Crédit Agricole CIB’s Post

In this week’s #ESG news, sustainable debt issuance has hit a record level this year, as investors pile into green bonds as a way of signalling environmental credentials whilst also ensuring attractive returns. The Financial Times covers the story. EU regulators have called for changes to the landmark ESG rulebook. Seen as the benchmark for setting sustainability-disclosure requirements worldwide, the legislation, which has faced significant criticism since its launch in 2021, continues to see pushback from regulators in charge of enforcing it. Bloomberg News covers the story. The launch of the Glasgow Financial Alliance for Net Zero (GFANZ) back in 2021 now looks like the high watermark of the ESG investing trend. But today, many are rethinking ESG and whilst the GFANZ group is still going, investors are increasingly sceptical that finance can save the world. The Telegraph covers the story. 🔗 Financial Times: https://lnkd.in/dZFXvNnT 🔗 Bloomberg: https://lnkd.in/dm9_UMER 🔗 The Telegraph: https://lnkd.in/dEVZBdUB

📈🌳 According to provisional figures from Environmental Finance Data, $1.1 trillion of sustainable bonds are set to mature by the end of 2026, which marks a major milestone in the development of the market – but also poses headwinds for future growth. At Environmental Finance's annual 𝗦𝘂𝘀𝘁𝗮𝗶𝗻𝗮𝗯𝗹𝗲 𝗗𝗲𝗯𝘁 𝗔𝗺𝗲𝗿𝗶𝗰𝗮𝘀 conference, 𝗿𝗲𝘁𝘂𝗿𝗻𝗶𝗻𝗴 𝘁𝗼 𝗡𝗲𝘄 𝗬𝗼𝗿𝗸 𝗼𝗻 𝟭𝟵 𝗦𝗲𝗽𝘁𝗲𝗺𝗯𝗲𝗿, we will discuss the outlook and drive for the sustainable debt market in the region, with topics including: • Funding a low-carbon future • Financing biodiversity and natural capital in fixed income • The continued growth of taxonomies in the region • The growth of sustainability-linked instruments • Closing the climate finance gap with sustainable investment • Blue finance's role in promoting sustainable capital markets • ESG investment strategies for sovereign debt • The ESG debate and the labelled bond market • Transition technologies • and more 🌎 𝘝𝘪𝘴𝘪𝘵 𝘵𝘩𝘦 𝘤𝘰𝘯𝘧𝘦𝘳𝘦𝘯𝘤𝘦 𝘸𝘦𝘣𝘴𝘪𝘵𝘦: https://lnkd.in/dDh_UBFN 𝗪𝗶𝘁𝗵 𝘁𝗵𝗮𝗻𝗸𝘀 𝘁𝗼 𝗼𝘂𝗿 𝘀𝗽𝗲𝗮𝗸𝗲𝗿𝘀: Alán Bonilla, Anne van Riel, Armelle de Vienne, Domingo Valdes, Fernando Reiter, Joshua Linder, Kirsty Meldrum, Laila Nordine, Marcy Block, Matt Kuchtyak, Mayela Almazan Stuparitz, Mehdi Khalili, Nuvneet Dhillon, Robert White, Romina Reversi, Samy Muaddi, Sarah Peasey, Stephen M. Liberatore, Xinxin (Grace) Wang, 𝗪𝗶𝘁𝗵 𝘁𝗵𝗮𝗻𝗸𝘀 𝘁𝗼 𝗼𝘂𝗿 𝘀𝗽𝗼𝗻𝘀𝗼𝗿𝘀: BNP Paribas CIB | Crédit Agricole CIB | ING | Natixis Corporate & Investment Banking | IFC - International Finance Corporation | Moody's | Santander Corporate & Investment Banking | T. Rowe Price | Sustainable Fitch | MSCI Inc. | S&P Global #efbonds #fixedincome #bonds #greenbonds #debtcapitalmarket #DCM #sustainability #esg #greenfinance #transition #debt #greendebt #greenloan #loan #investment

In our latest ESG newsletter article, we look at sustainable bond market trends and comment on debt for nature swaps and blue bonds, two instruments that are receiving greater attention from the market: https://bit.ly/3Y5Vzbc

Better transition benchmarks needed Indices play a key role in liquid asset classes, both as benchmarks for active strategies and as portfolio templates for the growing passive investment market segment. As a result, the rules governing the construction of sustainable investment indices are likely to have a major impact on the allocation of sustainability-oriented capital. Although the EU's Paris-aligned Benchmarks (PAB) and Climate Transition Benchmarks (CTB) were set up in 2020 to facilitate financial support for industrial transition, they structurally disadvantage emission-intensive industries that require significant transition investments in the coming years (see left chart below). Both PAB & CTB optimize for portfolio emissions over global emissions, by failing to provide capital to finance the transition of emission-intensive industries, and by relegating these companies to ownership by investors far less likely to push for transition investments. A third category (Taxonomy-Aligning-Benchmarks, TAB), proposed by the EU Platform on Sustainable Finance in 2023, appears to be better suited, as it focusses on taxonomy-aligned Capex instead of current emission levels. As the right chart below shows however, the strict rules and still patchy coverage of the EU Taxonomy are a limiting factor, especially for energy and materials companies. Read our ESG Focus & ESG Update publications for more thoughts and insights. https://lnkd.in/dQMespq #sustainability #esg #investing

