Climate Bonds convenes group of global experts to focus on standards development across waste management to underpin low-carbon investment.

What’s it all about?

The Climate Bonds Initiative has announced the formation of a new Waste Management Technical Working Group (TWG) to develop new sector criteria, which will stimulate investment into low-carbon waste management activities and infrastructure.

Expert Representation

The new TWG convenes 20 expert representatives from 17 organisations, including universities, NGOs, consultancies, and industry associations, with widespread and direct expertise on global waste management.

A screening tool for issuers and investors

Over the next 6-12 months, the TWG will develop science-based criteria that can be used to screen potential waste management assets and projects, identifying those that are best practice in addressing carbon and climate risks and can be considered consistent with limiting warming to a global average of 2°C, aligning with the targets of the Paris Climate Change agreement.

Science based focus

The work of the TWG in developing the Criteria will be pivotal in enabling governments, businesses, and investors to assess the green credentials of projects and assets in the waste sector.

Development of a science-based criteria is intended to facilitate capital flows to innovative, effective waste technologies and infrastructure that accelerates the transition to a low-carbon and climate-resilient economy.

They will provide a potential path for certifying green bonds or other debt instruments in the sector, under the Climate Bonds Standard and Certification Scheme.

Consultation and review process

As the criteria are being developed by the TWG, it will incorporate feedback from an Industry Working Group (IWG) consisting of bond issuers from the waste sector and other intermediaries, which Climate Bonds expects to launch shortly.

Once developed, the criteria will be released for public consultation and finally submitted to the independent Climate Bonds Standards Board for approval.

Who’s on the Waste Management TWG?

Anaerobic Digestion and  Bioresources Association (ADBA) Jessica Allan Environment and Regulation Manager	UK Green Investment Bank (GIB) Adrian Barnes Associate – Sustainable Finance	Trucost Tom Barnett Senior Account Director	Resource and Waste Solutions Terry Coleman Consultant TWG Lead Specialist
Veolia Gary Crawford Vice President of International Affairs	World Business Council for Sustainable Development Brendan Edgerton Manager, Sustainable Materials	London Waste and Recycling Board Stuart Ferguson Head of Investment	Golder Associates (UK) David Hall Senior Consultant
Eunomia Dr Dominic Hogg Chairman	Ricardo Energy & Environment Chris Hoy Waste Management Specialist	WRAP Keith James Special Adviser – Environmental Research	Anaerobic Digestion and  Bioresources Association (ADBA) Thom Koller Policy Officer
The Energy and Resources Institute (TERI) Sourabh Manuja Associate Fellow (Modelling & Scenario Building), Environment and Waste Management Division	University of Surrey Professor Richard Murphy Director, Centre for Environment & Sustainability	The Energy and Resources Institute (TERI) Dr Suneel Pandey Director, Environment and Waste Management Division	Ricardo Energy & Environment Dr Adam Read Practice Director – Resource Efficiency & Waste Management
C40 Amrita Sinha Manager, Solid Waste Network	University College London (UCL) Dr Carla Tagliaferri Research Associate	Resource Futures Bernie Thomas Principal Consultant	Zero Waste Europe Mariel Vilella Managing Director

​ 

Who’s saying what?

Terry Coleman, TWG Lead Specialist and Consultant, Resource and Waste Solutions:

“Climate change is probably the biggest environmental and economic challenge we will face this century, yet governments seem almost incapable of concerted action and business must step up to fill the gap and take the lead.”

“However, addressing climate change needs a huge investment to meet this challenge and investors want to know that their money is helping provide the infrastructure to mitigate or adapt to climate change in a meaningful way.”

“Our work will provide the standards against which the climate change credentials of investments can be judged fairly and objectively, giving investors that certainty and therefore increase confidence and future investment in the green bond market to help address climate change.”

Gary Crawford, TWG Member and Vice President of International Affairs, Veolia and Chair of the International Solid Waste Association Working Group on Climate Change & Waste Management:

“A major barrier for waste and resource management project development, especially in developing countries, has been establishing bankable projects and gaining access to financing.”

“The development of specific criteria for climate bonds addressing waste and resource management within the Climate Bonds Standard by the recently formed Technical Working Group will boost investor confidence and provide a new source of green financing that will help to scale up these much-needed projects around the world.”

Dr Suneel Pandey, TWG Member and Director, Environment and Waste Management Division, The Energy and Resources Institute (TERI):

“The key issue for improving the waste management in developing countries is difficulty in arranging finance to bring in innovative waste processing options to divert waste from landfills and address climate change. Climate Bonds can play a critical role here empowering local bodies to improve their performance.”

Amrita Sinha, Manager, Solid Waste Network, C40:

"With half of the global population currently living in cities - a figure that is estimated to reach 75% by 2050 – cities are key to successfully reducing emissions from the waste sector at scale. The World Bank projects that municipal solid waste streams will double worldwide by 2025, placing increasing pressure on cities to provide sustainable waste management services.” 

“Waste management is inherently a local issue and local leaders often have both the power and willingness to address climate risks and air quality issues related to waste. Cities require a significant share of their municipal budget to properly manage solid waste and need cost-effective solutions to affordably implement good waste management practices.” 

“Applying a lifecycle approach to waste management has the potential to contribute a significant reduction in global greenhouse gas emissions whilst offering meaningful health, poverty reduction and job creation benefits to cities.”

“Thus, C40 is pleased to join the Waste Management Technical Working Group (TWG) at Climate Bonds Initiative, to develop robust climate bonds criteria for the waste management sector and enable cities / municipalities with more ambitious emissions reduction targets in waste management.”

The Last Word

The Waste Management TWG is the first group to be convened in 2017, as Climate Bonds expands the sectors covered by its international Standard and Certification scheme.

Soon to be available are new Criteria for Land Use, Bioenergy, Hydropower, Marine and expanded criteria for Low Carbon Buildings and Water.

Meanwhile, a warm welcome to the experts on our new TWG and thank you for their generous contributions of time and knowledge.  

The Group will be working through 2017 and we’ll let you know of major developments.

‘Till next time,

Climate Bonds Initiative

Disclaimer: The information contained in this media release 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.

A record year with green bond issuance of USD 81bn, up 92% on 2015 figures

The Trends

A maturing of the green bonds market, diversification across issuers, products and use of proceeds are the main trends identified in our Green Bonds Highlights 2016 summary.

The Big Numbers

92%– growth on 2015 making 2016 the most prolific year to date

USD 11.8bn– November issuance, the largest month on record

24 – number of countries with green bond issuers

27%– proportion of Chinese issuers

241– number of labelled green bonds issued (median size USD133.7m)

>90– number of new issuers

>50– number of repeat issuers

USD 4.3bn– largest single green bond ever issued from the Bank of Communications (China)

1^st Sovereign– Republic of Poland became the world’s first sovereign issuer

China the Big Mover

Green bond debt raised by Chinese entities rose from 8th in 2015 to 1st place in 2016, accounting for more than a quarter of the 2016 global total.

This follows increasing awareness of environmental issues in China which has been followed through to policy and financial decision-making.

More information on major developments is available in English and Chinese in our special China Green Bonds Market 2016 report.

Read More Highlights

There’s more to read in the full summary, download it here.

The Last Word - Three things to watch for in 2017

More issuance from sovereign and sub-sovereign issuers as governments try to mobilise green investment and support market liquidity.

Policy developments will push green finance even further as the G20 nations prioritise climate action. This will also encourage greater harmonisation of green bond guidelines across markets.

Over-subscription of green bonds and tight pricing will remain and we expect to see more issuers from lower rating bands coming to market.

‘Till next time

The Markets 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.

January has kicked off with a stream of green finance developments and announcements stretching from Europe to China.

It’s been a busy start to the year here’s some of this month’s best green bond stories you won’t want to miss. 

Sweden’s Oldest Bank Joins Partners Programme

Leading European bank Swedbank AB is the latest Scandinavian financial organisation to join our Climate Bonds Partners Program. Domiciled in Sweden, bank operations are centred across the Nordic region and Baltic States.

Marika Dimming, Head of Green Bonds at Swedbank puts their view:

“Climate change is amongst society’s greatest challenges, and research shows that an increased concentration of greenhouse gases is warming the planet, with the potential to create substantial risks to both prosperity and growth. “

“Now is the time to act, and becoming a Climate Bonds Partner gives us an opportunity to do our part.”

You can read more about Swedbank’s commitment to sustainability and climate action here and the full announcement here.

Ontario Issues Third & Canada’s Biggest Green Bond 

Canada’s largest province has just announced its third green bond with a C800m (USD 610m) issuance, the largest in Canada so far.

Readers with sharp memories will recall Premier Kathleen Wynne announcing their intentions way back in October 2013, with first issuance in late 2014 and second in January 2016.

This 2017 bond was foreshadowed by Yvan Baker MPP, at the October 2016 launch of the Canada State of the Market Report 2016, jointly produced by the Smart Prosperity Institute and Climate Bonds.

As our 2016 Canada Report reflected; we think Canada has huge potential for green bonds at both a provincial and sovereign level.

There’s more here on this big Ontario bond and check out the eligible projects listed in this mid-January presentation from the Ontario Financing Authority.

California Goes Forward on Green Bonds & Infrastructure  

Treasurer of America’s largest state John Chiang, is forging ahead on climate finance with the release of Growing the US Green Bond Market Vol 1, prepared in part from interviews with major market participants across the US.

The USD 240m SFPUC Climate Certified Water Bond from 2016 is an example of what’s possible.

California is also not acquiescing to the new atmosphere of climate denial at the federal level, as this feisty media release reflects.

A quick look at this 19m.29s Facebook clip of Chiang’s keynote address to the 15th annual Cleantech Forum in San Francisco confirms his views on the need for green finance and climate action. 

You can find the report here, and for US readers, don’t forget to register for the Treasurer’s forthcoming Green Bonds Symposium to be held in the Fall.  

Well done, Mr. Chiang!

Mexican Climate Finance Council Fires Up

Meanwhile, south of the Rio Grande, the Mexican Advisory Council in Climate Finance (CCFC) has held its first meeting for 2017.  

A joint project of Climate Bonds Initiative and the Mexican Stock Exchange (BMV) with Co-Presidency shared between major investment and pension managers Afore Sura and Afore XXI Banorte, the CCFC has broad representation from finance sector stakeholders and a big agenda to develop green finance in Mexico.

Three working groups have been now been formed to develop:

• Public policy,
• Mexican market standards and
• Market education.

We also understand some new bonds in both Pesos and USD are in the pipeline for issuance over the next six to eight months (!).

If your Spanish is good this El Economista Mexico City interview with CEO Sean Kidney provides some views on where green finance could develop in LATAM.

He highlights the possibilities for Mexico partnering with US states like California, New York, Illinois, and Massachusetts to develop regional compacts around sustainable investment and push forward on climate action plans.  

An intriguing proposition.

Meantime make a note in your diary for the inaugural annual conference of the CCFC to be held on March 16^th 2017.  

Contact Eduardo Paquero at our local partner Mexico2 for details.

France Kicks off in Year of the Sovereign Bond 

But France has now followed up in second place with a whopping EUR 7bn (USD 7.5bn) issuance, maturing in 2039.

You can read the announcement and read one of the many stories here and here.

Or for simplicity you can watch this short clip of Minister for the Environment  Energy and Marine Affairs Segolene Royale on the floor of the National Assembly responding to a question on French green finance policy. (1m.58s)

Alpha Trains and New Rolling Stock

We like this Alpha Trains Certified Climate Bond, a world's first!

It stands out from the clean energy, water, low carbon buildings and energy efficiency bonds we’re generally familiar with.  

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

The EUR 250m US private placement has been exclusively used to refinance debt associated with the acquisition of 63 modern energy efficient and environmental friendly electric passenger trains.

Train buffs can read background details on the environmental design features of the new rolling stock here and the rest of us can hope we one will  get to ride on the greenest trains in Europe.  

Toot-Toot! 

Our Biggest January Newsletter

As a final item, take a quick look at our latest Standards Newsletter released just last week.  

You can find an update on the newly launched Standard 2.1, who the big Certified Climate Bond issuers from last quarter are and a look forward into 2017.

There’s lots more, download a copy here. 

'Till February folks,

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.

The second month in the 'year of sovereign green bonds' has started, and the Climate Bonds’ team is now up to speed to support 2017 global green finance developments.

From Sydney to Jakarta to Beijing and across to Brazil, here’s your chance to catch up with Sean, Rob, Justine or Bridget. 

February 2017 Events Schedule

'Till next month,

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.

Behind the high profile green bond offerings of 2016, policy initiatives gathered pace.

Download our analysis of the last year and some pointers for 2017.

Green bonds grow as a mainstream tool to help implement NDCs

Post Paris and Marrakesh climate negotiations, green bonds have gained traction as a part of country capital raising plans for financing their Nationally Determined Contributions (NDCs). 

2016 saw the link between global climate finance and green bonds highlighted again and again.

Sovereign green bond programmes

Poland won the race in 2016 and France was second to issue in January this year. Sweden and Kenya launched inquiries to develop local markets, Nigeria has committed to green bonds in 2017 and several other nations began quiet preparations.

Sovereign issuance is an important policy measure that complements other public sector issuance, particularly from development banks and municipalities.

Country level action taking off

China& France have led in issuing official green finance guidelines.

We now have high-level committees up and running in several countries including India, Mexico and Brazil, to support respective domestic policy and market development. A full summary of national actions is here.

The Big Three Policy Developments for 2017

The year of the sovereign?  

The first sovereign green bond of 2017 is out. Nigeria is coming, Bangladesh and Morocco have also made statements of intent and we expect to see more sovereign green bonds to follow throughout the year. 

Our Climate Bonds tip is that 2017 will close with ten separate sovereigns having raised the green bonds flag.

Capital-raising plans for NDCs

In 2017, we expect to see specific capital-raising plans in place for NDCs from several countries. As initial NDC implementation plans become more widespread, expect to see green bonds added to the climate finance mix.

International cooperation on green finance and green bonds:

Via the G20 Green Finance Study Group (GFSB), the FSB’s Task Force on Climate-related Financial Disclosures, the Bank of England and the European Commission’s High Level Expert Group on sustainable finance, green bonds moved up the global financial agenda in 2017.

Regardless of the disquiet over US climate policy intentions, we expect to see further mainstreaming of green finance in 2017, with German leadership at the G20 and the freshly minted European Commission Expert Group maintaining momentum in the run up to COP23 in Bonn.

The Last Word - We need to see USD 1 trillion of annual issuance by 2020

The green bond market has grown at record levels in 2016, but to meet global needs for climate-aligned infrastructure it needs to grow much faster.

Public sector policy is central to enabling and scaling up private capital flows into green bond issuance and investment at a rapid rate. USD1 trillion by 2020 is the target.

