What’s Happening in Sustainable Finance: Adopting the Climate Transition Finance Handbook, Recovery Through Sustainable Sovereign Debt and More

Episode Summary Hosts Nicholas Gandolfo, Director, Corporate Solutions Aditi Bhatia, Regional Sales Manager, Corporate Solutions   In this episode, Nick and Aditi cover some of the recent developments in sustainable finance with market diversification being the common thread. Market volumes continue to increase showing positive year-over-year momentum. Contributing to that growth is new market entries from various sectors as well as a broader scope of activities and projects being funded. With this diversity comes greater scrutiny of the market, especially of issuers and borrowers, their projects and frameworks, as well as their lenders. In our opinion, such scrutiny and debate will ultimately lead to more robust and credible sustainable finance activities.   Climate Transition’s Influence on Sustainable Finance  Although not expressly transition, some sustainable financing frameworks and issuances are coming to market in alignment with ICMA’s Climate Transition Finance Handbook. Japan’s Financial Services Agency has also released its Basic guidelines on climate transition finance with the aim of encouraging the allocation of more funds to contribute to the country’s carbon neutrality goals. In response to a listener question, Nick notes the Handbook’s use in the sustainability-linked bond and loan frameworks of companies in hard-to-abate sectors.   More Sovereigns Move Forward on Sustainable Debt Sovereigns continue to issue sustainable bonds to support their economic recoveries. Issuances from Germany, the UK and Pakistan made headlines, as did announcements from Canada and Kenya. The principality of Andorra even got in on the action, issuing its first sustainability bond and raising EUR 500 million to finance biodiversity conservation, sustainable water management, employment generation and access to essential services, among other green and social projects. Diversification's Positive Impact on the Market Diversification within the global sustainable debt market continues and we see that as a good thing. The entry of market participants from various sectors and the financing of innovative green and social projects has led to greater debate and scrutiny of the market. Highlighted this month are transactions from companies in real estate, semiconductors, agriculture, rail, household goods, banks, technology, education and the mainstay, renewables. This diversification of sectors and types of projects financed is important for the continued evolution and improvement of the sustainable finance market.  Key Moments 00:08 Introduction 00:46 Market news 01:14 Market volumes up 01:53 Shell landmark court verdict 02:42 Exxon shareholder activism 02:59 IEA “Net Zero by 2050” report 04:36 ICMA additional recommendations for building taxonomies 05:03 ICMA additional guidance for climate transition finance 05:49 Transition bonds in danger? 06:39 Challenges to SLBs 07:28 Update to Sustainability-Linked Loan Principles 08:24 Sustainable Trade Finance 09:12 Oil and gas and sustainability-linked frameworks 10:21 New Climate Bonds Initiative reports 10:44 Hong Kong Monetary Authority guidelines on sustainable finance subsidy program 11:26 Transactions overview 14:53 Social bonds overview 15:49 Green loans and bonds overview 16:24 Sustainability-linked bonds overview 19:42 Listener question 22:11 Sustainability-linked loans overview 24:19 Transition bonds overview 25:21 Labeled products overview 26:08 Regulatory update   Links to Select Resources IEA: Net Zero by 2050 report APLMA/LMA/LSTA: Sustainability-Linked Loan Principles May 2021 Climate Bonds Initiative: Sustainable Debt: Global State of the Market 2020 Post Issuance Reporting in the Green Bond Market 2021 Reports on ASEAN region Regulation Asia: HKMA Issues Guideline on Green & Sustainable Finance Grant Scheme Air Liquide Sustainable Finance Framework Second-Party Opinion Kellogg Sustainability Bond Framework Second-Party Opinion CaixaBank Sustainable Development Goals Framework Second-Party Opinion Weir Group PLC Sustainability-Linked Bond Second-Party Opinion Seaspan Sustainability-Linked Bond Second-Party Opinion Environmental Finance: Japan's FSA publishes bond & loan 'transition finance guidelines' Forbes India: Green bonds, sustainable bonds demand picks up in India in the pandemic era More Episodes

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