Episode Summary  Host:  Melissa Chase, Senior Content Marketing Manager, Morningstar Sustainalytics  Guest:  Aymen Karoui, Director of Methodology and Product Architecture, Morningstar Sustainalytics Data as the Foundation for Successful Portfolios  How can ESG ratings help investors identify risk when constructing and maintaining their portfolios? In this episode, we explore the practical answers to this question and more. We also feature research leveraging Sustainalytics’ Low Carbon Transition Ratings and Physical Climate Risk Metrics assessing companies' misalignment with the transition to net zero.   We also discussed COP 16, which is focused on biodiversity and the key role of the private sector in addressing biodiversity loss. A recent article using data from our Biodiversity and Natural Capital Stewardship program found that many companies are at the beginning of their journeys.  Share Your Feedback   Please take a moment to share your thoughts on ESG in Conversation. You can email us at [email protected].  Key Moments 00:00:00  Introduction  00:01:07  Interview with Aymen Karoui about Morningstar Sustainalytics report series in collaboration with Natixis exploring the ESG Risk Ratings and portfolio risk  00:19:51 Overview of the “Navigating Material Climate Risks in the Global Equities Market” report  00:20:57  Overview of “Mobilizing the Private Sector for COP16: A Critical Juncture for Biodiversity Action”  00:22:29 Highlights of upcoming Morningstar Sustainalytics events   Links to Select Resources Report series with Natixis   ESG Risk Ratings: A 360° Review ESG Risk Ratings: Distilling for Enhanced Performance and Downside Protection ESG Risk Premium: A Further Look Navigating Material Climate Risks in the Global Equities Markets Mobilizing the Private Sector for COP16: A Critical Juncture for Biodiversity Action Morningstar Sustainable Investing Summit 2024  More episodes

Episode Summary  Host:  Melissa Chase, Senior Content Marketing Manager, Morningstar Sustainalytics  Guest:  Arthur Carabia, ESG Research Policy Director at Morningstar  In Global Financial Markets, ESG Materiality Matters  On the heels of the EU parliamentary elections and ahead of pivotal contests in the U.S., the U.K. and elsewhere, ESG in Conversation met with Director of ESG Policy Research, Arthur Carabia to discuss what a change in political agendas and shifting priorities could mean for ESG and sustainability-focused regulations globally.   We also explore the topic of ESG materiality and what it means to asset owners globally, and we discuss its foundational role in the enhancements to Morningstar Sustainalytics' ESG Risks Ratings and corporate governance assessment framework.   Share Your Feedback   Please take a moment to share your thoughts on ESG in Conversation. You can email us at [email protected].  Key Moments   00:00:00  Introduction  00:01:34  Interview with Arthur Carabia about EU election outcomes and the state of ESG regulatory landscape  00:25:14  Overview of the Voice of the Asset Owner Survey 2024  00:26:34  Updates on Sustainalytics’ corporate governance assessment framework  00:28:14  Introduction to “Fundamentals of ESG Materiality: An Overview for Investors”    Links to Select Resources Voice of the Asset Owner Survey 2024: Qualitative Insights  On the Materiality of Corporate Governance: Themes, Applications and Best Practices  Fundamentals of ESG Materiality: An Overview for Investors  Webinar | Single, Double or Dynamic? An Exploration of Materiality in ESG Approaches to Investment  More Episodes

Episode Summary Host: Melissa Chase, Senior Content Marketing Manager, Morningstar Sustainalytics Guest: Arthur Carabia, ESG Research Policy Director at Morningstar The SEC’s New Rule Ushers in Climate Transparency and Reporting in the U.S.  In late March, the U.S. Securities and Exchange Commission introduced a climate disclosure rule that applies to its 10,000 registrant companies. In this episode of ESG in Conversation, we welcome back Arthur Carabia to shed light on what this new rule means for companies and their investors. He also shares his take on how the rule compares to other sustainability and climate disclosure regulations globally.  Sticking to the regulatory theme, you’ll learn about the EU’s regulations on deforestation-free products and why the issue of environmental regulation is so significant across industries according to our ESG Risk Ratings.  Finally, we share insight on the troublingly persistent issue of child labor in the cocoa supply chain.   Share Your Feedback Please take a moment to share your thoughts on ESG in Conversation. You can email us at [email protected] or take this short survey.   Key Moments 00:00:00 Introduction 00:01:38 Interview with Arthur Carabia about the SEC’s new climate disclosure rule 00:12:53 Overview of the EU Regulation on Deforestation-Free Products 00:14:09 Insights from Morningstar Sustainalytics annual Industry Reports 00:15:13 Details on child labor in global cocoa supply chains   Links to Select Resources The SEC’s Climate Disclosure Rule: A Step in the Right Direction EUDR: Navigating the EU Regulation on Deforestation-Free Products The State of ESG Risk Across Industries: Three Key Takeaways From Our Annual Industry Reports Child Labor in Cocoa Supply Chains: Unveiling the Layers of Human Rights Challenges  More Episodes

