intended to finance affordable housing, which has received or is going to receive at least a 2-star certification against China’s Green Building Standards. The whole programme will deliver quantifiable annual climate impacts.

Climate Bonds view: This is the first green bond from China that use all proceeds for affordable housing with a certain green building certification. Despite the deal being a private placement, the issuer has disclosed details on the use-of-proceeds and expected climate impact. We hope to see more private placement deals with a similarly high-level of disclosure on the green credentials of the project(s).

Repeat issuers - February

• BNP Paribas: EUR750m/USD853m
• City and County of San Francisco: USD157.3m – Certified Climate Bond
• Contact Energy: NZD100m/USD67m – Certified Climate Bond (Programmatic Certification)
• Iowa Finance Authority: 24 tranches for a total of USD216m
• Vasakronan: SEK500m/USD53.7m
• Vasakronan: SEK400m/USD43.1m

Repeat issuers – March

• Chengdu Rail Transit Group Co., Ltd: CNY3bn/USD447m
• China Suntien Green Energy Company Limited: CNY910m/USD136m
• Digital Realty Trust (tap): EUR225m/USD254m
• DNB Boligkreditt AS: SEK5.5bn/USD590m
• Duke Energy Progress LLC: USD600m
• Kungsleden AB: SEK400m/USD42m
• Nanjing Metro Group Co., Ltd: CNY2bn/USD298m
• Queensland Treasury Corporation: AUD1.2bn/USD892m – Certified Climate Bond (Programmatic Certification)
• Renew Power: USD375m – Certified Climate Bond (Programmatic Certification)
• Republic of Poland: two tranches for a total of EUR2bn/USD2.2bn
• Sichuan Railway Investment: CNY1.5bn/USD224m
• Société du Grand Paris (SGP): EUR2bn – Certified Climate Bond (Programmatic Certification)
• Vasakronan: SEK63.3m/USD6.8m

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. Although we support the Sustainable Development Goals (SDGs) overall and see many links between green bond finance and specific SDGs, in particular, SDGs 6, 7, 9, 11, 13 and 15, the proportion of proceeds allocated to social goals should be no more than 5% for inclusion in our database.

Green bonds in the market

• UGE International: USD5m – multiple closings
• Danske Bank: EUR500m – closed March 15
• Tokyo Tatemono: JPY50bn – closed March 15
• Access Bank: NGN15bn – Certified Climate Bond – closed March 18
• Hayward Unified School District: USD20m – closed March 20
• City of Santa Fe, New Mexico: USD14m – closed March 20
• Alexandria Real Estate Equities, Inc: USD350m– closing March 21
• NYSERDA: USD16m- closing March 21
• Fabege AB: SEK250m – closing March 22
• Baseload Capital AB Sweden: SEK500m – closing March 22
• Hysan MTN Limited: HKD500m – closing March 22
• New York State HFA: USD125m – Certified Climate Bond - closing March 26
• Argosy Property Limited: NZD100m – closing March 27
• UBank launched a consumer green deposit product targeted at millennials – Certified Climate Bond

Investing News

The European Commission-mandated Technical Expert Group on Sustainable Finance (TEG) published proposals for an EU Green Bond Standard (EU GBS). The Standard endorses regulating second opinion providers and a proposes a requirement for post-issuance impact reporting. The call for feedback will close on April 3rd, 2019.

A French-led expert group published a draft treaty for a European Finance-Climate Pact. It would establish a green subsidiary for the European Investment Bank, which would provide concessional loans worth up to 2% of each EU Member State’s GDP to finance climate projects.

China has published its first nationally unified guidelines on green finance, the Green Industry Guidance Catalogue. The document outlines green definitions for six sectors and more than 200 project types that can be financed with green bonds. The Catalogue includes “green coal”, which is not aligned with the Climate Bonds Taxonomy. However, CBI are working with the People’s Bank of China (PBoC) on a separate standard for green bonds, which will explicitly exclude all fossil fuel products. Its launch is expected later in 2019.

The UK’s Financial Conduct Authority (FCA) and the Prudential Regulatory Authority (PRA) hosted the inaugural meeting of their new Climate Financial Risk Forum on 8 March. The committee also includes 25 financial services companies including asset managers, banks and insurers.

According to a Bloomberg article, central banks such as the Federal Reserve maintain a cautious attitude to climate change, viewing it as an operational rather than systemic risk.

Zurich Insurance Group collaborated with BlackRock to develop an impact measurement framework that enables aggregating key environmental and social impact metrics across asset classes. The framework will be released for public use to catalyse further development of impact measurement standards and metrics.

Oil company Shell set its first ever short-term emission reduction targets, pledging to reduce its net carbon footprint by 2-3% by 2022 compared to 2016. Top executive remuneration is tied to achieving the goal. Investors welcomed the development with expectations rising for other fossil fuel companies to follow suit.

A group of investors with a combined USD30tn (EUR26.6tn) in assets has demanded the steel industry update its practices in an attempt to slow man-made climate change, which risks increasing global temperatures to dangerous levels.

The Norwegian government announced plans to divest its USD1 trillion sovereign wealth fund. If passed, the legislative proposal would see the fund give up NOK70bn (USD8bn) worth of shares in 134 companies that are purely focused on fossil fuel exploration and production.

Green Bond Gossip

Malaysian firm Pasukhas Green Assets (PGA) issued an ASEAN Green SRI Sukuk framework for a RM200m (USD49m) Medium-Term Note Programme. RAM Consultancy provided a Second Party Opinion. The proceeds of the sukuk will finance renewable energy assets in Malaysia.

Swedish home appliance manufacturer Electrolux plans to embark on a green bond programme. Funds will be spent on reducing the environmental impacts of the company’s products and operations, including e.g. improved energy or water efficiency at factories as well as increased use of renewable energy. CICERO has provided a Second Party Opinion for the green bond framework.

Readings & Reports

Even if all carbon emissions were to be halted immediately, the Arctic region would still warm by more than 5°C by the century’s end, compared with the baseline average from 1986 to 2005, according to a new studyfrom UN Environment. (summary article)

On a lighter note, another new UN study prepared by GRID-Arendal titled “Playing for the Planet, How Video Games Can Deliver for People and Environment” extracts six recommendations for the video game industry, gamers and policymakers to provoke new thinking, new collaborations, new games and real-world impact.

While 17% of current investment by large public corporations is already green, there’s an urgent need to mobilise even more capital to help build a lower-carbon and more sustainable economy, according to a report by Corporate Knights Research and the Climate Bonds Initiative. Global corporate green investment and the UN sustainable development goals look at how green bonds can help close the funding gap.

Climate Bonds reports

• Green bonds: state of the market 2018
• Post-Issuance Reporting In The Green Bond Market
• China annual green bond market report
• Hong Kong green bond market briefing
• Canada green finance market update
• Japan green finance market report

Moving Pictures

We had the opportunity to interview participants at the Climate Bonds Conference earlier this month. 

Here are our first picks:

• Assel Nurakhmetova, Head of Green Finance, Astana International Finance Centre (AIFC) (2:33secs) from Kazakhstan.
• David Jenkins, Head of Sustainable Finance, National Australia Bank (2:31secs) a leading green bond issuer in Australia. 
• Carl Hartack, Senior Portfolio Manager Fixed-Income ACTIAM (2:32secs) sharing his views on the green market in 2018 and discuss issues on growing the market.
• Ariyo Olushekun, CEO Capital Assets Limited (5:43secs) giving the news of the second Nigerian​ sovereign issue
• Lastly, Tim Meaney, Principal Infrastructure Finance Specialist, Asian Development Bank (ADB) (3:19secs) sharing insights about the bank’s aims of supporting climate-related development in the ASEAN region

‘Till next time,

Climate Bonds

Expert groups to commence development of science-based low carbon and climate resilient screening tool for agriculture investments

Agri TWG & IWG start the Process

Climate Bonds has convened an Agriculture Technical Working Group (TWG) aiming to develop a verifiable and science-based Criteria for Certifying agriculture-related climate or green bond issuances. The ultimate objective is to catalyse increased public and private investment, in agriculture-based climate mitigation, adaptation and resilience interventions.

Formation of the new Expert Groups for Agriculture is part of the accelerated development programme around the Climate Bonds Standard which saw new Criteria development programmes launched in 2018, including an umbrella Adaptation and Resilience Group. More details are in our latest newsletter here.

The Agriculture TWG held its inaugural meeting at the end of February 2019; the accompanying Industry Working Group (IWG) will be launched in April 2019.

Criteria Working Group Composition

Both groups gather representatives from investors, academia, public entities, environmental and agricultural NGOs and international policy bodies from around the world. Both groups will convene on a regular basis to develop Criteria that low carbon agriculture-related investments must meet if they are to be Certified under the Climate Bonds Standard.

