Green Bond Surge Expands

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Solar photovoltaic power generation in Hong Kong, China. (Photo by WING / Electrical and Mechanical Services Department Headquarters) Creative commons license via Wikipedia.


By Sunny Lewis

LONDON, UK, April 18, 2017 (Maximpact.com News) – The market for Green Bonds is developing rapidly, proving effective at channeling money into environmental projects. Offering insights into this fledgling, but fast-growing, market, “Environmental Finance,”the London-based online news and analysis service, has just announced its latest Green Bond Award winners.

The 25 awards recognize best practices, or significant issues in the development of the green bond market, during 2016. The winners were selected by a panel of judges made up of some of the world’s biggest green bond investors.

Poland was honored for the first ever issuance of Green Bonds by a national government. The world’s first sovereign green bonds, issued in December, will finance environmental projects in the country. Poland has been heavily reliant on coal as its energy source; its green bond auction represents a shift to more sustainable energy production.

Deputy Finance Minister Piotr Nowak said the green bonds would allow Poland to further diversify its investor base.

Global law firm White & Case, which advised the Polish Ministry of Finance on the €750 million issuance of its Green Bonds, took the award for best law firm.

Winners include the Dutch mortgage corporation Obvion, which won the title of best asset-based bond for its landmark green residential mortgage-backed security.

The Dutch bank Rabobank took the top spot for the second year running as the best bank issuer of green bonds. Rabobank is a major financier of both onshore and offshore wind farms, holding a Top 10 position worldwide and is the market leader in the United States, Canada and the Netherlands.

Rabobank has developed a Green and Sustainability Bond Framework for the two different types of bonds. Green bonds fund environmental projects, while sustainability bonds fund projects with a social impact that may or may not have environmental benefits.

Rabobank Green Bonds fund renewable energy projects such as solar and wind, while Rabobank Sustainability Bonds fund loans provided to small and medium-sized enterprises with sustainability certifications on products, processes or buildings.

Industrial Bank of China was named as the biggest bank issuer, and Bank of America Merrill Lynch as the biggest underwriter.

Green Bonds enable capital-raising and investment for new and existing projects with environmental benefits. In the past, most green bond issuers have been development banks and financial services firms.

In the United States green bonds have been issued by municipalities, power companies and a few other corporate entities.

Now this year, Environmental Finance Bond of the Year winners are U.S. corporate giants Starbucks and Apple.

In February 2016, Apple, headquartered in California’s Silicon Valley, issued a $1.5 billion green bond, boosting the young market’s prospects for attracting corporate issuers.

In May 2016, the Seattle-based coffee chain Starbucks issued a first-of-its-kind $500 million U.S. corporate sustainability bond. The funding will enhance sustainable coffee supply chain management and the operation of farmer support centers in eight coffee growing regions, as well as loans to farmers made through Starbucks Global Farmer Fund.

Bank of America Merrill Lynch was named again this year as the winner of both Best underwriter: corporate, and Best underwriter: municipality.

Click here to read about all the winners.

Environmental Finance also publishes the Green Bond Database, a table listing the 25 most recently issued green bonds.

Meanwhile, Canada is emerging as a green bond market force.

The Royal Bank of Canada (RBC) Capital Markets Green Bond Conference in Toronto on April 10 saw release of a report showing Canada’s capacity for green bond issues will be at least $56.3 billion in fiscal 2017/18.

The figures reported by the award-winning “clean capitalism” magazine “Corporate Knights,” are based on an analysis of the capital requirements, debt-raising capacity, and intended uses of proceeds on the part of 21 of Canada’s largest public and private bond issuers.

There’s clear momentum in green bond markets, but it’s still seen as a niche and perhaps even challenging financing tool,” says “Corporate Knights” CEO Toby Heaps. “A billion dollars worth of bonds formally labeled as green are currently being issued in Canada annually. This analysis shows there’s potential for exponential growth.

The analysis took a bottom-up approach to quantifying potential bond issues and is the first of its kind in Canada.

The report shows that in 2017/18, the 21 potential bond issuers have a need and capacity to fund $23.60 billion worth of “explicitly green projects” such as public transit, renewable energy, and loans for electric vehicle purchases and green power projects.

The Canadian potential bond issuers have a further need and capacity to fund $32.7 billion worth of “potentially green projects” such as energy efficient construction or retrofitting of public buildings and installation of broadband.

In Latin America, the Mexican government’s development bank Nacional Financiera, or Nafin, has tapped the green bond market with a issuance of $500 million in a deal that was five times oversubscribed.

China, too, is busily developing its green bond market.

