Market
The Economist, What makes bonds “green”
The Economist explains what standards issuers can apply to their investments when issuing a green bond.
The Centre for International Climate and Environmental Research in Oslo (CICERO), a Norwegian climate research institute, is one of the largest providers of external review on green bonds; certification by the Climate Bonds Initiative (CBI), an NGO, is another option.
Financial Times, Green bond funds struggle to put capital to work, Jennifer Thompson
Fitch report findings showed that some green bond funds with tight investment criteria struggle to find fixed income products to invest in.
There is no shortage of green bonds being issued but funds that apply the most stringent criteria would struggle to find investible options, said Sean Kidney, chief executive of the Climate Bonds Initiative, a UK-based non-profit that promotes investments that combat climate change.
Investments & Pensions Europe, Fitch: Green bond fund sector prospects 'far from certain', Susanna Rust
I&PE also highlights challenges ahead of green bonds funds underlined in the Fitch report.
It cited the example of a green bond issued by Repsol, a Spanish oil and gas company, in May, which was shunned by some investors due to concerns about the compatibility between the company’s business and environmental goals.
Bloomberg, Largest Green-Bond Fund for Emerging Markets Nearing $2 Billion, Emily Chasan, Brian Eckhouse
Much better green bond funds’ news coming from IFC and Amundi.
The World Bank’s International Finance Corp. and European asset manager Amundi SA are targeting year-end to raise $2 billion for what is expected to be the world’s largest green-bond fund dedicated to emerging markets.
The Australian Financial Review, Why Tesla snubbed the 'green bond' label, keeping the fledgling market small, Emily Chasan
Tesla disappointed the green bonds market after issuing a perfectly “green” 1.5 bn bond without marking it so. It’ll be however included in our climate bonds universe.
Costs to certify an offering as green can vary significantly. Sean Kidney, chief executive and co-founder of the Climate Bonds Initiative, estimates annual certification costs at between $US18,000 and $US41,000. Tesla choosing not to label its bond green was a "missed opportunity" for a fledgling sector hungry for another marquee name, he said.
Reuters, Emerging climate bonds boom, but are they really green?, Claire Milhench
Reuters stresses concerns over the green value of some “green bonds” issued by emerging economies.
China accounts for over two-thirds of total emerging market green issuance and a fifth of the global tally, even though it is classed as the world’s bigger polluter by carbon emissions. It issued $23 billion of green bonds in 2016, up from just $1 billion in 2015, according to the Climate Bonds Initiative.
International Financial Law Review, Primer: green bonds
A well-prepared guide — backed by quotes from market players.
There is no consensus on an official definition of green bond. According to Climate Bonds Initiative chief executive Sean Kidney what matters when considering if the bond is green is what it’s going to be used for (use of proceeds), not the issuer.
ReCharge, ‘A transition to a low-carbon economy has to see fossil fuels finance green energy’, Anamaria Deduleasa
An interview with chief executive of the Climate Bonds Initiative.
‘If we’re going to make a transition to a low-carbon economy, we have to see fossil-fuels money to finance green. We would welcome oil and gas companies-issued green bonds, as long as those bonds are used to finance assets that are relevant in the transition period. But this requires ambition.’
Bonds & Loans, Exchanges Play a Crucial Role in Developing the Sustainable Finance Market
An interesting and in-depth interview with Robert Scharfe, CEO of the Luxembourg Stock Exchange, that has over half of world’s green bonds listed on it.
“Industry self-regulation, so far, has worked tremendously well. We consider frameworks like the Green Bond Principles and the Climate Bonds Standard, developed by the Climate Bonds Initiative, as best practice in the market.”
Bonds & Loans, Emerging Market Regulators Make Strides Building Green Bond Momentum
Another worthwhile article from Bonds & Loans.
Growing support for market-driven policies aimed at facilitating green issuance has created important wins for the sustainable finance segment, especially in emerging market countries like China, India, and Mexico.
RenewablesNow, OVERVIEW - Green bonds mid-year summary 2017
RenewablesNow republishes our summary of developments in the green bonds market in the first half of 2017.
The investor-focused not-for-profit organisation expects issuance to increase over the rest of the year and possibly exceed the current CBI estimate for 2017 of USD 130 billion. In 2016 issuance stood at USD 81 billion.
Environmental Finance, The prospects for green bonds and green sukuk in the Middle East
Check out the sukuk discussion that took place at Environmental Finance roundtable.
