Big stories of certified bonds from ICBC and IREDA in the past month made a lot of media headlines. You are now unlikely to find a green finance media report that does not include a mention of green bonds. Here are some of the top stories we selected for you.
Market
Euromoney, Deal flow can turn back the tide of climate change, Chris Wright
Author says there is no way to address climate change without the significant role of private capital. He stresses investors’ focus on a simple product that is clear on risk and return.
The clearest example of this idea in action is the success of the green bond market. A decade after the first issue by the European Investment Bank, annual issuance hit $81 billion under the Climate Bonds Initiative’s definitions and $92 billion by other measures in 2016, $23 billions of it from China.
Euromoney, Can finance save the world’s vulnerable nations?, Chris Wright
Another Euromoney’s article in September with a similar overtone: to successfully combat climate change, sustainable projects must be packaged in a manner attractive to private capital.
And the key to that is to build something scalable. Green bonds are the first wave of this idea: using an existing structure that everybody understands and tagging on green intentions for the funds once raised. Next, asset-backed structures will be absolutely indispensable, and they will be aided in their growth by technology that allows us to receive and interpret data on a large scale very quickly.
Bloomberg, Big Oil Becomes Greener With Progress in Cutting Pollution, Anna Hirtenstein
Bloomberg’s article sends a positive message about oil behemoths cutting emissions as well as growing competitiveness of renewable energy opposite fossil fuels.
“The Paris agreement has been extraordinarily successful in establishing a new consensus,” Kidney said. ‘‘There’s a sense of future certainty developing which is influencing decision-making in the corporate sector.”
Financial Times, Going green is good for business, Naina Lal Kidwai
The article by sustainability chair of the Federation of Indian Chambers of Commerce & Industry leaves no doubt that green investments are good for companies’ bottom line.
There’s ample evidence that renewable energy and energy efficiency are booming sectors for business. In 2016, 190 of the Fortune 500 companies together saved close to $3.7bn through their collective renewable energy and energy efficiency initiatives. (…) The profitability of doing right by climate is increasingly clear.
Bloomberg, Evidence Mounts for Green Bonds Outperforming Conventional: HSBC, Anna Hirtenstein
Evidence gathered by HSBC shows that investors sell green finance products in the secondary market at profit.
“Our analysis suggests there is value in green bonds for bond investors,” wrote Michael Ridley, a green bonds and corporate credit analyst at HSBC who co-authored the report. This may dissipate in the future if there’s a sharp rise in supply, he said.
Bonds & Loans, Why Green Sukuk Could be a Growth Driver for Islamic Finance, Bashar Al Natoor
Author analyses potential for green financial products on the Islamic finance playground.
Green Sukuk funding and environmentally sustainable infrastructure projects, such as the construction of renewable or clean energy projects, could appeal to both Sukuk investors and conventional environment-focused investors (…).
South China Morning Post, How Islamic finance is helping fuel Malaysia’s green growth, Victoria Kwakwa
World Bank regional vice-president for East Asia and Pacific for SCMP shares insight into Malaysia’s green sukuk initiative.
To close this huge infrastructure gap, we need more options for investment financing. It would be better yet if these options adhered to our principles of sustainable development, particularly given the spectre of climate change. A tall order, but not impossible.
Global Capital, Bonds set to play big role in Lat Am green investment boom, Olivier West
An in-depth story of up to date development, prospects, challenges and main players in the Latin America green finance space.
“If local markets grow, Lat Am becomes a powerful regional story,” says Justine Leigh-Bell, [director of market development at the Climate Bonds Initiative in London]. “It is not only good for national development policy, but it attracts the right form of capital into each country.”
Global Capital, HKEX eyes Green Bond Connect, says CBI, Noah Sin
Global Capital and Global RMB reveals Climate Bonds Initiative is in talks with the Hong Kong Exchange about expanding the recently launched Bond Connect trading link to overseas investors.