Existing and well-proven tools that governments have used in the past to successfully steer private capital towards policy priority areas can now be applied to channel capital to climate investments, through green bonds.

Doing this will make the target far easier to achieve.

‘Till next time,

Climate Bonds

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. 

What a January! This month's market blog is bulging with all the green bond stories we’ve gathered up since the New Year. 

We look at green housing with NYHFA & Strasser, ride new passenger trains with Alpha and there’s a mountain of gossip items and quick links at the finish line.

And a late breaking story! India’s Renew Energy has just issued a USD 450m Certified Climate Bond. More below.

Here's to the year of sovereign bonds, let's get started...

Sovereign Bonds

French issues, and at EUR 7bn (USD 7.5bn), worth the wait!

France first announced the prospect of a sovereign green bond back in September 2016 – it's now here. While Poland bagged well deserved global bragging rights for being first, the French move has certainly made a splash.

The proceeds will be used to finance and refinance expenditures in six green sectors, as outlined in the Energy and Ecological Transition for Climate (TEEC).

The TEEC label was created in 2015 for mutual funds and aims to screen climate-friendly investment funds. This label guarantees that investments are going to activities in line with the green economy and that the environmental information supplied is being transparent and of quality.

The Climate Bonds Taxonomy and Green Bond Principles were both used as references for the label.

The six eligible sectors are as outlined in the green bond framework are:

• Buildings: investment in energy efficient buildings, no efficiency targets stated
• Transport: public transport, modal infrastructure, energy efficient transportation
• Energy: renewable energy and its integration into power systems
• Living resources and biodiversity: organic farming, sustainable forestry, biodiversity protection, protection of natural areas
• Adaptation: observation systems, climate research, adaptation research
• Pollution control and eco-efficiency: pollution monitoring, promotion of sustainable consumption, recycling.

The categories are in line with France’s very ambitious climate plans.

A review of the bond was provided by Vigeo Eiris here.

We will blog soon with an in-depth review of both the categories, as well as with some interesting questions that sovereign green bond issuance raises.  

On balance, we’re enthusiastic about the bond. Poland and now France in just two months!

Certified Climate Bonds

ReNew Power USD 450m Certified Climate Bond

ReNew Power, one of the expanding class of Indian clean energy producers, has just issued a USD 450m Certified Climate Bond solar issuance, with proceeds used to refinance debt associated with thirteen existing green projects via a special purpose vehicle Neerg Energy.

Listing will take place in London and Singapore.

Underwriters: Goldman Sachs, JPMorgan, HSBC, Bank of America Merrill Lynch, and UBS. 

Alpha Trains obtains Climate Bonds Certification for EUR 250m (USD 267.8m) green secured private placement

Earlier in January, we announced that Alpha Trains concluded its first green private placement, raising EUR 250m in the US private placement market with maturities in 2028 and 2036.

The deal was placed in late December 2016.

Proceeds will be used to refinance rolling stock, notably “the acquisition of 63 modern Electric Multiple Unit train sets equipped with environmental friendly and energy efficient technology”.

The models include the catchy names of KISS, FLIRT and TALENT 2– which have been leased to two German railway companies. 

Electric trains – well, yes, they’re green. Electric rolling stock assets are eligible under the Low Carbon Transport Criteria of our Standard.

The passenger trains noted above have even better environmental credentials, using lighter-weight materials, higher passenger capacity, higher material recovery rates and LED lighting. Read more about why they’re eligible here.

The deal is part of a larger EUR 605m debt deal and is secured through its whole-business securitisation platform. The proceeds will be immediately used to refinance the above trains and so no proceeds will be unallocated.

Sustainalytics provided the verification letter and the second opinion on their green bond framework.

The placement was arranged by Credit Agricole CIB, ING and UBS.

New York State Housing Finance Agency (HFA)’s second USD 53.9m green bond tranche

This is New York State HFA’s second Certified tranche, bringing their total issuance to USD 99m, all of which has been certified under the Low Carbon Buildings Criteria of the Climate Bonds Standard.

As with the first tranche, proceeds will finance the new construction of energy efficient buildings which are built in accordance with ENERGY STAR green building standards.

Certification under the Low Carbon Buildings Criteria is a pretty ambitious hurdle - for property assets to be eligible the building needs to be in the top performing 15% of buildings in its local market in terms of carbon emissions per square meter.

HFA will use existing building codes and energy rating schemes as proxies for achieving the 15% hurdle.

To achieve the hurdle for a 34-year bond, they will need to achieve a minimum target reduction of 38% against a 2016 energy use intensity baseline.

Sustainalytics verified the certification.

Underwriter: CITI.

A first for Strasser Capital and for Climate Bonds – first certified loan (USD 31.7m)

MEP Werke, Strasser Capital’s subsidiary, has received Climate Bonds Certification for a green loan – the first time the Climate Bonds Standard has been applied to a loan.

The EUR 30m 20-year green loan will be used to refinance investments made to develop solar PV equipment for German residential properties.

‘Innovation’ is a term regularly used in financial services. In this case all the parties involved deserve due recognition. 

Press release in German here.

The verification was prepared by Oekom.

Corporate Bonds

Enel's whopping debut EUR 1.25b (USD 1.3b) green bond

Italian energy utility, Enel, has just made its first foray into the green bond market, issuing one of the largest green bonds we’ve seen from an energy utility.

Utilities are natural issuers of green bonds, given their critical role in greening energy supply. Enel has plans to add 6.7GW of additional renewable energy capacity to its energy portfolio over the next three years. It also has a plan to decarbonise its portfolio by 2050. 

Eligible projects fall under the following categories:

1. Financing or refinancing of renewable energy: geothermal, wind, solar, tidal and hydro power (up to 25MW, or meeting IFC Standards if larger)

2. Transmission, Distribution and Smart Grid to connect renewable energy to the grid and improve networks in terms of demand-size management, energy efficiency and access to electricity

3. Other green projects, including clean transportation, green buildings and decarbonising technologies

As with most energy projects, this bond doesn’t finance any problematic areas – except for hydropower which is covered through the size limit or use of IFC standards.

Examples of projects that will be financed include Dominica Wind Farm in Mexico (already operating) and the Adams project solar farm in South Africa (under construction).

Vigeo Eiris conducted the review of the issuer’s green bond framework.

The deal was over 2 times oversubscribed with orders from 200 separate accounts. Asset managers accounted for 80% of the subscription.

Underwriters: Banca IMI, BAML, CITI, CACIB, DB, HSBC, JP Morgan, Mizuho, Natixis, SMBC Nikko, UniCredit

Agricultural Development Bank of China’s CNY 6bn (USD 870m)    

The Agricultural Development Bank of China has just raised a CNY 6bn green bond for ecological protection and adaptation projects. In doing so, it has become the second policy bank to issue a green bond following the Export-Import Bank of China’s green bond in early December.

There is limited detail on use of proceeds but broad areas of expenditure are: flood control, ground water replenishing and increasing forest coverage.

The term ‘policy bank’ might not mean much to our non-Chinese audience but it is an important one. In 1994, the Chinese government established three policymaking banks, each of which is dedicated to a specific lending purpose.

These include the Agricultural Development Bank of China (ADBC), the China Development Bank (CDB) and the Export-Import Bank of China. These banks are responsible for financing economic and trade development and state-invested projects.

ADBC provides funds for agricultural development projects in rural areas; the CDB specializes in infrastructure financing, and the Export-Import Bank specializes in trade financing.

China Exim Bank became the first policy bank to issue a green bond in December 2016.

Note:Agricultural Development Bank of China is not to be confused with Agricultural Bank of China which also issued green bonds for the first time in 2015, but is not a policy bank.

CECEP provided the second opinion.

Another Brazilian! Fibria issues debut 10-year green bond for USD 700m

This Brazilian pulp and paper company raised USD 700m towards the following eligible projects:

1) sustainable forest management of FSC or PEFC-certified eucalyptus plantations

2) restoration of native forests and conservation of biodiversity – e.g. acquiring and planting native seedlings and creating ecological corridors

3) waste management, including:

• reducing chemical usage and waste,
• increasing the efficiency of filtration and the removal of dregs,
• recovering fibres (for reuse) and minimizing fibre waste,
• installing a dryer for the use of dry waste as biomass,
• separating and recovering methanol waste (for reuse as fuel),
• reducing sedimentation in lagoons, or
• transforming industrial waste into sub-products.

4) sustainable water management in industrial processes including reducing consumption and facilitating reuse

5) renewable energy: optimizing biomass boiler efficiency to increase energy generated from biomass.

Fibria is the 3^rd Brazilian company to issue a green bond and two of the three are from paper and pulp companies.

Sustainable Forestry

Deforestation and land use changes accounts over 50% of Brazil’s emissions so it’s no surprise that the sector is leading issuance of Brazilian green bonds.

Sustainably managed forests will help reduce emissions as will the maintenance of virgin forest - arguably even more important. Certification from PEFC and FSC includes provisions around how and when land was converted from virgin forest so certification is very important for any forest bond.

Going beyond certification, the bond also includes some restoration of native forests which is also positive.

Sustainalytics published its second party opinion here.

Underwriters: BNP Paribas, CITI, HSBC, JP Morgan, BAML.

There’s more to come from Brazil in 2017, we’ll keep you well informed.

EDF's new green samurai bond (JPY 26bn/USD 227m) to finance renewable energy projects

According to the French press release, two of the four tranches (the 12 and 15-years maturity) are labelled as green.

EDF’s green bond programme states that the proceeds will go towards:

(i) The development of renewable power generation projects by EDF Energies Nouvelles; and

(ii) The modernisation and automation of existing hydropower facilities’ maintenance and operation as well as adaptation of existing hydropower assets in mainland France to changing climate patterns.

In this instance, hydro is included, the proceeds will finance the upgrades of existing dams, as opposed to the construction of new ones.

Underwriters: Mitsubishi, Mizuho, SMBC Nikko.

Modern Land goes again with a USD 150m green bond

Hong Kong real estate developer Modern Land re-opened its October green bond just before the end of 2016.

These are the 2 asset categories eligible under the green bond framework:

1) Energy efficient commercial and residential buildings (at least 90%) where:

• new and renovated buildings must meet one of the following standards:
  • Chinese Green Building Label (minimum 2-Star for Green Design Building Label or Green Building Operation Label);
  • LEED (minimum “Gold”) or any other equivalent green building label.
• New constructions must provide energy data showing performance improvement of at least 15%
• Existing buildings must provide energy data showing performance improvement of at least a 30% energy performance improvement, depending on location and other justifiable building benefits

2) R&D on energy efficiencydesign and technologies for housing and construction (up to 10%)

CICERO provided a second opinion which is available here.

The opinion classifies the asset’s energy performance targets as ‘medium to dark green’. It also notes that it is not always the objective of Modern Land to achieve the highest possible ratings and that more could be done to aim towards passive buildings in the future.

Underwriters: Guotai Junan, Zhongtai International.

Guangdong Huaxing Bank’s debut green deal – CNY 1bn (USD 150m)

Guangdong Huaxing Bank is a regional commercial bank, operating in South China’s Guangdong Province.

The proceeds will be used to finance projects under PBoC’s Green Bonds Endorsed Project Catalogue, including Energy Saving, Clean Transport, Clean Energy, Pollution Prevention, Ecological Protection and Adaptation, and Resource Conservation and Recycling.

Underwriter: Guotai Junan Securities.

CECEP provided the second opinion.

Jain Irrigation issues first green bond, USD 200m

Jain Irrigation has just issued India’s first green bond of the year through its financing arm Jain International Trading. Jain Irrigation is India’s largest producer of micro-irrigation systems and is the second largest producer of micro-irrigation systems in the world.

According to the review from Sustainalytics, the proceeds will invest in the following projects:

·        Renewable energy products including solar PV, solar water heaters, LED lighting, solar street lighting, biogas projects

·        Micro-irrigation systems including design, manufacture and supply of micro-irrigation systems to reduce water consumption

·        Water efficiency including design, production and installation of water-efficient products including pipe networks for municipalities

The review also provides a helpful list of 26 project examples. They include an 8.5MW solar PV plant, drip irrigation projects and water supply systems for a municipality in India.

Irrigation systems have been included in green bonds before but this is the first time that we can recall micro-irrigation systems being the primary focus of a green bond. The definition of micro-irrigation is not obvious but it appears that the ‘micro’ part refers to the size and precision of the water droplet rather than the size of the system itself – i.e. drip irrigation for all sizes of system rather than irrigation for small and micro scale farmers.

Micro-irrigation can both reduce water consumption and increase resilience and would fall under the Climate Bonds Water Criteria while renewable energy and energy efficient products would fall under energy and efficiency criteria. The water criteria are much broader than single technologies alone as they encompass where technology is deployed (e.g. to avoid putting further stress on already water stressed areas).

The Climate Bonds team also had a series of meetings in India last year with developers, regulators and financial institutions where plans to put water-efficient irrigation systems and solar powered pumps were highlighted. Furthermore, solar pumps and other renewable energy products are a welcome development.

Eligible projects include OpEx-like projects such as ‘manufacturing of micro-irrigation products required for projects’ so you may be wondering why bond financing is needed for general running of the business. This is a working capital play – where a relatively short-term bond finances the gap between capital that is needed for deployment of technology/turnkey projects and when they are paid back.

Interestingly, the company’s website and press release provides makes very little reference to the green bond with some press releases not containing any information about the bond being green. 

Underwriters: Deutsche Bank, JPMorgan, Barclays, Nomura, Rabobank.

Swiss utility Repower raises EUR 50m (USD 53.8m) via two green notes

The green notes are RePower’s first foray into the green bond market. They will allow the company to refinance sections of its renewable generation portfolio, namely expenditures related to the acquisition, development, operation and maintenance of:

• four onshore wind farms (two in Italy and two in Germany), with generation capacity totalling 52.4MW
• 2 run-of-river hydro plants located in Switzerland, with one currently under development (total generation capacity of 8.2MW)

RePower has also added two important exclusionary criteria:

• Large-scale hydropower plants that have a generation capacity of over 15MW;
• Nuclear power plants

Repower has the goal of making its generation portfolio 100% renewables-based by 2025.

Proceeds might also be allocated to OpEx specific to eligible projects.  OpEx will be tracked by using software that registers costs for each power plant. Allocating a small percentage of proceeds to OpeEx specifically relating to green projects is allowable under the Climate Bonds Standard if it can be tracked adequately, as in this case.

This is different to the Jain Irrigation bond above as the OpEx here is intended to be small and related specifically to green assets.

Sustainalytics’s second opinion is here.

Underwriter: ING.

‘YES’ for India’s YES BANK’s INR 3.3bn (USD 48.6m) new green bond!

Just before the close of the year, YES BANK came to the green bond market for the 3^rd time with a 7-year, 7.62% green private placement.   

