2016 proved to be yet another strong year for green finance and after taking stock, it’s time to look ahead. 2017 is already off to a promising start as our CEO joins the European Commission's High Level Expert Group on Sustainable Finance and we launch the China Edition of our State of the Market series.

Here's where we will be speaking this January:

January Events

We'll be sure to update you on the outcomes of these events in future blogs. Watch this space!
 

'Till next time,

Communications Team

Disclaimer: The information contained in this communication does not constitute investment advice and the Climate Bonds Initiative is not an investment adviser. Links to external websites are for information purposes only. The Climate Bonds Initiative accepts no responsibility for content on external websites.

The Climate Bonds Initiative is not advising on the merits or otherwise of any investment. A decision to invest in anything is solely yours. The Climate Bonds Initiative accepts no liability of any kind for investments any individual or organisation makes, nor for investments made by third parties on behalf of an individual or organisation.

2017 Climate Bonds Annual Conference and Green Bond Awards - Register here

Green bonds have become an investment phenomena, with USD 81 billion issued in 2016 — double what we saw in 2015.

This week France is in the market with its inaugural — and huge — green sovereign bond, having already kicked started a race for sovereigns with its statement of intent mid-last year (Poland just beat them to issuance).

Last year it was China that powered growth, going from a standing start to being the largest green bond market by year’s end. Green bonds have now been issued everywhere from Mexico to Latvia to the Philippines.

But it’s not enough. To make a real difference to the environmental challenges we face, we will need to see a trillion dollar a year market by 2020.

Will we get there? What’s the role of government? What to expect for 2017?

On 6 March we’re holding the 2017 Climate Bonds Annual Conference in London — and the 2017 Green Bond Pioneer Awards that evening. ICMA’s Green Bond Principles and the City of London’s Green Finance Committee will be our partners in hosting this event.

We would love it if you could join us.

This is a day-long working event, not about promotion. You’ll hear and be part of discussions about the future of green bond and green debt markets. You’ll be learning, thinking and hopefully debating. And you’ll be meeting the crème de la crème of the world’s green bonds industry.

Conference streams will explore:

• What 2016 gave us, the challenges for 2017
• The global industrial and economic transition we need and investor imperatives
• How central banks and regulators can step up to promote green bond issuance
• New instruments: green Islamic bonds, green loans
• New sectors for 2017: agriculture, industrial processes, broadband
• Where to with green covered bonds
• The role of the public sector
• How green bond markets are being developed in China, India, LatAm and the USA
• The opportunity with green bonds funds and debt infrastructure funds
• Pricing

You can register for the conference and the Awards here. 

The conference brochure can be found here.

The conference is free. You simply need to cover your own travel costs. But space is limited, so register quickly.

Event Partners:

I’m really looking forward to seeing you in London on 6 March, 

Sean

Sean Kidney
CEO, Climate Bonds Initiative

Disclaimer: The information contained in this communication does not constitute investment advice and the Climate Bonds Initiative is not an investment adviser. Links to external websites are for information purposes only. The Climate Bonds Initiative accepts no responsibility for content on external websites.

The Climate Bonds Initiative is not advising on the merits or otherwise of any investment. A decision to invest in anything is solely yours. The Climate Bonds Initiative accepts no liability of any kind for investments any individual or organisation makes, nor for investments made by third parties on behalf of an individual or organisation.

Strasser further opens the market to institutional investors with the first issue of a Climate Bonds Certified fixed rate loan in Europe for long-term financing of a solar lease business model.

What’s it all about

German based Strasser Capital has announced today successful of an EUR 30m placement with Dutch based manager Delta Lloyd Asset Management. The loan is certified under the Climate Bonds Standard and is secured against a “highly granular” pool of residential solar leases held by Strasser’s largest subsidiary MEP Werke.

The announcement notes this is the first issue of a Climate Bond Certified, 20-year green senior secured fixed rate loan in Europe for long-term financing of a solar lease business model, a new development in green finance. 

We’ll have more to say when we discuss this new green finance initiative in our first Market Blog for 2017, due out in a couple of weeks.

Meanwhile, these comments from various stakeholder gives some flavour to this new development in green loan securitisation.

Who's saying what

Konstantin Strasser, CEO and founder of Strasser Capital

“Throughout the world investors are looking for certified and rated green investment and financing opportunities.”

“The MEP green loan has a fixed interest rate and is secured by a granular, diversified portfolio of 20-year solar lease receivables which makes it the perfect investment for long-term investors such as pension funds or insurance companies.”

Ulrich Bogner, Director Corporate Finance and Investments

“With our partner NIBC bank as well as our advisors DWF Germany Rechtsanwaltsgesellschaft mbH, Hexagon Finance and Advisory Ltd. and Clifford Chance, we were able to develop this unique financing solution for the photovoltaic sector.”

Tamer Fawaz, Portfolio Manager Delta Lloyd Asset Management

“As investors we are convinced that MEP will contribute to bringing this innovative financing concept to the forefront of the energy transition from traditional to renewable energy sources in Germany. We are delighted that with Strasser Capital we have found not only a partner who searches for new solutions, but also one that is able to implement them strategically and consistently.”

Thom Rasser, CEO of NIBC Bank Deutschland AG

”This successful refinancing proves MEP’s long-term business model and we are delighted to have worked with Strasser Capital in this innovative financing and look forward to further long-term financings from the MEP Green Financing Programme.”

Rick Gambetta, Managing Director, Hexagon Finance and Advisory Limited

“MEP’s Solar Lease portfolio, with its granularity and predictable income stream, is a natural asset class for long-term asset-backed financing. Hexagon is extremely pleased to have advised on this transaction, the first distributed generation solar PV financing transaction closed outside the U.S. “

Dr. Arne Klüwer, partner at Clifford Chance

"This is the first structure combining whole business securitisation with traditional mobile lease receivables techniques, and constitutes an innovative blueprint for a new asset class.”

Sean Kidney, CEO Climate Bonds Initiative

“This is green finance leadership from Strasser Capital and marks a positive start to 2017. They have set out to lead the EU market, garnered support from major stakeholders and together they have all shown that is possible to develop green investment pathways. Well done all round!”  

“We need other financial institutions to follow and develop well-structured green securitization models, long term green investment propositions and help build market depth.”

The Last Word

Strasser first mooted this development back in June 2016, foreshadowing that they were currently structuring a long-term note issuance programme; “secured on a granular portfolio of MEP solar lease receivables.” 

At the time, Konstantin Strasser characterised the future issuance as “the first of its kind in Europe,” and it is.

Even better, growth is on the way. NIBC Bank Deutschland AG has granted underlying solar lease issuer MEP a second senior loan warehouse facility, opening the path for a second fixed rate financing product to be issued.

Building green finance in the EU to the trillion size scale needed to meet 2030 energy and climate goals was the subject of a comprehensive report released by the European Commission in mid-December. Following, on December 22^nd, the announcement of an Expert Group on Sustainable Finance whose members include our very own CEO Sean Kidney.

This new deal from Strasser is a small but significant example of what’s required. 

It’s underlying features and hence attractiveness to institutional investors highlight part of the green finance future the new EU Expert Group is looking towards.

Another important first from the European green finance market. 2017 is off to a great start.
 

‘Till next time,

Climate Bonds Communications

Note: MEP Werke is a Climate Bonds partner. A full list of partner organisations is available on our website here.

Disclaimer: The information contained in this communication does not constitute investment advice and the Climate Bonds Initiative is not an investment adviser. Links to external websites are for information purposes only. The Climate Bonds Initiative accepts no responsibility for content on external websites.

