global green bond market – overview
TRANSCRIPT
GlobalGreenBondMarket–overviewSerenaVento,DirectorofFundraising&PartnershipsClimateBondsInitiative
Weareaninvestor-focusedNGOmobilisingdebtcapitalmarketsforclimatesolutions.
ClimateBondsStandard&Certification
• Definitionsforinvestorsandguidelinesforbondissuers• Assurancethroughcertification
Policy advisory
• Policymodelsandgovernmentadvice
• Effortsinemergingmarketstogrowissuance
• Greeninnovationse.g.securitization,coveredbonds,IslamicFinance
Marketintelligence
• Greenbondsdatabase,feedingindices
• Stateofthemarket reports, GIIO,global and regional
Capacitybuilding&marketdevelopment
• Developing expertiseto issue, investinandunderwritegreenbonds
• Keystakeholdersconvening&mobilising
TheClimateBondsInitiative
WhatareGreenBonds?
Greenbondsaredebtsecuritiesissuedbyfinancial,non-financialorpublicentitieswheretheproceedsareusedtofinance100%greenprojectsandassets.
Justlikeregularvanillabonds.“Green”isabonusfeaturetothebond.
It’sabouttheprojectsandtheassets,nottheissuer.
Thegreenlabelisatoolforinvestors.
Proceedstoclimateprojects
ComparablepricingtovanillabondsRefinanceaswellasnewprojects
Anyentity SovereignLocalGovernmentMultilateralDevelopmentBanksCommercialBanksCorporates
Anystructure SeniorunsecuredAssetbackedCoveredBondsLoans,Sukuk,others
Reporting TransparencytoassetsandprojectsIndependentreviewReportingonuseofproceeds
Greenbonds:tooltofinancethetransition
Globalfinancialmarkets
• $90trnbondmarket• Investors
• Seekingyield• Wantgreen
Climatemitigationandadaptationrequirements
• Parisagreement• IEA:Energysectorrequires
$53trninvestmentby2035• $93trnforinfraby2030
Greenbonds
- USD167bntotalissuancein2018
- Over1,500 greenbondsissues
- 44 countries,8new,allcontinents
- 320issuers(204 new)
- EUR4.5bn – largestbond(Belgium)
- 5new sovereignGBissuers:Belgium,Indonesia,Ireland,LithuaniaandtheSeychelles
- Labeldiversificationincreasing
Globalgreenbondmarket:Upx4.5over2014annualvolume
Benefits• Newinvestors• Pricing• Halo
Greenbondbenefits
• Investordiversification(regions,types)
• Investorengagementandstickiness
• CSR/Fundingalignmentsupportingreputation
Issuerbenefits
Investorbenefits
••GreeningAuMthroughwell-understoodproducts
••‘Access’togreenassets/projectswithoutprojectrisk
••Strongsecondarymarketperformance
••Engagementwithcompanymanagementongreen
Issuerbenefitsbecomemoreandmoreapparentanddiverse…
…givenstrongandpersistentinvestordemandforgreen.
WhobuysGreenBonds?
MainstreaminvestorsandESGspecialists
Thehugedemandforthesebondsiscomingfromarangeofinvestors.Someexamplesinclude:
• Mainstreaminstitutionalinvestors;Aviva,BlackRock,StatesStreet
• SpecialistESG(Environmental,Social,Governance)andResponsibleInvestors;Natixis,Mirova,ACTIAM
• CorporateTreasury;Barclays,Apple
• Sovereignandmunicipalgovernments;CentralBankofPeru,CaliforniaStateTreasurer
• Retailinvestors;WorldBankissuancesforretailinvestorsthroughMerrillLynchWealthMangersandMorganStanleyWealthMangers.IFCandSolarCityissuancesforretailinvestorsthroughIncapital
Issuertypes:Sovereignsaregrowingstrongly
2013 2014 2015 2016 2017 2018
Loan
Sovereign
Government-backedentity
Localgovernment
Developmentbank
Non-financialcorporate
Financialcorporate
ABS
Useofproceeds:awidervarietyofgreenassetsareconsideredasconfidencebuildsintheformat
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2013 2014 2015 2016 2017 2018
ICT
Industry
Adaptation
LandUse
Waste
Water
Transport
Buildings
Energy
Useofproceedsbondsworkforalldebtformats
Coveredbond
Sukuk
Revenuebond
Projectfinance
Privateplacement
Securitisation
Loan
Retailbond
Commercialpaper
Subordinatedbond
Seniorunsecured
MTNprogrammePerpetual/hybrid
Schuldschein
USMuni
Trancheinadeal
Marketgovernance:Howdoyouknowitisgreen?
Overarchingmarketguidelines
Global:
- ClimateBondsStandard- GreenBondPrinciples
Country-specific:- Regulation(China)- Exchangeguidance- Countryguidance(Japan,Taiwanetc.)