The Criteria will be available for public comment towards the end of 2019. Once completed and released, the Agriculture Criteria will provide for Certification of agriculture-related investments under the Climate Bonds Standard.

Visit this page for ongoing Agriculture Criteria developments.

Developing the new Sector Criteria

The  Agri TWG and IWG undertake the following process when developing sector-specific criteria:

Criteria Development and the EU TEG

The European Commission’s Technical Expert Group (TEG) on Sustainable Finance is also developing guidance for sustainable finance in agriculture.

Sean Kidney, CEO and several of our TWG and IWG members are also contributing to the TEG. As both pieces of work develop, efforts will be made to ensure they complement one another wherever possible.

Agriculture’s Role in Climate Change  

The food supply chain contributes 19-29% of global GHG emissions of which majority of food system emissions occur at the farm level (80%–86%); the remainder comes from pre-farmgate production and post-farmgate activities such as processing, packaging, refrigeration, transport, retail, catering, domestic food management and waste disposal.

Climate change also poses significant risks to agriculture ecosystems, potentially affecting productive uses of agriculture resources and related socio-economic systems.

The Green Finance Opportunity

The Criteria will help unlock opportunities for green finance, aiming to mobilise capital towards climate-aligned agricultural projects and assets. Governments can also use the Criteria as guidance assisting in setting regulation/recommendations towards decarbonising the sector.

In 2017, agriculture and forestry made up a small proportion of the overall climate-aligned bond universe, accounting for just 1% of climate bond value. By 2018, despite the need for more finance to address climate change in these sectors, investment remained small.

The Last Word

There is enormous potential for green bonds and climate finance to tap into agriculture investments. Climate Bonds Standard Agriculture Criteria will provide guidelines to issuers defining low carbon and climate resilient pipelines.

This will be a new initiative aimed at market development and tackling one of the heavy emitting sectors of global economic activity and aligning investment towards sustainable practices and outcomes that contribute towards achieving the goals of Paris Climate Agreement. 

A big thank you goes to our dedicated TWG and IWG, without whom we cannot develop this multi-stakeholder, science-based Criteria!

‘Till next time,

Climate Bonds

Background Notes

The Agriculture Criteria

Development of the Agriculture Criteria originally began through development of Land Use Criteria back in 2014. The remit of the original Land Use Criteria was to develop Criteria that would work for forestry, agriculture and other land use.

However, to improve the low carbon ambition of each sub-sector it was decided that the land sector should be tackled by several separate Criteria.

Forestry Criteria were developed first, and the Agriculture Criteria now follow. In both cases (Forestry & Agriculture), the Criteria build on the principles established by the original Land Use Criteria work.

The scope of the Agriculture Criteria includes cropland, grassland, livestock and controlled environment agriculture, such as vertical farming or hydroponics.

The Climate Bonds Standard

The Climate Bonds Standard provides green definitions that issuers can Certify their bonds against. It is not a financial standard; rather it assesses the low carbon credentials of a bond. It is a science-backed screening tool that investors, issuers and intermediaries can use to evaluate the environmental integrity of green and Climate Bonds.

The Climate Bonds Standard allows easy prioritisation of climate and green bonds with confidence that the funds are being used to deliver climate change solutions. It consists of the overarching Climate Bonds Standard and a suite of sector-specific Criteria.

Sector Criteria are currently available for Solar, Wind, Geothermal, Forestry, Low Carbon Buildings and Low Carbon Transport. Bonds are Certified under the Climate Bonds Standard; assets funded must meet the requirements of the relevant Criteria. Soon to be available are Criteria for Bioenergy, Hydropower and Waste Management.

The Climate Bonds Standard Board* reviews all Criteria and documentation prior to final release. Decision-making is implemented through consensus.

*Disclosure: The Climate Bonds Standard Board is an Advisory Committee to the Climate Bonds Board.

Climate Bonds Certified Green Bond, a Landmark Step in Development of African Green Bond Markets

Access Bank Plc has announced the issuance of the 1st Certified corporate green bond in Africa, raising N15 billion (USD41 million). The launch ceremony was held yesterday at the FMDQ OTC Exchange.

The five-year, 15.50% fixed rate bond was fully subscribed and has been awarded an Aa- rating by Agusto & Co., with underlying framework verified by PwC (UK), and certification by the Climate Bonds Initiative. 

The popularity of the issuance is another pointer to the potential of the Nigerian green finance market.

Nigeria attracted international attention in since December 2017 when it became the first nation in Africa and only the fourth nation internationally to issue a Sovereign Green Bond, raising USD29m in a Climate Bonds Certified issuance. 

The Access Bank issuance is the first corporate bond to benefit from the Nigerian Green Bond Market Development Programme launched in June 2018, by FMDQ, Climate Bonds Initiative and the Financial Sector Deepening Africa (FSD Africa).

Who’s saying what?

Gregory Jobome, Executive Director, Risk Management Division, Access Bank

"Indeed, Access Bank has achieved this landmark feat, the first of its kind in Africa, and a significant step to galvanise the rest of the market. We recognise that the journey to improving climatic conditions in Africa is not one that can be achieved by one organisation. It is important that other financial and non-financial organisations buy into this vision, as only then would we achieve the critical mass that is required."

Herbert Wigwe, Group Managing Director/CEO, Access Bank

“With our pace-setting experience in the mainstreaming of sustainability in our business activities and operations, we are confident that the green bonds will further help in supporting environmentally friendly investors to meet their investment objectives. It will also simultaneously support the Bank’s customers towards realising growth opportunities in a fast-developing low carbon economy”.

Mark Napier, Director, FSD Africa

"Access Bank are trailblazers in the Green Bond market in Africa. We commend Access Bank for leading the way in Nigeria and setting an example to corporates across the African continent. With the technical assistance of the Green Bonds Nigeria Programme, this CBI-certified Green Bond will fund climate-smart green projects in manufacturing, transport and agriculture sectors, thus helping to pave the way for Nigeria to develop into a low-carbon economy."

Olumide Lala, Africa Programme Manager, Climate Bonds Initiative

"We’re proud to be part of this issuance as it is a solid sign to encourage green investment in Africa. It is exciting to see Access Bank promoting the local green finance agenda, supporting sustainable operational practices and global climate change mitigation and adaptation programme."

Justine Leigh-Bell, Deputy CEO, Climate Bonds Initiative

"This first Climate Bond Certified corporate green bond out of Africa represents a major milestone in the development of the local green finance market. In addition to being an inspiration to other private companies, this leadership from Access Bank is critical for the long-term development of the green finance market in Nigeria and a great example for other African nations to follow."

The Last Word

Congratulations to Access Bank for taking this pioneering step in the development of the local green finance market. 

The first Certified corporate green bond in Nigeria is a new landmark. 

Well done! 

‘Til next time,

Climate Bonds

 Watch Ariyo Olushekun CEO, Capital Assets Plc., talking green finance in Nigeria at the Conference.  

Our team is going to be part of a series of events and here is your guide on who's where.

April log is heavy on events across the United States but we have team members participating across the globe in training, capacity building and development forums for green finance.

If you would like a chance to engage and meet with the team here is how the month of April looks like for Climate Bonds.

Stay tuned to this space for more events to come. Meantime Climate Bonds Conference Videos& Interviews are up on our YouTube Channel and if you would like to have a browse of the Conference photos gallery, click here.

'Till next time,

Climate Bonds

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

Guest Viewpoint was published in Investment and Pensions Europe (IPE) April 2019. It can be found here also attached as a pdf to download from the bottom of the page.

First published March 2019 by Pensioen Pro under the heading: Opinie | Nodig grijze bedrijven uit voor het groene obligatiefeest

Till Next Time, 

Climate Bonds 

Strong demand marks Woolworths move to green network of supermarkets: Australia continues innovation and best practice in green finance 

Woolworths & Supermarkets Certification

ASX listed, food and liquor retail giant, Woolworths Group raised AUD400 million from more than 90 investors with their first Certified Climate Bond under the Low Carbon Buildings – Commercial Criteria. 

The proceeds will fund initiatives such as installing solar panels, supermarket retrofits, refrigeration upgrades with hybrid and HFC free systems and a host of other measures.

The Australian Financial Review reported strong interest from both domestic and Asia based investors, with the bond 5 times oversubscribed and orders over AUD2bn. 

Supermarkets - A New Segment of the Low Carbon Buildings Criteria

The Low Carbon Buildings (LCB) Criteria defines what property assets are eligible for Certification under the Climate Bonds Standard. 

Originally launched in 2015, the Criteria scope includes commercial buildings, residential buildings and upgrade projects. 

Climate Bonds has developed a new supermarkets segment, within the existing LCB Criteria with Woolworths as the first Certification. 