As with its previous green placement, the financed projects are linked to green infrastructure including solar and wind.

Back in 2015, YES BANK committed to financing 5GW of renewable energy projects by 2019, notably via its goal of mobilising USD 5bn from 2015-2020 for climate action.

Underwriter of the deal: YES BANK.

Acciona's inaugural EUR 22m (USD 23.3m) green notes

After its inaugural EUR 150m green Schuldschein, global energy, infrastructure and water specialist Acciona has issued EUR 22m in green notes, with proceeds allocated to renewable energy projects.

Disclosure about use of proceeds for this bond is pretty limited so more information would be great for future bonds. However, we note that that for the second consecutive year, Acciona was ranked as 'the world's greenest utility' by Energy Intelligence, showing great leadership from our Spanish friends.

Underwriter: BBVA.

Hebei Financial Leasing Company issues 3-year RMB 100m (USD 14.6m) green bond

Hebei Financial Leasing Co. Ltd is another of the new issuers emerging from China and provides financial leasing services, foreign exchange borrowing, interbank lending, and other services.

Bond proceeds will be used to finance seven leasing projects under the clean energy and clean transport categories that are in line with PBoC’s green definitions.

More specifically, the issuer has given 3 examples of projects to be financed:

• A solar farm with 50MWp installed capacity;
• A sewage plant with 60000m³/d capacity;
• Purchasing of 800 electric buses.

This bond has stronger disclosure of the management of proceeds compared to some other Chinese bonds, with the unallocated proceeds to be “invested in other green bonds issued by non-financial institutions and other high-rated fixed income securities” which is allowed under PBoC’s Guideline and consistent with international investor practice.

Underwriters: Agricultural Bank of China, Bank of Communications.

EY provided the external review.

Yunnan Water Investment will issue a RMB 550 million green bond on Shanghai stock exchange, and RMB 180m private placed green bonds

As a Hong Kong listed company, Yunnan Water’s issuance in mainland China will become another green panda bond. RMB 241m will be used to finance a Municipal Solid Waste Incineration for Power Generation Project, RMB 36m on a sewage plant construction, and the remaining RMB 273m will go to on the corporate’s general purpose.

The company also announced a RMB 180m non-public issuance. Proceeds from the issue will be used for the construction, operation and acquisition of green industry projects and the repayment of bank loans relating to green industry projects of the group.

Commercial Banks

Dutch NWB Bank’s new SEK 3bn (USD 340.2m) green bond issuance

This is the fourth time NWB Bank has come to the green bond market, making it one of our more regular issuers. The 6-years tenor bond will allow the Dutch water authorities to improve their water and flood management, climate change adaptation being a core element of their daily activities.

The latest iterations of the longstanding Dutch Delta Plan, aims to standardise and adapt the response of these water authorities to expected increasing heavier rainfall patterns, inundation risks and longer droughts.

Eligible categories described in the second opinion from CICERO fall under three primary objectives:

-mitigation (projects involving energy recovery from waste water and extraction of phosphor);

-adaptation (flood protection, other flood defences, waterway management, pumping stations); and

-biodiversity (water treatment, sanitation and dredging of waterbeds, transport and cleaning of wastewater; disposal of sewage sludge).

Underwriter: SEB.

Development Banks

First Climate Awareness Bond (CAB) of the year for EIB – SEK 3bn (USD 335.2m)

The European Investment Bank (EIB) has issued its first Climate Awareness Bonds for the year – will it be the largest development bank issuer for the year again?

The latest bonds are: a SEK 3bn 5-year bond and an additional tap of its EUR-denominated 11/2026 issuance for an additional EUR 300m (USD 321m).

Proceeds are earmarked for renewable energy include wind, hydro, solar and geothermal. The energy efficiency projects include district heating, co-generation, building insulation, energy loss reduction in transmission and distribution and new infrastructure.

Underwriter: SEB.

Sub-sovereign

Province of Ontario issues third green bond; upsized to CAD 800m due to demand!

Canada’s hero issuer and largest province Ontario issued its third green bond last week. As with previous bonds, proceeds will go to public transport and energy efficiency projects.

Read more about our analysis of previous bonds here.

The deal received plenty of demand which resulted in it being increased in sized from an initial target of CAD 500m to CAD 800m.

Ontario’s deal summary notes that more than 50 investors participated in the deal with Canadian investors making up 79% of demand. 78% of the final order book comprised investors with green mandates and/or signatories to the PRI.

Underwriters: BofAML, HSBC, RBC and TD.

The issuance has stimulated some local comment with the Smart Prosperity Institute calling for others to follow the Ontario lead.

Congratulations on this latest maple addition to the green bond market.

Central Puget Sound Transit Authority’s second green bond to fund clean transport – USD 400m

This is the second green bond issued by Sound Transit since October 2015. Proceeds will go towards the financing of a 25-year mass transit expansion plan that includes an additional 62 miles of light rail, an increase in the capacity of the Sounder Commuter Rail, and an expansion of the Bus Rapid Transit system amongst its objectives.

The bond received a second opinion from Sustainalytics, a transparency move we applaud as second opinions are still the exception rather than the norm for US green municipal bonds.

We’d like to see more second opinions as the green muni market grows. 

Underwriter: CITI.

New Jersey Environmental Infrastructure Trust issued 2 green bonds within 1 month (USD 7.2m and USD 106.4m)

The first municipal green bond of USD7.2m will finance loans for several municipalities, the full list can be found in the prospectus.

Investments will go to:

• A heat and power cogeneration project;
• Water and wastewater improvements;
• Rehabilitation of storm water equipment;
• New water storage and pipeline connections.

Underwriter: Janney Montgomery Scott.

The second bond issued last month totals USD 106.4m and it will be used to refinance projects from 2009-2010. Proceeds were originally used to fund loans for municipalities, local government sewage and utility authorities and certain private water supply companies.

The full list of projects refinanced includes:

• water metering installations,
• water and wastewater treatment projects,
• storm water drainage system improvements.

The latter will aim to reduce flooding, erosion and the transport of pollutants from storm water runoff along dirt or gravel roads into nearby waterways.

It is very refreshing to see such disclosure on projects and allocation of proceeds and we acknowledge it’s a simpler process when refinancing existing assets.

We have also appreciated finding the full list of municipal borrowers in the prospectus.

Underwriter: Raymond James.

Asset-Backed Securities

MidAmerican Energy issued USD 850m green ABS

Warren Buffet’s Mid-American Energy just issued its first green bond – an USD 850m offering in two tranches.

Proceeds will be used to repay funds from its balance sheet that it has used to develop and construct wind farm projects totalling 2.5GW, some of which are operational and some under construction.

The deal was over 3x oversubscribed, attracting USD 3.4bn of orders.

Unlike European utilities, US utilities have not been big issuers of green bonds to date, with Southern Power being the first in 2015 and only a few following.

We hope that Mid-American sparks a trend.

This may be their first officially labelled green bond deal but the company is no stranger to the concept - way back before there was much of a corporate green bond market, Mid-American was issuing solar project bonds like Solar Star and Topaz.

Underwriters: Barclays, BNP Paribas, Citi, Mizuho, MUFG and US Bancorp.

Renovate America Completes USD 284m PACE Infrastructure Securitization

Renovate America has just completed its ninth PACE securitization deal as part of the HERO Program, bringing its total issuance close to USD 2bn since its inaugural green ABS in March 2014!

As with previous deals, proceeds will be finance energy efficiency, water efficiency and renewable energy upgrades to residential homes. Read more about previous deals here.

Each of the nine securitizations has had a review from Sustainalytics.

Bonds in line with other definitions

The 1st green bond issued by a China LGFV (Local Government Financing Vehicle) is out!

This is the first bond issued by a LGFV, and are also known as a "Quasi-Muni Bond.”  LGFVs are companies established by local authorities to raise capital for municipal projects.

The RMB 1.67bn bond issued by Fengxi New City Construction and Development Co. Ltd of Xi’an City is very green.

All proceeds go to:

• developing HDR (Hot-Dry-Rock) geothermal power for residential heat supply. HDR is an exciting technology; generated electricity only costs a tenth of that from solar assets.
• building electric vehicle charging stations.

Green Bond Gossip

This section is growing a life all of its own, so we’ve rearranged it into some new categories for you.

On the green horizon:

France seeks EUR 20bn from bond market for green projects ; meanwhile, world's first solar panel road opens in Normandy village.

Philippines regulator considers green bonds.

SEB is about to issue its very first green bond.

DC Water to issue a new green bond?

CDC devrait émettre une obligation verte très prochainement … (CDC, Caisse des Dépôts, is set to issue a green bond, very soon…)

More bonds from Suzano in Brazil?

Tokyo Metropolitan Government’s plans to issue green notes in 2017 are becoming clearer, eligible sectors include energy efficiency, transport and urban environment projects.

New York’s Metropolitan Transportation Authority set to issue its third certified Climate Bond.

Sovereign and policy news:

First meeting of the Green Bond Private Public Sector Advisory Group marks a significant step towards Nigeria issuing its first tranche of sovereign green bonds.

Bangladesh joins the 2017 sovereign bond race.

Hayes says Ireland should issue green bonds.

FlexiGroup Australia certified green ABS deal wins an IFR Asia Award.  

The Nordic Investment Bank has now a dedicated page disclosing its purchases of green bonds.

European Investors' Association calls for enhanced disclosure on climate change.

Hyundai Capital Services said Thursday that its green bond has been named as Korea's best in 2016 by The Asset, a Hong Kong-based finance magazine.

AP Renewables Climate Bonds Certified green bond is recognised with a 2016 Bond Deal of the Year Award by Thomson Reuters.

Italy’s Ministry of Environment has just released a new report on greening the country's financial system.

Reading, reports, moving pictures: 

John Chiang, the California State Treasurer (a member of the Climate Bonds Standards Advisory Board), launches "Growing the US Green Bond Market"report.

New BMO Capital Markets' study shows that green bonds are beginning to trade at narrower spreads than traditional debt..

Berlin Hyp joins European Covered Bonds Council.

CICERO Climate Finance’s new report “shading climate risks red, orange or yellow” here.

Read our End of Year 2016 Roundup Report.

Nick Robins' piece on the key green finance trends in 2017.

Latest report on China’s green bond market available here.

FR: Les obligations vertes font partie intégrante de la transition: vidéo de La Fabrique Ecologique ici.

Manager moves:

Lombard Odier to launch a new climate change fund through its partnership with Affirmative Investment Management.

BlackRock unveils Green Bond Index Fund.

Northern Trust Asset Management has teamed up with GRESB for the launch of a new sustainable real estate index incorporating ESG factors.

California Infrastructure Bank  to Vote on USD450 Million of Green Bonds For State Water Resources Control Board.

Green ETF coming? 

UBS AM inaugural sustainable ETF.

PIMCO launches GIS Global Bond ESG Fund.

Pax World’snew sustainable bond fund features here.

A special CBI treat!

Our animation on January green bonds issuers, for those who made it all the way to the end...

‘Till next time,

Climate Bonds

P.S: Ladybird Expert Books welcome a new title under its Climate Change series, co-authored by the Prince of Wales (and we highly recommend the read).

Disclosure: Pax, MEP Werke, Affirmative, Berlin Hype are all Climate Bonds Partners.

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.

Halfway through February, here's some of our favourite green bond stories so far.  

MTA Latest USD 350m Certified Climate Bond

The Metropolitan Transportation Authority (MTA) looks set to offer New Yorkers access to their latest green bond offering, building on the success of the ground-breaking “Invest in the planet, Invest in the MTA” campaign of February 2016, which saw demand for the transit authority’s inaugural green bond upsized from USD 500m to USD 782m. 

As part of the 2016 green bonds issuance, the MTA placed ads aimed at retail investors on the websites of media outlets that cover the New York region and over the air on New York-area radio stations.

Advertising in the Subway

This time around advertising has included their network of station displays; including on Penn Station and Grand Central Terminal and other digital displays on the subway system.

MTA are also going a step further by becoming one of the first green bond issuers to take advantage of the Climate Bonds new Programmatic Certification option, an addition on the just released Version 2.1 of the Climate Bonds Standard.

The programmatic approach allows issuers with large pools of eligible assets who aspire to be frequent issuers of Certified Climate Bonds - such as MTA - to issue multiple Certified bonds using a streamlined pre and post issuance reporting processes, while maintaining the environmental integrity that the Climate Bonds Standard ensures.

Sustainalytics has verified that from MTA’s 2010-2014 Capital Plan, a multi-billion pool exists of assets and projects that are eligible under the Low-carbon transport criteria of the Climate Bonds Standard. 

We’ll have some details on this latest bond and the streamlining that Programmatic Certification offer repeat issuers in the next Market Blog due later in February.

Meantime, a big shout out to the MTA and our New York readers.  

The latest China Green Bond Market Newsletter is out - 中国绿色债券市场季报

Our new Climate Bonds China Green Bond Market Newsletter is here.

Published in Both English and Chinese, issue No2 includes a summary of every Chinese green bond issued in Q4; including the Bank of Communications RMB 30bn (USD 4.3bn) issuance.

This was the biggest green bond issued anywhere in the world - until it was overtaken by the USD 7.5bn French sovereign earlier in January!

Getting bigger - China Aligned Green Bond Issuance Q1-Q4 2016

New: 2016 Top 20 Chinese Green Bonds Underwriters

From this quarter onwards, the newsletter will now include a league table of Chinese green bonds underwriters.

It’s another step to keep readers informed as the Chinese market grows.

To give some perspective the table below shows the final 2016 rankings.

Note that the Bank of China, already a prominent issuer, also tops the underwriters.   

2016 Chinese Underwriters League Table

A Policy Update to watch:

A major policy update of Q4 was the 13th Five-year Plan on Energy, issued by the National Energy Administration of China in late November. 

According to projections, to meet the Wind Energy component of the plan an estimated RMB 700bn (USD 102bn) of investment is needed.

Companies in the wind industry are encouraged to “utilise instruments such as green bonds and securitisation” as financing tools.

The plan is targeting many clean energy SOEs, including existing green bond issuers such as State Grid, Huaneng, Datang and CECEP.

There’s more inside: download the full PDF in both English or Chinese.

点此下载中文和英文季报PDF

Big events in Australia and India

Indian Green Bonds Council Launches New Logo & 2017 Program

The Indian Green Bonds Council held its first meeting for the year in Mumbai.

A joint initiative between the Federation of Indian Chambers of Commerce and Industry (FICCI) and Climate Bonds, the Council has launched an ambitious agenda for 2017 including:

1. Drafting policy recommendations that will integrate into a National Blueprint for the development of the Indian green bond market and guidance to Government on green finance directions.
2. A schedule of green bond training programs facilitated by CBI, FICCI and supported by partnering organisations to build green finance capabilities.
3. A series of major investor-focused events are also planned for later in the year including the third Green Infrastructure Investment Coalition (GIIC) India event and RE-Invest 2017, both focussed on fostering investment in sustainable infrastructure in order to meet India’s climate mitigation goals.