More than 500 green finance experts from regulators and industry gathered at the annual Green Finance Summit in Beijing on April 15, the surging number of attendees reflecting the increased attention being placed on greening the financial system, reports Andrew Whiley, writing for Climate Bonds Initiative, an investor-focused not-for-profit based in London.

The Green Finance Summit has been held annually since 2015 by the China Financial Society’s Green Finance Committee which operates under the auspices of the People’s Bank of China.

Major issues on the summit’s agenda this year included:

  • opportunities and challenges facing green credit and green bond markets
  • establishment of green financial systems at a local level
  • innovation in green financial products

The summit saw the debut of the “Study of China’s Local Government Policy Instruments for Green Bonds” report.

Prepared by Climate Bonds & Syntao Green Finance, the new report examines green bond developments at a local government level and sets policy recommendations for growth.

Tracking the rapid growth in Chinese green bond issuance from almost zero in 2015 to RMB 238 billion (US$36.2 billion) or 39 percent of all green bonds issued around the world in 2016, the report outlines the policy steps taken by government regulators and stock exchanges in supporting such rapid growth.

China’s new Guidelines, issued by seven Chinese government ministries last September, call for government ministries and financial institutions to collaborate on the development of a wide range of financial instruments to move money from high-polluting to low-polluting sectors, including green credits, green bonds, green insurance, green equity indices, green development funds and carbon finance.

The guidelines are contained in the report “Establishing China’s Green Financial System” written by the Green Finance Task Force of the People’s Bank of China.

Two recommendations are particularly relevant to the international community’s current concerns about China’s financial system, wrote the World Resources Institute’s Shouqing Zhu last September.

The first relates to green bonds. Since the People’s Bank of China and the National Development and Reform Commission separately issued their directives on green bonds at the end of 2015, the market has witnessed exponential growth.

Following this rapid growth, there have been concerns about “greenwashing,” or businesses using green bonds to finance polluting projects instead of green ones due to a lack of a solid reporting and verification system.

Zhu writes, “The Guidelines call for harmonization of the two domestic green bond standards and development of third-party verification bodies in line with international practices.

International best practices are defined by the International Capital Market Association (ICMA) a UK-based industry membership association that publishes the Green Bond Principles .

Updated as of June 2016, the Green Bond Principles (GBP) are voluntary process guidelines that recommend transparency and disclosure and promote integrity in the development of the Green Bond market by clarifying the approach for issuance of a Green Bond.

The Green Bond Principles provide issuers guidance on the key components involved in launching a credible Green Bond. They are intended to aid investors by ensuring availability of information necessary to evaluate the environmental impact of their Green Bond investments. They assist underwriters by moving the market towards standard disclosures which will facilitate transactions.


Featured image: Trianel Windpark Borkum is an offshore wind farm of 40 turbines in the North Sea off the north coast of The Netherlands near the German border. A second stage of development is planned to start delivering power in 2019. It was financed in part by Rabobank. (Photo courtesy Trianel.com) Posted for media use. 

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Stock Exchanges Adopt Sustainability Reporting

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Trading floor at the New York Stock Exchange, May 15, 2014 (Photo by Scott Beale / Laughing Squid ) Creative Commons license via Flickr

By Sunny Lewis

GENEVA, Switzerland, December 13, 2016 (Maximpact.com News) – As many as 21 more of the world’s stock exchanges could introduce sustainability reporting standards before the end of the year, bringing the total number to 38, says an official with the United Nations Conference on Trade and Development .

Seventeen stock exchanges already recommend that their listed companies report on environmental, social, and governance, known as ESG, issues.

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James Zhan, director of investment and enterprise, UNCTAD (Photo courtesy UNCTAD) Posted for media use.

And James Zhan, director of the Division on Investment and Enterprise at UNCTAD, which co-organizes the UN’s Sustainable Stock Exchanges (SSE) initiative, said that 23 stock exchanges have committed to introduce new standards on sustainability reporting in 2016.

Just two have implemented so far, but more are expected to introduce new standards before the end of the year or early in 2017, he said.

The upsurge in sustainability reporting standards follows the launch of the SSE Model Guidance on Reporting ESG Information to Investors.

Twenty-one stock exchanges have confirmed to us they will introduce new guidelines either this year or within the first quarter of next year, and we know that many of them are close because they have posted draft guidelines on their websites for comment and discussion,” Zhan said.

Sustainability reporting has come of age,” he said, adding that the UN and nongovernmental organizations are no longer the only ones to advocate sustainability reporting and that “the markets themselves are demanding it.

In a newly published biennial report “2016 Report on Progress” on the progress made by Sustainable Stock Exchanges, SSE, the authors examined the environmental, social, and governance practices of 82 stock exchanges and found that exchanges are increasingly taking actions that contribute to the creation of more sustainable capital markets.