You can find our newly developed emissions thresholds for the Supermarkets Segment here. 

David Marr, Chief Financial Officer, Woolworths Group: 

“At Woolworths we are continuing to work hard to minimise our long-term impact on the environment, and as Australia’s largest retailer we understand we have a responsibility to take the lead in this space.”

“We know the investment community is also looking to support those who are committed to sustainability driven projects to minimise environmental impact. The issuing of Green Bonds is another step towards meeting our environmental commitment, while allowing our investors to support projects that are important to them.”

Sean Kidney, CEO, Climate Bonds Initiative:

“We applaud Woolworths for taking further steps to improve their environmental footprint via the issuance of the first Certified Green Bonds by a supermarket."

“We hope their leadership will encourage other companies, both ASX listed, and more widely, to invest further in projects and assets that deliver positive environmental and climate outcomes, while also contributing to the development of green finance and green bond markets.” 

“Purpose driven investors now have another opportunity to put their money to work in mitigating long-term environmental and carbon-related risks." 

Green Finance and Investment in Low Carbon Buildings (LCB) 

The expansion of the LCB Criteria to supermarkets is not an isolated step. We announced proxies to support investment in green buildings in Mexico City last week.

We also launched our 'Financing for Low Carbon Buildings' paper for the Japan Green Bond Issuance Promotion Platform in March.

Recent LCB Certifications include DNB Groupin Norway,  New York State HFA, (now into double figures for multiple green bond issuance) US based Kilroy Realty and Royal Schiphol Group NV in the Netherlands. 

Expect to see more posts from us over the next few weeks, particularly looking at cities and regions in Europe and Asia; where the LCB Criteria has application. 

The Last Word

Australia has been a testbed for green financial innovation since NAB issued the first domestic Certified green bond in 2014. The momentum has been maintained since including green Certified ABS in Solar, Monash University issuing a world first, more recently green bond and loans deals from property group Investa and Queensland Treasury Corporation adopting Programmatic Certification for multiple green issuance.

On the deposit side, November saw Westpac launching the first Climate Bonds Certified deposit product for institutional investors and Ubank followed earlier this year with a Certified term deposit for retail customers, aimed squarely at millennials. 

Against this backdrop, Woolworths Group have taken a new step in environmental responsibility and sustainability and as an iconic household brand amongst the ASX, giving green finance in Australia a solid nudge further into the mainstream.  

Well done!

‘Till next time,

Climate Bonds

São Paulo: Climate Bonds Certification, Green Taxonomy and Sector Criteria in the spotlight

Brazilian Verifiers gathered last week at Felsberg Advogados in São Paulo to discuss new trends and opportunities within the green bond market. Matteo Bigoni, Climate Bonds new Head of Certification, led the Roundtable outlining key features of Climate Bonds Standard Certification Framework, Taxonomy and Sector Criteria.

Connecting, knowledge sharing and technical exchange was the objective with a diverse group discussing the role of Verification in the Certification process.  

The International Green Bond Market Trends and Opportunities – Advisors Roundtable, held later in the day, gathering representatives from the biggest law firms in Brazil, specialists from Climate Bonds Initiative, London Stock Exchange (LSEG) and Marsh, for an overview of the opportunities in the global green market, evaluated at USD1.45 trillion.

The event aimed to provide an opportunity for Brazilian legal practitioners to gain familiarity around green bond issuance processes address areas of doubt and provide an insight on the market’s potential and its mitigation impact on climate change. Among the topics discussed were de-risking structures for Project Finance and LSEG’s Green Finance Offering.

Who’s saying what?

Alex Vervuut, Brazil Verifier, Bureau Veritas:

“This is a great initiative from Climate Bonds. Working with Verifiers in Brazil and providing an excellent level of assurance for the work that we are performing with local issuers. This will improve the whole domestic market for  green bonds.”

André Dabus, Director for Infrastructure, Power and Utilities, Marsh:

“When we talk about green bonds it is important to keep in mind that every model of development and/or management of risks should be addressed  prior to issuing green bonds. This is key in order to protect both investors and funders interests. This was a great initiative from Climate Bonds' Brazil team and I hope we get to meet again in the future.”

Matteo Bigoni, Head of Certification, Climate Bonds Initiative:

“The primary goal of the Verifiers Training is to ensure a shared understanding of the structure around the, such as the Sector Criteria, the process of becoming an approved verifier and what it means for the process of providing assurance services.”

Thatyanne Gasparotto, Head of Latin America, Climate Bonds Initiative:

“We’ve gathered many of the key players in the green bond issuance process. Providing training to Approved Verifiers in the Latin American market, joined with legal and financial advisors to supply an overview of the developments of the green bond market. These joint initiatives are an invaluable part of capacity building and support for stakeholders who will be integral to building robust green finance markets." 

The last word

2019 will be a year to strengthen relations with Verifiers and intermediaries across Latin America as they play a major role in the process of issuing green bonds. 

Qualified Verifiers are integral to assurance processes for both investors looking to optimise their capital and issuers looking to maximise market opportunities.  

Legal and financial advisors have an interest in best practice frameworks when structuring new green deals.

Our thanks to Bureau Veritas, Marsh and LSEG, and our hosts Felberg Advogados. 

Stay tuned as more training and development work is programmed for 2019 in Brazil.

'Till next time,

Climate Bonds

NGFS releases first comprehensive report, and its growing on me

I’m in Paris in the spring, and I’ve got a choice seat next to Sean Kidney, at Banque de France the headquarters for the Central Banks and Supervisors 'Network for Greening the Financial System' (NGFS) conference. 

Yes, you read right: central banks – 37 of them and growing – have joined together to green the financial system. Even Bundesbank and European Central Bank are members.

Hope

It’s almost four years since Bank of England Governor, Mark Carney, in his landmark September 2015 Breaking the Tragedy of the Horizon speech, warned about the dire financial risks posed by climate change. 

And just two and a half years since Carney delivered a follow up: Resolving the Climate Paradox advocating building new markets in climate transition and green finance to help resolve climate risks. 

Now, it's 37 central banks meeting in the heart of Europe. 

The first report 

As part of the conference, NGFS published its first comprehensive report: Climate Change as a Source of Financial Risk.

It’s an important step forward, essentially using the institutional heft of NGFS membership and a commitment to lead by example to pretty much instruct financial institutions to implement the Taskforce on Climate-related Financial Disclosure (TCFD) recommendations, amongst other things. 

The report has six recommendations. Four are aimed at the central banking community itself and two at policy makers and the private sector.

It recommends Central Banks to:

1. Integrate climate-risks into their monitoring and supervision activities.
2. Implement them in their portfolio management. One thing this is likely to mean: buy green bonds!
3. Bridge data gaps. Lots of data is held by government and not shared, especially around climate risk and detailed emissions.
4. Supply technical assistance and share knowledge within the central banking community. In other words, help everyone else get up to speed. This was backed up in panel sessions by calls to support emerging market central banks.

For the policy makers and the private sector, it calls for:

5. Robust and consistent disclosure of environmental risks, and; 
6. A taxonomy of green and brown assets. I’m glad they got that one in; given the vast amount of work we are currently doing supporting the development of the EU sustainable finance taxonomy!

My quick impression 

Much of the material is uncontro­­­­versial. The specific reference to a taxonomy of “brown” assets based on clearly defined criteria was a little bit of a surprise, although we knew some central banks have been looking at that idea. 

They also drove home the points that “brown assets “will be impacted by … low-carbon and climate-resilient transition”. 

One could call that an understatement, but I guess that’s purple prose for central bankers.

They also recommended that central banks: “Consider applying capital measures …for firms that do not meet supervisory expectations or with concentrated exposures”. 

For those companies that are slowest or simply unwilling to start the brown-to-green transition, the bankers are hinting at applying their own form of negative externalities.  

The pivotal moment? Banque de France Governor François Villeroy de Galhau opening the conference by definitively saying “Climate change is within the mandate of central banks.” 

Spring in Paris really is a joy! 

Lowering the carbon footprint in Europe’s built environment

Expansion of Low Carbon Building Criteria to drive investment in emissions reductions

Low Carbon Buildings - Blog Series

Climate Bonds has developed new thresholds/baselines and proxies for a range of cities in Europe to stimulate investment in low carbon buildings and open new opportunities for green issuers and investors. 

70% of today's greenhouse gas (GHG) emissions in cities come from buildings, making the transition to low carbon in Commercial and Residential buildings one of the biggest mitigation opportunities, having the ability to develop climate-aligned urban areas.

Integral to the Low Carbon Buildings (LCB) Criteria are lowering total emissions from the built environment with the objective of reaching zero carbon by 2050. 

Multiple European Countries, Multiple European Certification Opportunities 

Climate Bonds Certification is now available for green building investments in multiple locations. 