Who’s saying what

David Rasquinha, Co-Chair, Green Bonds Council & Deputy MD ExIm Bank:

"The work of the Council ties in well with the Prime Minister's initiatives for building renewable energy and setting a benchmark for other countries.”

Rita Roy Choudhury, Senior Director, FICCI

“There may be policy issues to address for investors and issuers of green bonds but it is worth pursuing as the momentum for green is now and here, and Council can bring this discourse upfront to all stakeholders.”

New Logo for 2017

The Council also has released their official logo, check it out:

Renew Power Goes to Market

The Council meeting coincided with Indian clean energy producer ReNew Power coming to market with a USD 475m Certified Climate Bond.

Upsized from an original USD 450m target, this is Renew’s second Climate Certified issuance following a USD 73m private placement in October 2016.

You can read more details in our latest Market blog.

Live from Sydney: Low-Carbon Commercial Buildings Webinar

Last week in Sydney saw an expert panel on Low Carbon Commercial Buildings present to a live and online audience at our first webinar for the year.

Kindly hosted by NAB, speakers included Jorge Chapa, Executive Director of Market Transformation for the Green Building Council of Australia (GBCA), Ché Wall (Director of Flux Consultants and Lead Specialist) from our Low Carbon Buildings Technical Working Group, Emma Herd, CEO of the Investor Group on Climate Change (IGCC), and David Jenkins, Director of Capital Financing Solutions, GBs, DCM, Renewables & Clean Energy & Structured Finance at NAB.

We could tell you more, but why not take a shortcut?

All the expert presentations are available here. Have a look.

Australia and sustainable buildings

Australia is fast becoming a best practice example for Low Carbon Certification of buildings, with emission baselines now set for major CBD markets and Monash University the latest to issue a Certified Climate Bond, just before Christmas.

Local Climate Contacts  

Further opportunities exist especially for Commercial Buildings and Significant Upgrades. Contact Rob Fowler (Melbourne) or Bridget Boulle (Sydney) for more info.

Missed the Webinar - The GBCA is holding another one

Don’t worry if you missed this one.

You can catch CEO Sean Kidney giving his global perspective on green finance, infrastructure and sustainable buildings during a special Webinar hosted by the Green Building Council of Australia on Wednesday, Feb 15, 2017 12:30 PM - 1:30 PM AEDT.

Contact the GBCA for details.

The Last Word

"I firmly believe that 2017 will be the year of green bonds for Brazil"

Our Director of Market Development, Justine Leigh-Bell, speaks to Bonds and Loans about the huge untapped potential of green bonds in LATAM and South America. 

Go here for the very snazzy looking online edition of the Bonds and Loans January E-Magazine and flip straight to page 27 for the feature.

We’ve spoken often of green finance developments in Brazil, and the December 2016 Brazil's New Economy Forum in London signalled momentum for 2017.

Fibria has issued Brazil's 4th green bond and first this year, page 30 has some more in this story.

There’s more green announcements from Brazil in the pipeline, keep an eye out. 

                                           Fiquem de olho!

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 is not advising on the merits or otherwise of any bond or other type of 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 three new certified bonds just announced, Australia is cementing its reputation of green bonds best practice. FlexiGroup’s ABS, Queensland’s sub-sovereign and Westpac’s off-shore placement all gained our attention

FlexiGroup Greenium on 2^nd Certified Solar Securisation  

FlexiGroup has followed up its award winning 2016 Certified ABS for rooftop solar with a second green securitisation. Nasdaq is reporting some keen pricing on the AUD 50m green notes within an AUD 265m (USD 204m) offer that went to market on Tuesday, replicating the ‘greenium’ (green premium) first observed in the 2016 sale.  

On both occasions the Clean Energy Finance Corporation is a cornerstone investor.

The 2016 Flexigroup ABS was a world first certified green ABS Climate Bonds Certified green securitisation and also Australia’s first securitisation to include a green tranche, with AUD 50m of A2G notes backed by loans for residential rooftop solar power systems.

Sunshine State Sub Sovereign from QTC - Climate Bonds Certified

Queensland’s Treasury Corporation (QTC) has announced pre-issuance Climate Bonds Certification on eligible assets that align with the Climate Bonds Solar and Low Carbon Transport Standards respectiveley. Pre-issuance certification enables QTC to issue an independently verified green bond to domestic and international investors.

Solar energy, light rail and new bicycle networks are amongst the projects to be funded. QTC has a wide pool of green assets and has signalled its intention to undertake further certified bond issuance.

Queensland is the second Australian sub-sovereign to offer Certified Climate Bonds to the market following Victoria’s ground-breaking issuance in July 2016.

Westpac Sells JPY 5.6bn (AUD 64.8m) of Climate Certified green bonds into Japan

Responsible Investor is reporting a private sale some JPY 5.6bn (EUR 46.5m / AUD 64.8m) of Climate Certified green bonds to Japan based Meiji Yasuda Life Insurance.

In declaring the purchase Meiji advise they have a policy to invest 150 billion yen in domestic and 250 billion yen overseas, totalling 400 billion to purchase green bonds and other related ESG bonds and expect a  target of 400 billion yen at the end of this fiscal year.

Westpac has previously issued a whopping AUD 500m Climate Certified bond in May 2016, the third of Australia’s ‘Big 4’ banks to issue certified bonds.

The Last Word

We’ll be following up on these three stories in our next full Market Blog due out before the end of February.

Meantime, it’s worth revisiting a series of points we made when Monash University issued their world leading certified green bond just before Xmas.

Australia has issued a high proportion of Certified Climate Bonds, indicating a strong adherence to international best practice in green bond investment governance. 

The three announcements from last week reinforce that trend.

Previous certified issuance includes:

• NAB Dec 2014 AUD 300m (Solar)
• ANZ Bank May 2015 AUD 650m (Low Carbon Buildings Wind, Solar)
• Flexigroup April 2016 AUD 50m (Solar)
• Westpac Bank May 2016, AUD 500m (Multisector)
• Treasury Corporation of Victoria (TCV/Victorian Govt) July 2016 AUD 300m (Multisector)
• Monash University Dec 2016 AUD 218m (Multisector).

Australia has also been the source of a slew of green bond firsts despite its relatively small size in the international market. 

The advantages it enjoys in contemplating growing a global green finance presence need repeating:

 - Australia is the world’s 13^th largest economy, with a stable financial sector, large retirement funds and a global presence in infrastructure and alternative investments.

​- The national savings pool is fast growing, due to mandatory retirement contributions and now ranks as the third largest in the world according to the latest OECD Pension Funds in Figures report. 

- Three of the ‘Big 4’ major banks, NAB, ANZ& Westpac have already issued Certified Climate Bonds, with NAB being the first mover, way back in Dec 2014.

- This March 2016 conference presentation by ANZ Bank sustainability experts, calculates significant domestic opportunities with AUD 40bn of eligible commercial property, another AUD 40bn in rail infrastructure and a combined AUD 40-45bn in large and small scale clean energy projects all suitable for green refinancing.  

- A September 2016 FinanceAsia Roundtable: Going Green with Bonds with Westpac, the CEFC and major local asset managers, reflects investors looking for the domestic market to grow, quality green debt to become available and a preference for certification and verification.

We hope to see more green issuance in Australia, from the major banks, the commercial property sector, corporates and with the states of Queensland and Victoria having stepped up, possibly other state based investment bodies. 

To encourage issuers; large pension funds making their voices heard locally and internationally in seeking more labelled green product, would be another positive.

With Australia’s financial regulator APRA now advising the nations’ banking, insurance and asset managers that climate change is a material risk, building on the best practice foundations in green finance that have been laid to date would seem a forward looking part of prudent action.

'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.

Our Climate Bonds Annual Conference at London’s Guildhall is coming up in 2 weeks, on March 6^th. Demand is very high.

It’s become the single largest green bonds event ever held in the UK.

Confirmed Speakers  

The good news is that we have some 40 speakers, including:

·      Michael Sheren, Bank of England & co-Chair G20 Green Finance Study Group

·      Abigail Herron, Aviva Investors

·      Howard Bamsey, CEO of Green Climate Fund

·      Ashley Schulten, BlackRock

·      Alan Gordon, Deputy State Treasurer of California

·      Peer Stein, Head of Climate Finance, IFC Financial Institutions Group

·      Tracey Cai, Syntao Green Finance

·      Leslie Maasdorp, Vice President & CFO, New Development Bank

·      Thomas Pönisch, Head of Treasury, Deutsche Kreditbank (DKB)

·      Jenny Johnson, European Covered Bond Council

·      Gustavo F. Vargas, Director of Finance, Costa Rica Development Bank

·      Bodo Winkler, BerlinHyp

We have sessions ranging from “Tales from Happy Treasurers” and “The Role of the Public Sector” to “Steps for Developing Green Bond Markets” and “Top Predictions for 2017”.

We’re Oversubscribed

The bad news is that we’ve been well and truly swamped with registrations. Bad, because it means that, even though we’ve traded up to a larger room at Guildhall, we still only have just over 500 seats for 750 people who have registered or are on the Wait List.  

Something will have to give...

We will be giving priority to:

1.     People who are traveling from overseas: we have people coming from 46 countries, from China and India to Mexico, Argentina and Nigeria.

2.     Investors and issuers.

3.     Climate Bond Partner organisations and Green Bond Principles members.

Capping off this week

We’ll be capping numbers per organization. This coming week we’ll have to start telling a few people we don’t have a place for them. This is a regrettable but necessary step we have to take as the venue has limits on capacity.

My apologies in advance if you’re disappointed, the demand has been overwhelming.  

If we can’t see you in London, I’ll be looking to catch up on the road or at one of our 2017 regional events.

Yours,

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 is not advising on the merits or otherwise of any bond or other type of 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.

Capital market stakeholders to meet in Lagos as sovereign domestic green bond moves closer to March launch

International investors and sustainable finance experts will gather in Lagos this Thursday in a high-profile event which brings Nigeria’s sovereign green bond a step closer.

Initially mooted in May 2016 by Nigerian Environment Minister Amina J Mohammed, and supported by Finance Minister Kemi Adeosun, the Nigerian green bond gained widespread attention after being formally announced by President Buhari at the October 2016 signing of Nigeria’s NDC commitments New York.

Thursday’sLagos Green Bonds Capital Markets and Investors Conference has now become a significant event, not only to strengthen momentum around the proposed NGN 20bn (USD 63m) domestic issuance, but also in laying down markers for international investors as Nigeria develops its long-term approach to green finance and planning around project pipelines.

Environment Minister Mohammed, who is soon to take up a new appointment as UN Deputy Secretary General, outlined the wider context to Climate Bonds:

“Nigeria is committed to sustainable economic development. The Lagos Event is a concrete step in the process of developing our 2017 sovereign green bonds program.

In Lagos, we are bringing together the institutional investors, banking finance and young social entrepreneurs groups that will ensure this initial bond launch is a success; enabling the development of a green bond market while building our national climate finance capabilities." 

This green bond will be the first sovereign issuance from an African nation. The bond has been provisionally earmarked for a range of climate-related initiatives including mass transit, land re-afforestation, remediation and solar projects. These plans reflect the government’s priorities and climate change commitments under Nigeria’s Nationally Determined Contributions (NDC) of the Paris Agreement.

Preparations for the bond launch gathered pace once Minister Mohammed and Finance Minister Kemi Adeosun convened stakeholders in October 2016. That meeting was closely followed by publication of green bond guidelines and project eligibility criteria by the Ministry of Environment, and the inaugural meeting on 12 January of the new formed Green Bonds Advisory Group.  

From the outset of the development process the UNEP Inquiry has been providing overall project coordination and support, one facet of their wider program to develop Nigerian finanacial and capital markets.  

Extensive support and advice

Sponsors for Thursday’s event include the Nigerian Stock Exchange (NSE), Citi Bank, Chapel Hill Denham while the World Bank and EY are also playing active roles.

The involvement of UNEP Inquiry, NSE and international finance organisations is another indicator of the longer-term climate finance objectives that lie behind this issuance.

"A sovereign green bond represents a new stage in the development of Nigerian capital markets and opens the way for further corporate issuance and international investment” says Nigerian Stock Exchange CEO Oscar N. Onyema.

“The NSE is playing a key role to help develop this enormous opportunity for Nigeria and fulfil one of our key objectives as a member of the UN Sustainable Stock Exchange Initiative,”

For Chapel Hill Denham CEO and Advisory Group Member Bolaji Balogun, the planned debut green bond issuance “demonstrates Nigeria's seriousness about its climate change commitments and is evidence of its willingness to subject itself to the discipline and transparency that capital markets require."

There is also acknowledgement of the wider implications from Funmi Ogunlesi, Executive Director of Citibank Nigeria, "Citi recognizes the importance of this debut sovereign green bond to both Nigeria and Africa." 

"The international banking and finance sector has an obligation to help develop climate finance solutions across emerging markets, and Citi’s role in supporting this initial Nigerian launch fits directly within that obligation.” 

Throughout the project, in conjunction with the UNEP Inquiry, Climate Bonds Initiative has supplied technical support and specialist advice. 

Nigeria’s climate challenge

Africa’s largest economy by GDP, Nigeria has a population approaching 180 million. The business capital, Lagos, is set to become one of the world’s 2030 megacities. Four of the world’s ten fastest growing cities are in Nigeria and the remaining six are also African.

The World Bank estimates that Nigeria will need USD 140bn to achieve its climate goals and meet its NDC targets. The low carbon-growth path encompasses clean energy, green infrastructure, improved transport, clean water, agriculture and large scale remediation and promise to enhance government efforts in creating green jobs for its young population.

Nigeria next in the 'Year of Sovereign Green Bonds'

Poland gained a place in green finance history in December with the first ever sovereign green bond, followed by France in early January. Nigeria looks set for third place on a global basis and the first from Africa. 

Climate Bonds estimates that 9 or 10 nations will either issue or signal sovereign green issuance in 2017.

Leadership from Africa would draw significant attention from those countries mulling over both their options and timing.

“Nigeria is the next building block in this year of sovereign green bonds,” points out Justine Leigh Bell Climate Bonds’ global Director of Market Development.

“The work in Nigeria is about tangible, green finance outcomes that other developing nations can follow. Together with UNEP and local stakeholders, that's the goal we're working to achieve.”

The last word

‘As goes Nigeria, so goes Africa’ is a well-known proverb.

Morocco took early action at COP22 in Marrakesh with MASEN’s Climate Bond Certified solar issuance of 1.15 billion dirham (USD 272m) and the purchase of USD 100m of green bonds from the IBRD.