The Climate Bonds Initiative is not advising on the merits or otherwise of any investment. A decision to invest in anything is solely yours. The Climate Bonds Initiative accepts no liability of any kind for investments any individual or organisation makes, nor for investments made by third parties on behalf of an individual or organisation. 

Climate Bonds and China Central Depository & Clearing Co. (CCDC) invite you to join us for a simultaneous live broadcast of our ‘China Green Bond Market 2016’ report launch from Beijing and London.

CCDC’s Vice President LIU Fan will give a short presentation in Chinese from their offices in Beijing, after which Climate Bonds CEO Sean Kidney will present in English from the City of London. This will be followed by a Q&A session.

气候债券倡议组织和中央结算公司邀请您参加我们于伦敦和北京向您实时播报的《2016中国绿色债券市场》报告发布。

中央结算公司副总经理刘凡将在北京以中文进行简要致辞。气候债券倡议组织首席执行官Sean Kidney将在伦敦以英文对报告进行介绍。之后将是问答环节。

2016 saw China’s green bond market grow rapidly to become the largest issuing country by year’s end, accounting for 38% of the global total. The launch presentations will give an overview of the report’s analysis, including of the domestic green bond market in China, the market infrastructure and verification tools available and major policy developments of the last year. The report concludes with a number of action points for the year ahead, designed to ensure continued market growth.

Both this broadcast and the ‘China Green Bond Market 2016’ report will be essential for anyone interested or involved with green finance in China.   

- Register here / 请点击此处进行注册 -

Disclaimer: The information contained in this communication does not constitute investment advice and the Climate Bonds Initiative is not an investment adviser. Links to external websites are for information purposes only. The Climate Bonds Initiative accepts no responsibility for content on external websites.

The Climate Bonds Initiative is not advising on the merits or otherwise of any investment. A decision to invest in anything is solely yours. The Climate Bonds Initiative accepts no liability of any kind for investments any individual or organisation makes, nor for investments made by third parties on behalf of an individual or organisation. 

Innovative green finance Alpha Trains concludes a world first green private placement in the rolling stock lessor sector, Certified using the Climate Bonds Low Carbon Transport criteria.

Green debt refinance associated with the acquisition of energy efficient electric passenger train sets.

What's it all about?

Luxembourg based Alpha Trains Group announced yesterday, it has tapped into the US market to successfully complete the world´s first green private placement by a leasing company in the rolling stock sector.

The Group has raised EUR 250m, which has been exclusively used to refinance debt associated with the acquisition of 63 modern electric multiple unit train sets (pictured above) equipped with energy efficient technology, reducing the energy consumption of passenger transportation.

Who are Alpha Trains? 

Alpha Trains are Europe’s largest private operating lessor of rolling stock, including passenger trains and locomotives used by operators in 13 European countries.

Low Carbon Transport Certification

This Alpha Trains private placement has attained Climate Bonds certification with assets eligible under the Low Carbon Transport Criteria.

Verification was provided by Sustainalytics.

Tell me more about Low Carbon Transport Certification?

The Low Carbon Land Transport Criteria sets out eligibility for certification under the Climate Bonds Standardumbrella, based around compatibility with an emission trajectory that limits global temperature rise to 2°C.

Applicable assets under the Criteria include public passenger transport e.g. rail, metros, trams, electric/hybrid buses, private light-duty and heavy goods vehicles that are electric, hybrid or alternative fuel, dedicated freight railway lines and supporting infrastructure.

Transport projects can be defined as low carbon on a per passenger-km (p/km), for passenger transport, or a per tonne-km (t/km), for freight, basis.

This allows all modes of transport to be compared and qualify should they fall within the threshold.

Who’s saying what?

Shaun Mills, CEO of Alpha Trains:

“We are proud to have obtained the Climate Bond Certification for this private placement as the first company in the rolling stock sector worldwide, which is a milestone for both our financing, environmental and social responsibility strategies."

"This new source of capital widens our lender base and, by providing modern and energy efficient electric rolling stock, we contribute to the achievement of the European Union´s greenhouse gas reduction targets and support the sustainable development goals of creating safe and sustainable cities.”

Sean Kidney, CEO Climate Bonds Initiative:

“Innovation & green finance leadership in rail transport from Alpha Trains make a good start to the year. There is tremendous global potential for well-structured green financing products to assist fund new rail infrastructure and rolling stock.“

“This new certified placement from Alpha Trains is an international demonstration to the rail sector of best practice in green refinancing that promotes sustainable investment in low carbon transport.”

Tanguy Claquin, Head of Sustainable Banking at CACIB:

“By issuing its first successful Green capital market transaction, Alpha Trains has become one of the most innovative private players in the rail market worldwide with best in class standards for Green Bond transactions.”

“Transportation is a key sector to fight climate change and we hope the Alpha Trains Green Private Placement will be instrumental in the further development of green transportation investments and financing.”

The Last Word

We like the basic features of this green deal. It’s a rail related refinance, a private placement and its EU based.

This last point has its own significance following the December 2016 release of an EC report recommending a host new measures for increased use of green bonds to help meet European 2030 climate and energy goals.

This was followed by the pre Christmas announcement of a High Level Group on Sustainable Finance as part of the ongoing Capital Markets Union reform process. Amongst the 20 members appointed to the group is our own CEO Sean Kidney.

Both developments hint to the enourmous potential to significantly scale up green finance markets across the EU.

We’ll have some more to say on this particular refinance in a coming Market Blog, meanwhile congratulations to Alpha Trains Group! 

Till next time,

Climate Bonds Communications

Disclaimer: The information contained in this communication does not constitute investment advice and the Climate Bonds Initiative is not an investment adviser. Links to external websites are for information purposes only. The Climate Bonds Initiative accepts no responsibility for content on external websites.

The Climate Bonds Initiative is not advising on the merits or otherwise of any investment. A decision to invest in anything is solely yours. The Climate Bonds Initiative accepts no liability of any kind for investments any individual or organisation makes, nor for investments made by third parties on behalf of an individual or organisation. 

Monday saw the simultaneous Beijing-London launch of the Climate Bonds China Green Bonds Market Report 2016, produced in partnership with the China Central Depository and Clearing Co Ltd. (CCDC).   Available in both Chinese and English, the report covers the major characteristics of the domestic green bond market in China and the significant trends that emerged in 2016.

Tell me more about the launch

Use of Proceeds

RMB 238bn (USD 36.2bn) in labelled green bonds was issued from China in 2016, accounting for 39% of global issuance in the year.  This total includes both issuance aligned with China’s green definitions and that which is aligned with international definitions of green.

Clean Energy is the largest theme (at 21%) under the PBoC’s Green Bonds Endorsed Project Catalogue, followed by Clean Transportation and Energy Saving (both at 18%).

Green Pricing beating Vanilla 

CCDC analysis included in the report indicates that for bonds with the same ratings, coupon rates of green bonds are slightly lower than regular bonds.

This is an initial finding that bodes well for 2017 issuance. We’ll monitor pricing trends throughout 2017 and cover the developments in the next annual China report.

Investment-grade green bonds dominate Chinese issuance

Prime rated bonds (AAA) made up 74% of the total 2016 issuance. Most Chinese issuers use local rating agencies, while offshore issuance such as the BoC’s green covered bonds usually have ratings from international agencies.

The report also includes a detailed analysis and comparison of three Chinese green bond indices.

International policy leadership

Various regulatory authorities and stock exchanges in China have played crucial roles in sparking the development of the green bonds market by releasing policies and guidance. The report covered these policy developments, from the launch of the PBOC’s announcement on green bond guidelines in December 2015, to the establishment of the G20 Green Finance Study Group (GFSG). The work of the latter will continue under Germany’s presidency in 2017 and under future G20 presidencies.