In this the first of a 3-part Blog Series we look at Germany where LBBW and Volkswagen Immobilien have already issued LCB Certified Bonds. 

In our next Blog, we’ll be looking more widely at Europe, providing details on baselines and thresholds for LCB investments in France, Netherlands Poland, Czech Republic, Belgium, England & Wales, and Norway. 

In early May, we’ll follow up with a 3rd Blog on LCB Certification opportunities in other continents.  

Regional Variations 

Regional variations in energy use and emissions reporting practice for buildings led the Climate Bonds LCB Technical Working Group (TWG) follow country-specific analysis to establish regional trajectories and best available market proxies. 

This means an issuer can now stand by their green label with certainty, knowing that the assets included in their bond meet Climate Bonds Certification requirements, achieved in one of three ways; a trajectory, a best available proxy, or a significant upgrade, relevant to the circumstances of their specific region or market. 

The Trajectory Methodology explained

The Trajectory Methodology of the LCB Criteria are hurdle rates that comply with the decarbonisation required by 2-degee scenarios of the Paris Accord.

The trajectory (expressed in a kgCO²e/m²calculation) is established by taking the emissions performance of the top 15% of buildings in the selected locations (the baseline) and drawing a straight line to hit net-zero carbon by 2050. 

Regional variations in emissions intensity, and hence in the baseline, make these trajectories location or city specific.

A building or portfolio of buildings can demonstrate eligibility for Certification if their emissions intensity is at or below an emissions intensity target calculated using the trajectory and the term of the relevant bond. Specifically, the target is equal to the value of the trajectory in the year that corresponds to the mid-point of the bond’s tenor.

Germany in focus – Commercial Buildings 

For Germany two pathways are available for Commercial property, the baseline/trajectory path and the proxy path. 

Climate Bonds has worked to establish multiple city level decarbonisation trajectories within Germany. 

The table below gives the kgCO²e/m²/y starting point for trajectories towards zero carbon.

There is also a Commercial Proxy available for Germany, based on emissions-related data analysis. It requires a Valid EPC, built after 2008, and already part of a refinancing pool. Our Fact Sheet explains more. ​

Proxies explained

Where data availability is limited and a low carbon trajectory cannot be established with confidence, Climate Bonds has reviewed a range of market-based mechanisms such as building codes, rating schemes and post occupancy performance evaluations to determine best available proxy in the market. These act as place holders until enough data to establish a trajectory, can be gathered.

Germany in Focus – Residential Proxy

For residential assets in Germany, Climate Bonds has run into a similar challenge as Commercial Buildings. Energy and emissions performance data is not widely available. In order to begin to develop financial carbon performance standards for the German market, Climate Bonds has leveraged the work of the European Commission and the Energy Performance Building Declaration (EPBD). 

Through this programme, German Residential Buildings are required to benchmark building performance through a similar programme as the UK’s Energy Performance Certificate (EPC) known as Energieeinsparverordnung (EnEV) or  Energy Saving Ordinance.

Through this programme, a building is given an Energieausweis consisting of an A-G rating. 

It has been determined that a residential building with an Energieausweis (EPC) B rating and higher qualifies for Climate Bonds Certification under the proxy route. 

This proxy is reviewed on a regular basis to ensure it remains aligned with the performance of the top 15% of the market. 

As emissions data becomes available for residential assets, Climate Bonds intends to scope development of a low-carbon trajectory that supersedes the Residential market proxy. Our Fact Sheet is here. 

Building Opportunities, Building Green Investment – What can you do?

Climate Bonds develops new baselines in different markets to reflect investors need, data availability and trends in green bonds demand. 

We are always looking for industry sector and civil society participants to support the development of new baselines in cities and regions. Please contact Anna Creed, Head of Standards for more information.

We also look at incorporating suitable proxies where emissions performance data is not yet available or detailed to meet the Criteria. Please see our Guidelines for more details.  

The Last Word

Climate Bonds believes that reducing overall emissions intensity in the built environment, with an ultimate objective of a net zero carbon buildings is a vital contributor to our climate challenge. 

We are not alone in that view, amongst many, the World Green Building Council (WorldGBC) also emphasises a net zero carbon trajectory. 

Our Low Carbon Buildings Criteria is designed to encourage more investment in both new builds and refurbishments that move building stock towards that zero emissions goal. 

The increasing LCB Certifications in US, Australia and Scandinavia demonstrate that the LCB Criteria is gaining acceptance amongst investors and issuers pursuing best practice in green building.  

More to come on Europe and elsewhere. Stay tuned! 

'Till next time,

Climate Bonds

Jiangsu Financial Leasing Co., Ltd.'s RMB1bn Climate Bonds Certified Green Bond launch   

Jiangsu Financial Leasing Co., Ltd. successfully booked its first green bonds in April 2019. The Climate Bonds Certified issuance marks a new stage in the development of the domestic green finance sector attracting strong local investor interest. 

The green issuance by Jiangsu Financial Leasing Co. Ltd is the first green bond offered in China’s onshore market that has obtained both domestic and foreign green certifications. 

China Chengxin (CCX) provided Verification for the bond, which was oversubscribed by domestic and foreign investment institutions. 

The use of proceeds will be in line with the “Green Bond Endorsed Project Catalogue” and the Solar Energy Sector Criteria under the Climate Bonds Standard.

World’s Largest Floating Solar Park

This is the first Climate Bonds Certified Bond to support floating solar farms on freshwater bodies. This includes the largest floating solar park in the world so far, which is located in Huainan City, Anhui Province, China. 

It has a total installed capacity of 150MW and became fully operational in 2018. The solar park was developed by Three Gorges New Energy, a subsidiary of Three Gorges Corporation, which previously issued a Wind Energy related Climate Bonds Certified Bond in July 2017.

Two other solar facilities are built on land above abandoned and collapsed coal mines. One solar PV facility is built over a freshwater fishpond.

Altogether, the nominated projects amount to a total capacity of 510MW in solar PV generation.

Who’s saying what?

Shen Shuangbo, Vice President of China Chengxin Credit Management Co., Ltd. (CCX): 

“Since CCX became a Climate Bonds Approved Verifier in May 2017, it has been working closely with Climate Bonds on market research and green bond Certification.” 

“Climate Bonds Standard is a green bond standard widely used in the international market. CCX is the first Verifier in China to help get a domestic green bond Certified against the Climate Bonds Standard."

"The issuance of this green debt has greatly deepened the understanding of investors with green preferences on China's domestic green debts; it has also played a key role in demonstrating the financing of domestic green industry projects, which will help the long-term development of the market.”

Sean Kidney, CEO, Climate Bonds Initiative:

"This domestic green issuance from Jiangsu Financial Leasing has set a new example. It is the first green bond in China’s domestic market that is Certified by Climate Bonds, with the proceeds being used for Chinese solar assets. Congratulations to Jiangsu Financial Leasing, they are leading the way in financing domestic clean energy assets and projects." 

The Last Word

Our Green Bonds State of the Market 2018 report ranks China at No.2 in the labelled green bond markets and continues to grow its green investment space.

Jiangsu Financial Leasing Co. Ltd. has adopted best practice global standards with this sucessful issuance. 

We commend their efforts and look to other participants in the market to follow their example. 

'Till next time,

Climate Bonds

Opportunities for Green Issuers in Belgium,England & Wales, France, Germany, Netherlands, Norway, Poland and Czech Republic  

This is 2nd of our special 3 part Low Carbon Buildings (LCB) Blog Series: The first looked at Germany, this time we look more broadly at the growing number of European cities and jurisdictions where Climate Bonds Certification is available for LCBinvestments. 

Why an EU Green Buildings Focus? 

Buildings are responsible for approximately 40% of energy consumption and 36% of CO₂ emissions in the EU. The Climate Bonds LCB Criteria is designed to assist the transition, with its focus on investment that has overall emissions reductions in the built environment and a pathway towards Net Zero Carbon buildings as its objectives. 

Some investors have already taken this path. One example is ING Group N.V.’s recent USD2.95bn in green bonds (the largest Climate Bonds Certified to date), where approximatley 35% of proceeds will be funding both Low Carbon Residential and Commercial buildings in Europe. 

Previous multiple LCB Certifications from ABN AMRO stretching back to 2015 and more recently Obvion and OVG Real Estate are pointers of leading green investment in the buildings space.

In yesterday's Germany Blog we noted both LBBW and Volkswagen Immobilien as LCB Certified issuers. 

Commercial Buildings Methodology 

The trajectory (expressed in a kgCO²e/m²calculation) is established by taking the emissions intensity performance of the top 15% of buildings in the selected locations (the baseline) and drawing a straight line to hit Net-Zero Carbon by 2050. 

Regional variations in emissions intensity, and hence in the baseline, make these trajectories location or city specific.