Africa’s biggest nation is now taking its turn. Success could mean international investors taking up subsequent issuances and give real impetus to other countries looking to finance their own climate actions.

Thursday’s Lagos Conference will draw several hundred national and international attendees focussed on Nigeria’s green bond program.

The implications for green finance should not be underestimated.

----

Co-written by:

Andrew Whiley: Communications Manager for the Climate Bonds Initiative.

Ms. Esther Agbarakwe: Communications Adviser to the Hon. Minister of Environment Nigeria.

Disclaimer: The information contained in this media release 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 Climate Bonds Initiative, in collaboration with the ESRC Centre for Climate Change Economics and Policy (CCCEP) at the London School of Economics, has released‘Public sector agenda for stimulating private market development in green securitisation in Europe’ 

What’s in the report?

The report paper analyses the rationale for green securitisation – including investor demand – and explores the current challenges for expanding green securitisation in Europe, a part of developing wider climate finance and green investment.

It sets out a strategic role for the public sector to facilitate the development of a green securitisation market and increase private sector investment and deal flow.

Developing green securitisation in Europe can help close the infrastructure gap and meet the EU 2030 climate targets.

Green securitisation: a USD 380bn + opportunity

Maturing green bond markets are increasing the potential for green asset-backed securities (ABS). The green ABS market globally has grown to USD 5bn of issuance in 2016, but it is dominated by issuance outside of Europe.

A Euro Market of USD 84bn by 2035 - OECD

In Europe, green ABS annual issuance could reach USD 84bn by 2035 (37% of green securities) according to the OECD.

Globally, annual issuance of green ABS could reach between USD 280-380 billion by 2035 for renewable energy, energy efficiency and low-emission vehicles (LEVs) alone, the OECD estimates. Investments for low carbon public transport, adaptation, land-use and waste would add to the figure.

Policy makers have a central role

The public sector has historically been instrumental in promoting securitisation in new asset classes, including mortgages and student loans.

In Europe, there is momentum to revitalise the securitisation market through the European Commission’s proposed regulation for a "Simple, Transparent and Standardised Securitisation", and to introduce sustainability elements into the capital markets legislation through the High-Level Expert Groupon Sustainable Finance.

Climate Bonds CEO Sean Kidney is one of the NGO representatives appointed to this group.

Both these projects provide opportunities and should be capitalised on to help develop a green securitisation market.  

5 Core Recommendations for Policy Makers

The paper outlines 5 recommendations for the public sector to help develop and grow a European market for green asset backed securities:

1. Work with market players to develop clear and consistent definitions of what qualifies as green
2. Establish or offer financial support to existing initiatives and groups working on standardisation of green loan contracts
3. Support financial warehousing of standardised loans; warehouses can be set up as public-private partnerships or hosted by local development banks
4. Offer guarantees for junior and mezzanine tranches of green asset-backed securities to make the senior tranches attractive to institutional investors
5. Invest in green ABS and consider incorporating environmental factors into capital weights to favour climate-friendly investments

Who’s saying what?

Simon Dietz, Co-Director of the ESRC Centre for Climate Change Economics and Policy at the London School of Economics

“This paper was supported by our Innovation Fund which aims to stimulate the flow of innovative ideas on climate policy. Greater investment is needed in low-carbon technologies and infrastructure in Europe and globally and new ideas about how to increase access to investment, such as the securitisation of green loans as discussed in this paper, have the potential to make a real contribution to the advancement of climate policy and to aid the transition to a low carbon economy.”

Diletta Giuliani, Climate Bonds Policy Analyst and lead author on the paper 

“What is needed now is for the market in asset-backed securities for green assets to be kick-started in Europe. National governments of EU member states could help expand trading in green ABS, and open a new financial stream outside banks’ and companies’ balance sheets.”

“It is crucial for policy makers to implement measures that will help aggregate and transform small scale projects into securities that can attract institutional investors, and help generate investment in low carbon assets required to meet the climate policy goals that have been established by the EU.”

The Last Word – Strong and Effective Policy

On their own, traditional sources of funding for new green technologies from banks, utilities and government are unable to fund the multi-billion Euro investments needed.

Grouping these investments into packages means the debt can be sold on to much bigger investors who buy and sell securities on the multi-trillion Euro bond market.

This Climate Bonds - CCEP report highlights how strong and effective public policy around green ABS, underpinned by a credible climate policy, offers another opportunity for mobilising the capital needed to fund the EU transition to a low carbon economy.

'Till next time,

Climate Bonds

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.

March is upon us which only means one thing: The 2017 Climate Bonds Annual Conference & Green Bond Awards! A big start to our agenda on the 6^th in London.

Over the coming weeks members of our team will be visiting European cities, China and Latin America to promote green bonds and green finance.

March 2017 Events Schedule

'Till next month,

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 over 600 registrations from 40 different countries Monday’s Annual Conference is set to be the single largest green bonds event ever held in the UK…. possibly the world.

2017: The Year of Sovereign Green Bonds

It all started at the end of last year, when Poland won the race and became the first sovereign green bond issuer in the world, seeing out a year of record growth on a high note.

Now it’s time to discuss the future of green finance, set the tone for 2017 and celebrate the pioneers that have lead the market closer to the goal of USD1 trillion in green bonds by 2020.

USD1 trillion in Green Bonds by 2020?

The green bonds market has enormous potential to respond to global climate issues. 2016 was a record breaking year by all metrics, reaching a whopping USD 81bn, almost double the USD 41.8bn from 2015.

Estimates for 2017 issuance range from USD 120bn up to USD 220bn. Let’s work towards the latter.

The Awards

The Climate Bonds Initiative, in partnership with the City of London and the Green Finance Initiative, is hosting the 2^nd Green Bond Pioneer Awards to acknowledge global leadership in the sector.

The Awards Ceremony will take place directly after the 2017 Climate Bonds Annual Conference. 

(Check out the agenda here)

Follow the Conference live on Twitter and via Periscope videos

Follow proceedings live on Periscope via our Twitter @climatebonds. 

Or search for conference updates via #greenbonds #greenfinance and #CBI17 on our account.

An Apology

If you’re one of the several hundred people on the Wait List, Sean Kidney sends his apologies on behalf of us all. We’re happy to reserve you a seat for next year’s event, we’re already scoping larger central London venues.

The Last Word

Monday’s event will be all about action and focus.

Let’s measure success by market growth that bolsters climate action and reduces emissions.

Global investors calling for more green products and diverse issuers responding. Sovereigns adding liquidity and confidence.

USD1 trillion in green bonds by 2020 won’t come from waiting for someone else.

‘Till Monday

Climate Bonds Initiative

P.S: And a huge thank you to all our event partners and sponsors below. More information on them can be found 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.

International investment manager M&G Investments (M&G) has joined the Climate Bonds Initiative Partners Program. The announcement was made by Richard Sherry, Director of Alternative Credit, on Monday at the Climate Bonds Annual Conference in London.  

Based in the UK and a signatory to the UNPRI, M&G is one of Europe’s oldest and largest active investment managers with more than 80 years of investment experience.

Richard Sherry, Director of Alternative Credit at M&G:

“Global economies require investment on a huge scale to address social and environmental challenges such as climate change. Hence why institutional asset owners are increasingly looking to invest not only for financial return, but also to benefit society and the environment. Increasing awareness among institutional asset owners, pension scheme members and individual savers is also shifting attitude in favour of a more sustainable approach to investment.

M&G’s fixed income department is active across a range of climate finance investments including green investments in private debt, public debt and ABS.

Partnering with the CBI we can share useful insights on sustainable investment opportunities which will help us contribute to achieving the common long-term goal of building climate resilient economies.

M&G’s commitment to climate finance is also demonstrated by our previous activity including a £250 million financing of debt facilities for Lightsoure, a UK solar energy company, or providing mezzanine debt financing to leading French renewable energy producer, Neoen.”

Sean Kidney, Climate Bonds CEO:

“Partnering with M&G provides a new opportunity to develop green bond markets and climate finance solutions.

As a high profile institutional investor, M&G are strongly placed for us to work together, particularly on UK and EU development projects.”  

About M&G

M&G is an international active asset manager, investing on behalf of individuals and institutions for over 80 years. At 31 September 2016 the firm manages over £266 billion of assets through a wide range of investment strategies across equities, fixed income, real estate and multi asset.

Headquartered in London, M&G employs over 1,900 people worldwide operating from offices across Europe and Asia. M&G is the investment arm of Prudential Plc in the UK and Europe.

M&G Investments is a business name of M&G Investment Management Limited and is used by other companies within the Prudential Group. M&G Investment Management Limited is registered in England and Wales under number 936683 with its registered office at Laurence Pountney Hill, London EC4R 0HH. M&G Investment Management Limited is authorised and regulated by the Financial Conduct Authority.

About the Partners Program

Partners assist in developing initiatives to grow investment in climate solutions, participate in market development committees, and help define policy agendas for sector, country and sub-national programs. Partners include banks, bond issuers, developers, NGOs and investors.

A list of all our partners is available here.

Welcome, M&G.

Disclaimer: This announcement reflects the authors’ present opinions reflecting current market conditions which are subject to change without notice and involve a number of assumptions which may not prove valid. It has been written for informational purposes only and should not be considered as investment advice or as a recommendation of any particular security, strategy or investment product. Information given in this document has been obtained from, or based upon, sources believed by us to be reliable and accurate although M&G does not accept liability for the accuracy of the contents. M&G does not offer investment advice or make recommendations regarding investments. Opinions are subject to change without notice. M&G Investments is a business name of M&G Investment Management Limited and is used by other companies within the Prudential Group. M&G Investment Management Limited is registered in England and Wales under number 936683 with its registered office at Laurence Pountney Hill, London EC4R 0HH. M&G Investment Management Limited is authorised and regulated by the Financial Conduct Authority.

Disclaimer: The information contained in this media release 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 and information contained in this media release is not an investment recommendation. 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.

Leaders from Poland to Costa Rica, Mexico to Munifin, Monash University to Masen, Alpha Trains to AP Renewables recognised at Award Ceremony following the Climate Bonds 2017 Annual Conference.

Last night in London, Climate Bonds in partnership with the City of London and the Green Finance Initiative, held the 2^nd Annual Green Bond Awards at Guildhall celebrating the stand outs and pioneers of the rapidly growing green bonds market.

The award ceremony followed a packed day of conference sessions that saw standing room only in plenaries as expert speakers discussed the year ahead and prospects for green finance out to 2020.

2017 Green Bond Awards

The Awards are in recognition of leading organisations, financial institutions and governments, who have pushed green finance forward and developed the green bonds market in the past year through their pioneering initiatives and issuances, providing a positive example of low carbon investments.

There were 16 categories of Awards this year, including the world's first sovereign green bond and eight pioneer issuers in various regions.

Award Winners by Category:

First Sovereign Green Bond – Poland

First Green Schuldschein – Nordex (Germany)

First RMBS – Obvion N.V (Netherlands)

Largest Single Green Bond – Bank of Communications (China)

Largest Non-Financial Corporate Green Bond – Grupo Aeroportuaro Ciudad de Mexico (Mexico)

Largest Overall Issuer – SPD Bank (China)

Innovative Regulator – People’s Bank of China PboC (China)

Most Second Opinions in 2016 – CICERO (Norway)

New Country Issuances:

• Philippines - AP Renewables
• Colombia – Grupo BanColombia
• Costa Rica - Banco Nacional de Costa Rica
• Finland – Municipality Finance (MuniFin)
• Morocco – Masen
• Luxembourg - Alpha Trains

Regional Sub-Sovereign – Mexico City (LatAm)

Regional Sub-Sovereign – Treasury Corporation of Victoria (Asia-Pacific)

2017 Green Bond Certificates

In addition to the awards, a series organizations have also been granted Recognition Certificates, encompassing the following categories: Sub-national/Municipal, Development Banks, Commercial Banks, Corporates, Structured, Certifications, and Market Infrastructure.

Certificate Recipients by Category:

Sub-national/Muni, Largest Overall Issuer – New York MTA, USA

The First Chinese Policy Bank Green Bond Issuer – Export-Import Bank of China

Development Bank, Largest Overall Issuer – European Investment Bank

Corporates, Country Pioneer New Entrant – Hyundai, South Korea

Corporates, Largest Overall – Iberdrola, Spain

Structured, Country Pioneer New Entrant, 1^st ABS – Flexigroup, Australia

Structured, Country Pioneer New Entrant, 1^st ABS – Suzano/EcoAgro, Brazil

Structured, First Dual Recourse in China – Bank of China

Structured, Largest ABS in 2016 – Toyota, Japan

Certifications, First Water – SFO PUC, USA

Certifications, Largest Certified (and first in France) – SNCF, France

Certifications, First certified Green Bond from a University – Monash University, Australia

Certifications, First Indian Certified Bond – Hero Futures Energy, India

Certifications, First Certified Green Loan – Strasser Capital/MEP Werke, Germany

Certifications, First Certified German Bank Bond - DKB, Germany

Certifications, Indices: First Unlabeled Green Bond Index – CCDC, China

Market Infrastructure, Pioneer Listing Rules – Shanghai Stock Exchange

Market Infrastructure, Pioneer Listing Rules – London Stock Exchange

Market Infrastructure, Pioneer Listing Rules – Mexico Stock Exchange

Market Infrastructure, Pioneer Listing Rules – Luxembourg Stock Exchange

Who’s saying what?

Piotr Nowak, Deputy State Secretary, Ministry of Finance, Poland:

“We are delighted that our efforts in the field of green finance have been recognized with this prestigious award. With the first ever sovereign green bond we wanted to show our open-minded approach towards the green bond market, to demonstrate commitment to sustainable development and set a good example for others.”

Miguel Ángel Mancera Espinosa, Mayor of Mexico City:

“As the impacts of climate change are already happening in cities, it is our responsibility to find concrete local solutions to this global challenge.”

“I wish to thank the Climate Bonds Initiative for its recognition of Mexico City for being the first City in Latin America to issue a Green Bond and for taking actions to tackle climate change in a decisive and innovative way as a local government."

Max Bronzwaer, Executive Director & Treasurer of Obvion Mortgages:

"We are very grateful and proud to receive this award and it is an encouragement to continue in the direction we have taken with Green STORM 2016.”

“We believe this world's first green RMBS had led non-green investors to start looking at green investments, green investors to look at RMBS investment and other RMBS issuers to look at the possibilities and opportunities to issue a green RMBS."

Christa Clapp, Head of Climate Finance at CICERO:

"As green bonds move from a niche market to the mainstream, it is vital to give investors information on what is green, as we do in our independent second opinions using Shades of Green. What is important to us is to be a thought leader on what is green, based on the latest environmental science.”

Gustavo Vargas, Director de Finanzas del Banco Nacional de Costa Rica:

“This award sets the National Bank of Costa Rica to the high level of the international financial market, as a bank committed with sustainable values. It rewards our efforts to promote initiatives and practices that are aligned with our sustainable banking strategy and vision.”

