Lots of media coverage in July digest: FT, Economist, Forbes & much more

Posted: Jul 31, 2014

Analysing the green bond media coverage in July brings an obvious conclusion: the momentum is growing.  We now find ourselves in a position of having to heavily filter the coverage for this digest. – and this month we have chosen 28 media stories worth sharing with you.

There have been 7 green bonds issued in July, each attracting strong attention from the media, with first Asian green bond by Advanced Semiconductor Engineering as the most talked about.  Second big news came with the first green bonds index by Barclays & MSCI. And finally, the third big theme this month has been release of our HSBC commissioned report Bonds & Climate Change. The state of the market in 2014, which was reported in the Financial Times, Forbes and The Guardian, just to mention few.

Probably the most prominent and widely read green bonds media story in July, trending  on the social media many days after its publication has been Economists’ Green grow the markets, O The article’s author suggests that offsetting climate risks such as heavier regulation of dirty industries, as one of the main benefits of investing in green. 

Nonetheless, there is far from universal agreement over the question, “What makes a bond green?” At the moment the answer is, “If someone says it is.” At first, that someone was the World Bank’s environmental department, which made sense when the bank issued most of the bonds. But something else was needed as corporate green bonds came along.

EMEA Finance’s cover green bonds story starts with Sean Kidney’s description of retreating Arctic glaciers, then goes on to talk about a ticking clock reminding us of the urgent action needed to prevent disastrous climate change. He calls the growth of the green bonds market ‘a tick in the right box’.

“The biggest challenge facing the planet is how to avoid catastrophic destruction of economies, of societies – let alone of investment portfolios” […] Mobilising capital markets to help fill the gap makes perfect sense, Kidney says: “Most of the stuff that has to be done can be done in an old-fashioned infrastructure investment model. So what are we waiting for? Interest rates are at the lowest in recent history. If there’s ever been a time to rebuild the planet, it’s right now.”

  • The Australian, Green bonds find their purple patch in golden era, Stirling Larking

    The author talks about world’s first green bonds index launched by Barclays and MSCI. He describes this development as a critically important milestone, as it finally brings Green and Climate derived invest­ment products into the fold.[…]

This development will also provide numerous opportunities for not only Institutional and Ultra High Net Worth (UHNW) investors but also, in time, for the broader investment community. It appears that Green Bonds have found their purple patch and issuers are welcoming this new-found golden era.

’Bonds & Climate Change. The State of the Market in 2014’ report coverage

The era of green bonds that finance environmentally friendly projects has begun, with the market forecast to grow by $40bn this year and $100bn next year.[…]  The report said green bonds are a much publicised and fast-growing subsector of a much broader climate-themed bond universe, with an estimated $503bn of bonds outstanding.

​The figure that is turning heads is the growth in private sector issuance by corporations and banks, whose participation in green finance is seen as crucial to addressing climate change, with corporates issuing $10.2bn (55%) so far in 2014 compared with $3bn (27%) last year.

The article talks about the size of the climate-themed bonds market and highlights the potential scope for property-related bonds investments that outstrip even the largest theme identified in our report; Transport.

While the market for bonds issued against low-carbon buildings is small […] 2% of the total, according to the report – the potential is much bugger, says Sean Kidney […]. “The difference is that while transport bonds are issued against new projects, existing buildings (or portfolio of them) can become assets against which bonds are issued”, Mr. Kidney said.

“One of the myths to bust is that the space is full of junk bonds that you can never invest in,” Boulle said. “Around 90% is investment grade, but when we put further filters on that to mirror what would be includible in an index, in terms of size of issuance and the currency – just over half of the full universe meets index requirements.”

A new report released by the Climate Bonds Initiative and HSBC shows that the market for green bonds, a debt instrument for financing projects that tackle climate change, is exploding. And the sustainable built environment is expected to benefit greatly, with green buildings and urban improvement bonds expected to comprise more than 50 per cent of the market in the long term.

At the end of 2013, seemingly out of nowhere, the market for green bonds took off, all of them over-subscribed. From a meagre $2 billion issued over several years, we ended the year with $11 billion in newly issued bonds, spurring many bankers to call it a tipping point.

This trend is gaining pace: global asset managers holding over US$13 trillion currently incorporate ESG issues into their investment decisions ...

Non-english speaking media about the report

And more…

The title which says it all.

Despite the growth, these carbon-fighting bonds make up less than 1 percent of more than $1.4 trillion in U.S. corporate bond issues, and the challenge for many investors is actually getting in on the green bond deals, largely snapped up by pension funds and other big institutional investors.

The article summarizing the market leaders discussions during the ‘Environmental Bonds 2014’ conference.

The article focuses on maintaining the integrity of the fast growing green bonds market.

We need strong standards that address how Green bonds are constructed, and standards that assess how the ‘Greenness’ of the bond is reported,” said Sean Kidney […]. “Investors have to be able to link the money to the underlying asset.

​​Euromoney comes with a green bonds article that usefully summarizes our media digest this month: For an asset class that accounts for less than 1% of the corporate bond market, green bonds have been attracting an awful lot of attention.

Several developments and initiatives underway are adding more clarity for investors as the number of issuers expands beyond development institutions and government-owned issuers to corporate entities. These include the Green Bond Principles, Expert Network on Second Opinions(ENSO) launched by Cicero, a Ceres-led initiative for investors, and the Climate Bonds Initiative (CBI).

An interesting article based on an interview with Ché Wall who chairs the Climate Bonds Green Property Working Group. He talks about game changing level of potential for green property bonds in Australia.

Key was the value proposition on offer that tapped institutional debt markets and its fast growing appetites for climate-friendly products. […] But how big is that appetite? Right now it’s estimated at US$150 billion, but Wall says that if you remove “your property-centric view the picture looks bigger”.

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