A building or portfolio of buildings can demonstrate eligibility for Certification if their emissions intensity is at or below an emissions intensity target, calculated using the trajectory and the term of the relevant bond. Specifically, the target is equal to the value of the trajectory in the year that corresponds to the mid-point of the bond’s tenor.

Depending on the city, the top 15% of the buildings establish the rate at which net reductions in emissions have to be achieved to hit the 2050 zero emissions target. This follows as a linear trajectory that determines the emissions performance targets for the issuer.   

Commercial Buildings Thresholds & Proxies across Europe

At present Certification opportunities for Commercial buildings are available across Europe including: 

• Germany
• France
• Netherlands
• Poland
• Czech Republic 

Find the details in the table below: 

Residential Buildings

The Criteria developed so far for Residential buildings in Europe use local building codes and energy ratings/labels as a proxy for performance. Like Commercial Buildings, for Residentials, top 15% of buildings establish the threshold. 

Examples of the proxies are building codes such as Flemish building code or Energy Performance Certificate (EPC) rating in Belgium or the TEK Building Code 2007 & 2010 or EPC rating in Norway.   

You can find more details on Trajectory and Proxy methodology in our previous blog on Germany, released yesterday and in the LCB section of our website. 

Building Upgrades  

For a Building Upgrade project to qualify for Climate Bonds Certification, it has to achieve a carbon reduction target determined by the term of the bond. For a 5-year bond, the carbon reduction target is 30%. For a 30-year bond, carbon reduction target needs to be at least 50%. 

The chart below indicates the carbon reduction targets for different bond terms from 5 years to 30 years.

Residential Buildings Proxies across Europe

Green investment in new residential projects and Upgrades are of increasing importance in emissions reduction. 

Proxies available for Residential buildings Certification under the Climate Bonds Standard in the following countries: 

• Germany
• Netherlands
• Belgium
• England & Wales
• Ireland
• Norway

Details can be found in the table below:  

The Last Word

Since the introduction of the LCB Criteria in 2015 we’ve seen high profile issuance in Asia, multiple issuance from Australia and the latterly new US issuers joining the market. 

In Europe, we expect to see the pace of green buildings investment accelerate. More issuers turning towards Certification opportunities for green bonds, green loans and green securitisations across these new locations.  

We’ll be adding more jurisdictions into 2020, to support the issuers and investors who have lowered overall building emissions in their investment considerations.

Net Zero Carbon in buildings by 2050 isn’t going to happen on its own.

There's a room for everyone. 

‘Till next time,

Climate Bonds

Highlights:

• April issuance at USD8.4bn to date
• Australia: Woolworths Group world’s first supermarket chain to issue a Certified green bond under new Supermarket segment of the Low Carbon Buildings Criteria
• Chile: government reportedly planning a sovereign GB
• Italy: GB from two energy companies and UBI Banca ’s debut GB place Italy in the lead for April
• Spain: Instituto de Credito Oficial enters GB market with a benchmark issuance
• USA: Fannie Mae’s Green MBS deals for March total USD680m, a 41% year-on-year decrease

Newly published - Q1 market updates:

Quarter 1 2019 Global Highlights

Green bond issuance reached USD47.9bn in Q1 2019, up 42% compared to Q1 2018: a clear upward trend.

A third of deals came from non-financial corporates, including the first from telecoms companies.

Almost 25% came from debut issuers: there were 43 new market entrants from 17 countries.

14% of deals were Certified Climate Bonds, including the largest single green bond of Q1 2019: Société du Grand Paris’s EUR2bn (USD2.3bn) deal using the Programmatic Certification route. 

The report also provides a summary of post-issuance reporting findings and an update on issuance from the wider labelled universe. Including all labelled bonds, Q1 issuance reached USD59.4bn.

Quarter 1 2019 China Newsletter

The USD6.9bn worth of overall green bonds from China represents a 44% surge year-on-year, and USD2.9bn of Q1 volumes from Chinese issuers is in line with international green bond definitions.

Government-backed entities dominated the market in Q1 2019 with USD2.7bn, or 39% of the Q1 total, and all 13 issuers are local government financing vehicles (LGFVs).

The China newsletter also provides details on the recently released China Green Industry Guiding Catalogue and important green finance policies update from Q1 2019.

Green bond deals across the globe - 2019

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

At a glance

As of April 23^rd, monthly green bond issuance stood at USD8.4bn, with non-financial corporates contributing 40%of volumes. Issuance so far has been dominated by developed markets (DM), which account for 80% of volumes.

The largest corporate deals came from the Italian energy sector: energy producer ERG SpA issued its inaugural green bond and transmission system operator Terna completed its second deal, both sized at EUR500m.

Financial corporates contributed 28%, with deals from ABN Amro (EUR750m), UBI Banca’s benchmark debut green bond (EUR500m) and Link REIT’s green convertible (HKD4bn) accounting for 81% of volumes from Financials.

Among government-backed entities, numbers were fuelled by Spain’s Instituto de Credito Oficial, whose inaugural EUR500m green bond made it the second government-backed issuer  after ADIF Alta Velocidad.

At this point in time, Italy leads the country rankings with the deals mentioned above contributing 20% of April issuance to date.

Emerging markets issuance was driven by Brazilian paper company Klabin, a repeat issuer whose USD denominated benchmark bond comprised 52% of EM volumes. The remainder originated in China (46%) and Iceland (2%).

To see how the country ranking changes over the rest of April, check back with us on the next Market Blog where we'll report on the total monthly volumes.

In April so far, we have seen a larger than usual volume of excluded deals, totalling USD5.6bn. With volumes covering just over half of the month, excluded issuance is already more than twice as large as the corresponding 2018 figure of USD2.6bn.

This has been driven for example by a large deal from China Three Gorges Group (CNY20bn/USD2.9bn), which was excluded as nearly a third of the proceeds were earmarked for working capital. Another large excluded bond came from Belgian local government Flemish Community, which issued a EUR750m/USD845m sustainability bond. As noted in our Green Bonds: State of the Market 2018 report (p. 23-24), we expect to see continued growth in both green bonds and other labelled issuance, particularly sustainability and SDG bonds.

> The full list of new and repeat issuershere.

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

Certified Climate Bonds

Jiangsu Financial Leasing Co., Ltd. (CNY1bn/USD149m), China, brought to market a 3-year green bond. The proceeds will be used for nine projects financing PV panels and the construction of floating solar farms on freshwater bodies. This is the first Certified Climate Bond to finance such assets. Two of the solar facilities are built on land above abandoned and collapsed coal mines, which have since filled with rainwater. One facility is built over a freshwater fishpond. The latter is in fact the largest floating solar park in the world with an installed capacity of 150MW, is located in Huainan City, Anhui Province. The asset was developed by Three Gorges New Energy, a subsidiary of Three Gorges Corporation, which previously issued a wind energy-related Certified Climate Bond in July 2017.

The bond is expected to deliver several climate and environmental impacts, such as 88,000 tons of coal equivalent (TCE) avoided every year, 236,000 tons of CO₂ avoided annually, and 2298.3 tons of sulphur dioxide (SO₂) reduced per annum. A third-party agency will follow up on the issuer’s projects and their environmental benefits. The issuer will disclose use of proceeds to market on a quarterly basis, as well as annually before 30 April 2020.  

This is the first Certified Climate Bond to be issued domestically in China. The climate impact metrics used by the issuer are consistent with findings from CBI’s post issuance reporting research, where electricity generation, carbon reduction and TCE avoidance are most frequently used for renewable energy assets. The issuer’s effort to list reporting metrics at issuance demonstrates best practice in the market.

Woolworths (AUD400m/USD284m), Australia, has become the first supermarket chain globally to issue a green bond and Certify it under the new metrics for supermarkets of the Low Carbon Buildings (Commercial) criteria. 83% of the 5-year bond’s proceeds will be used to finance investments made to construct free-standing supermarket buildings across Australia, which meet the Low Carbon Buildings eligibility requirements. The remaining 17% will finance energy efficiency improvements to supermarket buildings, as well as rooftop solar panel installation. Woolworths already has rooftop solar panels over their outdoor car parks, as well as supermarket and other buildings. In June 2018, the installed capacity of the installations amounted to 2.2 GW.

Annual reports on the use of proceeds will be made available publicly on the issuer’s website.

Issuers in Australia have been at the forefront of innovation in green bonds and Woolworths adopting the new type of building criteria is the latest example. 

New issuers

Bank of Lanzhou (CNY2bn/USD298m), China, issued a 3-year green bond whose proceeds will finance six waste treatment projects ranging from WEEE (Waste Electrical and Electronic Equipment) to waste paper recycling, four projects with a focus on water supply and treatment, an urban public transit project, an energy efficiency project and one solar farm. The issuer has listed the expected environmental benefits of the investments: e.g. annual CO₂ emission reductions of 20,600 tons, as well as 63,100 tons of scrap metal, 21,000 tons of plastic pellets, and 21,000 tons of waste cardboard recycled annually.

