Posts

Green Bond Market Shoots Up

greenshootsengland

By Sunny Lewis

 WASHINGTON, DC, October 27, 2016 – (Maximpact.com News) – The green bond market reported a worldwide milestone in August when aggregate green bond issuance topped US$150 billion for the first time since the World Bank issued the inaugural green bond in 2008. It was a US$400 million four-year bond issued in Sweden during the depths of the 2008 financial crisis.

 Green bonds finance projects that achieve energy efficiency, pollution prevention, sustainable agriculture, fishery and forestry, the protection of aquatic and terrestrial ecosystems, clean transportation, sustainable water management, and the cultivation of environmentally friendly technologies.

 Green bonds are similar to traditional bonds in terms of deal structure, but they have different requirements for reporting, auditing and proceed allocations.

A green bond is distinguished by its “use of proceeds” pledge, which earmarks the proceeds from sale of the bonds for specific projects with environmental benefits. Marketing and branding values not available to traditional bonds arise from this difference.

With the heightened awareness of global environmental and climate challenges, green bonds are increasingly seen as a tool that could allow the private sector to take an active part in raising the funds needed to put our society on a more environmentally sustainable footing,” wrote Charles Smith in an article ‘How the green bond market works‘ for the European Bank for Reconstruction and Development (EBRD) earlier this month.

 The EBRD first started issuing green bonds in 2010, and its portfolios of green projects now include 261 investments worth a total of €2.7 billion.

Smith, who is responsible for the day-to-day running of green bond issuance for the EBRD, views green bonds as “a new tool for helping the private sector green the world.”

Mobilising green projects is the goal but, ultimately, I think it is a much larger transition process,” Smith told a roundtable organized by the publication “Environmental Finance” last November. “It is about changing the way companies and entire societies think about and engage with the environment. And that is not done in a day.

At the same roundtable, some of the challenges were outlined by Yo Takatsuki, associate director, Governance and Sustainable Investment, BMO Global Asset Management. BMO Financial Group is a service mark of the Bank of Montreal.

I think one of the challenges is that the underlying assets that are being financed through green bonds are mostly renewable energy or energy efficiency. If we want a broader range of corporates to come to the market we need to encourage opening up the focus of projects beyond just climate change,” said Takatsuki.

I think people are struggling with impact reporting,” Takatsuki said. “For renewable energy, it is relatively straightforward, but for other types of projects the impact reporting is either not agreed or is not sufficiently established.

Smith comments on this issue in his article on the EBRD site, writing, “The reporting is made more complicated by the broadening range of issuer types – from banks to corporates in various industries – with different green assets and operating in dissimilar regions.

This makes comparing the bonds challenging to say the least, and the reputational risk for the issuer in making a mistake in the reporting could be considerable,” Smith writes.

Despite the challenges, the green bond market is growing quickly.

In 2015, green bond issuance hit what was then a record high, amounting to US$41.8 billion worth of investment worldwide. Compare that to 2012, when green bond issuance worldwide amounted to just $2.6 billion.

Of all the green bonds issued in 2015, $18 billion worth was issued in the European Union and $10.5 billion was issued in the United States, making these regions the leaders in the green bond initiative.

India and China are expected to get more involved in this type of investment in the near future.

The World Bank is a important issuer of green bonds. The bank has been very active through the first half of 2016, especially in the United States, where its issuances total over US$496 million and in India, where its issuances total over US$2.7 billion Indian rupees.

World Bank green bonds finance projects such as India’s Rampur Hydropower Project, which aims to provide low-carbon hydroelectric power to northern India’s electricity grid.

The World Bank Green Bond raises funds from fixed income investors to support World Bank lending for eligible projects that seek to mitigate climate change or help affected people adapt to it.

The product was designed in partnership with Skandinaviska Enskilda Banken (SEB) to respond to specific investor demand for a triple-A rated fixed income product that supports projects that address the climate challenge.

 Since 2008, the World Bank has issued over US$9 billion equivalent in green bonds through more than 125 transactions in 18 currencies.

World Bank Vice President and Treasurer Arunma Oteh said, “We have a responsibility to our clients to help them both recognize and respond to the risks that climate change poses.” 

To date, green bond issuer groups include supranationals, government agencies, cities, states, and also corporate entities.

Investors have expressed a desire for more choice of products for their growing portfolios – green bonds from more issuers and more diverse types of green bond products that offer different risk profiles, according to the World Bank.

panamawindfarm

Green-bond supported wind farm in Penonome, Panama. (Photo by Alessandra Bazan Testino / International Finance Corporation) Posted for media use

There are several types of tax incentives policy makers can put in place to support the issuance of green bonds. The incentives can be provided either to the investor or to the issuer.