“We are proud to receive this prestigious international recognition for our pioneering green bond issuance, the first for Costa Rica and for Central-America. It encourages us to continue looking for green investment opportunities.”

Mustapha Bakkoury, President of Masen:

"I'm particularly proud to receive this first ever green finance award on behalf of Morocco. Masen has issued the first ever Moroccan Green Bond, which will boost development of new projects everywhere in Morocco.”

“This Green Bond bears witness to Masen's pioneering and innovative fund raising qualities, which are a crucial strength for developing renewable energies in Morocco and elsewhere."

Shaun Mills, CEO Alpha Trains Group:

“We are extremely proud to receive this prestigious recognition. The award acknowledges Alpha Trains as country pioneer in Luxembourg and our role as one of the most innovative private players in the rail sector.”

“With our recent Green Private Placement, we paved the way to communicate our sustainability strategy and to match our financing needs with growing investor demands for transparent green projects that meet their long-term climate objectives.”

Chiara Caprioli, Business Development Manager Luxembourg Stock Exchange:

“There is an inextricable link between mitigating climate change and the development of sustainable finance. Via the creation of the Luxembourg Green Exchange, we are the first exchange to establish a dedicated service that bridges investors’ need for increased transparency and issuers’ commitment to assure quality of reporting.”

“We believe that our innovative mind-set in developing new tools in the sustainability space will channel more funds to the green bond market – we are proud and happy that CBI recognised our initiative.”

Ignacio Real de Asúa, Head of Capital Markets & Financial Risk Management, Iberdrola Group:

“At Iberdrola, we would like to thank the Climate Bonds Initiative for the recognition granted to our strategy of investing in sustainable assets while securing finance through green instruments.”

“We encourage Climate Bonds to continue its work, since we are convinced that the investors’ increasing demand for green financing will drive sustainable investments in the fight against climate change.”

David Harris, Group Head of Sustainable Business, London Stock Exchange Group:

“We are proud to have been recognised by the Climate Bonds Initiative for our dedicated green bond segments which was the first green bond segment to be launched by a major exchange; with now 40 green bonds that have raised around $10.5 billion in 7 different currencies.”

“This forms one component of our Global Sustainable Investment Centre which aims to support all our clients, including issuers, investors and intermediaries, in the transition to a low-carbon and sustainable economy. This follows innovative new FTSE Russell ESG Indexes and the launch of LSEG's ESG Reporting Guidance in February this year.”

Monash University President and Vice-Chancellor, Professor Margaret Gardner AO:

“The Green Bonds Pioneer Certificate is welcome recognition of our commitment to deliver significant financial and economic benefits to Monash University while advancing sustainable development across our campuses.

“The Monash University Climate Bond, together with our new environmental, social and governance commitments, demonstrate how we are engaging with industry and using innovative technologies to influence the transition to a net zero carbon economy.”

Konstantin Strasser, CEO MEP Werke GmbH and Strasser Capital GmbH:

“We are honoured to have been recognised for our first certified green loan. As part of our pioneering role in the renewable energy sector we consider it our duty to create awareness for innovative green financing instruments. This accolade by the Climate Bonds Initiative will help us in paving the way for future investors and issuers.”

Alba Aguilar, Director New Markets Development, Mexican Stock Exchange:

“At the Mexican Stock Exchange we are aware of the need for our country to have financial solutions that allow us to move towards a sustainable and low carbon economy and, considering the role we play in the financial system, we affirm our commitment in the development of environmental markets and climate finance.”

“In order to mobilize private capital towards green investments, we created the rules for listing green bonds, which provide standardization, transparency and credibility to the market; with the assurance that this new instrument will allow investors to address the challenges and opportunities presented by climate change.”

“In the same spirit, we have formed the Climate Finance Advisory Council, composed of several leaders of the financial system with the objective of promoting best practices that may stimulate market development; fostering dialogue in the sector on the need to address new financial risks and challenges related to climate change.” 

Eila Kreivi, Director Capital Markets, EIB:

"EIB has great satisfaction of receiving today the recognition for largest overall green bond issuer in its category of Development Bank awarded by Climate Bonds Initiative.”

“It acknowledges our long-term effort in developing the green bond market since we issued our first green bond a decade ago. Since then we have issued a total of EUR16.2 bn climate awareness bonds related to 146 projects in 44 countries, the proceeds of which have been deployed to renewable energy and energy efficiency projects.”

“We are enthusiastic to continue to be at the forefront of green bond market development in order to contribute to EU climate objectives’’

Antti Kontio, Head of Corporate Responsibility, MuniFin:

"MuniFin wishes to thank Climate Bonds Initiative for the country pioneer award recognition. We believe that municipal sector is in key role when it comes to combatting climate change. As the first green lender in Finland, we truly are in a position to ignite the green revolution.”

CEO Sean Kidney, CEO, Climate Bonds:

“The 2^nd Green Bond Awards honor the organizations that over the past year have been leaders in the global financial sector, mobilizing the capital needed to address climate change, limit carbon emissions and finance the green infrastructure of the future. This year’s Awards in part reflect the diversification of issuers and acceleration in the green bonds market that has taken place over the past year.”

“Behind each of the award winners in each category are host of companies, institutions, municipal authorities and other organisations that have also been recognised for their contributions to climate finance, green bonds innovations and low carbon growth paths. They also deserve acknowledgement and congratulations.”

The Last Word

A quick glance at the variety of recipients tells the growth and innovation story of 2016. The accolades are well deserved, particularly for the first sovereign issuance.

Climate Bonds would like to publicly thank external industry based panel who provided feedback on award categories and other advice in the selection process.

And we look forward to a 2017, being the year of sovereign green bonds, where other nations emulate France and Poland, more banks follow Grupo BanColombia and Banco Nacional de Costa Rica, and green securitisation deals take off.

A doubling of market size and expansion of issuers across all parts of the finance spectrum will be something to look forward to at next year's event.

We will post more on Monday's amazing event later this week.

'Till then,

Climate Bonds 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.

Additional Disclaimer: The external industry based panel do not endorse or promote any of the bond issuances identified in this communication nor make any recommendation as to the advisability of investing in such bonds.  It is possible that members of the panel have purchased and may currently hold some of these bonds in client accounts.

We’ve produced 5 new briefing papers, all launched at the Climate Bonds Annual Conference on Monday. Each summarising a policy, development or analysis critical to unlocking the potential of global green finance out towards the USD 1 trillion by 2020 target.

We’ve kept them short and to the point. Pick any or all for download.

Green Securitisation: unlocking finance for small-scale low carbon projects

About USD 5bn (6% of market share) of green securities issued in 2016 were asset-backed securities (ABS), up from USD 1.9bn in 2014. A securitization can be defined as ‘green’ when cash flows backing the securitization come from low carbon assets.

Despite recent growth, the potential is still great; with the OECD estimating that annual issuance of green ABS could reach between USD 280-380 billion by 2035 just for renewable energy, energy efficiency and low-emission vehicles (LEVs) alone.  

Low carbon transport, adaptation and land use projects could add tens of billions to that estimate.

In this paper we summarise the global policy recommendations need to stimulate the green securitisation market to that level. Download here.

Looking for a more in-depth read?

Try “Public sector agenda for stimulating private market development in green securitisation in Europe”, our latest collaborative report produced in conjunction with the ESRC Centre for Climate Change Economics and Policy at the LSE.

Green Covered Bonds: What are they?

An ideal tool to finance low carbon infrastructure. Covered bonds are highly-regulated securities with superior credit ratings and lower funding costs than unsecured debt, thanks to a dual recourse structure where bond investors have a claim over a dedicated ‘cover’ pool of assets, as well as a general claim over the issuer.

Banks are the sole issuers of covered bonds and by issuing green covered bonds, they are able to access cheaper and longer-dated funds to on-lend to designated low carbon projects.  

With more covered bonds in the market, highly regulated institutional investors will be able to increase the exposure in their portfolios to low carbon assets because of the high level of security offered by covered bonds.

Sounds complicated? It’s not.

This paper reviews the basics and overviews the current market. Download here.

Is there a ‘Greenium?’ - Green Bond Pricing in the Primary Market: Snapshot

Since the first corporate green bond was issued in 2013, there have been anecdotes of green bonds pricing tighter than similar vanilla bonds.

This pilot study presents an initial analysis of a Q4 2016 sample to explore how they are received in the primary market.

Initial indications are that at issuance, final pricing is consistently lower than initial price talk. Post issuance, pricing tightens after 7 days and most bonds performed better than their corresponding index.

It is the first analysis in a series that we aim to produce on a quarterly basis during 2017.

Download here.

The Role of Stock Exchanges: Green Segments, Indices & Market Education

Stock Exchanges are uniquely placed to catalyse the growth of the green bonds market by providing institutional investor base access to green bonds and helping build confidence and liquidity.

This briefing paper explores what exchanges can do to:

1. Set up green bond lists or segments
2. Develop guidelines for green bond listings
3. Support green bond indices & ETFs
4. Promote market education

And a big shout out to the Sustainable Stock Exchanges Initiative for their peer-to-peer learning platform along the way.

Download The Role of Exchanges here.

Green City Bonds: financing low carbon urban infrastructure

Green bonds are increasingly being used by municipalities and other city-affiliated entities, such as utilities and transport companies, to finance climate-aligned infrastructure. Organisations like Climate-Kic and C40 Cities are working on low carbon directions.

Green bond issuance from cities and municipalities has grown from USD 4bn in 2014 to USD 10.5bn in 2016.

This paper looks at some examples, from Mexico to Hong Kong to Scandinavia.

To date, transport and water have been the dominating themes.  

The key takeaway? Developing a pipeline of financially viable projects is the essential first step to green bond financing of new green urban infrastructure.

Download Green City Bonds here.

The Final Word

Green finance can look complicated. But the broad policy directions aren’t. These five papers are our latest effort to identify some distinct areas for policy maker and private sector action. 

Take your pick.

Using these building blocks, scaling green investment to USD 1 trillion by 2020 shouldn’t be that hard. 

We hope you find these informative,

Climate Bonds

P.S: Don't miss our latest update on Standard and Certifications news, prepared especially for participants at the conference. Download it 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.

The green debt market continues to diversify with a new synthetic securitisation deal. Last week, Crédit Agricole CIB and Mariner Investment Group completed a USD 3bn private synthetic risk transfer through a Green Capital Note.

What’s it all about?

Crédit Agricole is freeing up capital by transferring the risk of a USD 3bn portfolio of infrastructure loans to Mariner Investment Group LLC. The loans remain on Crédit Agricole’s balance sheet; the risk transfer means that Mariner now shares some of the liability in the event of any default.  

Crucially, this risk transfer allows the bank to hold less regulatory capital (essentially the levels of capital banks must carry as reserves, which are higher following the global financial crisis).

The use of the resulting USD 2 billion of freed up capital is what makes this synthetic deal innovative; Crédit Agricole have committed it in full to new green lending.

A central benefit of synthetic securitisation is the high leverage opportunities. The FT reports that Mariner’s investment in this first green synthetic deal is likely to be around USD 150m.

Using USD 150m to unlock USD 2bn of new green lending is an exciting prospect given the urgent need to scale up low-carbon investment.  

Green synthetic securitisation: the next evolution in structured finance?

The overall green securitisation market reached USD 5bn of issuance in 2016, but until now, all of those deals have been ‘true-sale securitisations.’

In a true-sale securitisation, a portfolio of loans is moved off the issuer’s balance sheet into a special purpose vehicle (SPV), which then issues asset-backed securities to investors.

In contrast, a ‘synthetic securitisation’ sees the assets remain on the issuer’s balance sheet; a portion of the risk is transferred to the investor rather than the full asset.

What are the green credentials of the deal?

The green credentials of the synthetic securitisation deal arise from the ‘proceeds’ of the deal, in the form of USD 2bn of freed up capital, being allocated to green projects.

The USD 3bn portfolio backing the deal is not green, but a mix of 200 mainly non-green loans from a range of sectors, including power, oil and gas, real estate and more.

That is exactly what we need to see: banks finding ways to use their non-green legacy assets to finance new green ones at scale, and so over time “colouring the balance sheet green,” in the words of Pascale Olivié, head of structuring, research and asset allocation in Crédit Agricole’s credit portfolio management group.

New green investment

So what kind of new green projects is the bank getting ready to fund? Crédit Agricole is using their existing green bond framework to determine eligible green projects for the USD 2bn of freed up capital.

The framework includes renewable energy, energy efficiency loans for commercial real estate renovation, public transportation, and sustainable waste and water treatment facilities, and has an external review from Sustainalytics.

Crédit Agricole has also committed to reporting on what types of green projects they lend to, and include more details on selected projects.

The last word

This deal is exciting in its own right, primarily as it represents another step in the development of green securitisation and will encourage other banks to follow with similar risk sharing structures that free up capital for new green investment.

In the wake of last week’s deal, Mariner has already discussed with banks the potential for replicating the success by securitising commercial real estate loans and allocating proceeds to low-carbon buildings.

Bravo!

We look forward to reporting on other institutional investors taking up green securitization opportunities.  

Until next time,

Climate Bonds 

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.

Our second Market Blog for the year is no less crowded than the first. Familiar faces are beginning to re-issue, we welcome new kids to the block and green bonds go retail. 

Latest Certified Bonds

Breaking news - Queensland Treasury Corp's first green bond - AUD750m (USD577m)

Just yesterday, Queensland Treasury Corp issued its first certified Climate Bond for AUD750m, becoming the second sub-sovereign in Australia to issue a green bond.

More information to come in a follow up blog.

More information about investors here.

Neerg Energy (ReNew Power) raises USD475m in secured green bond

This new 6-year tenor bond is the second green issuance from India based ReNew Power, following their August 2016 debut.

The Economic Times reported that the bond traded at about 38 basis points tighter than the initial guidance, allowing the firm to secure cheaper financing.

Proceeds will be used for refinancing solar and wind power projects of its subsidiaries, across 5 Indian States (Andhra Pradesh, Madhya Pradesh, Karnataka, Gujarat and Maharashtra).

The Verification was undertaken by Emergent Ventures.

Underwriters: Bank of America Merrill Lynch, Goldman Sachs, HSBC, JP Morgan and UBS

NY MTA’s USD313m green bond

New York’s Metropolitan Transportation Authority , the largest certified climate bond issuer of 2016, have kicked off their 2017 green bond year with their latest USD313m green bond.

They have again offered a retail investor component in this issuance, following up from their “Invest in the Planet Invest in the MTA” offer to New Yorkers in their inaugural certified green bond of February 2016.

MTA went a step further by becoming one of the first green bond issuers to take advantage of the Climate Bonds new Programmatic Certification option.