Episode Summary  Host:  Melissa Chase, Senior Content Marketing Manager, Morningstar Sustainalytics  Guests:  Kilian Theil, Associate Director, Intelligent Process Automation, Morningstar Sustainalytics  Andrei Hera, Senior Manager Data Science, Morningstar Sustainalytics   AI Technology is Reshaping the World of ESG Assessments In recent years the marvels of artificial intelligence have been touted across various sectors. As applications of AI technology proliferate, in this episode of ESG in Conversation we chat about how it’s being used in the ESG research space. Members of Morningstar Sustainalytics data research and development teams discuss how the company has been leveraging AI technologies for the past decade and what’s on the horizon in terms of gathering and analyzing corporate ESG risk data.    You’ll also learn more about ESG risks in global supply chains as we share insights from our recently published ESG Spotlight series. The reports explore the impact of supply chain incidents, with a focus on human rights and biodiversity loss. They also offer investors frameworks for assessing supply chain-related risks among portfolio companies and potential strategies to improve portfolio performance and mitigate losses.    Share Your Thoughts About the Show  Please take a moment to share your thoughts on ESG in Conversation. You can email us at [email protected] or take this short survey. Key Moments  00:00:00  Introduction  00:01:17  Interview with Kilian Theil and Andrei Hera on how AI is changing the world of ESG research and assessments   00:20:52  Overview of the ESG Spotlight series on ESG risks in supply chains    Links to Select Resources  Artificial Intelligence for ESG Assessments  Supply Chain Incidents: Understanding the Impacts  Unlocking Human Rights in Corporate Supply Chains  Biodiversity in the Balance: Hedging Portfolio Risks 

Episode Summary Host: Melissa Chase, Senior Content Marketing Manager, Morningstar Sustainalytics Guest: Thomas Kuh, Head of ESG Strategy, Morningstar Indexes  Survey Says... Asset Owners Are Committed to Sustainable Investing In this episode of ESG in Conversation, Thomas Kuh, Head of ESG Strategy at Morningstar Indexes shares the results from Morningstar Indexes and Morningstar Sustainalytics’ Voice of the Asset Owner Survey. Not surprisingly, asset owners are concerned about the influence of global events on the market. They are confused about ever-changing regulations and are seeking improvements and reliability from ESG service providers. Despite these challenges, asset owners also say they remain committed to sustainability and are putting more resources towards their ESG strategies.   You’ll also learn more about the low-carbon transition risks facing some of the world’s biggest food companies and the steps they can take to get their emissions reductions back on track. Finally, the start of 2024 brings new sustainability-focused regulations. The Corporate Sustainability Reporting Directive (CSRD) came into effect in the European Union on Jan. 1 and will apply to nearly 60,000 companies globally. The directive could be a watershed moment for corporate reporting as well as investors seeking more sustainability data from issuers.   Tell Us What You Think  Please take a moment to share your thoughts on ESG in Conversation. You can email us at [email protected] or take this short survey.    Key Moments 00:00:00  Introduction  00:01:30  Interview with Thomas Kuh discussing asset owners’ views on ESG investing   00:10:52  Insights on the low-carbon transition risks of major food companies and how they can reduce emissions  00:12.33  Details on the Corporate Sustainability Reporting Directive     Links to Select Resources Voice of the Asset Owner 2023: Quantitative Analysis  Big Food’s Broken Promises: The Data Behind the Food Industry’s Rising Emissions  CSRD Reporting: Preparing for Mandatory ESG Disclosure Deadlines  More Episodes  