Global sustainable bond sales reach $1 Trillion for second time Sustainable bonds—encompassing green, social, and sustainability bonds—are financial instruments designed to fund projects with positive environmental and social impacts. In 2024, global issuance of these bonds reached a remarkable $1 trillion, underscoring a significant shift towards responsible investment. Understanding bonds is essential because they play a pivotal role in both individual investment strategies and the broader financial system. For investors, bonds offer a means to preserve capital while generating steady income through interest payments, contributing to a balanced and diversified portfolio. In the wider economy, bonds facilitate the funding of government initiatives and corporate projects, driving economic growth and development. Further, bond markets serve as indicators of economic health, influencing monetary policy decisions and reflecting investor sentiment regarding factors like inflation and interest rates. What are the implications for businesses across all industries? ➖Access to Capital: Sustainable bonds provide companies with opportunities to secure funding for eco-friendly and socially responsible projects, often at more favourable terms ➖Enhanced Reputation: Engaging in sustainable financing can bolster a company’s image, attracting customers and investors who prioritise environmental and social governance (ESG) criteria. ➖Regulatory Alignment: Issuing sustainable bonds helps businesses comply with increasing regulatory demands for sustainability, positioning them ahead of legislative changes ➖Long-term Risk Mitigation: Investing in sustainable initiatives through these bonds can lead to improved environmental performance and operational efficiencies, reducing long-term risks The surge to $1 trillion in sustainable bond issuance highlights a global commitment to addressing environmental and social challenges through finance. This growth reflects the increasing integration of ESG considerations into business strategies and investment decisions, fostering a more sustainable and resilient global economy Further readings in the comments. Link to Bloomberg article in comments too. As the sustainable bond market continues to expand, businesses across all sectors are encouraged to explore these instruments as viable avenues for funding and advancing their sustainability objectives. #sustainablefinance #greenbonds #esg #impactinvesting #sustainability #finance #climateaction #investment #corporatesocialresponsibility #responsibleinvestment

🌍💼 Exploring the Impact of ESG Bonds on Sustainable Finance 💼🌍 In today's evolving financial landscape, Environmental, Social, and Governance (ESG) bonds are making waves. These innovative financial instruments are not just a trend; they're a powerful force driving sustainable development and responsible investing. 🔍 What are ESG Bonds? 🤔 ➡️ ESG bonds are debt securities issued to fund projects that have positive environmental, social, and governance outcomes. They are crucial in financing initiatives like renewable energy, affordable housing, and sustainable infrastructure. 💡 Why are ESG Bonds Important? 👉Sustainable Impact: They provide capital for projects that address global challenges such as climate change, social inequality, and corporate governance issues. 👉Risk Mitigation: Companies with strong ESG practices often exhibit lower risk profiles, making them attractive to investors. 👉Regulatory Alignment: As regulations around sustainability tighten, ESG bonds help organizations align with international standards and guidelines. 📈 Market Growth The ESG bond market has seen exponential growth, reflecting increased demand from investors seeking to make a positive impact. In 2023 alone, global ESG bond issuance surpassed $500 billion, underscoring the significant appetite for sustainable investment opportunities. 🔗 Future Outlook With growing awareness and regulatory support, ESG bonds are set to play a pivotal role in the transition to a more sustainable and equitable global economy. They offer a compelling opportunity for investors to contribute to a better future while achieving financial returns. 🌱 Join the Movement Investing in ESG bonds isn't just about returns; it's about making a difference. Let's continue to support and innovate in the ESG space, paving the way for a sustainable future for generations to come. #SustainableFinance #ESGBonds #ResponsibleInvesting #Sustainability #Finance #GreenBonds #ImpactInvesting #FutureOfFinance

Investment in green, sustainability, and social bonds all increased, while sustainability-linked bond (SLB) issuances declined as a result of scrutiny over the bonds’ linked sustainability targets. Overall, GSSS issuances accounted for 12% of total bond issuances in the first quarter (down 2% from 2023). Moody’s is projecting a total of $950 billion in GSSS Issuances by the end of 2024 as macroeconomic conditions remain relatively soft. https://lnkd.in/gXtD5WzH