China Bond Rating awarded the deal a green bond rating of G3 (Medium Green) (assessment not publicly available). A third-party agency has been mandated to follow up on the eligible projects and their associated environmental benefits, and the issuer will publish a use-of-proceeds statement each quarter, and an annual report on before 30 April 2020.

Climate Bonds view: China Bond Rating’s green bond rating scheme, launched in December 2016, contains six grades ranging from the highest G1 (Dark Green) to NG (Not Green). We applaud the issuer’s structured and clear approach to disclosure of relevant information.

ERG SpA (EUR500m/USD564m), Italy, is an energy provider that recently launched a EUR1bn MTN programme to facilitate its transition to renewable energy. The proceeds of the initial 6-year bond will be used to finance or refinance renewable energy projects in Europe. For refinancing, solar projects must not be older than 24 months calculated from the issuance date and for wind projects, the equivalent time limit is 36 months.

ERG’s Green Bond Framework, reviewed by VigeoEiris, specifies that the issuer will produce an annual allocation report and impact report until proceeds have been fully allocated.

Climate Bonds view: Italy has already reached its 2020 target for the share of renewable energy, driven mainly by solar power (especially in the South). Significant investments have been made even after incentives ended in 2014. However, only 13 bonds have been issued by Italian energy companies, with 3 issues each from Enel and Terna. The issuance from ERG is, therefore, a welcome addition to the pool and helps with market diversification.

Illinois Finance Authority (USD450m), USA, issued revolving fund revenue bonds with various maturities, the longest of them being 22 years. The proceeds will refinance loans from the Illinois Environmental Protection Agency (IEPA) to local governments through the Illinois SRF (State Revolving Fund) Programs, which have been used to finance wastewater treatment, sanitary sewerage and drinking water facilities. The projects make a key contribution to advancing the Clean Water Act and the Safe Drinking Water Act in the state.

The issuer has not obtained an external review. However, IEPA will provide annual project-level updates, including each eligible project’s participant local government name, project name and description, loan amount and percentage disbursed, as well as the expected or actual completion date. The reporting will be published on the Illinois Financial Authority’s website.

Climate Bonds view: CBI commend the issuer’s approach to reporting on the use of proceeds at individual project level. This represents best practice in the market, particularly for US municipal / local government issuance, for which this level of granularity is extremely rare.

Instituto de Credito Oficial (EUR500m/USD560m), Spain, a repeat social bond issuer, has issued its inaugural green bond, a 5-year senior unsecured deal. The state-owned bank will use the proceeds to finance or refinance projects that provide environmental benefits and promote sustainable development. The Framework defines eligibility criteria for renewable energy, energy efficiency, clean transportation, pollution prevention and control, sustainable management of living natural resources and land use, as well as water and wastewater management.

As noted in the Second Party Opinion provided by Sustainalytics, ICO has committed to annual reporting of both allocation and impact until full allocation of the bond’s proceeds. Allocation reporting will be provided at the category level, while impact reporting will include relevant quantitative metrics.

Climate Bonds view: ICO had already issued social bonds, and it’s GB market entry marks the sixth green bond from a Spanish issuer in 2019 compared to 11 bonds were issued in 2018. The ICO deal is aligned to the intention of the Spanish Government to increase financing for projects with an environmental focus, as it seeks to make an “ecological transition” and become carbon neutral by 2050.

JACCS (JPY10bn/USD89m), Japan, issued a 5-year senior unsecured green bond which received a Green 1 rating from Japan Credit Rating Agency. JACCS plans to use the funds to refinance loans mainly used to fund the installation of solar power generation systems and highly energy-efficient equipment by its nationwide store network.

JACCS plans to regularly disclose the estimated power generation and estimated CO₂ reductions from the solar power generation systems annually on its website after calculating environmental improvements for residential solar loans and industrial solar loans.

Climate Bonds view: This is the 10^th green bond issued from a Japanese entity in 2019, and yet another example of a Japanese corporate operating in the credit business issuing a green bond to finance solar loans (others include Orient Corporation and AEON Product Finance), which has been less common in other countries.

Orient Corporation (JPY5bn/USD45m), Japan, is one of the largest consumer credit companies in the country. It issued a 5-year senior unsecured bond to refinance “Green Renovation Loans” to individual and corporate customers. The loan funds were spent on installing PV power generation systems and ancillary equipment. Most of the loan amounts are between JPY2m and JPY3m (ca. USD18k to 26k), with an average installed power output of 5.4 kW. Orient Corporation plans to use the proceeds to fund about 2,000 loans.

The bond received a Green 1 rating from Japan Credit Rating Agency, and will provide an annual third-party review of post-issuance reporting until the bond matures. Reporting on allocations is not expected as this is a refinancing deal, but Orient has committed to disclose the estimated amount of electricity generated and CO₂ saved by installing solar systems on its website annually.

Climate Bonds view: It's a postive to see more consumer-focused green lending aggregation in the market, especially extending to residential loans. However, CBI would encourage issuers to disclose their project eligibility requirements in the form of a green bond framework, in keeping with market best practice.

UBI Banca (EUR500m/USD562m), Italy, issued a 5-year green bond, which benefits from a Second Party Opinion provided by ISS. The deal forms part of a EUR6bn Medium Term Note (MTN) programme, and the proceeds finance new or existing loans dedicated to renewable energy production. The bank’s reference portfolio comprises loans primarily for solar (63%), but also wind (23%), biomass (8%) and hydro (6%) power generation.

The issuer commits to reporting annually on use of proceeds and impacts until the full allocation of proceeds. Reporting will disclose proceeds allocated per Eligible Projects category, share of refinancing, and the amount of unallocated proceeds. If, after completion of the allocation period, some Eligible Projects are replaced, UBI Banca will publish an updated allocation report and an updated impact report. The impact metrics reported will include expected annual renewable energy generation (MWh) and the expected amount of energy saved (MWh).

Climate Bonds view: UBI is the third Italian commercial bank to come to market. Cassa depositi e Prestiti and Intesa San Paolo issued benchmark sized green bonds in 2018 and 2017, respectively. UBI’s bond takes the total from banks to EUR1.5bn, or 14% of Italy’s total issuance volume to date.

New issuers issued prior to April 2019

FMO (USD100m), the Netherlands, a repeat sustainability bond issuer, issued the first green bond from a national development bank in the Benelux region in February 2019. Sustainalytics provided a Second Party Opinion on FMO’s GB Framework, in which the climate-related categories are defined in line with the Multilateral Development Banks (MDBs) report for Climate Finance Tracking.

FMO commits to reporting to stakeholders annually and will be done in accordance with the Green and Social Bond reporting templates.

The proceeds of the 5-year senior unsecured bond will finance climate change mitigation and adaptation, but also other activities that do not directly target climate change mitigation or adaptation but still have a positive impact on the environment. A minimum 20% reduction in energy consumption or GHG emissions is required for energy efficiency projects related to in industrial equipment and buildings. Other eligible categories include renewable energy, transport, agriculture and forestry, waste and wastewater management. Examples of adaptation and resilience projects include climate-smart agriculture, increasing biological diversity, controlling overfishing, and adaptive land use management.

Climate Bonds view: We welcome MDB issuance from Europe. FMO’s framework is extensive and ambitious and includes specific definitions, targets and guidelines for each eligible project category. The issuer has also followed market best practice by obtaining an external review, as well as making the commitment to annual post-issuance reporting on both the use of proceeds as well as the impact of investments. For impact reporting, FMO has disclosed a methodology already at issuance, which is rare to see.

Clemens Kraft AS (NOK300m/USD38m), Norway, issued a 7-year green bond in February 2018 to exclusively finance small-scale hydro power plants (SSHPP’s) in Norway. Only run of river hydro plants without dam reservoirs are eligible. CICERO provided a Second Party Opinion.

The issuer illustrates commitment to sustainability by stating their intention to create a separate section for green bond reporting on their website. The disclosure will take place at least annually until full allocation of proceeds and reporting will include amount of unallocated proceeds, share of refinancing, energy generation (MWh), installed capacity (MW), and any negative deviations including regulations, guidelines or agreements breached.

Climate Bonds view: More hydro issuance from Norway is encouraging as the country has significant potential to leverage this form of renewable energy generation. In line with CICERO’s remarks, we also find the issuer’s reporting commitment commendable, in that it states that any instances where projects are non-compliant with regulations or guidelines will be highlighted. The issuer has also included Environmental Impact Assessments (EIAs) as a mandatory step in each project aimed at mitigating the possible negative social and environmental consequences that can arise even from small-scale hydro projects. This is laudable.