The Hong Kong Exchange is in talks with Climate Bonds Initiative to launch a Green Bond Connect, an initiative to help Bond Connect investors identify Chinese bonds that meet the international standards of green investments, Sean Kidney, CEO at CBI, told GlobalRMB in Beijing.
Nasdaq, Climate Bonds Initiative in talks over 'Green Bond Connect', Thomas Blott
And more on that from Nasdaq…
Sean Kidney, CEO of the CBI, told IFR he was hopeful the scheme, dubbed Green Bond Connect, would launch later this year. He said that the CBI was also in talks with parties on the mainland, including the People's Bank of China.
CityWire Private Wealth, Goodbye to greenwashing, Ishika Mookerjee
A look at certification of Asian green bonds on page 36 of CityWire magazine.
The Climate Bonds Initiative has been providing green certificates to issuances around the world in accordance with its published standards for the quality of the green asset and the issuer’s ability to track and report the use of proceeds. It recently got the green light to certify green bonds in China.
Market Realist, What drives the green bonds returns
A clear message about benefits of investing in green bonds in an insightful report from VanEck and Market Realist.
A new study by the Climate Bonds Initiative is the first to take an analytical approach to studying whether or not a green bond “premium” exists. The conclusion? It depends. Some green bonds have priced inside the issuer’s yield curve, some priced on it, and others have priced above.
Structured Credit Investor, 'Substantial' green ABS volumes eyed
An interesting insight into green securitization across various sectors.
Many of those at the forefront of promoting the current market for green bonds anticipate it to morph into a much larger one for green ABS within the next decade or so. "One of our medium-term objectives is to build on the current interest in green bonds to create appetite for ABS," confirms Kidney. "That will be a critical growth market for us."
Bonds & Loans, Beyond Green Bonds, Sustainability Certification Brings Broader, Deeper Benefits
An interview with Head of South American Markets at Vigeo Eiris – an approved verifier for Climate Bonds Standards programme.
In emerging markets, Vigeo Eiris supported the first green bond issued out of the Middle East, by National Bank of Abu Dhabi, several green bond issuances in Morocco, and has provided CBI certifications of green bond issuances in several markets including Brazil.
The Market Mogul, A New Trend: The Modern Day Relationship Between Millennials and Investing, Tiaan Coetzee
Worth-reading article in which author shares his observation of the investment habits of millennials, who - while reluctant to invest in general – are predominantly interested in “sustainable investing”
The priorities held by those Millennials who do decide to invest are far from those held by generation X or the baby- boomer generation. No longer is the act of investing only for financial returns; a lot greater emphasis has been put on socially responsible investments.
The Actuary, WCA’s 2017 Phiatus award recognises green credentials
Nick Silver, the co-founder of the Climate Bonds Initiative, was awarded Worshipful Company of Actuaries (WCA) Phiatus award for his efforts to create a market for green investments.
In its first three years the initiative comprised just Nick and Sean, but has now established more of a presence and influence, growing to 50 members of staff.
Thomson Reuters Foundation, China and India take different roads to green Asia’s infrastructure, Adela Suliman
Green finance agenda of China and India examined.
India and China, Asia’s two economic heavyweights, have taken starkly different approaches to how the region could green its infrastructure, a conference at London’s Asia House heard this week.
CityAM, The new emerging markets? Report says green finance will become "core element of global capital markets", William Turvill
Author presents outcomes of the TheCityUK and Imperial College Business School report, that predicts a huge role of green finance in the global capital marketplace with a leading role of the UK.
As well as highlighting UK’s strong position in the green bond market, with 14 listed on the London Stock Exchange last year alone, the report also drew attention to the work of the Green Investment Bank.
The Australian, Kangaroo bonds alternative to a lacklustre stock market
Author outlines the advantages of adding bonds to investors’ portfolios in the volatile market conditions and advises taking company’s ESG practices into account when making an investment decision.