With tax credit bonds, bond investors receive tax credits instead of interest payments, so issuers do not have to pay interest on their green bond issuances.

An example of tax credit bonds in the area of clean energy is the U.S. federal government Clean Renewable Energy Bonds (CREBs) and Qualified Energy Conservation Bonds (QECBs) program. The program allows for the issuance of taxable bonds by municipalities for clean energy and energy conservation, where 70 percent of the coupon from the municipality is provided by a tax credit or subsidy to the bondholder from the federal government.

With direct subsidy bonds, bond issuers receive cash rebates from the government to subsidize their net interest payments.

This structure also is used under the U.S. federal government CREBs and QECBs program.

With tax-exempt bonds, bond investors do not have to pay income tax on interest from the green bonds they hold, so the issuer can get a lower interest rate. An example is tax-exempt bond issuance for financing of wind projects in Brazil.

Green bond issuers report both use of proceeds and the impact achieved. Still, specific reporting requirements are under development and currently non-standard.

A coalition of organizations including leading issuers and buyers are working together to establish reporting procedures. Anticipated reporting standards include third party review by an auditor of the sustainability of qualifying projects, and annual reporting on a universal template.

Meanwhile, 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 are intended for broad use by the market, according to the World Bank. They provide issuers guidance on the key components for launching a credible Green Bond; they aid investors by ensuring availability of information for evaluating the environmental impact of their Green Bond investments; and they assist underwriters by moving the market towards standard disclosures that will facilitate transactions.


Billboard- 970x250-min-min

Image: Green shoots growing in the kitchen gardens, Tatton Park, Cheshire, England, May 2010 (Photo by Will Clayton) Creative Commons license via Flickr

Sustainable Goals and Social Impact: Do You Have What you need to succeed?

maximpact-newssletter-image-165820

By Maximpact

Sustainable Goals and Social Impact: 

Do You Have What you need to succeed?

At the nexus of change Maximpact.com is a work space for projects, businesses, ideas and endless opportunities.  A global marketplace of qualified consultants, experts and services.

Maximpact.com today announced the launch of their consulting and advisory services to support the development of projects, businesses and funds in the circular, impact and sustainability sectors. Aligned with the UN Sustainable Development Goals, Maximpact offers over 185 services to 20 different sectors including agriculture, assessment, community, environment, forestry, fisheries, water, waste management, renewable energy, women empowerment and more…

Existing customers have welcomed the diversity of the rich suite of services and it’s ease of use saving them both time and money. 

Customers at Maximpact can choose from both packaged or tailored support development and support services to assist their project or business at any stage of development. With access to pre-selected resources, an extensive network, knowledge and skills from around the world customers are well equipped in a rapidly changing world.

With hundreds of pre-qualified experts, project mangers and thousands of NGOs with experience in many thousands of projects worldwide, sourcing hard-to-find consultants, services and partners has never been easier than through Maximpact’s one-stop-shop.

By streamlining and simplifying the process of project and business development Maximpact has helped its clients save up to 65% in time and money, that is a welcome change to any one’s bottom line.

Difficult searches for good resources is now a thing of the past as users benefit from a unique Project Search Map allowing them to find experts quickly based upon project, geography, sector, language and expertize. Maximpact has once again made  complex tasks easy.

After finding the right expert, clients can book a call with the expert of their choice, receive a phone recording of their call and if they wish can proceed to hire the expert for their project online.

Services Offered

The new support and development services provided by Maximpact are designed for all projects, businesses and funds.

Project Services

Project services deliver resources and solutions to support, develop and improve projects at any stage of their development and cycle. Maximpact will tailor consulting and project services to find the right solution for the most complex challenges. Services cover different stages of project cycles such as: 

  • Consultation
  • Project initiation and planning
  • Assessment
  • Implementation
  • Capacity building
  • Visibility, communication and networking

Business Services

Tailored advisory services addresses the challenges businesses face in a rapidly changing marketplace. Maximpact offers a wide range of business services and solutions to suit the unique needs of each client. Assisting to plan, solve problems, mitigate risk, fund and source market opportunities through Maximpact’s global network.

Services cover different stages of business cycles such as: 

  • Consultation
  • Corporate Finance
  • Assessment
  • Strategy
  • Capacity Building
  • Operations and Supply chain

Investment Ready Services include packaged business services to suit the budget of all businesses.

Services cover different stages of business cycles such as:

  • Business plans and financials
  • Business valuations
  • Due diligence

Fund Services

Unique investment fund services have been designed to streamline processes and help improve the funds’ efficiency and competitiveness. By offering expert advice in 20 sectors we are able to deliver tailored services to the needs of each fund.