Repeat issuers – April

• ABN Amro: EUR750m/USD848m – Certified Climate Bond
• African Development Bank (AfDB): SEK1.25bn/USD135m
• Aguas Andinas: UF2m/USD83m (issued in March 2019)
• Arizona State University : USD125m
• Atrium Ljungberg: SEK500m/USD54m
• CDL Properties: SGD100m/USD74m
• CDL Properties: SGD400m/USD295m
• Fabege: SEK400m/USD43m
• IFC: EUR18m/USD20m
• IFC: EUR113m/USD126m
• Interstate Power and Light Company: USD300m
• Jernhusen: SEK1.5bn/USD161m
• Klabin: USD500m
• Landwirtschaftliche Rentenbank: SEK2bn/USD216m
• LCDA (Louisiana Community Development Authority): USD10.4m
• Link REIT: HKD4bn/USD510m (convertible)
• Reykjavik Energy: ISK2.11bn/USD18m
• SNCF: EUR250m/USD282m (tap) – Certified Climate Bond (Programmatic Certification)
• Societe du Grand Paris: EUR70m/USD79m – Certified Climate Bond (Programmatic Certification)
• Societe du Grand Paris: EUR55m/USD61m – Certified Climate Bond (Programmatic Certification)
• Terna: EUR500m/USD562m
• Toyota Finance: JPY60bn/USD536m
• World Bank: EUR250m/USD281m
• World Bank: AUD200m/USD154m (tap)

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. Although we support the Sustainable Development Goals (SDGs) overall and see many links between green bond finance and specific SDGs, in particular SDGs 6, 7, 9, 11, 13, 14 and 15, the proportion of proceeds allocated to social goals should be no more than 5% for inclusion in our database.

Green bonds in the market

• Sogn og Fjordane Energi: NOK200m – closed April 24
• La Banque Postale: EUR750m, closed April 24
• ICBC Singapore– Closing April 25
• Midsummer: SEK200m – closed April 25
• ADIF Alta Velocidad: EUR600m – closed April 25
• Sogn og Fjordane Energi: NOK200m – closing April 26
• Asian Development Bank: SEK500m (tap) – closing April 29
• City of Starkville, MS– closing May 1
• Royal Bank of Canada– closing May 2
• Lidl Austria: CHF300m (3 tranches, each 100m) – closing May 15
• Dutch State Treasury Agency: EUR4-6bn – Certified Climate Bond – closing May 23
• United Urban Investment Corporation: JPY10bn – closing May 23
• UGE International

Investing News

The Nature Conservancy (TNC) has launched its plan to help island and coastal nations address their debt challenges, positively affect over 40 million people and conserve 15% more of the world’s oceans than at present in the next five years. TNC’s Blue Bonds for Conservation plan works through leveraging USD40.5m in philanthropic funding to catalyse up to USD1.6bn of financing for ocean conservation.

Chicago, IL has passed legislation that commits the city to using 100% renewable energy by 2040. The city council’s resolution was signed into law on April 10^th, and requires a transition plan outlining strategies, progression milestones, and a timeline for reaching “an equitable clean energy transition”, be put in place by December 2020. New York City’s Mayor announced the“OneNYC 2050” plan to cut carbon emissions by 30% by 2030, while Washington State aims to be fully carbon neutral by 2030.

The Bank of England (BoE) became the first central bank to issue guidance for insurers and banks on how to manage the financial risks of climate change.

Elsewhere, BoE Governor Mark Carney and his colleagues from the Network for Greening the Financial System (NGFS) issued a stark warning for banks ignoring climate change. Mr Carney called it existential threat to the global financial system, and urged industry actors to take immediate steps to reform.

The Finance Ministers of more than 20 countries have come together to combat climate change. Co-led by the Ministers of Finance of Finland and Chile, the group convened in Washington, DC on April 13^th at the Spring Meetings of the World Bank and the IMF to launch the Coalition of Finance Ministers for Climate Action. The group also endorsed the new “Helsinki Principles” aimed at promoting climate action through fiscal policy and public finance.

Oil firm Saudi Aramco, the world’s most valuable company, issued its first ever public debt in the form of USD10bn corporate bonds. In the prospectus, Saudi Aramco names climate change as the key risk for its business going forward, in part as the company expects that it may result in lawsuits against the firm. Yet the firm does not see “peak oil” happening in the next decade, and aims for the “last barrel of oil to come from the [Arabian peninsula] region”, according to its CEO’s comments at the World Economic Forum in Davos this February.

Expected annualised returns from sustainable and impact forestry funds range from 7% to 18%, with a median of 8%, according to the Global Impact Investing Network (GIIN). In another market sizing study GIIN finds that the impact investment universe currently stands at approximately USD502bn, managed by over 1,340 organisations globally. The figure is more than twice as large as previously thought, which sends an overwhelmingly positive signal on the growth of sustainable investing.

Green Bond Gossip

The Dutch government will require potential investors to pre-qualify with their ESG credentials before being considered for priority allocation for its upcoming sovereign green bond. Prospective investors will need to have a dedicated internal Environmental, Social and Governance (ESG) analysis team, specific ESG requirements and criteria related to Green Bonds, as well as the intention to purchase Dutch sovereign bonds to fulfil targets on green bond amounts. Investors must also transparently report on their investments in Green Bonds in an annual report or specific sustainability/responsible investment report.

Reuters reported the Chilean government’s ambitions to issue the first Latin American sovereign green bonds. The deal size could be up to USD1.5bn, which is the amount of foreign currency debt that Chile is expected to raise in 2019. The issue would allow the country to widen its investor base as well as comprise part of a wider environmental and strategic effort by the government. Chile will also host COP 25 in Santiago in December.

Danish bank Nykredit is preparing to issue a green covered bond, which is intended to finance green mortgages on energy efficient buildings across Denmark. The company obtained a Second Party Opinion for its Green Bond Framework from Sustainalytics.

The Egyptian Ministry of Financeannounced that its planned sovereign green bond issuance has been postponed to the following fiscal year to allow the government to adequately prepare and comply with Euroclear regulations. Minister of Finance Mohamed Ma’it commented to Bloomberg: “We will make sure that next year we will be more ready to issue Panda, Samurai and Green bonds”.

Belarusian Belinvestbankintends to issue green bonds to finance projects related to renewable energy, energy efficiency and low carbon transportation. The bank wants to grow the share of green projects in its portfolio significantly from the current 10% to ultimately transform itself into “Ecobank”.

Readings & Reports

The bad news:

• Man-made CO₂ emissions trap heat in the atmosphere that is the equivalent of 400,000 Hiroshima-sized bombs every day, states Bill McKibben of 350.org. In this article he outlines how this is causing the impacts of climate change that are being felt here and now, from Houston to Calcutta and everywhere in between.​
• A new report by the European Commission’s Directorate General for the Environment found that by failing to implement legislation to limit air pollution, the EU incurred EUR24bn of costs in 2018 alone.

The good news:

• The International Renewable Energy Agency (IRENA) has found that by 2050, renewables could meet 86% of global power demand. IRENA’s new report titled “Global Energy Transformation: A Roadmap to 2050” states that to make this a reality, investors, companies and regulators will need to collaborate globally to electrify key sectors, such as transport and heavy industry. Renewable energy production will also need to grow six times faster than at present.
• A new study conducted by consulting firm PwC finds that harnessing artificial intelligence (AI) in key sectors, including energy, transport, water and agriculture, could result in a drop in of up to 4% in global greenhouse gas emissions by 2030. Embedding AI in these sectors could also help to create up to 38 million jobs worldwide, the report finds.

Proposed actions:

• The most effective ways to curb climate change might surprise you, says the CNN. The paper published a climate change-themed quiz based on the solutions ranked by Project Drawdown on its website, allowing quizzers to test themselves in prioritising some of the proposed solutions. 
• A report produced jointly by the Urban Land Institute and real estate asset manager Heitman finds that physical and transitional risks from climate change can be disastrous for property investors, if left unmitigated. The study outlines strategies that investors can employ to be more prepared, including for example mapping the physical risks for existing portfolios and potential acquisitions, incorporating climate change risk into due diligence, as well as engaging with policymakers on city-level resilience initiatives.

Finally, a new civil society movement to fight climate change, Extinction Rebellion, occupied many of London’s landmark sites in protest for the last week, garnering unprecedented support for its cause. The Financial Times interviewed people within the climate resistance to shed light on the goals of the movement.