Who’s Saying What

Dr Ma Jun, Chief Economist, Research Bureau, People's Bank of China:

“This report shows that the green bond market has had a strong start in China, now the world's largest green bond market. Green bonds already make up 2% of Chinese bonds, whereas globally the figure is less than 0.2%.” 

“But the potential is tenfold, because 20% of investments in China need to be green to meet our national objectives. So we expect the green bond market to continue to have very strong growth.”

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

“Developing green bond markets could help us mobilise more private capital into green projects to deal with climate change and environmental challenges, and to achieve the transition of a green economy in China. China’s green bond market is growing rapidly: in 2016, the green bond issuance from Chinese issuers represents 38% of the global green bond issuance.”

“CCDC has been facilitating the development by offering products such as green bond indices, and depository and clearing services for domestic and cross-border green bond issuance. We will continue to provide support for sustaining the growth of the green bond market in China.”

Sean Kidney, CEO, Climate Bonds Initiative:

“Both this China Green Bonds Market report and the ChinaBond Climate-Aligned Bond Index demonstrate the huge potential for China to continue to lead green bond market development”

“This is more than simply leading on green bond issuance, but also in developing policy mechanisms that will catalyse the rapid market scaling that we urgently need to see. I’m confident that the exciting domestic policy initiatives of 2016 will generate the momentum that will see China to continue to be a global leader in both these areas in 2017.”

Action points for the road ahead

After such an impressive 2016 for green bond market growth, the stage is set for China to continue to lead the way in 2017. To that end, the China Green Bonds Market Report 2016 suggests an 8-point plan for policymakers:

• Simplify the approval process for green bonds
• Incorporate green bonds into the scope of collateral for Standing Lending Facility
• Lower the regulatory cost of green financial bonds
• Provide guarantees and credit enhancement
• Require investors to have a minimum exposure to green bonds
• Provide early stage incentives for green projects
• Harmonise green bonds standards and disclosure
• Demonstration issuance from local government

The Last Word

In 2016 China became the world’s largest green bond market, taking just one year to accomplish what in other markets has taken over five. This growth has been spurred by key policy developments and incentives put in place by the PBoC and NDRC. We can expect more incentives in 2017, especially at a provincial and city level.

Through these policy developments, China has proven what Climate Bonds and other market players have long been saying - that policy tools are essential for the growth of green finance and the green bond market.

China led the way in 2016. In 2017, it needs to push to harmonise standards to facilitate even further issuance. Then, it’s up to the rest of the world to follow.

Till next time,

Climate Bonds Communications

Disclosure: The ChinaBond China Climate-Aligned Bond Index is a joint initiative of China Central Depository & Clearing Co. Ltd (CCDCC),CECEP Consulting and the Climate Bonds Initiative.

Disclaimer: The information contained in this communication does not constitute investment advice and the Climate Bonds Initiative is not an investment adviser. Links to external websites are for information purposes only. The Climate Bonds Initiative accepts no responsibility for content on external websites.

The Climate Bonds Initiative is not advising on the merits or otherwise of any investment. A decision to invest in anything is solely yours. The Climate Bonds Initiative accepts no liability of any kind for investments any individual or organisation makes, nor for investments made by third parties on behalf of an individual or organisation.

With Zero Carbon by 2050 targets now emerging across Australia and the release of Climate Bonds emission performance trajectories for major Australian cities, it's time to talk green finance trends in the Australian commercial property sector.

Invitation

You’re invited to join our special one-off Australian webinar, with local experts discussing the latest developments in sustainable investment, green commercial property development and Climate Bonds Low Carbon Building Criteria, webcast live from NAB Sydney offices.

Since the 2014 launch of the Low Carbon Buildings Criteria, there has been a stream of certified green property bonds from Australian issuers including NAB, ANZ Bank, National Australia Bank, Westpac, Treasury Corporation Victoria and Monash University, with more to come.

If your interest is in sustainable buildings, large-scale property investment, green finance, and moving commercial design and development in Australia towards Zero Carbon by 2050, this webinar is for you.

Register here

Webinar: Low Carbon Commercial Property Developments - Australia

When: 2:00PM-3:30PM AEDT, Tuesday 7^th February

Qld 1:00PM-2:30PM AEST / SA 2:30PM-4:00PM ACDT / WA 11:AM-1:30PM AWST

Delhi 8.30am IST / London 3am GMT / New York 10pm EST (on the 6th)

Where: NAB, 255 George St, Sydney

Panellists

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

Ché Wall, Director, Flux Consultants and Lead Specialist, CBI Low Carbon Buildings Technical Working Group

David Jenkins, Director, Investment Grade Originations NAB

Jorge Chapa, Executive Director of Market Transformation: Green Building Council of Australia (GBCA)

Chair: Rob Fowler, Head of Certification, Climate Bonds Initiative

A detailed agenda will be sent out in advance to all registered participants.

Extensive time will be allocated for Q&A and audience participation.

Register here

In Sydney on the 7th? Want to attend in person?

Limited seating will be available at the venue, please contact Rob Fowler for details.

Want to know more?

Information on Australia’s Commercial Building Disclosure Program (CBDP) and Climate Bonds Australian commercial building emissions trajectories is available here.

Additional information on Australian bond issuers who have gained Climate Bonds Certification is contained in this December post here.

Some examples of zero carbon commitments by diverse Australian organisations include  Investa, Government of South Australia,the New South Wales Government and VisionSuper. 

Still interested?

Register for the Webinar here!

A thank you for NAB-Australia for their hosting and support of this event,

Climate Bonds Initiative

Disclosure: National Australia Bank (NAB) is a Climate Bonds Partner Organisation.

Disclaimer: The information contained in this communication does not constitute investment advice and the Climate Bonds Initiative is not an investment adviser. Links to external websites are for information purposes only. The Climate Bonds Initiative accepts no responsibility for content on external websites.

The Climate Bonds Initiative is not advising on the merits or otherwise of any investment. A decision to invest in anything is solely yours. The Climate Bonds Initiative accepts no liability of any kind for investments any individual or organisation makes, nor for investments made by third parties on behalf of an individual or organisation.

California State Treasurer John Chiang launches new green bonds report. Seeking new sources of finance to lower emissions and fund climate-friendly infrastructure.  

First stage of California’s plan to boost acceptance and issuance of green bonds across the US.

What’s it all about?

Treasurer John Chiang has just released ‘Growing the US Green Bond Market: Volume 1: The Barriers and Challenges’ in a bold new move by America’s largest and most innovative state to lead on climate finance, green infrastructure funding and kick-start the US green bond market.

Green bonds: an infrastructure financing tool

The Treasury is coming at this partly from an infrastructure angle. They recognise the urgent need for massive infrastructure upgrades – green buildings, transport networks, energy grids and clean water systems, not just in California, but across the US – and also, that there is a critical need to ensure long life infrastructure is designed and built to be climate-friendly, adaptive and resilient.

The untapped potential for green bonds in the US is massive

While the US has enjoyed the leading global position in overall green bond issuance in the past, it was surpassed by China in 2016.

Moreover, green bonds in the US account for a much lower share of the overall bond markets than in Western Europe, China, India, and Latin America.

Less than one-tenth of one percent of bonds outstanding in the US are labelled green. There’s plenty of room to grow.

What does the report cover?

The report provides a comprehensive overview of the current state of the US green bond market, what’s holding back growth and what can be done to ramp up the market. It looks at five main areas:

• market function, including supply, demand;
• pricing;
• standardization, third party review, disclosure, reporting;
• refinancing and additionality;
• policy issues.