The report was prepared for the fifth SSE Global Dialogue held in September in Singapore. Representatives from 16 countries, including stock exchange chief executives, institutional investors and companies, senior government policymakers and United Nations representatives gathered to discuss the theme, “A New Global Agenda.

One development in the new agenda is the number of exchanges now partnering with the SSE initiative. Fifty-eight stock exchanges, representing over 70 percent of listed equity markets, have made public commitments to advancing sustainability in their markets and are now official SSE Partner Exchanges.

Market transparency is gaining in acceptability too. Twelve exchanges currently incorporate ESG reporting into their listing rules and 15 provide formal guidance to stock issuers.

The progress of SSE’s campaign to encourage exchanges to issue guidance signals that the industry is ready to take the lead when presented with practical opportunities to develop more sustainable markets.

Another significant development is the growth of green finance. Green bond listings grew considerably and there is increasing interest among equity investors in issues like stranded assets and carbon risk.

The Luxembourg Stock Exchange now lists 110 green bonds and represents half of all listed green bonds globally.

Today 11 stock exchanges offer green bond listings, demonstrating that exchanges are already supporting the transition to a green economy and there is room for further growth.

ESG indices remain the most popular sustainability instrument among exchanges, with 38 of 82 exchanges providing them.

Upon joining the ESG guidance campaign in September 2015, Oscar Onyema, CEO of the Nigerian Stock Exchange, said, “The Nigerian Stock Exchange is using its unique platform to advocate for the adoption of global corporate governance standards and sustainable business practices. We are committed to developing principle-based sustainability reporting guidelines and a roadmap that will inspire sustainability imperatives in the Nigerian capital market.

Looking at the policy landscape, many governments, too, are encouraging corporate disclosure of ESG factors, with 30 of the largest 50 country economies having at least one regulation on disclosure of ESG factors in place.

Government involvement on the investment side is less developed, with eight of the 50 countries implementing an investor stewardship code that addresses ESG factors.

Despite many reasons to be optimistic, the SSE’s data show that more action is needed if stock exchanges are going to play an important role in promoting the reorientation of financial markets to support the Sustainable Development Goals.

By reporting on sustainability issues, companies tend to act more sustainably too, Zhan said. They may have an incentive to do so, since analysts increasingly see a positive correlation between sustainable performance and strong financial performance too.

Zhan said the SSE initiative had helped spread corporate sustainability reporting, by distributing model guidelines for use by the stock exchanges themselves and their listed members.

The SSE initiative works to “advance sustainability” in the markets. It is organized by UNCTAD, the United Nations Global Compact, the United Nations Environment Programme Finance Initiative (UNEP-FI) and the Principles for Responsible Investment.

The private sector is seen as critical to achievement of the UN’s Sustainable Development Goals , and the SSE initiative is viewed as an important channel to get the private sector more involved in accomplishing these goals.

Launched by UN Secretary-General Ban Ki-moon in 2009, the SSE initiative now includes 58 stock exchanges, representing more than 70 percent of listed equity markets, and some 30,000 companies with a market capitalization of over US$55 trillion.

The SSE initiative was built on the demand from exchanges for a place to come together with investors, companies and policymakers to share good practices and challenges in a multi-stakeholder environment.

Since 2012 when the first five stock exchanges – BM&FBOVESPA in São Paulo, Brazil; Borsa Istanbul; Egyptian Exchange (EGX); Johannesburg Stock Exchange (JSE); and Nasdaq – made a public commitment to advancing sustainability in their market, the initiative has grown into a global partnership platform including most of the world’s exchanges.

Through the SSE, exchanges have access to consensus and capacity building activities, guidance, research and other support to assist in their efforts to contribute to sustainable development.

Market expectations are shifting quickly and we see more and more stock exchanges viewing sustainability reporting as necessary and inevitable,” said Anthony Miller, UNCTAD’s SSE initiative coordinator. “Those expectations create their own momentum.”

The report concludes with recommendations for exchanges that range from introducing ESG reporting guidance to promoting gender-diverse boards to listing green bonds.

By putting the recommendations into action, exchanges can take leadership roles in creating more stable capital markets and a sustainable society.


Featured image: Nasdaq displays the SSE logo in Times Square, New York City, March 2016 (Photo courtesy UNCTAD) Posted for media use

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Green Grow the Climate Awareness Bonds

By Sunny Lewis

LUXEMBOURG, October 29, 2015 (Maximpact News) – The European Investment Bank is the first issuer to link its individual green bonds to the projects they finance for the sake of transparency and accountability ahead of the Paris climate talks.