"I am an investor and I will accept having less coupon – I would say between five and 10 bps – from a green sukuk issuer if it trades like a regular sukuk in the market" - Mohammad Awad Al Duwailah, Kuwait Finance House
Establishing an official European green bond standard
Global Capital, EU panel calls for European green bond standard, duty of sustainability, Jon Hay
This is music to the ears of many green bond specialists. “Every man and his dog is saying ‘just tell me what is green’,” says Sean Kidney, chief executive of the Climate Bonds Initiative, an NGO that promotes green bonds, based in London.
Investment & Pensions Europe, HLEG recommends ‘enhanced’ ESG role for European supervisors, Susanna Rust
The European Insurance and Occupational Pension Authority could in future include environmental, social and governance (ESG) risks in its stress tests of pension funds, the European Commission-appointed High Level Expert Group (HLEG) on sustainable finance has suggested.
Pensions & Investments, European Commission group recommends more ESG disclosure, Sophie Baker
The group made a number of other early recommendations, including the introduction of an official European green bonds standard for green asset classes, as well as labels for sustainable and responsible investing and sustainable strategies.
Law360, EU Plans New Labels For Green Bonds To Boost Investment, Richard Crump
Commission Vice President Valdis Dombrovskis said improved labeling of financial products will be required to fund the transition to a low-carbon economy as part of global efforts to combat climate change.
Bloomberg, The Coming Backlash to 'Greenwashing' of Bonds, Luca Morreale
The group says labels could be an effective response to investor complaints on the lack of standards in the market.
Foreign language media coverage
Maxpress, Brasil já se estrutura para cumprir metas climáticas, afirmam líderes do setor produtivo
A China, atual líder na emissão desse tipo de título, atingiu o patamar de US$ 36 bilhões em 2016, volume que o Brasil pode alcançar caso comece a estruturar projetos de longo prazo. “Temos uma carteira de ativos naturais incomparável com qualquer outro país”, disse Thatyanne Gasparotto, gerente de relacionamento do CBI.
Börsen Zeitung, Nachhaltig sowie umweltgerecht leben und wohnen
Schließlich wächst am Kapitalmarkt die Nachfrage nach nachhaltigen Wertpapieren seit einiger Zeit stark. Nach Angaben der Climate Bonds Initiative hat sich das Neuemissionsvolumen an Green Bonds - ökologischen Anleihen - im Jahr 2016 mit 81 Mrd. US-Dollar im Vergleich zum Vorjahr nahezu verdoppelt.
China
Euromoney, Green means go for Chinese regulators, Morgan Davis
Slowdown of Chinese issuance in 2017, role of regulators, standards, coal-green bonds and more – all that covered in an insightful article from Euromoney.
Like the PBoC/EIB initiative, the CBI is also working on developing standards for green financing, including policy recommendations for the PBoC and collaborating on principles of responsible investment with the Asset Management Association of China.
South China Morning Post, Policy support, higher standards seen boosting China’s green bonds market, Karen Yeung
SCMP with positive outlook for the Chinese green bonds market.
But China’s determination to address environmental challenges – such as air, soil and water pollution – and to encourage greater capital flows into green projects, are likely to improve investor confidence and the performance of green bonds, analysts said.
The Market Mogul, How Green Bonds Could Develop China’s Fixed Income Sector, Ivan Draganov
Green bonds can be a driving force for development of the fixed-income sector in China that now accounts only for 11 percent of the total household and corporate debt.
Developing a green bonds market in China could be a sustainable solution, while further helping the country to attract Foreign Direct Investments (FDI) and establishing China as a leader of the climate-change movement.
South China Morning Post, Chinese accountants see rising demand for ‘green’ certification work in wake of food scandals, Enoch Yiu
Tong noted that there are two internationally recognised green bond standards – one issued by the International Capital Market Association, and the other by Climate Bonds Initiative.
Climate Bonds Standard Certified Bonds
REC
At the beginning of the summer, the Rural Electrification Corp of India (REC) issued a certified Climate Bond for USD 450m. See what the media were saying.
Business Green, India's agency for rural electrification raises $450m with first green bond, Michael Holder
India's state-owned Rural Electrification Corporation (REC) has raised $450m for climate-friendly projects through its first ever green bond, which was admitted to trading on the London Stock Exchange.
Dawn, Green bonds become increasingly popular, Anand Kumar
“This certified bond will help bring green energy to rural Indian villagers and clean power to where it’s needed most,” said Sean Kidney, CEO and co-founder of Climate Bonds Initiative. “It’s another step towards the nation’s 2022 renewable energy target.”