John Chiang Treasurer State of California:

“I am determined to boost green bond issuance and acceptance both here in California and across the country. The challenge is to find a way to make bonds equally attractive to investors and environmentalists.”

Fantastic! A Blueprint for other Treasuries around the world to follow.

The broader green bonds plan: what's next?

The report will be followed by a large scale symposium in the latter half of this year to put practical solutions on the table. An action program will then follow, where the Treasurer’s Office will work with other stakeholders to foster market development, and “take the US green bond market to the next level.”

Where California goes... 

Comprehensive action on green bonds from California can play a huge role, not just for the US green bond market, but also globally: It’s America’s largest state economy and sixth largest in the world.

This leadership on green finance from the Golden State will have a ripple effect.

The Last Word

You can register for the Treasurer’s 2017 Green Bond Symposium here. Don’t miss it. Meantime this report will stimulate discussion and action across the US, as it should.

Or look for Treasurer Chiang delivering his key note speech later tonight at the 2017 Cleantech Forum in San Francisco. (5:45 p.m. Pacific Time /1:45 a.m. GMT)

Congratulations!

‘Till next time

Climate Bonds

Disclosure: John Chiang from the California State Treasurers Office is a member of the Climate Bonds Standards Advisory Board, represented By Deputy Treasurer Alan Gordon.

Disclaimer: The information contained in this communication does not constitute investment advice and the Climate Bonds Initiative is not an investment adviser. Links to external websites are for information purposes only. The Climate Bonds Initiative accepts no responsibility for content on external websites.

The Climate Bonds Initiative is not advising on the merits or otherwise of any investment. A decision to invest in anything is solely yours. The Climate Bonds Initiative accepts no liability of any kind for investments any individual or organisation makes, nor for investments made by third parties on behalf of an individual or organisation.

Strong demand and keen pricing mark global record green bond issuance from the Republic of France.  

Investor demand has seen France’s initial foray into sovereign green bonds surpassing all expectations, creating a world record green bond issuance at EUR7Bn (USD 7.5bn) June 2039 green OAT (GrOAT), with more to come.

Initial media reports have pointed to keen pricing with Reuters reporting it at 13bp over the 1.25% May 2036 OAT.

Spotlight on Sovereigns in 2017

While initial focus has been on the long tenor of the French offer, the size of this initial tranche has implications for future sovereign issuance. In addition to Poland and France, another seven nations have publicly foreshadowed sovereign issuance in 2017 including Sweden, Nigeria and Morocco.

Speaking to Global Capital from the initial meeting of the EC High Level  Group on Sustainable Finance in Brussels, Climate Bonds CEO Sean Kidney said:

“France went to market looking for EUR 3bn, a week ago it said it wanted a minimum of EUR 2.5bn. It’s printed EUR 7bn — talk about evidence of demand. How many sovereigns are now going to be thinking, ‘we need to do this’? This provides a fantastic template for other governments.“

“France went to market to support liquidity. It said it would be a benchmark sovereign issuer to help create the market.”

“With this EUR 7bn print all sorts of issuers will benefit. France did it for the public good — not for the French treasury — and that’s a lesson for all governments.”

“You have to say, ‘Bravo, Bravo, mes amis en France!”

The Last Word

With estimates for 2017 green bond issuance ranging from USD 130bn to near USD 200bn, this USD 7.5bn record size green bond from France makes a healthy January. Now for the next sovereign to step up and investors to again demonstrate their desire for good quality green product. 

Disclaimer: The information contained in this communication does not constitute investment advice and the Climate Bonds Initiative is not an investment adviser. Links to external websites are for information purposes only. The Climate Bonds Initiative accepts no responsibility for content on external websites.

The Climate Bonds Initiative is not advising on the merits or otherwise of any investment. A decision to invest in anything is solely yours. The Climate Bonds Initiative accepts no liability of any kind for investments any individual or organisation makes, nor for investments made by third parties on behalf of an individual or organisation. 

The 2nd edition of our Standard and Certification Newsletter features all the latest developments, certification stories and updates on the best practice green bond issuers during Q4 2016. 

Download the PDF here.

Disclaimer: The information contained in this communication does not constitute investment advice and the Climate Bonds Initiative is not an investment adviser. Links to external websites are for information purposes only. The Climate Bonds Initiative accepts no responsibility  for content on external websites.

The Climate Bonds Initiative is not advising on the merits or otherwise of any investment. A decision to invest in anything is solely yours. The Climate Bonds Initiative accepts no liability of any kind for investments any individual or organisation makes, nor for investments made by third parties on behalf of an individual or organisation.

We’ve just released Climate Bonds Standard V2.1, the most recent update to our overarching multi-sector standard. The Standard allows investors and intermediaries to easily assess the environmental integrity of green bonds so they can invest accurately on low-carbon and climate-resilient projects.

What’s New?

Process improvements and an increase in product reach, mark this update to the assessment tool, the next stage in development since Standard V2.0 was launched in December 2015.

Major new features are:

1. The expansion of the Range of Debt Instruments that can now be Certified under the Standard
    
2. The inclusion of a Programmatic Certification option that will streamline the verification process for regular issuers with large portfolios of eligible assets

New Range of Debt Instruments

While the focus of Climate Bonds' work is on the international bond markets, there are some potential issuers who are also keen to explore Certification of debt instruments which may not fall within the strict definitions of a ‘bond.’

This includes Loan Facilities, Syndicated Loans, Sukuk and a wide variety of other debt instruments which are all useful additions to the climate finance movement.

In Version 2.1 of the Standard, the definitions of what is a ‘bond’ for the purposes of Certification has been expanded to include 'Other Debt Instruments'. A full list is available on our website here.

This list expands the existing four bond definitions that are based on the Green Bonds Principles definitions (Use of Proceeds, Use of Proceeds Revenue, Project, Securitized).

We expect to see exciting developments in this space in the coming months, as issuers become more familiar with the expanded range of debt instruments including Certification of loan facilities for green building initiatives.

What is Programmatic Certification?

Previously, under Version 2.0 of the Standard, each bond issued had to have both pre and post-issuance involvement of the verifier for it to be Certified. However, many issuers want to issue multiple Certified Climate Bonds each year against a large portfolio of eligible assets. 

Version 2.1 of the Standard includes this option, a ‘Programmatic Certification’ to streamline the verification of several bonds against the same large portfolio of eligible assets.

Programmatic Certification is for issuers that intend to issue at least twice a year over multiple years. This option has been very popular in discussions with existing and potential issuers. 

How Programmatic Certification Works in Practice

There are four steps for issuers under the Programmatic Certification option:

1. The issuer's first Certified Climate Bond in the programme is verified and Certified for pre-issuance and post-issuance in the normal way. This ensures that the issuer’s internal compliance framework is in place and that they have a large enough stack of eligible assets for the issuance programme.
    
2. When the issuer comes to issue again under their programme, they must provide the requisite information to, and receive formal Certification, from the Board, but the issuer does not need to involve the verifier during the issuance phase.
    
3. The issuer must engage a verifier annually to review the issuer’s internal Green Bond Framework, to examine the compliance of all Certified Climate Bonds issued under the programme since the previous year’s verification and to produce a Verifier’s Report.
    
4. Reporting obligations remain the same for each bond as Climate Bonds continues to track all existing Certified Climate Bonds via the submission of the Climate Bond Information Form by the issuer before every issuance under their programme, and the annual Verifier’s Report on all bonds issued under the programme.

Backwards Compatibility with Version 2.0 for Previous Certifications

The updated version of the Climate Bonds Standard has new options available to issuers but it has not changed the detailed requirements for meeting the Standard. This means that there is no need for bonds Certified under version 2.0 of the Standard to update their documents or seek recertification under Version 2.1.