Ouattara said investors were increasingly aware that if a company exhibits strong ESG practices, it is more likely to provide financial performance in the long term — and this applies to debt paper as well as equity.
Clean Technica, Record $56 Billion Green Bonds Issuance Witnessed In H1 2017, Smiti
Clean Technica summarizes data presented in Climate Bonds Initiative mid-year summary.
The global green bonds market has scored yet another record issuance during the first half of 2017. A record $56 billion was issued during the first six months of the year while the second quarter saw issuance of $30 billion, the Climate Bonds Initiative reported.
RenewablesNow, Global green bonds overtake 2016 total
RN reports on great news we shared with our blog readers in September – a month that saw green bonds issuance in 2017 overtake 2016 total. More here.
The record 2016 green bonds total of USD 81.6 billion has been surpassed and there are 94 days left to reach the CBI's longstanding USD-130-billion forecast for 2017.
Börsen-Zeitung, Green Bonds sollten Einfluss auf das Klima haben
Green Bonds sind eine der wachstumsstärksten Nischen im Finanzmarkt. Viele Marktteilnehmer argumentieren für die rasche weitere Expansion des Green-Bond-Marktes, um den Klimawandel aufzuhalten.
China
South China Morning Post, Going green: the changing face of corporate finance, David Broadstock
The author of the article stresses the fact that green finance that stormed China in recent months means companies face growing pressure to rethink workforce’s skillset. He however concludes that extra effort and cost associated with shifting to socially responsible business model does pays off. Green bonds investments are the perfect example.
It is the simplicity of green bonds, and their similarity to traditional financial products, that drives their appeal. There is little distinction between green and regular (or black) bonds. Since corporations frequently issue black bonds to help raise capital, they are familiar with the instrument.
The Telegraph, Capacity building key to growth of Chinese green financing, Wu Xiaobo
Ma Jun, chief economist of the research bureau of the People’s Bank of China has called for capacity building to scale up green financing, that he considers a part of Chinese national strategy.
Mr Ma also called for capacity building in the development of green financing products. He gave examples of how insurance products for green projects, asset-backed securities and carbon-emissions-rights collateral products could play a positive role in green financing, and urged banks, insurance, securities and asset management companies to do more research.
Shanghaiist, China is now looking to build nearly 300 'eco-cities' across the country, Máté Mohos
Chinese cities are facing a shift towards green urban development.
This is all made possible by China's move towards "green bonds" which have been supported by the China Securities Regulatory Commission (CSRC) since March. The bonds are aimed at helping regional governments finance "eco-cities" and other environmental-friendly projects.
China Briefing, Eco-Friendly Investment Opportunities in China: The Rise of Green Bonds, Maurizio Mazzoni
To solve its environmental issues, China needs the private capital to be in play – green bonds present a solution.
Green bonds will help businesses empower R&D departments financially, potentially allowing the Chinese market to become one of the most eco-friendly in the world.
Climate Bonds Standard Certified bonds
Indian Renewable Energy Agency (IREDA) – read more
Bloomberg, India’s Renewables Agency Lists Green Masala Bond In U.K.
The Indian Renewable Energy Development Agency has launched a new green masala bond on the London Stock Exchange's new International Securities Market to raise funds to finance renewable energy projects across India.
LiveMint, IREDA lists 5-year Green Masala Bond in UK, Aditi Khanna
The new green bond is certified by Climate Bonds Initiative, an international, investor-focused not-for-profit, which helps build robust and transparent assurance frameworks around green bond investment.
The Asset, IREDA prints lowest yield green Masala bonds, Chito Santiago
The Indian Renewable Energy Development Agency Limited (IREDA) garnered a strong investor demand when it priced on September 28 a 19.5-billion-rupee (US$300 million) green Masala bond at the lowest yield for any such issuance so far by an Indian issuer.
The Hindu Business Line, IREDA raises $300 mn via Green masala bonds at LSE, K R Srivats
London Stock Exchange is now the largest Masala Bond centre globally with 42 Bonds listed in total with an equivalent of over $ 6 billion.
