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Episode Summary
Hosts:
- Cheryl Tay, Senior Associate, Corporate Solutions
- Nicholas Gandolfo, Director, Corporate Solutions
In this round up of news, transactions, and regulatory updates in the global sustainable finance market, Nick and Cheryl discuss climate adaptation and the importance of biodiversity and natural capital. They also share some useful updates and resources from the Climate Bonds Initiative (CBI). CBI recently launched criteria for hydropower, providing guidance for developers on ensuring climate change resilience. It also published several new reports covering the state of green finance in Japan, infrastructure in Malaysia, and the pricing dynamics of green bonds. Finally, CBI shared a helpful list of stock exchanges with dedicated green bond or sustainable bond segments.
IFRS Sustainability Standards Board
On the topic of the growing call for global sustainability standards and the integration of sustainability into financial reporting, Nick and Cheryl discuss the International Finance Reporting Standards (IFRS) Foundation’s proposal for a sustainability standards board that would sit alongside the International Accounting Standards Board and build on the work of other standard setters focused on sustainability reporting.
Development in US Sustainability
In the U.S., the Biden administration announced commitments to cut emission by 50% compared to 2005 levels. Nick anticipates that the U.S. Securities and Exchange Commission’s increasing focus on environmental, social and governance (ESG) and climate issues in finance will ultimately have positive ramifications for the broader sustainable finance market.
Combination Instruments
Touching on a prediction made about what we might see in the market this year (listen to our 2021 Outlook episode), Nick touches on the emerging trend of combination instruments. Both Takamatsu Construction Group in Japan and Verbund in Austria issued sustainability-linked green bonds which combine the best of both worlds. Though many investors and issuers still show a preference for either use of proceed bonds (more transparent and explicit allocation of funds) or linked instrument (allowing more flexibility), the idea of a combined approach is being floated in the market.
Nick and Cheryl wrap things up by answering a couple of listener questions and offering up a fun fact about bees and why it’s imperative that we protect these pollinators.
Key Moments:
| 00:00:09 | Introduction |
| 00:01:39 | Market news |
| 00:01:39 | Climate adaptation article |
| 00:03:07 | CBI Hydropower criteria |
| 00:04:08 | Additional CBI reports
|
| 00:05:59 | IFRS reporting standard proposal |
| 00:07:55 | Biodiversity / natural capital initiatives |
| 00:09:25 | US administration new emission targets |
| 00:10:09 | SLB continuing trend |
| 00:11:38 | Hybrid instruments - linked and labelled |
| 00:12.58 | Green elements of insurance |
| 00:14:04 | Bond issuance overview |
| 00:19:49 | Green loans and social bonds overview |
| 00:22:04 | Sustainability-linked bonds overview |
| 00:24:56 | Sustainability-linked loans overview |
| 00:26.55 | Transition bonds overview |
| 00:28:58 | Sustainable product developments |
| 00:30:08 | Listener questions |
| 00:32:13 | Fun fact - why we need to protect bees |
Links to Select Resources:
- Climate Bonds Initiative: Japan Green State of the Market | Green Bond Pricing H2 2020 | Hydropower Criteria
- Environmental Finance: IFRS Foundation Sets Out 'Strategic Direction' for Global Sustainability Standards
- Bloomberg: Global Securities Watchdog Targets Greenwashing in New ESG Plan
- E.ON SPO with EU Taxonomy add on
- Global Capital: Enel Takes Crown for Biggest Sustainability Loan
- Sustainalytics Published Projects: Visit our website to view the second-party opinions and annual reviews mentioned in this episode
- Earthday.org: Facts about bees