‘Till next time,

Climate Bonds

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

MoU represents a milestone of collaboration between ADBC & Climate Bonds Initiative 

Beijing signing ceremony marks new focus on green agriculture investment 

Sitting: (L) Sean Kidney, CEO Climate Bonds Initiative and (R) Ms Liu Youhui, General Manager of ADBC Treasury signing the MOU

Agricultural Development Bank of China (ADBC) and the Climate Bonds Initiative have signeda Memorandum of Understanding (MoU) signifying a mutual consensus on the importance of developing green agriculture projects and green bonds in China, and the need to direct private capital to support China’s transition towards a green economy. 

Mr Yin Jiuyong, Vice President of the ADBC, met with Sean Kidney at the signing ceremony in Beijing and discussed recent green finance developments. 

Ms Liu Youhui, General Manager of ADBC Treasury and Mr Kidney signed the MoU on behalf of their respective organisations.  

What’s in the MoU?

Under the MoU, Climate Bonds and ADBC will work together on the following activities: 

• Developing green agriculture criteria that are in line with green definitions in the international market, China’s climate and environmental policies and agriculture strategy;
• Identifying potential green agriculture projects, available financing options and supporting mechanisms;
• Promoting and providing training on green agriculture criteria to relevant investors including Chinese SOEs, funds, banks and international investors. 

ADBC and Climate Bonds are making increased efforts to achieve deep cooperation. This MoU represents a milestone of the collaboration between Climate Bonds and ADBC, and ADBC’s commitment to social responsibility. The partnership will drive more peer organisations to achieve green development and to promote the green economy transition in China and globally. 

(L) Sean Kidney, CEO Climate Bonds Initiative and (R) Yin Jiuyong, Vice President of ADBC discussing green finance developments

Role of ADBC 

ADBC is committed to introducing green into the development of “agriculture, rural areas and farmers”. Through the issuance of green financial bonds, ADBC guides domestic and foreign capital to support green agriculture development, to promote ecological environment protection and improvement, and to support brown-to-green transition.

ADBC is also well-known in the international market, sharing its experiences with a wide-ranging audience including regular participation at the Climate Bonds Annual Conference.

The last word

In the 15 years since the first issuance of development bank financial bonds, ADBC has issued over RMB8tn bonds, with RMB69.5bn green bonds issued in China’s domestic market. In 2018, ADBC issued its first overseas green bond, amounting to EUR500m. As one of the top domestic green bond issuers, ADBC is a leader and promoter in greening the capital market in China. 

In November last year, they issued another benchmark size green bond in accordance​ with their 'ADBC Green and Sustainability Bond Framework'. 

We welcome this opportunity to work in cooperation with one of China's leading banks.   

‘Till next time,

Climate bonds

Recent Aramco bond symbolises sanguine attitude of many investors to a 2050 world

Blog Post by Prashant Vaze, Head of Policy and Government at the Climate Bonds Initiative

The Aramco Bond and 2049

I often find the sanguine attitudes about climate change in the finance world unnerving, and several events in April were a particularly stark reminder of the gap in world views.  

Early last month, Saudi Aramco raised USD 12 billion from its debut bond issuance. The longest dated tranche is for repayment in 2049. The coupon on these long-dated bonds is 4.375% which represents a spread over US Treasury gilts of 155 bp identical to long-dated bonds issued from other non-US A+ rated companies. The market evidently views Saudi Aramco as a safe long-term investment.

But hang on! By 2049 when the company has to return the capital back to investors, demand for the company products, if the international community’s Paris Agreement goes to plan, should be almost zero.

The issuance’sprospectus pointed out the company’s ultra-low cost of production, huge oil reserves - 336 billion tonnes of oil equivalent (around 10 years global demand for oil) and immense cash reserves (USD 49 billion). The document spent a few dutiful paragraphs trotting out boilerplate text on the risks from global climate mitigation policy and climate litigation.

But what did the document have to say about the company’s plans to mitigate its emissions? Almost nothing. There were plans to improve the operational energy efficiency, reduce flaring and utilise a tiny proportion of its huge CO2 emissions for enhanced oil recovery. Together these will reduce the company’s world beating production costs even further!

I had expected to see some nod in the prospectus to carbon capture and storage (CCS) providing a fig leaf of cover about how the business might survive in a net zero emissions world. But the only context the word “capture” appears in the prospectus is about the company’s attempts to move downstream and capture a higher value of the petroleum value chain.

The Credit Rating Agencies (CRAs) were impressed and gave the company ratings of A1 (Moody’s) and A+ (Fitch) higher even than the Saudi government itself – indicating the unique position the company has in determining the health of the Kingdom’s finances.

Risk and Horizons

Investors seem prepared to turn a blind eye to the long-term threats to the company’s business model, its dubious ESG performance and focus on the bond’s low default risk and high yields. The bond was lapped up and reportedly ten times oversubscribed. The credit risk models run by agencies aren’t yet equipped to handle the political, greenhouse gas mitigation and migration risks that could beset the company (and the Kingdom) may face over the thirty-year time horizon.

Maybe we are asking too much from the CRAs? In my hart of harts I couldn’t blame them. Their views conform to those of the broader industry. In February, BP published its energy outlook. Oil demand is forecasted to grow till 2030 and then plateau by 2040, justifying BP’s continued investment in exploration. No-one can accuse BP of being ignorant about climate change or climate mitigation risk. It’s just there is no compelling commercial reason for them to move away from their current business model.

Central Banks yet to face market failure

Later in April, I attended the Network for Greening Financial System (NGFS) meeting in Paris. The assessment of the threat from climate change was somber.

Frank Elderson, Chairman of NGFS, put it well: “The financial risks we face through climate change are analytically difficult, unprecedented and yet very urgent.”

But this urgency is not reflected in the speed or extent of interventions mooted by the NGFS in its recommendations.

In the “fireside chat” session three of the world’s top central bankers were asked to reminisce, as though it were 2040, about the role the Network had played in greening financial systems. Their mood wasn’t exactly complacent but there was a muted optimism that a steady improvement in the quality of companies’ climate disclosures would be sufficient. Disclosure of companies’ exposure and strategy would eventually lead to the correct pricing of risk.

They were so sure about the wisdom of the decision-making process governing the invisible hand, they even predicted the market forces would obviate the need for the NGFS altogether.

Central bankers were resistant about exceeding their mandates and using their powers to force capital to shift by imposing differential costs of finance for brown and green assets. Democratically elected governments should be responsible for determining the overall level of emissions and policies towards fossil fuel use, not unaccountable central bank boards.

The main concrete action, seen as realistic, was making the reporting framework (scenarios and stress tests) mandatory within the next five years. This would give time for voluntary disclosures to iron out the crinkles.

Sounds sensible? In five years, insurance companies and banks would have to show their exposure to climate risks.

I don’t want to downplay what a big deal this is. Its huge and welcome progress. But what if it isn’t enough? What if we don’t have time for the gradual step-by-step approach loved by prudent policy makers and we simply have to act on the imperfect data available at hand.

Extinction Rebellion see the emergency

The day after the NGFS meeting, I stopped to talk to an Extinction Rebellion (XR) protestor camped in Parliament Square in London. He was bemused to hear I had been working on climate change policy on and off all my working life, and all his life. He was born soon after 1992, the year the climate change convention was signed, which committed the richer countries to reduce their emissions and support poorer countries efforts to do the same. He had always lived with the existentialist threat climate change poses mankind.

He asked me how I felt my generation had stewarded the environment? I think I failed to give him a satisfactory answer. I reproduce the graphic from the IPCC 1.5 special reportwhich shows recent and projected emissions we need to limit temperature rise to 1.5°C  

Source: IPCC, Special Report 1.5

Looking at the graph two things stand out. Firstly, it is apparent that climate change policy efforts haven’t achieved much. There is barely a dent in the rate of growth in GHGs emissions between 1970 and 1992 (when international climate policy kicked off) and the period thereafter.

The XR protestors can’t be blamed for asking what precisely has the world achieved in the last thirty years.

The other point to note about the graph is the trajectory proposed for the two scenarios (varying in society’s risk tolerance) for maintaining temperature rise to below 1.5°C: it’s viciously steep.

It requires a massive and immediate change in the way we use energy, we have to halve global emissions by 2030 in the more risk-averse trajectory.

The substance of what the XR protestors demand: government funded communication of the immediacy of the threat from environmental risks, a Net Zero carbon budget by 2025 and a Citizen’s Assembly to remove party politics from existential threats doesn’t seem so tall an order given how little has been delivered so far.

Throughout the young protestor’s life the threat of climate change has hung over us. Governments have failed to implement meaningful carbon pricing. They have axed government funded programmes to improve home energy efficiency that worked. They have continued to support land-use practices that subsidise livestock over trees.

The Last Word

The XR central challenge is that short-term political calculus has trumped the long-term rehabilitation of the global commons despite the increasingly shrill messages from science.

The Smiths make XR’s point well: When you say it's gonna happen "now", When exactly do you mean? See I've already waited too long. And all my hope is gone.