Hindustan Times, Indian renewable energy agency's green ‘masala bond’ raises $300 mn in London, Prasun Sonwalkar
The green ‘masala bond’ on London Stock Exchange’s International Securities Market is certified by Climate Bonds Initiative, an international, investor-focused not-for-profit that helps build robust and transparent assurance frameworks around green bond investment.
PV Tech, Indian renewables financing agency raises US$300 million on London Stock Exchange, Tom Kenning
In a release, CBI said that the IREDA deal achieved the tightest ever yield in a public masala issuance, having been oversubscribed at 1.74x across 49 accounts - the highest in the masala space this year.
PV Magazine, India’s IREDA lists $300 million bond on London Stock Exchange, Sraisth
The new issuance is the fourth green bond to be listed by an Indian issuer on the London Stock Exchange.
Outlook India, India's renewables agency lists Green Masala Bond in UK, Aditi Khanna
IREDA provides financing for hydro, wind and solar energy projects, new and emerging technologies and for bio energy sectors.
The Industrial and Commercial Bank of China (ICBC) – read more
Global Capital, European Investors pile into ICBC’s €1.8bn green bond, Morgan Davis
The Industrial and Commercial Bank of China raised €2bn-equivalent from its three tranche offshore green bond debut, making it one of the largest green bond deals from a Chinese bank.
The Asset, European accounts flock to ICBC’s inaugural green bond issuance, Darryl Yu
Industrial and Commercial Bank of China’s (ICBC) Luxembourg branch on September 29 priced a US$2.15 billion equivalent debut green bond in three tranches, attracting strong interest from Asian and European accounts.
RenewablesNow, ICBC issues inaugural green bond
The One Belt One Road (OBOR) Green Climate Bond is the first green bond with Climate Bonds Certification for the Chinese bank, the Climate Bonds Initiative (CBI) said on Thursday.
Cape Town – read more
Bonds & Loans, CASE STUDY: Cape Town Wins Race to Issue Africa’s First Municipal Green Bond
The City of Cape Town successfully placed ZAR1bn in new green bonds this Summer to fund a raft of sustainability initiatives in the city, proving once again that cities are a natural fit for sustainable finance instruments. (…) The bond was accredited by Climate Bonds Initiative as compliant with its core use of proceeds criteria.
Climate Bonds State of the Market Report 2017
Responsible Investor, New CBI report sets out market target of $1trn by 2020, Daniel Brooksbank
Kidney was speaking at a Climate Week event in New York at which he presented the latest ‘State of the Market’ report on green bonds, which identifies an $895bn universe of ‘climate-aligned bonds’ (of which $221bn are labelled green bonds). That is up by $210bn on the 2016 number.
Institutional Asset Manager, Green and ‘climate-aligned’ bond universe now stands at USD895bn outstanding issuance
The 2017 report has a particular focus on cities, with ten case studies identifying existing best practice green city bonds and also opportunities for new city based green bond issuance.
Renew Economy, Policy uncertainty is blocking investment in low carbon assets, Emma Herd
Australian investors are interested to invest in low carbon assets. What they need is policy signals, supporting frameworks and scalable deals.
The large allocation to fixed income can be explained by the dramatic growth in green bonds. This looks set to continue with the latest Climate Bonds Initiative State of the Market 2017 report finding that US$895 billion in climate aligned bonds have now been issued globally, up from US$3bn in 2012.
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 debt instrument 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 financial merits or otherwise of any debt instrument or investment product 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.
Certification under the Climate Bond Standard only reflects the climate attributes of the use of proceeds of a designated debt instrument. It does not reflect the credit worthiness of the designated debt instrument, nor its compliance with national or international laws.
A decision to invest in anything is solely yours. The Climate Bonds Initiative accepts no liability of any kind, for any investment an 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 any other Climate Bonds Initiative public communication.
