GREEN BONDS: DEBT CAPITAL MARKETS AND THE LOW CARBON TRANSITION LENORA SUKI HEAD OF SUSTAINABLE FINANCE PRODUCT STRATEGY

Transcription

1 GREEN BONDS: DEBT CAPITAL MARKETS AND THE LOW CARBON TRANSITION LENORA SUKI HEAD OF SUSTAINABLE FINANCE PRODUCT STRATEGY

2 GREEN AND THEMATIC BONDS LEVERAGE CAPITAL FOR SUSTAINABLE AND EQUITABLE ECONOMIES The climate bond will fund. Electric Vehicles: development and charging stations New public green spaces: roofs, walls, facades Production of renewable energy: solar panels Retrofitting 200 schools: energy efficient buildings Construction of energy efficient buildings: social housing Alternative transport: Cycling Plan

3 PARIS IS NOT ALONE SSA ISSUERS HAVE BUILT THE GREEN BONDS MARKET 230 unique SSAs and municipal issuers

4 CORPORATE ISSUANCE IS RAMPING UP Corporate issuers in the green bonds market

5 5 THE MOVEMENT FOR DECARBONIZATION AND DISCLOSURE ACROSS STAKEHOLDERS IS GROWING $3 tn target by COP21 $8 tn in assets to disclose footprints $100 bn target by COP21 PDC oversees $230 bn in AUM $24 tn in AUM calling for an agreement on climate change $22 tn investor group engaging with over 1,300 companies 154 companies with $4 tn in revenues pledge environmental goals

6 SUSTAINABLE AND RESPONSIBLE INVESTMENT IS ACCELERATING BUT STILL LARGELY EQUITY Principles for Responsible Investment DU - 11% 27% NY 73% Funds With Sustainable Investment Strategies Sources: Principles for Responsible Investment, Bloomberg

7 BLOOMBERG USER GROWTH ILLUSTRATES GROWING INTEREST IN SUSTAINABLE INVESTMENT

8 CLEAN ENERGY INVESTMENTS HAVE LEVELED AT ~$300 BN/YR SINCE 2011 DU - 11% 27% NY 73% * Estimated 2015 figure includes end of year projected R&D estimates and EST asset finance Source: Bloomberg New Energy Finance (BNEF)

9 BOND ISSUANCE FINANCES INCREASING SHARE OF CLEAN ENERGY INVESTMENTS, REFINANCING DU - 11% 27% NY 73% Source: Bloomberg, Bloomberg New Energy Finance (BNEF)

10 GREEN BONDS HAVE BEEN THE MOST IMPORTANT VEHICLE FOR THAT GROWTH Source: Bloomberg, Bloomberg New Energy Finance (BNEF)

11 NOT ALL PUBLIC DEBT SEGMENTS FINANCING CLEAN ENERGY ARE THE SAME

12 STANDARDS ARE BUILDING EXPECTATIONS OF TRANSPARENCY AND SUSTAINABILITY PERFORMANCE

13 ACHIEVING GOALS OF COP 21 WILL REQUIRE SUSTAINABLE FINANCE, ESPECIALLY GREEN BONDS G7 decarbonization pledge already made Capital providers are responding with sustainable finance DU - 11% innovation (e.g. green bonds, yieldcos, funds) 27% Differentiated, distinct contributions key to success NY 73% Supranationals are leveraging green bonds for North-South resource distribution More climate finance funds and vehicles South-South Climate Cooperation Fund, Green Investment Banks can be green bond issuers Quantifiable, measurable, reportable, verifiable targets Green bonds market is headed toward more transparency and standards

14 BLOOMBERG AND GREEN BONDS >>>>>>>>>>>>>

15 BLOOMBERG PROMOTES TRANSPARENCY AND ACTIONABLE INFORMATION

16 BNEF ANALYZES GREEN BONDS ISSUANCE, THEMES AND MARKET MAKERS BNEF<GO> Source: Bloomberg

17 NEWS AND PREDEFINED PORTFOLIO SEARCHES GIVE UP-TO-THE-MINUTE ACCESS DU - 11% 27% NY 73%

18 GRANTMAKING FOR STANDARDS AND SUSTAINABILITY BUILDS THE ECOSYSTEM

19 Adoption TRANSPARENCY AND STANDARDS DRIVE ADOPTION OF BEST PRACTICE FOR CORPORATES AND INVESTORS Today Standards- Setting Phase Mainstream application Financial Analysis / Integration Derivative Financial Instruments Benchmarks established Best practices identified Measurement / Management Sustainability risk /opportunity for Companies and Investors Innovation Information / Analytics Initial Activity Quality, comparable data emerges Standardization / normalization begins Early stage Standards evolution Developed

20 BLOOMBERG HAS ADVANCED TRANSPARENCY AND MARKET CREATION ACROSS BOND MARKETS BEFORE 2 0

21 MARKET FRONTIERS AND GROWTH >>>>>>>>>>>>>

22 THE CURRENT TREND IN CLEAN ENERGY INVESTMENT SEES A SHIFT TO LARGE SCALE RENEWABLES Source: Bloomberg New Energy Finance

23 CLEAN ENERGY CAPACITY IN EMERGING AND DEVELOPING MARKETS IS GROWING RAPIDLY New Clean Energy Capacity China Gross Annual Capacity Additions and Retirements

24 AGGREGATION AND NON-ENERGY CO- BENEFITS WILL DELIVER ANOTHER PUSH Energy efficiency and distributed generation Residential, commercial, hospitality, health care, industrial, MUSH, municipal equipment Distributed assets with heterogeneous cash flows, contracts and structures Data challenges, baseline and measurement Need for a sophisticated aggregator and a pool of capital to finance Challenge of public + private benefit, social co-benefits => guarantees, PPPs, tax incentives

25 ASPIRATIONAL PARTING THOUGHTS Debt and Financial Innovation Small investments won t get us to the quantum of capital we need to achieve climate goals. Tapping global debt capital markets is critical. New Investment A very small proportion of existing green bonds issuance is for new projects. We push issuers now on the new investment part of the green bonds. Stephan Bonte, Standish Mellon Asset Management Quality of Disclosure Bloomberg and others are creating new transparency and evaluation screens. Impact Investment 49% of investors say that impact investment will be one of the predominant themes of their future investment plans. The Future of Green Bonds In the future, all bonds should be green. Suzanne Buchta, Bank of America Merrill Lynch