Services offered to funds such as:

  • Sector specific advice and market study
  • Investment sourcing 
  • Investment filtering 
  • Financial due diligence / auditing 
  • Investment analysis and reports
  • Acceleration of market-ready investments

Leveraging our unique global network and services Maximpact  delivers expertise, improved efficiency, real-time market knowledge and decision-making capabilities.


Tom_Holland_imageTom Holland, Founder and CEO of Maximpact.com comments:

Since Maximpact’s inception years ago we are dedicated and continue to focus on building our vision. Bringing together those working in silos of activity and to group together like-minded communities wishing to create good impact and a more sustainable future for us all. In doing so our community of over 90,000 includes hundreds of qualified experts, consultants and services in over 173 countries. Our expert community is expected to grow to 1,000 by year end.  New project and business activity continues to increase and will grow further as we welcome the thousands of project managers and NGOs who will become active in our network.

Visit us and find our out more about www.Maximpact.com


Billboard- 970x250-min-min

Achieving My Max Impact

Achieving_My_Max_ImpactCan I maximize my impact? That’s a fair question many of us raise. I am convinced that your investments, your ideas and your work have a potential you haven’t tapped into yet.

The more we understand what and how we are able to contribute, the bigger our impact will be. Often our pursuit to contribute gets jeopardized by what we don’t understand about the baggage we still carry with us from the time when our thoughts and deeds were primarily focussed on doing business the old fashioned way: meeting business targets and our own personal needs and wants, first and foremost. And let’s be honest, we all had this time in our lives when the ecosystem, people and planet came secondary, if not last.

I suggest you grab a cup of coffee (or tea, if you prefer so), sit down and take an introspective moment for the benefit of our planet and your impact on it. Please ask yourself, what stands in your way to offer more of the best you can give to make this world a better place? Is there a fear that there would not be enough for you and your loved ones if you give more, compromise more, sacrifice more? Is there a fear that the people you love and want to be appreciated and respected by turn away from you because they don’t understand? Fears are illusions created by an overactive left hand side of our brain. They are not a sign of reality. Your brain tricks you and makes you think they are. That’s what brain research tells us. So what about having a coffee break now? The community of the human family needs you, me and many more to achieve our max impact. It might start with this coffee…

Yours,

Martina Violetta Jung

A Hero's Journey to Healthy LeadershipMartina Violetta Jung is a German writer, business woman, leadership coach and speaker. She focuses on the concepts “Leadership Beyond Intellect” and a more Holistically and conscious way of doing business.   Martina Violetta Jung’s most recent book ‘A Hero’s Journey To Healthy Leadership‘ available on Amazon. 

Making Deals in Impact Investing

By Pallavi ShahInternational sustainable/impact investing consultant; photographer

Global Investing, May 20, 2016 (Maximpact.com News)  – Impact investing is gaining traction among both large and small investors and entrepreneurs. Angels, private equity firms, and banks are expanding beyond their traditional markets and exploring deals that could generate financial returns, while also having a positive environmental or social impact. Some previously niche industries – such as clean tech, natural food – are moving toward the mainstream. While both investors and entrepreneurs are embracing this trend, they are having a hard time connecting.

Why? In my experience, it is a limited understanding by both parties on the opportunities of impact investing, the risks, and the realities and nuances of each other’s worlds.

Many investors say they have trouble finding good quality deals; they’re too risky, difficult to scale, and are mired in confusing definitions of business models (for-profit vs. non-profit vs. hybrid) and impact investing itself (impact vs. SRI vs. ESG vs. sustainability). At the same time, for-profit impact enterprises (“investees”) are getting more attention but are having trouble securing funding.

It’s like dating. A good match can be very successful, but it is difficult when you know what you want but just can’t find the right person, or when you are not sure what you want and end up with some not-so-great options. In impact investing, the trial and error process for both parties takes a lot of time and money. It can lead to poor quality investments, higher perceived risks, frustration, and in some cases, no investments at all.

In my work with investors, including through the International Finance Corporation (IFC/World Bank), and with for-profit investees, building their “investor-readiness,” I’ve gained perspective on each party’s needs and common pitfalls. A few lessons stand out:

Investors

Evaluating and choosing impact deals is complicated. As with any investment, investors need to understand the investee’s business model and potential risks before making an investment decision. The riskier the deal profile the costlier the capital. Risk assessment of impact investments is tricky because of the sector’s relative infancy, its heterogeneity, the variety of measurement and reporting approaches, and the limited information on lessons learned.

In addition, most investors do not have an impact investing track record and vague terminology makes it hard to sort through potential options and choose what’s right for them. There are also industries, geographies, and business models that are less risky than others so painting all impact deals with the same brush can lead to an over- or under-assessment. All of these factors affect the categorization of the deal’s risk profile.