Episode Summary  Host:   Melissa Chase, Senior Content Marketing Manager, Sustainalytics  Guest:   Ruthann Bartello, Commercialization Director, Stewardship Services  Investors’ Greenwashing Concerns and How to Address Them   Greenwashing is a growing concern among financial market participants. Whether it’s measuring the sustainability performance of companies in a portfolio or ensuring that their own firms and offerings are not making exaggerated claims about their sustainability impacts, asset managers are on the lookout for potential greenwashing risks. Adding to the confusion is a lack of clarity around what defines a sustainable investment, as well as the growing list of regulations and reporting frameworks asset managers need to comply with.   In this episode, we discuss the European Sustainability Reporting Standards, the cornerstone of the Corporate Sustainability Reporting Directive, which should pave the way for more accessible and standardized corporate sustainability information. You also hear from Morningstar Sustainalytics’ Ruthann Bartello about the key strategies investors can use to mitigate greenwashing risks in their investment products and across their portfolios.  Share Your Feedback With the Team  Please take a moment to share your thoughts on ESG in Conversation. You can email us at [email protected].     Key Moments  00:00:00  Introduction  00:01:50  Morningstar Sustainalytics new ebook “Seeing Through the Green: As Guide to Greenwashing Risks for Asset Managers”   00:03:00  The final Corporate Sustainability Reporting Directive and its standards are published  00:4:09  Investor stewardship as a tool to combat greenwashing.   00:5:30  Interview with Ruthann Bartello on key strategies institutional investors can use to address greenwashing  00:06:07  Greenwashing explained  00:08:15  Investor concerns around greenwashing  00:09:58  What’s behind investors’ concerns  00:11:35  Consequences of greenwashing for investors  00:15:05  Key regulations related to greenwashing  00:19:31  Strategies for asset managers to mitigate against greenwashing risks  00:20:23 Tips for asset managers to build a robust investment strategy  00:24:49  Final thoughts    Links to Select Resources  Seeing Through the Green: As Guide to Greenwashing Risks for Asset Managers   Implications of CSRD: What the Final Standards Mean for Investors and Issuers  ESG Stewardship: A Powerful Tool to Mitigate Greenwashing Risks  More episodes

Episode Summary Host: Melissa Chase, Senior Content Marketing Manager, Sustainalytics  Guest:   Arthur Carabia, Director, ESG Policy Research, Morningstar  New Format, Same Great Insights  We are excited to share with you the revamped ESG in Conversation! In this new format, we’re expanding the focus beyond sustainable finance to share the latest environmental, social and corporate governance insights. In addition to highlighting recent research from our global team of ESG experts, we will continue to bring you deep dives into the ESG, climate, impact, sustainable finance and regulatory insights you need to know about.  In this episode you’ll learn about the upcoming greenhouse gas reporting requirements for companies in North America, the implications of Europe’s policy response to the climate crisis, the Fit for 55 package, and what it means for companies that supply goods and services in the EU.     Also, Morningstar’s Arthur Carabia discusses what the recently published International Sustainability Standards Boards reporting standards mean for companies and investors.  Tell Us What You Think  Please take a moment to share your thoughts on ESG in Conversation. You can email us at [email protected].     Key Moments  00:00:00  Introduction  00:01:45  Greenhouse gas emissions requirements for North American companies  00:03:50  Interview with Arthur Carabia about the launch of the ISSB standards  00:10:40  Highlights of the EU’s Fit for 55 legislation    Links to Select Resources  Mandatory Scope 3 Emissions Reporting in the U.S. and Canada: Most Companies Are Unprepared  Policy Responses to Climate Change: The EU’s Fit for 55 Package and Its Implications for Companies and Investors  What the New ISSB Climate Standard Means for Investors  More Episodes  

In this episode of ESG in Conversation, we’re exploring the question: what does it take to be a sustainability leader in 2023 and beyond? You’ll hear from Joseph Hill, London Techstars alumn and CEO of Zephframe, about the sustainability challenges facing start-ups. You’ll also hear from Eileen Buckley, VP of Corporate Responsibility at Stryker, about the importance of integrating sustainability across an organization. Gabriel Presler, Global Head for Enterprise Sustainability at Morningstar, also joins in to discuss the role investors play in sustainability leadership.

Host: Curtis File, Editorial Manager, ESG and Sustainable Finance Featuring: Juliette Goulet, Project Manager, Ellen MacArthur Foundation Wayne Hubbard, CEO, ReLondon Joris Laseur, Associate Director, Stewardship, Morningstar Sustainalytics Jonathan Kellar, Manager, Stewardship, Morningstar Sustainalytics As global leaders gain a more nuanced understanding of climate change, they are looking at the circular economy as a potential solution to mitigate their impact. In a circular economy, organizations aim to prevent waste throughout the value chain instead of relying solely on recycling. This approach involves sharing, leasing, reusing, repairing, and recycling materials and products for as long as possible. Proponents say the approach comes with huge potential upside. The Ellen MacArthur Foundation, for example, projects that a circular economy could reduce greenhouse gas emissions by 25%, create 700,000 jobs, and save $200 billion per year by 2040. But the path to achieving those goals is far from clear, and it will require an all-hands-on-deck effort. In this episode of ESG in Conversation, we’re exploring the question: how do businesses, governments and investors fit into the circular economy? You’ll hear from Juliette Goulet, a seasoned sustainability practitioner from the Ellen MacArthur Foundation, about the challenges of implementing a circular economy. You’ll also hear from Wayne Hubbard, CEO of ReLondon, about putting the circular economy into practice in London, England. Joris Laseur and Jonathan Kellar from Morningstar Sustainaltyics’ stewardship team also join to discuss the role investors play in helping businesses reduce their waste and implement circular business practices.