Issuers are encouraged to use version 2.1 of the Standard for new applications for Certification. Existing applications using version 2.0 of the Standard are welcome to be submitted up to the middle of 2017.

What Other Updates are in V2.1?

Other updates from Version 2.0 to Version 2.1 include:

1. Alignment with the most recent version of the Green Bond Principles
    
2. Adjusting the list of sector-specific Criteria available to include new additions such as Water Sector Criteria
    
3. Clarification of wording in the Standard based on feedback from issuers and verifiers, including the eligibility of leased assets, examples for reporting metrics, and updated Climate Bonds terminology
    
4. Removing some redundant explanatory material to reduce the overall size of the document

The Last Word

This update to the Standard, combined with the new sector criteria available to issuers, further streamlines the process and widens the pool of assets available for Certification. If you would like to explore the new possibilities opened up by V2.1, please get in touch with our Head of Certification, Rob Fowler. 

We’ll continue our development work in 2017 and as always keep you advised on the latest Certifications and market developments.

‘Till next time

Climate Bonds Initiative

Disclaimer: The information contained in this communication does not constitute investment advice and the Climate Bonds Initiative is not an investment adviser. Links to external websites are for information purposes only. The Climate Bonds Initiative accepts no responsibility for content on external websites.

The Climate Bonds Initiative is not advising on the merits or otherwise of any investment. A decision to invest in anything is solely yours. The Climate Bonds Initiative accepts no liability of any kind for investments any individual or organisation makes, nor for investments made by third parties on behalf of an individual or organisation.

Strasser further opens the market to institutional investors with the first issue of a Climate Bonds Certified fixed rate loan in Europe for long-term financing of a solar lease business model.

What’s it all about

German based Strasser Capital has announced today successful of an EUR 30m placement with Dutch based manager Delta Lloyd Asset Management. The loan is certified under the Climate Bonds Standard and is secured against a “highly granular” pool of residential solar leases held by Strasser’s largest subsidiary MEP Werke.

The announcement notes this is the first issue of a Climate Bond Certified, 20-year green senior secured fixed rate loan in Europe for long-term financing of a solar lease business model, a new development in green finance. 

We’ll have more to say when we discuss this new green finance initiative in our first Market Blog for 2017, due out in a couple of weeks.

Meanwhile, these comments from various stakeholder gives some flavour to this new development in green loan securitisation.

Who's saying what

Konstantin Strasser, CEO and founder of Strasser Capital

“Throughout the world investors are looking for certified and rated green investment and financing opportunities.”

“The MEP green loan has a fixed interest rate and is secured by a granular, diversified portfolio of 20-year solar lease receivables which makes it the perfect investment for long-term investors such as pension funds or insurance companies.”

Ulrich Bogner, Director Corporate Finance and Investments

“With our partner NIBC bank as well as our advisors DWF Germany Rechtsanwaltsgesellschaft mbH, Hexagon Finance and Advisory Ltd. and Clifford Chance, we were able to develop this unique financing solution for the photovoltaic sector.”

Tamer Fawaz, Portfolio Manager Delta Lloyd Asset Management

“As investors we are convinced that MEP will contribute to bringing this innovative financing concept to the forefront of the energy transition from traditional to renewable energy sources in Germany. We are delighted that with Strasser Capital we have found not only a partner who searches for new solutions, but also one that is able to implement them strategically and consistently.”

Thom Rasser, CEO of NIBC Bank Deutschland AG

”This successful refinancing proves MEP’s long-term business model and we are delighted to have worked with Strasser Capital in this innovative financing and look forward to further long-term financings from the MEP Green Financing Programme.”

Rick Gambetta, Managing Director, Hexagon Finance and Advisory Limited

“MEP’s Solar Lease portfolio, with its granularity and predictable income stream, is a natural asset class for long-term asset-backed financing. Hexagon is extremely pleased to have advised on this transaction, the first distributed generation solar PV financing transaction closed outside the U.S. “

Dr. Arne Klüwer, partner at Clifford Chance

"This is the first structure combining whole business securitisation with traditional mobile lease receivables techniques, and constitutes an innovative blueprint for a new asset class.”

Sean Kidney, CEO Climate Bonds Initiative

“This is green finance leadership from Strasser Capital and marks a positive start to 2017. They have set out to lead the EU market, garnered support from major stakeholders and together they have all shown that is possible to develop green investment pathways. Well done all round!”  

“We need other financial institutions to follow and develop well-structured green securitization models, long term green investment propositions and help build market depth.”

The Last Word

Strasser first mooted this development back in June 2016, foreshadowing that they were currently structuring a long-term note issuance programme; “secured on a granular portfolio of MEP solar lease receivables.” 

At the time, Konstantin Strasser characterised the future issuance as “the first of its kind in Europe,” and it is.

Even better, growth is on the way. NIBC Bank Deutschland AG has granted underlying solar lease issuer MEP a second senior loan warehouse facility, opening the path for a second fixed rate financing product to be issued.

Building green finance in the EU to the trillion size scale needed to meet 2030 energy and climate goals was the subject of a comprehensive report released by the European Commission in mid-December. Following, on December 22^nd, the announcement of an Expert Group on Sustainable Finance whose members include our very own CEO Sean Kidney.

This new deal from Strasser is a small but significant example of what’s required. 

It’s underlying features and hence attractiveness to institutional investors highlight part of the green finance future the new EU Expert Group is looking towards.

Another important first from the European green finance market. 2017 is off to a great start.
 

‘Till next time,

Climate Bonds Communications

Note: MEP Werke is a Climate Bonds partner. A full list of partner organisations is available on our website here.

Disclaimer: The information contained in this communication does not constitute investment advice and the Climate Bonds Initiative is not an investment adviser. Links to external websites are for information purposes only. The Climate Bonds Initiative accepts no responsibility for content on external websites.

The Climate Bonds Initiative is not advising on the merits or otherwise of any investment. A decision to invest in anything is solely yours. The Climate Bonds Initiative accepts no liability of any kind for investments any individual or organisation makes, nor for investments made by third parties on behalf of an individual or organisation. 

Climate Bonds and China Central Depository & Clearing Co. (CCDC) invite you to join us for a simultaneous live broadcast of our ‘China Green Bond Market 2016’ report launch from Beijing and London.

CCDC’s Vice President LIU Fan will give a short presentation in Chinese from their offices in Beijing, after which Climate Bonds CEO Sean Kidney will present in English from the City of London. This will be followed by a Q&A session.

气候债券倡议组织和中央结算公司邀请您参加我们于伦敦和北京向您实时播报的《2016中国绿色债券市场》报告发布。

中央结算公司副总经理刘凡将在北京以中文进行简要致辞。气候债券倡议组织首席执行官Sean Kidney将在伦敦以英文对报告进行介绍。之后将是问答环节。

2016 saw China’s green bond market grow rapidly to become the largest issuing country by year’s end, accounting for 38% of the global total. The launch presentations will give an overview of the report’s analysis, including of the domestic green bond market in China, the market infrastructure and verification tools available and major policy developments of the last year. The report concludes with a number of action points for the year ahead, designed to ensure continued market growth.

Both this broadcast and the ‘China Green Bond Market 2016’ report will be essential for anyone interested or involved with green finance in China.   

- Register here / 请点击此处进行注册 -

Disclaimer: The information contained in this communication does not constitute investment advice and the Climate Bonds Initiative is not an investment adviser. Links to external websites are for information purposes only. The Climate Bonds Initiative accepts no responsibility for content on external websites.