As the planet warms, growing cities and developing countries need airports, roads, buildings, water systems and energy generation that can withstand rising temperatures and extreme weather.

Green bonds, called Climate Awareness Bonds or CABs, are a new and increasingly popular source of climate-friendly funding for these expensive projects.

Green bonds were created to increase funding by accessing the $80 trillion bond market and expanding the investor base for sustainable projects. They are dedicated exclusively to climate mitigation and adaption projects, and other environmentally beneficial activities.

The EU’s nonprofit long-term lending institution, the European Investment Bank (EIB), the world’s largest issuer of green bonds, has just announced that it is enhancing the transparency of its reporting on Green Bonds by showing bondholders precisely what their money does.

The bank is going this direction to be in step with the Paris Climate Summit set for November 30 through December 11. There, world leaders will sign a legally-binding universal agreement to limit global warming to 2 degrees Celsius above pre-industrial levels.

Bertrand de Mazières, director general of finance, European Investment Bank, said, “Ahead of the Paris climate conference, COP 21, EIB is supporting EU’s leadership in climate policy through innovation in the green bond market.”

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“Green bond issuance has grown substantially, and has the potential to contribute significantly to addressing the 2 degree Celsius target,” said de Mazières.

Transparency and accountability are key themes of the European Union’s position for the Paris climate conference, as adopted by the EU Council on September 18.

“The Paris Agreement must provide for a robust common rules-based regime, including transparency and accountability rules applicable to all Parties…” the EU Council declared.

In harmony with this declaration, earlier this month the EIB extended its transparency effort by reporting on the allocations of proceeds from individual CABs to individual projects, beginning with allocations made in the first half of 2015.

De Mazières explained why, saying, “Granular transparency on the allocation of the CAB-proceeds helps this process by bringing investors more precise insights and promoting best practice.”

The disclosure of the allocation of individual CAB-proceeds to individual projects establishes a direct link between the two.

EIB can deliver this level of information due to an upgrade of its internal procedures and IT-infrastructure following extensive due diligence in 2014 and 2015.

Today, the bank records CAB-eligible disbursements and allocates CAB-proceeds to them on a daily, first-in first-out basis.

This enables detailed monitoring and reporting of allocations, and helps to complete the set of information available to investors.

Eila Kreivi, EIB’s director and head of Capital Markets, said, “Investors are increasingly eager to receive clear information on the use of proceeds and the impact of eligible projects. EIB’s launch of detailed reporting in these areas this year has established an important reference.”

“Transparent management and reporting are essential to further grow the green bond market,” she said. “At the same time, one must be careful not to overload issuers with administrative hurdles. Striking the right balance will be a key challenge for the market.”

EIB’s first Climate Awareness Bond pioneered the green bond segment in 2007 and the EIB is the largest issuer of Green Bonds to date.

In September 2014, together with other multi-lateral development banks, the EIB committed to maintaining a developmental role to spur further sustainable growth of the green bond market.

In response to a recommendation in the Green Bond Principles “to help establish a model for impact reporting that others can adopt and/or adapt to their needs,” the African Development Bank, International Bank for Reconstruction and Development and the International Finance Corporation (IBRD) have joined EIB in a first harmonization proposal for bonds that fund renewable energy and energy efficiency projects. It is now being circulated for discussion.

Meanwhile, the EIB is popularizing its CABs across the world, entering the Canadian market for the first-time this week.

The Climate Change Support Team, working for United Nations Secretary General Ban Ki-moon has described green bonds as very attractive to institutional investors, with demand for green bonds much larger than the supply.

EIB’s issuance of €2.7 billion equivalent in Green Bonds this year to date has brought total CAB issuance to over €10 billion and confirms EIB’s position as the world’s largest issuer of Green Bonds.


Award-winning journalist Sunny Lewis is founding editor in chief of the Environment News Service (ENS), the original daily wire service of the environment, publishing since 1990.

Featured image: shutterstock – royalty-free stock images
Slide Show images: a) Gemasolar, a 15 MW solar power tower that uses molten salt for receiving and storing energy, is located in the city of Fuentes de Andalucia, Seville, Spain. (Photo by Markel Redondo/Greenpeace under creative commons license via Flickr). b) Wind turbines generate electricity at Europoort, an area of the Port of Rotterdam and the adjoining industrial area in The Netherlands.  (Photo by Frans de Wit under creative commons license via Flickr)
Image 01: Bertrand de Mazières, director general of finance, European Investment Bank (Photo by Crédit Agricole, sometimes called the Green Bank, a French network of cooperative and mutual banks)