The programmatic approach allows issuers with large pools of eligible assets who aspire to be frequent issuers of Certified Climate Bonds - such as MTA - to issue multiple Certified bonds using a streamlined pre and post issuance reporting processes, while maintaining the environmental integrity that the Climate Bonds Standard ensures.

Sustainalytics has verified that from MTA’s 2010-2014 Capital Plan, a multi-billion pool exists of assets and projects that are eligible under the Low-carbon transport criteria of the Climate Bonds Standard. 

This latest bond will refinance existing low carbon transport projects including stations and subway cars on the subway system in New York.

The transport authority has now raised nearly USD1.7bn in green bonds since February 2016.

Underwriter: Bank of America Merrill Lynch

PS: The sharp-eyed blog devotee will also note new retail offerings from Canada and via two new ETFs. Are green bonds breaking out into retail? We’ll have more to say on this in a future post.

Australia’s FlexiGroup returns to market for second green securitisation- AUD50m (USD38.3m)

Flexi broke new ground in Australia last year when it issued the first certified structured green ABS deal. This latest transaction is part of a larger Asset Backed Securitisation sale totalling AUD265m. Debt raised will refinance residential rooftop solar PV systems and other equipment such as batteries and inverters.

Flexi’s April 2016 transaction obtained a 5bp green premium or “greenium” in the overall AUD260m securitisation and there is a Nasdaq report discussing a pricing benefit in this second offering.  

The approved verifier was DNV GL.

Underwriters: Commonwealth Bank of Australia, National Australia Bank

National Australia Bank’s second certified green bond – EUR500m (USD528m)

The bank issued their second Climate Bonds Certified green bond after the order book was well oversubscribed.

Proceeds from the bond will refinance renewable energy and low carbon transport projects and assets in the UK, Europe, Australia and the Americas, including wind and solar energy generation, and electrified rail infrastructure including electric rolling stock.

NAB have committed to undertaking environmental financing activities of USD18bn by 2022.

According to their press release, the renewable energy assets earmarked for refinancing by this bond are expected to have an installed capacity of approximately 1.1GW – this is estimated to represent avoided GHG emissions of around 1.69 million tonnes annually.

NAB holds the distinction of being the first green bond issuer in Australia with a December 2014 transaction and has been involved in supporting several other Certified Climate Bonds, including the July 2016 Treasury Corporation of Victoria green bond.

Underwriter: CITI, HSBC, NAB

Sovereign & Sub-sovereign

First ever green bond from Argentina! La Rioja Province - USD200m

La Rioja Province issued Argentina’s first green bond in late February, USD200m. Deemed "historic" by its Lieutenant Governor, this is the first time the province has accessed international funding.

The issue will fund the expansion of the Parque Eólico Arauco SAPEM wind farm, increasing generation capacity by 300MW. Arauco SAPEM operates 24 turbines across the country.

This development is in line with Argentina's governmental renewable energy tender RenovAr, a policy kick-started in 2016 that has already initiated more than 1GW of renewable projects. 

The Arauco wind farm is located in the North West part of Argentina where wind conditions help achieve a capacity factor of 40%. Operation started in 2012 and generates electricity for water pumping, which is used to increase the irrigation capacity of the region’s productive areas. 

Maturing in 2025, the USD200m offering has a fixed yield rate of 9.75% per annum, with repayment in four years. More details in this press release in Spanish here.

Underwriter: UBS

Québec Province’s inaugural green bond – CAD500m (USD373.8m)

Canada’s Quebec Province became the second province in Canada to issue a green bond -with its CAD500m, 5-year inaugural green bond

Proceeds will finance 4 public transit projects identified and chosen by the ministerial-level Green Bond Advisory Committee:

• 52 new metro rail cars (60-100%)
• 258 hybrid buses (0-20%)
• Metro infrastructure upgrade, part of the Réno-Infrastructures project (0-10%);
• Metro network operational stationary equipment (0-10%)

The bond was well received, with an order book of over CAD1.1bn. Over 60 investors participated in the deal with 60% from Canada, 28% from the US, 8% from Europe and the rest from Asia. Fonds de solidarité (FTQ) took 4% of the allocation (FTQ is a development capital fund that channels the savings of Quebecers into investments)

The Québec green bond framework received a second opinion from CICERO.

The good news is that the Province plans to become a regular issuer in this market. Félicitations ami(e)s Québecois(es), l’affaire est ketchup!

Great to see more climate action and mobilisation from Canada’s provinces, a point notedby Banque Du Canada Deputy Governor Tim Lan’s address to the 2^nd March  Finance and Sustainability Initiative in Montréal.

Underwriters: HSBC, RBC, TD

Corporate

First green bond ever from Slovenia! Gen-I Sonce issued EUR14m (USD14.7m) for solar.

Another new kid on the block – this one from Eastern Europe.

Maturing in 2024, the green bond will be used solely for the purpose of financing green energy projects (exclusively solar) for Gen-I Sonce. A subsidiary of Gen-I, the firm provides electricity and solar power plants installation services to households and businesses across Slovenia.

The two bond investors were SID Banka and Nova KBM.

It’s a small green bond but it’s refreshing to see new entrants in the market, congratulations to Gen-I Sonce!

Fabege raises more green financing via SFF – 2 green bonds of SEK300m (USD67.5m) in less than 2 weeks!

Swedish property company Fabege has issued two green bonds in two weeks (early and mid-February 2017) for a total of SEK600m/USD67.5m via subsidiary SFF.

Fabege has a goal to increase green financing, which now represents 21% of Fabege's total funding. The company intends for its entire property portfolio to be environmentally certified by 2018.

The company also raised another SEK300m (USD34m) under its own name. This press release mentions a persistent high demand for the company’s green bonds, with oversubscription over 4x for this issuance.

Underwriters: Swedbank

Iberdrola’s whopping new EUR1bn (USD1.06bn) green bond – first of 2017

Spanish Iberdrola, the largest corporate green bond issuer of 2016, just kicked off 2017 with a big one - a EUR1bn 8-year green bond.

The bond received a second opinion from Vigeo Eiris.

Book orders reached EUR2.3bn from more than 100 big investors.

The money raised will refinance existing and on-going onshore and offshore wind projects in Spain, the UK and Germany and managed by Iberdrola’s subsidiaries.

The list of selected eligible projects includes:

• 6 onshore wind parks in Spain totalling 226MW;
• 5 onshore wind parks in the UK 365MW or 219,000 homes;
• 1 offshore windfarm in the German Baltic Sea,350MW, the first of 70 turbines was installed last month.

Since their green bond debut in 2014, Iberdrola have raised more than USD5.3bn in green debt!

Underwriters: Banca IMI, BBVA, Citi, HSBC, NatWest Markets, Santander, SMBC

Huarong Financial Leasing issued RMB2bn green bonds in two tranches (USD292m)

Another new entry from China, Huarong Financial provides various leasing services across manufacturing, transport, environmental sectors and energy.

Proceeds will be used for 3 direct leasing projects in energy saving and clean energy sectors and 6 leaseback projects in pollution prevention, ecological protection and adaptation and clean energy sectors.

Typical projects to be financed are also disclosed and include solar farms and sewage plants.   

Underwriter: China Development Bank, Exim Bank of China, Donghai Securities, Agricultural Bank of China, Merchants Bank of China

External Review from EY here.

Canadian CoPower’s second retail green bond (CAD20m, USD15m)

CoPower, a Canadian clean energy investment platform, has closed its second retail green bond totalling CAD20m.

CoPower green bonds are backed by a diversified portfolio of solar, LED and geothermal projects across North America. The underlying portfolio of project loans will continue to grow as proceeds from the sale of bonds are used to lend to more projects.

Proceeds will be used to refinance loans previously made by the platform including rooftop solar projects in the Ontario cities of Windsor and Chesley, condominium LED retrofits and an energy efficiency project in Toronto.

The minimum investment required from retail investors is CAD5,000.

The USD20m offering was made to five impact investors financing a revolving credit facility that provides CoPower access to flexible capital. As explained by this infographic, the revolving structure of the Credit Facility means that investors leverage their capital repeatedly and multiply their impact.

The company is also a Certified B Corporation, meaning it meets high standards of social and environmental performance, accountability, and transparency.

We receive lots of enquiries about retail green bonds so it’s good to see some starting to appear!

Commercial Banks

SEB’s first green bond – EUR500m (USD531m)

After being a pioneer in the market since the very beginning and having facilitated the issuance of USD13.8bn in green bonds, SEB have finally issued their own green bond.

Proceeds will finance or refinance the following eligible projects:

• Renewable energy including:

  • wind, solar, small scale hydro power, tidal, geothermal and bio-energy

• Energy efficiency/green buildings

  • Projects/technology/processes leading to 25% energy efficiency gain

  • LEED Gold, BREEAM Very Good or equivalent,

  • Commercial/residential buildings with energy use per m2 at least 25% lower than Swedish codes

  • Major renovations leading to 35% energy per m2 energy use

• Clean transport

  • transport systems based on non-fossil fuel based fuel or hybrid technology

• Pollution prevention and control

  • waste management: waste-to-energy, methane capture, waste reduction

  • reduction of CO­2, Sox, NOx particulates

  • wastewater management

• Sustainable forestry: forestry projects with certification from FSC or equivalent

There is a good level of detail disclosed for project types with great ambition shown in the buildings space – e.g. LEED Gold equivalent is in line with the Climate Bonds low carbon buildings criteria. Within potentially controversial areas like hydro and forestry, additional parameters are given (<10MW limit for hydro, FSC certification for forestry).

CICERO provided the second opinion on SEB’s Green Bond Framework.

PwC was mandated to analyse SEB's processes and systems for separating green borrowing and lending. 

The final pricing at MS+20bps was the tightest of any EUR senior unsecured benchmark issued by a bank, post financial crisis. This followed from a highly oversubscribed order book in excess of EUR 2.1bn.

The final order book had broad participation across Europe, including investors from Germany and Austria (26%), Benelux (20%), Nordics (19%), France (19%), UK/Ireland (10%), Switzerland (3%) and other regions (3%). 

Underwriters: SEB, ABN Amro, HSBC

Wuhai Bank comes to market with its first RMB500m (USD73m) green bond

Proceeds of this bond will be used to finance a wide range of projects under the PBoC’s Guidelines, including energy saving, clean transport, clean energy, pollution prevention, resources conservation and recycling.

Specific projects include solar, wind, hydro and geothermal energy, to replace the use of fossil fuel use. In the Clean Energy Category, there is no indication that clean coal projects will be financed.

Founded in 2010, Wuhai Bank is a regional commercial bank, operating in China’s northern autonomous region, Inner Mongolia. The bank is headquartered in Wuhai City, whose economy is heavily based on coal mining, electric power generation, metal-working and chemical industries.

Many Chinese coal cities are looking for a transition to low carbon economy through green bonds. Climate Bonds was invited to another big Chinese industrial city, Datong, to give suggestions on developing green city bonds last year.

Underwriter: Guotai

China Credit Rating provides a second opinion.

Development Banks

Agricultural Development Bank of China makes second tap of RMB4bn (USD 582m)

Following their first RMB 6bn issuance in last December, Agricultural Development Bank of China just issued the second RMB 4bn tap on 27^th February.

Proceeds of this tap will be allocated to 42 forest projects.  It is worthwhile noting that the bank’s initial issuance last year received was 4.5 times oversubscribed.

CECEP provided the second opinion.

KfW re-opening – GBP250m (USD311.5m)

German development bank KfW has just made a GBP250m second tap of its sterling issue in November 2016.  This raises the total value of the bond to GBP500m.  Proceeds will finance renewable energy projects as with previous KfW green bonds.

Underwriters: Citigroup, Deutsche Bank and TD Bank

KfW is one of the largest issuers in the green bond market, with over EUR9bn outstanding. 

Government Agencies

Inaugural green bond from Caisse des Dépôts et Consignations (CDC) – EUR500m (USD531m)

French public sector financial institution, Caisse des Dépôts et Consignations, has just issued its inaugural green bond for EUR500m, continuing the French flavour of 2017.

Vigeo Eiris provided the second opinion on the bond. The green bond framework is available in French as well as the full list of eligible projects. 

Net proceeds will be used to finance and refinance existing eligible assets in France or Europe included under the 3 categories:

Renewable energy, 24% of the use of proceeds:

• construction and development of electricity production units with more than 85% of its production from solar, wind, geothermal, micro-hydropower, biomass, or wave and tidal

• construction and development of heat production units with more than 85% of its production from solar, geothermal, or biomass. The units will have to emit less than 500g of CO2 per MWh and will have to obtain the ‘Ecoréseau de chaleur’ label

• The eligibility list describes 4 biomass projects, and a large number of wind, geothermal and solar projects.

Real estate, 66%:

• construction or renovation of buildings with at least a minimum level of LEED Gold, BREEAM Very Good and other equivalent French certifications

• The list notably includes the constructions of 7 nursing homes.

Site rehabilitation, 10%:

• remediation of polluted soils in urban zones

This inclusion of these renewable energy and real estate assets are in line with Climate Bonds criteria in these area e.g. Climate Bonds solar criteria state that solar thermal generation may use a maximum of 15% gas-fired power as a backup while our Low Carbon Buildings criteria also use LEED Gold and BREEAM Very Good as minimum hurdle rates.

While we do not have criteria in place for soil remediation yet, there will be clear environmental benefits and possibly climate benefits to such projects.

The issuer will track the net proceeds in two dedicated accounting sections of its treasury and the management of proceeds will be reviewed annually by an external auditor.

CDC expects to issue around EUR3bn of green bonds by the end of this year. 

Underwriters: BNP Paribas, Crédit Agricole, HSBC, JP Morgan, Natixis and SocGen

CDC is a partner of the Climate Bonds Initiative. 

Municipal

DC Water and Sewer Authority’s new USD100m green muni bond

The District of Columbia Water and Sewer Authority (D.C. Water) has issued a USD100m green bond financing a 25-year municipal sewage clean-up project as part of the DC Clean Rivers Project. This is part of a larger USD300m transaction.

The project is scheduled to be fully implemented by 2030. It will help to reduce flooding in certain districts and is also expected to reduce sewer overflows by 96%. D.C. Water will make annual green bond issuances to fund the project through to its scheduled completion in 2030.

Flood protection is essential to ensure the resilience of cities and municipalities.

Green bonds now account for 20% of DCW’s outstanding debt.

The bond received a Moody's green bond assessment (GBA) of GB1 (Excellent).

Underwriters: Goldman Sachs, Ramirez & Co.

It is good to see such buoyant green bond market activity in the US space, considering the recent US muni bond outlook for 2017.

Martha's Vineyard Land Bank’s second green muni bond (USD20m)

This is the second green bond issued by Martha’s Vineyard since 2014.