The Climate Bonds Initiative is not advising on the merits or otherwise of any investment. A decision to invest in anything is solely yours. The Climate Bonds Initiative accepts no liability of any kind for investments any individual or organisation makes, nor for investments made by third parties on behalf of an individual or organisation. 

Innovative green finance Alpha Trains concludes a world first green private placement in the rolling stock sector, Certified using the Climate Bonds Low Carbon Transport criteria.

Green debt refinance associated with the acquisition of energy efficient electric passenger train sets.

What's it all about?

Luxembourg based Alpha Trains Group announced yesterday, it has tapped into the US market to successfully complete the world´s first green private placement by a leasing company in the rolling stock sector.

The Group has raised EUR 250m, which has been exclusively used to refinance debt associated with the acquisition of 63 modern electric multiple unit train sets (pictured above) equipped with energy efficient technology, reducing the energy consumption of passenger transportation.

Who are Alpha Trains? 

Alpha Trains are Europe’s largest private operating lessor of rolling stock, including passenger trains and locomotives used by operators in 13 European countries.

Low Carbon Transport Certification

This Alpha Trains private placement has attained Climate Bonds certification with assets eligible under the Low Carbon Transport Criteria.

Verification was provided by Sustainalytics.

Tell me more about Low Carbon Transport Certification?

The Low Carbon Land Transport Criteria sets out eligibility for certification under the Climate Bonds Standardumbrella, based around compatibility with an emission trajectory that limits global temperature rise to 2°C.

Applicable assets under the Criteria include public passenger transport e.g. rail, metros, trams, electric/hybrid buses, private light-duty and heavy goods vehicles that are electric, hybrid or alternative fuel, dedicated freight railway lines and supporting infrastructure.

Transport projects can be defined as low carbon on a per passenger-km (p/km), for passenger transport, or a per tonne-km (t/km), for freight, basis.

This allows all modes of transport to be compared and qualify should they fall within the threshold.

Who’s saying what?

Shaun Mills, CEO of Alpha Trains:

“We are proud to have obtained the Climate Bond Certification for this private placement as the first company in the rolling stock sector worldwide, which is a milestone for both our financing, environmental and social responsibility strategies."

"This new source of capital widens our lender base and, by providing modern and energy efficient electric rolling stock, we contribute to the achievement of the European Union´s greenhouse gas reduction targets and support the sustainable development goals of creating safe and sustainable cities.”

Sean Kidney, CEO Climate Bonds Initiative:

“Innovation & green finance leadership in rail transport from Alpha Trains make a good start to the year. There is tremendous global potential for well-structured green financing products to assist fund new rail infrastructure and rolling stock.“

“This new certified placement from Alpha Trains is an international demonstration to the rail sector of best practice in green refinancing that promotes sustainable investment in low carbon transport.”

Tanguy Claquin, Head of Sustainable Banking at CACIB:

“By issuing its first successful Green capital market transaction, Alpha Trains has become one of the most innovative private players in the rail market worldwide with best in class standards for Green Bond transactions.”

“Transportation is a key sector to fight climate change and we hope the Alpha Trains Green Private Placement will be instrumental in the further development of green transportation investments and financing.”

The Last Word

We like the basic features of this green deal. It’s a rail related refinance, a private placement and its EU based.

This last point has its own significance following the December 2016 release of an EC report recommending a host new measures for increased use of green bonds to help meet European 2030 climate and energy goals.

This was followed by the pre Christmas announcement of a High Level Group on Sustainable Finance as part of the ongoing Capital Markets Union reform process. Amongst the 20 members appointed to the group is our own CEO Sean Kidney.

Both developments hint to the enourmous potential to significantly scale up green finance markets across the EU.

We’ll have some more to say on this particular refinance in a coming Market Blog, meanwhile congratulations to Alpha Trains Group! 

Till next time,

Climate Bonds Communications

Disclaimer: The information contained in this communication does not constitute investment advice and the Climate Bonds Initiative is not an investment adviser. Links to external websites are for information purposes only. The Climate Bonds Initiative accepts no responsibility for content on external websites.

The Climate Bonds Initiative is not advising on the merits or otherwise of any investment. A decision to invest in anything is solely yours. The Climate Bonds Initiative accepts no liability of any kind for investments any individual or organisation makes, nor for investments made by third parties on behalf of an individual or organisation. 

Monday saw the simultaneous Beijing-London launch of the Climate Bonds China Green Bonds Market Report 2016, produced in partnership with the China Central Depository and Clearing Co Ltd. (CCDC).   Available in both Chinese and English, the report covers the major characteristics of the domestic green bond market in China and the significant trends that emerged in 2016.

Tell me more about the launch

Use of Proceeds

RMB 238bn (USD 36.2bn) in labelled green bonds was issued from China in 2016, accounting for 39% of global issuance in the year.  This total includes both issuance aligned with China’s green definitions and that which is aligned with international definitions of green.

Clean Energy is the largest theme (at 21%) under the PBoC’s Green Bonds Endorsed Project Catalogue, followed by Clean Transportation and Energy Saving (both at 18%).

Green Pricing beating Vanilla 

CCDC analysis included in the report indicates that for bonds with the same ratings, coupon rates of green bonds are slightly lower than regular bonds.

This is an initial finding that bodes well for 2017 issuance. We’ll monitor pricing trends throughout 2017 and cover the developments in the next annual China report.

Investment-grade green bonds dominate Chinese issuance

Prime rated bonds (AAA) made up 74% of the total 2016 issuance. Most Chinese issuers use local rating agencies, while offshore issuance such as the BoC’s green covered bonds usually have ratings from international agencies.

The report also includes a detailed analysis and comparison of three Chinese green bond indices.

International policy leadership

Various regulatory authorities and stock exchanges in China have played crucial roles in sparking the development of the green bonds market by releasing policies and guidance.

The report covered these policy developments, from the launch of the PBOC’s announcement on green bond guidelines in December 2015, to the establishment of the G20 Green Finance Study Group (GFSG). The work of the latter will continue under Germany’s presidency in 2017 and under future G20 presidencies.

Who’s Saying What

Dr Ma Jun, Chief Economist, Research Bureau, People's Bank of China:

“This report shows that the green bond market has had a strong start in China, now the world's largest green bond market. Green bonds already make up 2% of Chinese bonds, whereas globally the figure is less than 0.2%.” 

“But the potential is tenfold, because 20% of investments in China need to be green to meet our national objectives. So we expect the green bond market to continue to have very strong growth.”

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

“Developing green bond markets could help us mobilise more private capital into green projects to deal with climate change and environmental challenges, and to achieve the transition of a green economy in China.”

"China’s green bond market is growing rapidly: in 2016, the green bond issuance from Chinese issuers represents 38% of the global green bond issuance.”

“CCDC has been facilitating the development by offering products such as green bond indices, and depository and clearing services for domestic and cross-border green bond issuance. We will continue to provide support for sustaining the growth of the green bond market in China.”

Sean Kidney, CEO, Climate Bonds Initiative:

“Both this China Green Bonds Market report and the ChinaBond Climate-Aligned Bond Index demonstrate the huge potential for China to continue to lead green bond market development”

“This is more than simply leading on green bond issuance, but also in developing policy mechanisms that will catalyse the rapid market scaling that we urgently need to see. I’m confident that the exciting domestic policy initiatives of 2016 will generate the momentum that will see China to continue to be a global leader in both these areas in 2017.”