Bestpractice:externalreview
ClimateBondsCertification E.g.Barclays,ANZ,ING
Secondpartyopinion
E.g.WorldBank,Engie,TFL,Repsol
GreenBondrating E.g.:
Assurancestatementunderlocalregulation E.g:ChinaIndustrialBank
Poorpractice:Noexternalreview Issuerdisclosure E.g.USmunis,
The Climate Bonds Taxonomy
IncentivesrequireregulationConsistentrulessupportmarketgrowth
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NGFS WS3 Industry Outreach 4 June 2018
Hosted by the Monetary Authority of Singapore
Administrative Note The Monetary Authority of Singapore (MAS) warmly welcomes you to Singapore. This note provides some practical information that will be helpful during your stay. If you require more information or assistance, please contact: Mr. Lim Weilun [email protected] +65 6422 5310
Mr. Jeryl Hong [email protected] +65 6229 8849
Mr. Jesper Pan [email protected] +65 6229 9452
Mr. Yeo Wei Xin [email protected] +65 6422 5269
For enquiries on the industry outreach agenda or content, please contact: Mr. David Doehrmann Deutsche Bundesbank [email protected] +49 69 9566 6659
Mr. Karl-Manuel Cseh Deutsche Bundesbank [email protected] +49 69 9566 3560
1. MEETING VENUE The meeting will be held at the Penthouse (30th floor) of the MAS Building, located at 10 Shenton Way, Singapore 079117.
2. MEETING ARRANGEMENTS Registration will open at 12:45pm on 4 June 2018 and a registration counter will be set up at the front entrance of MAS Building for the issuance of visitor passes. Participants are reminded to bring along their personal identification documents (e.g. passport, ID) for the purpose of visitor registration. Lunch and an afternoon tea break will be provided. 3. SUBMISSION OF MEETING PRESENTATIONS Presentation slides and other materials should be submitted (via email to the contacts provided above) no later than 31 May 2018 if you wish for them to be printed for distribution at the meeting.
Voluntaryrulesdroveearlymarketgrowth,allowedglobalconsistency
SynergiesbetweenGreenBondsandSDGs
ManySDGs haveasocialprimaryfocus,butaclimate-resilienceandmitigationlensneedstobeappliedforsocialgoalstobeachieved
Investmentininfrastructureassets,whetherthroughgreen,socialorSDGbonds,needtoalignwithclimatetargets,sincefailingtoactonclimatechangewillcompromisetheSDGsasawhole
Climatechangepresentsthesinglebiggestthreattodevelopment,anditswidespread[...]UrgentactiontocombatclimatechangeandminimizeitsdisruptionsisintegraltothesuccessfulimplementationoftheSustainableDevelopmentGoals.
UN:SustainableDevelopmentGoals
Bed-timereadingatwww.climatebonds.net
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Climate Bonds Taxonomy
Climate Bonds Taxonomy A guide to climate aligned assets & projects SEPTEMBER 2018
Introduction
A large segment of institutional investors have indicated their support for action to address climate change. However, when it comes to environmental criteria, investors currently have too few tools to help ensure that their investments are making a significant impact, particularly for debt based investments. The market needs independent, science-driven guidance on which assets and activities are consistent with a rapid transition to a low-carbon economy.
The Climate Bonds Taxonomy identifies the assets and projects needed to deliver a low carbon economy and gives GHG emissions screening criteria consistent with the 2-degree global warming target set by the COP 21 Paris Agreement. It has been developed based on the latest climate science including research from the Intergovernmental Panel on Climate Change (IPCC) and the International Energy Agency (IEA), and has benefited from the input of hundreds of technical experts from around the world. It can be used by any entity looking to identify which assets and activities, and associated financial instruments, are compatible with a 2-degree trajectory.
First released in 2013, the Climate Bonds Taxonomy is regularly updated based on the latest climate science, emergence of new technologies and on the Climate Bonds Standard Sector Criteria.
Contents
Automatically compatible
Compatible if compliant with screening indicator Not compatible
More work required
Climate Bonds Certification available
Energy
Transport
Water
Buildings
Land use & marine
Industry
Waste
ICT
2
7
10
11
12
14
15
16
Using this document
A traffic light system has been adopted to indicate whether identified assets
and projects are considered to be automatically compatible with a 2-degree
decarbonisation trajectory. Green Light is automatically compatible. Orange
Light is potentially compatible, depending on whether more specific criteria
are met. Red Light is incompatible. A Grey circle is used to indicate where
further work is required to determine which traffic light colour is appropriate
for a specific sub-set of assets or activities.
The Taxonomy is the foundation used by the Climate Bonds Initiative to screen
bonds to determine whether assets or projects underlying an investment are
eligible for green or climate finance. Where detailed analysis of a sector has
been undertaken and specific eligibility Criteria have been developed, bonds
in that sector can be Climate Bonds Certified. This is indicated via a blue
‘Climate Bonds Certification tick’. Where detailed sector based Criteria for
Certification are still under development, this is indicated by a yellow circle. In
this case, bonds in this sector cannot yet be certified under the Climate Bonds
Standard.Criteria under development
An Executive Briefing
for the public sector to
stimulate private sector
market development
for green bonds
CONSULTATION PAPER
SCALING UP
GREEN BOND
MARKETS FOR
SUSTAINABLE
DEVELOPMENT