The prospectus states that proceeds will be used to refinance environmentally beneficial projects located on the 93km² Martha’s Vineyard island, located off the coast of Cape Cod, Massachusetts.

Projects include the 8.5ha Ocean View Farm Preserve and the 1.1km²Three Ponds Reservation. Both parks are used for activities including nature study, hiking, picnicking, biking, horseback riding, mountain-biking, dog-walking, fishing, kayaking, farming or hunting.

From both a climate and a broader environmental point of view - parks and recreation bonds like these are pale green - a ‘nice to have’ rather than a ‘have to have’ as they are unlikely to have a strong environmental or climate impact.

It’s nice for local citizens and there’s value in that but they won’t get us to the USD1tr in green bonds by 2020 objective needed to help reach global climate goals. 

Underwriter: RBC

ABS and MBS

Solar Mosaic's USD139m green securitisation ABS

California-based Mosaic closed its first green labelled securitization of consumer loans for solar rooftop. Mosaic provides solar loan financing solutions for homeowners.

The offering will enable Mosaic to continue to provide loans for residential renewable energy projects by providing financing to homeowners for loans that enable the sale and installation of residential solar energy systems.

The deal generated overwhelming investor demand and achieved an oversubscription level of 5.6x the offering size. 

Mosaic has originated over USD1bn in solar loans since inception, and expects to be a frequent issuer in the securitization markets.

The ABS received a second opinion from Sustainalytics.

Underwriters: BNP Paribas, Guggenheim Securities

Fannie Mae’s inaugural Green REMIC (USD611m)

US Fannie May priced its first green REMIC (Real Estate Mortgage Investment Conduit) tranches maturing in 2027, backed by exclusively green collateral. 

The USD611m green tranches were part of a larger USD1bn bond.

The collateral in this deal consists of mortgage loans backed by multifamily properties that meet one of two criteria:

1. Possess a recognised green building certification (e.g. LEED or ENERGY STAR)

2. Use a portion of the loan to ensure that the property achieves at least 20% annual reduction in either energy or water consumption. 

Fannie Mae's Multifamily Green Financing Business provides financing through several different green product offerings.  The aim is to incentivise borrowers to undertake energy- and water-savings improvements to their properties via preferential borrowing rates.

We’re very enthusiastic about mortgage giant Fannie Mae joining the green bond market and especially in their preferential borrowing rates for green.

We do, however, think that for the first criteria, more ambitious hurdle rates should be pursued for next time.

Our view, based on the research of our Technical Working Group for the low carbon buildings criteria is that to achieve significant climate impact, buildings should be certified to at least LEED Gold or equivalent rather than just any level of certification (as in the first criteria).

The second criteria is aligned with Climate Bonds criteria in that it specifically targets energy/water consumption improvements – but at 20%, the hurdle isn’t as ambitious as the 30% - 50% we ask for in our Low Carbon Buildings Criteria.

While this is Fannie Mae’s first labelled green product, it states that in 2016 it delivered USD3.6bn in mortgage backed securities to the market for multifamily properties with a Green Building Certification such as LEED and ENERGY STAR or properties committing to reducing their energy or water consumption by 20%.

Prospectus available here.

Underwriters: Citi, Nomura, KGS-Alpha Capital Markets, CastleOak Securities

Other green debt instruments

Green loan from BBVA - EUR500m (USD534m)

Spanish bank, BBVA provided a EUR500m green loan to the multinational electric utility Iberdrola earlier in February.

The purpose of this loan is to fund several projects related to energy efficiency and renewable energy.

Access Iberdrola’s press release in Spanish here. The loan received a second opinion from Vigeo Eiris.

Bonds not yet aligned with international definitions and best practice

Longfor Properties’ RMB 1billion (USD150m) Green Bond

Longfor is a Chinese property developer listed on Hong Kong Stock Exchange. This RMB 1bn green bond will be mainly used for green buildings development.

They have disclosed that 70% proceeds will finance projects including office buildings, a hotel, and a commercial centre. All of them are located in a newly developed business district in Shanghai City.

The projects received at least a 2-Star Certificate from the Evaluation Standard for Green Buildings, which is equivalent to LEED Silver. This is a widely-used Chinese domestic green building standard and was developed by the Ministry of Housing and Urban-Rural Development.

This bond will not be included in our data as 30% of proceeds will be used for the corporate’s general operations.

Although NDRC regulations allow issuers to use up to 50% of bond proceeds to repay bank loans and invest in general working capital, this bond is not in line with international expectations that at least 95% of proceeds must be linked to green assets or projects.

Dongjiang Environment issues first green bond for RMB 1bn (USD 144m)

Another new entrant to the market, Dongjiang Environment is an environmental service provider in China. It is focused on resource recovery, industrial and municipal waste treatment as well as environmental engineering.

They have disclosed that the RMB540m proceeds will be used to finance 4 projects including waste-to-energy facilities, recycling facilities and recycled products, which are in line with Climate Bonds definitions.

However, the remaining RMB460m will be used to refinance 7 other projects, including at least RMB 70 million that will go to landfill projects without gas capture process.

Although this is permissible under NDRC’s guidelines, we excluded this bond as it’s not in line with our taxonomy.

This is the first green bond to be listed on the Shenzhen Stock Exchange.

No second opinion was provided.

Underwriter: GF Securities

China Development Bank’s RMB5bn (USD728m)

Following the green bonds issuance by Exim Bank of China and the Agricultural Development Bank late in 2016, the third of the policy banks, China Development Bank (CDB), issued its inaugural green bond on 21st February. 

The bond is themed as “Air Pollution Prevention”, proceeds will be used for 9 projects under Energy Saving, Clean Transport and Clean Energy categories, etc. The expected environmental impact includes: reductions of 137K tons of CO2, 591 tons of PM, 1584 tons of SO2, 351 tons of NOx, etc.

CDB is primarily responsible for raising funding for large infrastructure projects. Debts issued by CDB are usually treated as risk free assets and it is also exempt from providing bond ratings on the China Interbank Bond Market. Of note, the bond was issued on a tender basis, which means the coupon rate is determined by auctions from investors.

However, among the project examples given by CDB, we found a project titled “Replacing Small Units with Large Ones (RSWL)”.

Although replacing small coal-fired power stations with larger ones can improve efficiency and ‘clean coal’ projects are included in the PBoC’s green Catalogue, any projects relating to coal are excluded from our database.

External review was provided by PwC.

Gossip

This section is growing a life all its own, so again we’ve arranged it into some categories for you.

On the green horizon:

Nigeria plans a USD64m green bond issue by April; list of preliminary eligible projects here.

IBank (California Infrastructure and Economic Development Bank) approvedUSD450 Million of Green Bonds issuance For State Water Resources Control Board.

India’s Rural Electrification Corporation (REC) to raise green bonds?

Swedish real estate company Atrium Ljungberg has developed a green framework aimed at issuing green bonds.

Lawrence City (Kansas) commissioners approved USD11.3 million in energy-efficient improvements to lighting, heating and cooling systems financed by green bonds.

Norwegian real estate Entra contemplates green bond issuance

Sovereign and policy news:

Poland considers another green bond issuance according to Polish newspaper Puls Biznesu.

In comments reported by Radio Poland, following their 2017 Green Bond Pioneer Award, Deputy Finance Minister Piotr Nowak signalled another bond later this year. If your Polish is good, the original Polska Agencja Prasowa story is here.

Nigeria - Amina J Mohammed Chairs Green Bond Program Administrative Team Meeting before inaugural sovereign green bond to be launched next month.

Federal Government of Nigeria meets investors on issuance of Sovereign Green Bonds.

The Kenya Bankers Association and the Nairobi Security Exchange are working on publishing their Green Bond Guidelines.

Central Bank of Russiaconducts"Review of financial market regulation: green bonds", available in Russian only.

India targets green bond development. Indian Green Bonds Market Development Council Meets in Mumbai.

Asean Green Bond Standards are being developed by the Asean Capital Markets Forum (ACMF) in collaboration with the International Capital Market Association (ICMA).

Reading, reports, moving pictures: 

Nigeria Green Bonds Summit: Nigeria targets 30% Renewable Energy by 2030. (2m51s)

Find a short and sweet interview from our CEO Sean Kidney on Bloomberg TV Canada about the Quebec green bond, global growth trends and 2017 predictions. (6m22s)

Joint Climate Bonds & CCCEP-LSE Report: How to grow green securitisation in Europe:  Building a USD80bn+ market. Download here .

Cambridge Institute for Sustainability Leadership (CISL) and ClimateWise published the report “Investing for Resilience”, which explores how the insurance industry can contribute to redirecting substantial flows of capital into resilience enhancing investments.

Share Action's new investor guide for engaging with banks on climate change is out.

Climate change could threaten the entire financial system, Australian financial services regulator APRA warns.

Green bonds made it to the Daily Mail!

LBBW’s (Landesbank Baden-Württemberg) new piece of research on Green Bonds is out (German only).

French current affairs clip from BFM Business about green bond funds. Explores recent retail ETF offerings from Lyxor and Van Eck. (3m29secs)

Green Bond reporting:

Apple published their first Annual Green Bond Impact Report.

NIB’s Environmental Bond Report 2016 out.

Bancolombia is ready to lend around USD55m to clean-energy projects with money raised via its inaugural green bond.

Green bond Funds and investors:

Solactive and Lyxor launch USD & EUR green bond index with the help of the Climate Bonds Initiative.

Lyxor launches green bond ETF;

VanEck launches green bond ETF;

Natixis launches green bond fund.

S&P Dow Jones Indices launches S&P Green Bond Select Index.

NN Investment Partners includes green bonds in recently launched sustainable multi-asset fund.

AP3 (Sweden’s third national pension fund) is reported to have doubled its green bond holdings (rising to SEK9.5bn in 2016 from SEK4.5bn in 2015).

Second AP Fund Publishes 2016 Sustainability & Corporate Governance Report and return figures on its green bond portfolio.

Deutsche AM enters ESG corporate bond ETF market.

Canadian Montrusco Bolton Investments announces the introduction of green bonds to its portfolio.

Huxford Group has pledged to invest a minimum of USD100m into green bonds by the end of this year.

Graph of the month (as of 15 March 2017)

Monthly green bond issuance comparison indicates 2017 is well on its way to overtake 2016:

VanEck is a partner of 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.

We know that many of our international blog readers couldn’t make it to our Annual Conference in London. So, we’ve picked out the best, quick takeaways for you.

Size of Market in 2017

The boldest prediction came from Henry Shilling, Senior Vice President of Moody’s Investors Services, who saw green bond issuance in 2017 reaching over USD 200bn by year’s end (based on favourable conditions).

In ‘Green Really Is Gold for These Bond Lovers’ Bloomberg looks at the conference buzz around growth prospects in 2017.  Read it here.

A Second Sovereign from Poland?

Poland’s Green Bond Pioneer Award for the world’s first sovereign green bond issuance garnered extensive media attention in the days following the conference.

Deputy Finance Minister Piotr Nowak has also been signalling Poland will make a further sovereign green issuance in 2017.

One of our conference Media Partners, Thomson Reuters, also took a look at what’s happened so far in the year of sovereign green bonds with ‘From Africa to Asia, governments considering 'green' bond sales.’

Green Bonds on a Paris Trajectory? Connecting NDCs and Green Finance

We highly recommend this well constructed post by Ian Callaghan from NDCI.Global.  

It traverses the conference discussions on sovereign issuance, green securitisation, Multilateral Development Banks, Development Finance Institutions, whilst identifying the underlying challenge: linking NDCs and green investment.  

If there’s only one article you read arising from the conference…. read it here.

The 2017 Green Bond Pioneer Awards

We've had many requests for a full list of 2017 Green Bond Pioneer Award and Certificate recipients, so here’s the link to our post with all the details.  

Congratulations to every green finance leader, well done!

The Last Word: Growth, Sovereigns, the G20 & COP23 in Germany

A USD 200bn+ year of green bonds in 2017 would put the market well on the road to the objective of USD 1trillion in green bond issuance by 2020.

France has already declared its hand with the largest green bond ever issued. If Nigeria and Kenya are also successful in their sovereign issuance, and Poland firms towards a second round, expectations for some G20 or Eurozone nations to follow suit will grow.

Above and beyond green bond issuance or sovereign action, keeping the green finance momentum moving, building and implementing country climate plans that link to NDCs and the 2 degree Paris target is fundamental, a point NDCI Global reiterates in the conclusion to Global Green Bonds on a Paris Trajectory.

In his closing address, Climate Bonds CEO Sean Kidney called conference participants to be active:

“To bring forward the identification and plugging of capacity and policy gaps that will allow countries to identify the projects that can be financed by instruments like green bonds.”

“That’s the win-win-win. The countries get the investment for the projects they need, the bond market gets its pipeline, Paris gets the more ambitious outcomes that are vital for the 1.5°C-2°C result.”

“But all the actors aren’t on the stage yet, let alone having learnt their lines. We need to accelerate, we need to get the full cast assembled to get this show properly on the road.”

This is the real economy challenge requiring continued leadership in 2017.

Firstly, from the G20 in maintaining the climate momentum expressed in the Hanzhou Leaders Communique and continuing the work done by China and the UK which culminated in the GFSG synthesis report.

Secondly from the nations, the banking and finance sector organisations now assembling their delegations for COP23 in Bonn.

Till next time,

Climate Bonds

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.

Today Singaporean Minister for National Development Lawrence Wong announced that the Monetary Authority of Singapore are launching a Green Bond Grant scheme which will cover the costs of external reviews for green bond issuance.

Speaking at the Investment Management Association of Singapore’s 20th Anniversary conference, the Straits Times reports that Minister Wong declared that sustainable investing had become mainstream, and that Singapore was taking steps to build a financial sector with a strong sustainability focus. 

Starting with this green bond grant scheme, the Monetary Authority of Singapore will promote the development of a wide range of sustainability-oriented benchmarks, funds and products. 

What excellent news! The cost of getting an external review is one of the key hurdles that hold potential first-time green bond issuers back from joining the party.

Once issuers have come to market they tend to find that the benefits outweigh any additional set-up costs, but it remains a bottleneck for new issuers.

Supporting Market Growth 

With this simple move of a grant scheme absorbing the external review cost, Singapore’s central bank is facilitating rapid market growth – and crucially ensuring scale does not compromise sound environmental quality by incentivising every green bond issuer to get an external review. These are the two things we need to see: scale and impact.

We have yet to see all the details on what the central bank will set as criteria for ‘qualifying issuance’; but they have released some broad guidelines. 

Qualifying bonds can be denominated in any currency but must: 

• be issued and listed in Singapore

• have a minimum size of S$200 million

• have a tenure of at least three years

Others should follow 

Let’s hope other central banks and public sector entities are paying attention to this great development from Singapore – it is a model ready to be replicated! 

Climate Bonds

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

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

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