Action points for the road ahead

After such an impressive 2016 for green bond market growth, the stage is set for China to continue to lead the way in 2017. To that end, the China Green Bonds Market Report 2016 suggests an 8-point plan for policymakers:

• Simplify the approval process for green bonds
• Incorporate green bonds into the scope of collateral for Standing Lending Facility
• Lower the regulatory cost of green financial bonds
• Provide guarantees and credit enhancement
• Require investors to have a minimum exposure to green bonds
• Provide early stage incentives for green projects
• Harmonise green bonds standards and disclosure
• Demonstration issuance from local government

The Last Word

In 2016 China became the world’s largest green bond market, taking just one year to accomplish what in other markets has taken over five. This growth has been spurred by key policy developments and incentives put in place by the PBoC and NDRC. We can expect more incentives in 2017, especially at a provincial and city level.

Through these policy developments, China has proven what Climate Bonds and other market players have long been saying - that policy tools are essential for the growth of green finance and the green bond market.

China led the way in 2016. In 2017, it needs to push to harmonise standards to facilitate even further issuance. Then, it’s up to the rest of the world to follow.

Till next time,

Climate Bonds Communications

Disclosure: The ChinaBond China Climate-Aligned Bond Index is a joint initiative of China Central Depository & Clearing Co. Ltd (CCDCC),CECEP Consulting and the Climate Bonds Initiative.

Disclaimer: The information contained in this communication does not constitute investment advice and the Climate Bonds Initiative is not an investment adviser. Links to external websites are for information purposes only. The Climate Bonds Initiative accepts no responsibility for content on external websites.

The Climate Bonds Initiative is not advising on the merits or otherwise of any investment. A decision to invest in anything is solely yours. The Climate Bonds Initiative accepts no liability of any kind for investments any individual or organisation makes, nor for investments made by third parties on behalf of an individual or organisation.

With Zero Carbon by 2050 targets now emerging across Australia and the release of Climate Bonds emission performance trajectories for major Australian cities, it's time to talk green finance trends in the Australian commercial property sector.

Invitation

You’re invited to join our special one-off Australian webinar, with local experts discussing the latest developments in sustainable investment, green commercial property development and Climate Bonds Low Carbon Building Criteria, webcast live from NAB Sydney offices.

Since the 2014 launch of the Low Carbon Buildings Criteria, there has been a stream of certified green property bonds from Australian issuers including NAB, ANZ Bank, National Australia Bank, Westpac, Treasury Corporation Victoria and Monash University, with more to come.

If your interest is in sustainable buildings, large-scale property investment, green finance, and moving commercial design and development in Australia towards Zero Carbon by 2050, this webinar is for you.

Register here

Webinar: Low Carbon Commercial Property Developments - Australia

When: 2:00PM-3:30PM AEDT, Tuesday 7^th February

Qld 1:00PM-2:30PM AEST / SA 2:30PM-4:00PM ACDT / WA 11:AM-1:30PM AWST

Delhi 8.30am IST / London 3am GMT / New York 10pm EST (on the 6th)

Where: NAB, 255 George St, Sydney

Panellists

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

Ché Wall, Director, Flux Consultants and Lead Specialist, CBI Low Carbon Buildings Technical Working Group

David Jenkins, Director, Investment Grade Originations NAB

Jorge Chapa, Executive Director of Market Transformation: Green Building Council of Australia (GBCA)

Chair: Rob Fowler, Head of Certification, Climate Bonds Initiative

A detailed agenda will be sent out in advance to all registered participants.

Extensive time will be allocated for Q&A and audience participation.

Register here

In Sydney on the 7th? Want to attend in person?

Limited seating will be available at the venue, please contact Rob Fowler for details.

Want to know more?

Information on Australia’s Commercial Building Disclosure Program (CBDP) and Climate Bonds Australian commercial building emissions trajectories is available here.

Additional information on Australian bond issuers who have gained Climate Bonds Certification is contained in this December post here.

Some examples of zero carbon commitments by diverse Australian organisations include  Investa, Government of South Australia,the New South Wales Government and VisionSuper. 

Still interested?

Register for the Webinar here!

A thank you for NAB-Australia for their hosting and support of this event,

Climate Bonds Initiative

Disclosure: National Australia Bank (NAB) is a Climate Bonds Partner Organisation.

Disclaimer: The information contained in this communication does not constitute investment advice and the Climate Bonds Initiative is not an investment adviser. Links to external websites are for information purposes only. The Climate Bonds Initiative accepts no responsibility for content on external websites.

The Climate Bonds Initiative is not advising on the merits or otherwise of any investment. A decision to invest in anything is solely yours. The Climate Bonds Initiative accepts no liability of any kind for investments any individual or organisation makes, nor for investments made by third parties on behalf of an individual or organisation.

California State Treasurer John Chiang launches new green bonds report. Seeking new sources of finance to lower emissions and fund climate-friendly infrastructure.  

First stage of California’s plan to boost acceptance and issuance of green bonds across the US.

What’s it all about?

Treasurer John Chiang has just released ‘Growing the US Green Bond Market: Volume 1: The Barriers and Challenges’ in a bold new move by America’s largest and most innovative state to lead on climate finance, green infrastructure funding and kick-start the US green bond market.

Green bonds: an infrastructure financing tool

The Treasury is coming at this partly from an infrastructure angle. They recognise the urgent need for massive infrastructure upgrades – green buildings, transport networks, energy grids and clean water systems, not just in California, but across the US – and also, that there is a critical need to ensure long life infrastructure is designed and built to be climate-friendly, adaptive and resilient.

The untapped potential for green bonds in the US is massive

While the US has enjoyed the leading global position in overall green bond issuance in the past, it was surpassed by China in 2016.

Moreover, green bonds in the US account for a much lower share of the overall bond markets than in Western Europe, China, India, and Latin America.

Less than one-tenth of one percent of bonds outstanding in the US are labelled green. There’s plenty of room to grow.

What does the report cover?

The report provides a comprehensive overview of the current state of the US green bond market, what’s holding back growth and what can be done to ramp up the market. It looks at five main areas:

• market function, including supply, demand;
• pricing;
• standardization, third party review, disclosure, reporting;
• refinancing and additionality;
• policy issues.

John Chiang Treasurer State of California:

“I am determined to boost green bond issuance and acceptance both here in California and across the country. The challenge is to find a way to make bonds equally attractive to investors and environmentalists.”

Fantastic! A Blueprint for other Treasuries around the world to follow.

The broader green bonds plan: what's next?

The report will be followed by a large scale symposium in the latter half of this year to put practical solutions on the table. An action program will then follow, where the Treasurer’s Office will work with other stakeholders to foster market development, and “take the US green bond market to the next level.”

Where California goes... 

Comprehensive action on green bonds from California can play a huge role, not just for the US green bond market, but also globally: It’s America’s largest state economy and sixth largest in the world.

This leadership on green finance from the Golden State will have a ripple effect.

The Last Word

You can register for the Treasurer’s 2017 Green Bond Symposium here. Don’t miss it. Meantime this report will stimulate discussion and action across the US, as it should.

Or look for Treasurer Chiang delivering his key note speech later tonight at the 2017 Cleantech Forum in San Francisco. (5:45 p.m. Pacific Time /1:45 a.m. GMT)

Congratulations!

‘Till next time

Climate Bonds

Disclosure: John Chiang from the California State Treasurers Office is a member of the Climate Bonds Standards Advisory Board, represented By Deputy Treasurer Alan Gordon.

Disclaimer: The information contained in this communication does not constitute investment advice and the Climate Bonds Initiative is not an investment adviser. Links to external websites are for information purposes only. The Climate Bonds Initiative accepts no responsibility for content on external websites.

