Ambitious agenda to grow green securitisation, green bonds, ABS & covered bond markets in Europe.
What’s it all about?
A new European Green Securities Steering Committee has been launched with the goal of promoting green securities market development in Europe including covered, asset-backed and senior unsecured bonds. The committee has backing from the Climate Bonds Initiative (CBI) and the European Covered Bond Council (ECBC) with the support of the UNEP Inquiry.
The inaugural meeting of the new Committee was held on June 29th 2017 where members established the group’s priorities and forward agenda.
The Committee is comprised of industry-wide members representing twenty-two European commercial and development banks, investors, rating agencies, NGOs and industry associations, including ABN AMRO, Clifford Chance, Glennmont Partners, and Obvion.
What’s on the agenda?
Members will be working together on the development of Europe’s budding green debt market, influencing policymakers and implementing action plans to support market growth that contributes to the achievement of EU climate objectives and green infrastructure goals.
Committee priorities include:
- Identifying regulatory and supervisory hurdles for both issuers and investors around green covered bonds and green securitisation
- Supporting common definitions for green at EU level, leveraging existing labelling schemes
- Promoting origination of green assets by facilitating the identification of green assets at the European level and through standardisation of contracts where appropriate
- Developing a common position on relevant regulation under development at the EU level, such as the STS and Covered Bonds files
- Investigating aggregation and warehousing solutions for smaller projects
- Exploring the potential for favourable capital treatment for green securities based on differential risk profiles and asset valuations
- Identifying opportunities to further issuances of green asset-backed securities and covered bonds in well-established markets
- Coordinating and encouraging investor demand
Who’s saying what
Luca Bertalot, Secretary-General, European Covered Bonds Council:
“Coordination on the ‘green’ debate at the European level is essential; this diverse group will facilitate engagement with the European institutions to grow the market for green covered, asset-backed and senior unsecured bonds.”
Nick Robins, Co-Director, UNEP Inquiry:
"This new initiative is perfectly timed - responding to the Europe's growing policy and market interest in expanding green securities. Crucially, it will help to build trust and confidence in the potential of asset-backed securities for financing a sustainable economy.”
Sean Kidney, CEO, Climate Bonds Initiative:
“We have only a short time to achieve our climate and energy targets. The European Green Securities Steering Committee offers an opportunity to maximise the origination of green assets and influence regulation at the European level.”
Where can I find out more?
It depends on what you’re looking for. Here’s some reference material that may help.
April 2015 OECD publication “Unlocking SME finance through market-based debt” on financing via ABS, securitisation and covered bonds is here.
ECBC Covered Bond Fact Book 2016 is a comprehensive annual information resource and is available here.
The Feb 2017 ground breaking Climate Bonds & CCCEP-London School of Economics joint report “Public sector agenda for stimulating private market development in green securitisation in Europe” is here.
March 2017 Climate Bonds two page briefing papers on green securitisation and green covered bonds are here and here.
The April 2017 OECD report “Mobilising Bond Markets for a Low Carbon Transition” that references both green bonds and ABS is here.
May 2017 European Commission announcement “Capital Markets Union: EU reaches agreement on reviving securitisation market” is here and EC background on securitisation policy and STS is here.
The Last Word
Green investment needed to reach the EU’s 2030 emissions targets ranges between 2.6 and 4.5 percent of GDP, with EUR 200 billion of annual investment needed to back clean energy and energy efficiency investments alone.
Increasing the uptake of green bonds and green securities of various types can help unlock finance from debt capital markets for low carbon and climate-resilient infrastructure projects across Europe.
The new Steering Committee has an ambitious agenda to grow green investment with efforts to be directed at the policy, regulatory, investor and market level. Its foundation members see the opportunities.
Their timing couldn’t be better.
Six global climate leaders including Christiana Figueres have just published a call in the prestigious publication Nation calling for accelerated action on climate and carbon efforts over the next three years, part of the Mission2020 project.
One of their six milestones is a USD1trillion green bonds and green finance market by 2020.
Green bonds and asset-backed, covered and senior unsecured bonds are a growing and increasingly vital segment of climate finance.
They now have an even bigger role to play in new infrastructure investment, emissions reduction goals and transitioning to a low carbon economy.
The European Green Securities Steering Committee has been established to help achieve exactly that.
‘Till next time
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