The fastest growing section of the global bond market? Green bonds. The world’s biggest bank, India’s ICBC (which is also the world’s biggest listed company) has just issued its first Climate Bonds Initiative (CBI)-certified Green bond. The market is expanding and maturing rapidly. So far the UK has not been a big issuer. It doesn’t even figure in the Climate Bonds Initiative 2005-2017 list of Top 15 issuing nations (which count supranationals as one group). The organisation says the City of London GFI and LSE are working hard to establish London as a green finance hub, but banks and corporates have largely been “MIA” (Missing in Action) on domestic green issuance. Unilever and EIB came to market in 2014, TfL and KFW in 2015, then some names re-appear but the list starts to flag after that.
Until now. British energy company SSE has just issued a €600m green bond, the largest in the UK to date, topping the recent Anglian Water £250 million offering. It will go to finance eligible renewable energy projects, including transmission infrastructure onshore and offshore, such as the Beatrice Windfarm in the Outer Moray Firth in Scotland. The CBI notes it will keep a careful eye on ‘double counting’ green assets where more than one project owner may be involved in re-financing projects.
Such clarity and transparency of reporting is essential if trust in the Green Bond sector is to grow. Asset owners are in a position to hold corporates to account on these standards, and they should.
Fortuna AMC has specialist expertise in assessing Environmental, Social and Governance (ESG) issues affecting investors, and how to address and communicate the risks and opportunities they present. If you would like to know more, please contact Caroline@fortunaamc.co.uk