The Climate Bonds Initiative is not advising on the merits or otherwise of any investment. A decision to invest in anything is solely yours. The Climate Bonds Initiative accepts no liability of any kind for investments any individual or organisation makes, nor for investments made by third parties on behalf of an individual or organisation.

Strong demand and keen pricing mark global record green bond issuance from the Republic of France.  

Investor demand has seen France’s initial foray into sovereign green bonds surpassing all expectations, creating a world record green bond issuance at EUR7Bn (USD 7.5bn) June 2039 green OAT (GrOAT), with more to come.

Initial media reports have pointed to keen pricing with Reuters reporting it at 13bp over the 1.25% May 2036 OAT.

Spotlight on Sovereigns in 2017

While initial focus has been on the long tenor of the French offer, the size of this initial tranche has implications for future sovereign issuance. In addition to Poland and France, another seven nations have publicly foreshadowed sovereign issuance in 2017 including Sweden, Nigeria and Morocco.

Speaking to Global Capital from the initial meeting of the EC High Level  Group on Sustainable Finance in Brussels, Climate Bonds CEO Sean Kidney said:

“France went to market looking for EUR 3bn, a week ago it said it wanted a minimum of EUR 2.5bn. It’s printed EUR 7bn — talk about evidence of demand. How many sovereigns are now going to be thinking, ‘we need to do this’? This provides a fantastic template for other governments.“

“France went to market to support liquidity. It said it would be a benchmark sovereign issuer to help create the market.”

“With this EUR 7bn print all sorts of issuers will benefit. France did it for the public good — not for the French treasury — and that’s a lesson for all governments.”

“You have to say, ‘Bravo, Bravo, mes amis en France!”

The Last Word

With estimates for 2017 green bond issuance ranging from USD 130bn to near USD 200bn, this USD 7.5bn record size green bond from France makes a healthy January. Now for the next sovereign to step up and investors to again demonstrate their desire for good quality green product. 

Disclaimer: The information contained in this communication does not constitute investment advice and the Climate Bonds Initiative is not an investment adviser. Links to external websites are for information purposes only. The Climate Bonds Initiative accepts no responsibility for content on external websites.

The Climate Bonds Initiative is not advising on the merits or otherwise of any investment. A decision to invest in anything is solely yours. The Climate Bonds Initiative accepts no liability of any kind for investments any individual or organisation makes, nor for investments made by third parties on behalf of an individual or organisation. 

The 2nd edition of our Standard and Certification Newsletter features all the latest developments, certification stories and updates on the best practice green bond issuers during Q4 2016. 

Download the PDF here.

Disclaimer: The information contained in this communication does not constitute investment advice and the Climate Bonds Initiative is not an investment adviser. Links to external websites are for information purposes only. The Climate Bonds Initiative accepts no responsibility  for content on external websites.

The Climate Bonds Initiative is not advising on the merits or otherwise of any investment. A decision to invest in anything is solely yours. The Climate Bonds Initiative accepts no liability of any kind for investments any individual or organisation makes, nor for investments made by third parties on behalf of an individual or organisation.

We’ve just released Climate Bonds Standard V2.1, the most recent update to our overarching multi-sector standard. The Standard allows investors and intermediaries to easily assess the environmental integrity of green bonds so they can invest accurately on low-carbon and climate-resilient projects.

What’s New?

Process improvements and an increase in product reach, mark this update to the assessment tool, the next stage in development since Standard V2.0 was launched in December 2015.

Major new features are:

1. The expansion of the Range of Debt Instruments that can now be Certified under the Standard
    
2. The inclusion of a Programmatic Certification option that will streamline the verification process for regular issuers with large portfolios of eligible assets

New Range of Debt Instruments

While the focus of Climate Bonds' work is on the international bond markets, there are some potential issuers who are also keen to explore Certification of debt instruments which may not fall within the strict definitions of a ‘bond.’

This includes Loan Facilities, Syndicated Loans, Sukuk and a wide variety of other debt instruments which are all useful additions to the climate finance movement.

In Version 2.1 of the Standard, the definitions of what is a ‘bond’ for the purposes of Certification has been expanded to include 'Other Debt Instruments'. A full list is available on our website here.

This list expands the existing four bond definitions that are based on the Green Bonds Principles definitions (Use of Proceeds, Use of Proceeds Revenue, Project, Securitized).

We expect to see exciting developments in this space in the coming months, as issuers become more familiar with the expanded range of debt instruments including Certification of loan facilities for green building initiatives.

What is Programmatic Certification?

Previously, under Version 2.0 of the Standard, each bond issued had to have both pre and post-issuance involvement of the verifier for it to be Certified. However, many issuers want to issue multiple Certified Climate Bonds each year against a large portfolio of eligible assets. 

Version 2.1 of the Standard includes this option, a ‘Programmatic Certification’ to streamline the verification of several bonds against the same large portfolio of eligible assets.

Programmatic Certification is for issuers that intend to issue at least twice a year over multiple years. This option has been very popular in discussions with existing and potential issuers. 

How Programmatic Certification Works in Practice

There are four steps for issuers under the Programmatic Certification option:

1. The issuer's first Certified Climate Bond in the programme is verified and Certified for pre-issuance and post-issuance in the normal way. This ensures that the issuer’s internal compliance framework is in place and that they have a large enough stack of eligible assets for the issuance programme.
    
2. When the issuer comes to issue again under their programme, they must provide the requisite information to, and receive formal Certification, from the Board, but the issuer does not need to involve the verifier during the issuance phase.
    
3. The issuer must engage a verifier annually to review the issuer’s internal Green Bond Framework, to examine the compliance of all Certified Climate Bonds issued under the programme since the previous year’s verification and to produce a Verifier’s Report.
    
4. Reporting obligations remain the same for each bond as Climate Bonds continues to track all existing Certified Climate Bonds via the submission of the Climate Bond Information Form by the issuer before every issuance under their programme, and the annual Verifier’s Report on all bonds issued under the programme.

Backwards Compatibility with Version 2.0 for Previous Certifications

The updated version of the Climate Bonds Standard has new options available to issuers but it has not changed the detailed requirements for meeting the Standard. This means that there is no need for bonds Certified under version 2.0 of the Standard to update their documents or seek recertification under Version 2.1.

Issuers are encouraged to use version 2.1 of the Standard for new applications for Certification. Existing applications using version 2.0 of the Standard are welcome to be submitted up to the middle of 2017.

What Other Updates are in V2.1?

Other updates from Version 2.0 to Version 2.1 include:

1. Alignment with the most recent version of the Green Bond Principles
    
2. Adjusting the list of sector-specific Criteria available to include new additions such as Water Sector Criteria
    
3. Clarification of wording in the Standard based on feedback from issuers and verifiers, including the eligibility of leased assets, examples for reporting metrics, and updated Climate Bonds terminology
    
4. Removing some redundant explanatory material to reduce the overall size of the document

The Last Word

This update to the Standard, combined with the new sector criteria available to issuers, further streamlines the process and widens the pool of assets available for Certification. If you would like to explore the new possibilities opened up by V2.1, please get in touch with our Head of Certification, Rob Fowler. 

We’ll continue our development work in 2017 and as always keep you advised on the latest Certifications and market developments.

‘Till next time

Climate Bonds Initiative

Disclaimer: The information contained in this communication does not constitute investment advice and the Climate Bonds Initiative is not an investment adviser. Links to external websites are for information purposes only. The Climate Bonds Initiative accepts no responsibility for content on external websites.

The Climate Bonds Initiative is not advising on the merits or otherwise of any investment. A decision to invest in anything is solely yours. The Climate Bonds Initiative accepts no liability of any kind for investments any individual or organisation makes, nor for investments made by third parties on behalf of an individual or organisation.