Bonds & Loans, India’s Rural Electrification Corporation Debuts a US$450mn Green Bond
Notably, the green bonds have been certificated by the Climate Bond Initiative (CBI), while the “Green Bond Framework” formulated by REC has been verified by KPMG.
Money Control, India's Rural Electrification Corporation lists Green Bond in UK
It was 3.9 times oversubscribed on the final order book and secured strong international investor interest (…).
Energy Infra Post, Rec Raises USD 450 Mn Through Green Bonds
“REC has become the first Indian PSU to issue USD green bonds and raised USD 450 million from international markets,” REC said in a statement.
Energy World, Rural Electrification Corporation of India launches first Green Bond in London
The state-owned company, which finances and promotes power sector projects in India, will use the proceeds of the Climate Bonds Initiative certified green bond to finance environmentally friendly projects across India.
India Today, REC raises USD 450 mn through green bonds
It said that the bonds have been issued at a yield of 3.965 per cent.
Clean Technica, Rural Electrification Corporation Of India Lists $450 Million Green Bond At London ISM, Saurabh Mahapatra
The green bond has a maturity of 10 years with an annual yield of 3.965 per cent.
Azure Power
India’s Azure Power Energy issued its inaugural green bonds certified under the Climate Bonds Solar Criteria.
Bonds & Loans, Azure Power CEO on Building Green into Corporate DNA
“We certified the bond through the Climate Bonds Initiative, and there was nothing particularly cumbersome for us in going through that process, in part because much of what was being asked for in terms of data and disclosure were things we already voluntarily do.”
The Economic Times, NYSE-listed Azure Power raises $500 million from sale of bonds, Mohit Bhalla
The sale of bonds by Delhi-based Azure Power — (…) — is said to have attracted bids for $1 billion, or two times the size of the offering.
PV Magazine, India: Azure Power to issue $500m solar green bond, Ian Clover
“The transaction is aimed at financing Azure Power’s existing and future eligible solar power projects, which promote sustainability, while optimizing financial costs and diversifying sources of funding,” said Azure Power CEO and chairman Inderpreet Wadhwa.
PV Tech, Azure Power to issue US$500 million solar green bond, Conor Ryan
Azure Power had also - been assigned an SP 1A rating - the top credit rating - by the ICRA, one of India’s leading rating agencies.
RenewablesNow, India's Azure Power to issue USD-500m solar green bond
The bond, which has been certified as “green” by the Climate Bonds Initiative, matures in 2022.
The Hindu Business Line, Latham & Watkins advises on $500-mn Azure Power Green Bond Offer
Azure Power is a leading solar power producer in India with a portfolio of over 1,000 MWs across 18 states.
GreenTechLead, Azure Power Energy to issue green bond
The company is offering the bond to eligible yield investors who have a specific mandate or portfolio for buying green bonds.
Cape Town
In July Cape Town issued a Climate Bonds Standard certified green bond (4 times oversubscribed!). Here are media reports.
Business Day, Cape Town’s first green bond auction nets R1bn, Bekezela Phakathi
The City of Cape Town’s first green bond auction exceeded expectations during a closed bidding process on Wednesday.
Eyewitness News, City of CT raises R4.3bn with 'green bond', Lindsay Dentlinger
Certified by the Climate Bonds Initiative, it's been awarded a GB 1 rating by Moody's.
BizNews, Investing in green bonds: Cape Town raises R1bn to boost eco-friendliness, Alec Hogg
(…) they went through an accreditation process through the Climate Bonds Initiative, which basically involved adhering to set criteria applicable to their various sectors.
Eyewitness News, City of CT to use money raised from green bonds for climate change projects, Lindsay Dentlinger
The city will use the money to buy electric buses, introduce energy efficiency measures in its buildings as well as introduce water management initiatives.
Contact Energy
Kiwi firm Contact Energy has launched an NZD1.8bn Green Loan Borrowing programme certified under the Climate Bonds Standard.
Institutional Asset Manager, Contact Energy secures Climate Bonds certification
Sean Kidney, CEO Climate Bonds Initiative, says: "This NZD1.8 billion (USD1.3 billion) Green Borrowing Programme from Contact Energy includes one of our single largest Certifications to date and is a significant global boost for best practice standards in green finance. (…)
RenewablesNow, New Zealand's Contact Energy certifies debt instruments as green
All of the company's geothermal assets, excluding Ohaaki power station, qualify to be included as eligible green assets, while its hydropower stations could not be included yet as Climate Bonds Initiative is still to release hydropower criteria.
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.