Sustainability-linked bonds see a drop in issuance – AFME (Association for Financial Markets in Europe) #ESG Report This report, written up by my colleague Sehrish Alikhan Finextra and commented on by Tatjana Greil Castro, PhD Muzinich & Co, and Justine Leigh-Bell of Anthropocene Fixed Income Institute Highlights: 🚦 There was an inflow of $122.75 billion in ESG funds in this quarter. ESG bonds and loan issuance in Q3 2024 reached €116 billion – this is an increase of 6% from 2023, but a drop of 27% from the previous quarter. 🚦 Green bonds have the highest issuance, but issuances remained below 2021 and 2022 levels. 🚦 ESG securitisation increased, sustainable and social and sustainability-linked bond issuance decreased. Check out what Tatjana and Justine thought of the reasons behind the numbers. https://lnkd.in/erWQ7SKE

🌍 📜 𝗘𝗨 𝗚𝗿𝗲𝗲𝗻 𝗕𝗼𝗻𝗱𝘀 – 𝗰𝗼𝗺𝗶𝗻𝗴 𝟮𝟭 𝗗𝗲𝗰𝗲𝗺𝗯𝗲𝗿 𝟮𝟬𝟮𝟰... The EU Green Bond (EuGB) Regulation sets the gold standard for sustainable ‘use of proceeds’ bonds, ensuring alignment with the EU Taxonomy. It offers participants a structured pathway to contribute to the green transition and to support key objectives such as boosting transparency, combatting greenwashing, enhancing market efficiency and building investor confidence. 💡 𝗗𝗶𝗱 𝘆𝗼𝘂 𝗸𝗻𝗼𝘄? According to the AFME’s Q3 2024 ESG Finance Report, green bond issuance is already on track to reach the highest issuance on record, having increased 27% year-on-year. https://lnkd.in/dgPeKX3B ⏰ The EuGB Regulation is applicable from 𝟮𝟭 𝗗𝗲𝗰𝗲𝗺𝗯𝗲𝗿 𝟮𝟬𝟮𝟰. Therefore, issuers and investors don’t have long to wait to start leveraging the opportunities presented by this voluntary sustainability standard. In the meantime, here are some recent developments, resources and watch-items worth noting: 📢 𝗥𝗲𝗰𝗲𝗻𝘁 𝗱𝗲𝘃𝗲𝗹𝗼𝗽𝗺𝗲𝗻𝘁𝘀 ➡️ On 13 December, ESMA clarified aspects of its guidelines on funds' names using ESG or sustainability-related terms, including that investment restrictions related to the exclusion of companies do not apply to investments in EuGB. This will be of interest to prospective AIF and UCITS investors https://lnkd.in/dw8txg4b ➡️ On 17 December, the European Commission opened feedback on draft legislation on the templates for voluntary post-issuance disclosures, for adoption in Q1 2025 https://lnkd.in/dUeUfaxz 🧰 𝗥𝗲𝘀𝗼𝘂𝗿𝗰𝗲𝘀 🌐 𝗖𝗲𝗻𝘁𝗿𝗮𝗹 𝗕𝗮𝗻𝗸 𝗼𝗳 𝗜𝗿𝗲𝗹𝗮𝗻𝗱: New EuGB webpage, containing updated Guidance on Submitting a Debt Submission Template and a dedicated email address https://lnkd.in/dE-5wBdQ 📜 𝗘𝘂𝗚𝗕 𝗥𝗲𝗴𝘂𝗹𝗮𝘁𝗶𝗼𝗻: See the Annexes for key documents such as the European Green Bond Factsheet https://lnkd.in/dNDVUbbF 🌱 𝗘𝗨 𝗧𝗮𝘅𝗼𝗻𝗼𝗺𝘆: Key European Commission resources here https://lnkd.in/dxsYpkTr 🕒 𝗘𝘂𝗚𝗕 𝗜𝗺𝗽𝗹𝗲𝗺𝗲𝗻𝘁𝗮𝘁𝗶𝗼𝗻 𝗧𝗶𝗺𝗲𝗹𝗶𝗻𝗲: https://lnkd.in/dremZ2-n 🗓️ 𝗖𝗼𝗺𝗶𝗻𝗴 𝘂𝗽... 🔔 ESMA plans to consult on remaining technical standards from March-June 2025 🔔 Stay tuned for upcoming domestic legislation establishing administrative penalties for non-compliance #EUGB #EuropeanGreenBond #SustainableFinance #LegalUpdate #MHCLaw

Moody’s reports global sustainable bond issuance rebounds to $281 billion in Q1 2024 - Although sustainable bond issuance accounted for the lowest quarterly share of global bond issuance since the beginning of 2022, we expect sustainable bonds to remain top of mind for issuers in many markets as climate finance needs, investment in emerging green technologies and market innovation support volumes this year. Matthew Kuchtyak, VP-Sustainable Finance at Moody’s Ratings https://lnkd.in/dPU3RzWW #sustainablebonds #moodys #climatefinance #investments