What can investors do to help make their process easier?

  • Build their internal capacity. Increase investment staff’s awareness and expertise to help them better understand impact investing and the various risk profiles.
  • Offer a range of investment options. Don’t offer a “one size fits all” deal structure. Typically this isn’t the best way to support both the finance and impact goals of an impact investment.
  • Set up impact-related systems. Set up systems to collect impact evaluation, monitoring and reporting data according to the investor’s impact strategy and goals.
  • Apply lessons learned. Analyze data regularly to identify patterns and understand what worked and didn’t work and why.
  • Collaborate with external parties. Work with industry experts, strategic partners who have complementary geographic, technical, or market expertise.

Investees

For-profit impact investees are unique. Their goal – to address an environmental or social issue and have a profitable business model – is not easy. The ones that will thrive are the ones with effective business models, who know how to approach investors, and who know what factors are critical to their business.

What can investees do to improve their funding chances?

  • Target the right investors. They need to understand and articulate their company profile (e.g., Is this a startup? What is the target market? What impact does the business want to make?). Knowing these answers will help them target the right investors. For instance, angel investors will be best for some investees while others will be better served by a bank.
  • Address key risks for investors. Address two sets of risks: those that are common to all businesses (such as business model, team composition, competitiveness, etc.) and those unique to the impact sector (e.g., how incorporating environmental & social factors will affect the revenue model; how to measure and report impact). Example: A biomass energy company was providing electricity to underserved populations and approached an investor for funding. While the business was compelling, it had not secured a reliable biomass fuel supply or done a comparative analysis to its competition. The deal was rejected because the company did not address its key business risks.
  • Ensure the pitch tells the right story. Lead the pitch with the business arguments. Then show how incorporating environmental, social impact will support the business. Example:A sustainable coffee company focused most of its investment pitch on how the coffee would improve the lives of farmers and reduce environmental impact. It did not provide information about the increasing demand for coffee in its target market, how its coffee met gourmet quality standards, or its plan to get environmental certification, which was proven to yield a price premium. These oversights led to it being rejected by the investor.
  • Clearly show returns, impacts. Showing financial returns over time is important for investors. Additionally, investees need to be clear about which specific environmental, social metrics they will focus on (e.g., CO2 reduction, job creation, access to energy) and their approach to measuring, monitoring, and reporting the impacts.

These are some of the key factors that can help both investors and investees understand each other’s needs and concerns and lead to more productive conversations. Addressing the real and perceived differences in incentives, interests and constraints will give both parties a better chance of finding the right match.

Maximpact: Bringing the Impact Sector Together

At Maximpact,we pride ourselves on our inclusive approach to impact investing. An important part of our mission is to strengthen the sector by providing a place where a wide range of impact players can come together and make impact deals. To make this happen more effectively, we’ve adopted a very broad definition of impact investing, creating a “big tent” that invites a diverse range of players under the same roof. The chart above shows how different types of impact actors are able to come together on Maximpact.

Our strategy seems to be working. Today, Maximpact welcomes funders, intermediaries and entrepreneurs from every part of the world and every corner of the impact sector. Some are veteran funders and intermediaries who have supported the idea of impact since the beginning. Others are new to impact and just discovering its potential. The chart also shows some of the new types of players that are entering the field, notably from the corporate social responsibility (CSR), eco and green technology, and the philanthropy sectors.

For Maximpact, this is good news. We believe that a greater variety of players in the impact arena will lead to better deal flow and a faster pace of innovation. In the meantime, we do our best to maintain the “big tent”, making sure all our users are discovering a world of new impact possibilities on our ever-expanding global platform.

The Maximpact Collaborative Approach – How it works

At the time of registration, users will be asked to identify them selves with a sector group (impact, philanthropy, CSR or eco; green) then select a user group(entrepreneur, intermediary or fund). Different types of users have different rights and levels of access to the Maximpact platform.

Definitions

  • Entrepreneurs:Entrepreneurs and companies
  • Intermediaries: Angel investors, social enterprise accelerators,incubators, venture capital groups, social venture networks and others
  • Funds: Investment funds, family offices,foundations,organizations, NGOs, companies, asset managers and others

Every registrant is vetted by Maximpact and best efforts are made to certify and qualify each applicant before access is permitted.Password access enables registered users to list and search for deals and ventures according to their access rights.When a deal or venture is listed, the listing party has an opportunity to identify the kind of funders they wish to attract (impact, philanthropy, CSR and/or eco & green). This allows users to filter and find like-minded funding matches more easily. However, it does not exclude deals from being searched by other types of funders that were not selected.

The hope of Maximpact is that all users will at some point reach out beyond their group and seek collaborative opportunities with others to create the biggest impact for us all.