Episode Summary Hosts Nicholas Gandolfo, Vice President, Corporate Solutions Aditi Bhatia, Senior Regional Manager, Corporate Solutions What Will the EU Green Bond Standard Mean for the Market?  With the European Union’s Green Bond Standard set to come into effect sometime next year, we look at what it could mean for the global sustainable finance market more broadly. Although the highly anticipated framework is expected to be the gold standard for what we see in the market going forward, there are ongoing concerns about its usability. Some market participants are worried about the potential difficulty in meeting all the requirements of the Green Bond Standard and whether the standard is too prescriptive in its requirements to set up a framework.   Sustainable Finance Meets AI   The sustainable debt market continues to see innovations in the types of projects being funded. One example is the use of green bonds to raise money for artificial intelligence (AI) projects related to green or social initiatives. The green bond issuance highlighted in this episode will finance AI projects related to improving the environmental performance of buildings through data analytics and energy management software. Using AI to support corporate sustainability improvements is not new, but funding such projects using sustainable debt instruments could be the next wave.  Changes Coming to the Podcast! Our sustainable finance insights show will be taking a break for the summer. We’ll be back this fall with some exciting changes to bring you more ESG, sustainable finance and responsible investing insights. In the meantime, please subscribe to ESG in Conversation on your favorite podcast platform and enjoy new episodes each month!  Key Moments 0:00:49  Market overview  0:01:36  CBI Q1 highlights report  0:03:04  LMA sustainability linked loan drafting model  0:03:28  Sustainable bond market risks  0:04:44  Gender-focused social bonds   0:05:37  Transition plan guidelines  0:05:58  Debt for nature swaps  0:06:23  IRENA report on the cost of energy transition  0:07:00  New CBI reports  0:07:42  SLB and SLL overview  0:11:35  Audience questions  0:16:08  Green bonds and loans overview  0:19:25  Labeled products, transition bonds and regulatory updates    Links to Select Resources Climate Bonds Initiative – Sustainable Debt Market Summary Q1 2023  Environmental Finance – LMA Publishes ‘Vital’ Sustainability-Linked Loan Drafting Model  Morningstar Sustainalytics – Anticipating the Inevitable: What to Expect from the European Green Bonds Regulation   Responsible Investor – Details Emerge on EU Green Bond Standard as Concerns About Uptake Remain  Environmental Finance – Sustainable Bond Market Risks Fragmentation Amid ‘Regulatory Overload’  BusinessWorld – No Plans for Follow-Up Offer of Catastrophe Bonds – De Leon  WION – Bhutan Takes Steps to Set Up Green Cryptocurrency Mining Operation: Report  Environmental Finance – ‘Huge Opportunities’ for Gender-Focused Corporate Sustainable Bond Growth  Environmental Finance – GSAM: 36% of European Investors Ready to Invest in Social Bonds  Forbes – Companies Going Green Should Add Finance To Sustainability Strategies  Eco-Business – The Next Wave of Greenwashing: Offsets, Competitor Claims and ‘Transition-Washing’  Environmental Finance – Banks Call on EU to Provide Transition Plan Guidelines  Environmental Finance – Credit Suisse Arranges $1.6bn Debt-for-Nature Conversion With Ecuador  IRENA – Low-Cost Finance for the Energy Transition  Climate Bonds Initiative Reports  Concrete Policies to Underpin the Cement Transition  ASEAN Sustainable Finance State of the Market 2022  Property Certification Opportunities in Tokyo  Sneak Peek: The CBI’s Resilience Taxonomy Blueprint  Sustainalytics Second-Party Opinions  TDC NET Sustainability-Linked Finance Framework Second Party Opinion  UMH Properties Inc. Sustainable Finance Framework Second-Party Opinion  Grupo Bimbo Sustainable Financing Framework Second-Party Opinion  More Episodes

Episode Summary Hosts: Sabrina Tang Sales Associate, Sustainable Finance Solutions Nicholas Gandolfo, Vice President, Corporate Solutions   Is the Sustainable Finance Market Rebounding in 2023? In this month’s episode, Nick and Sabrina dig into the sustainable finance market’s rebound in Q1. Despite the market pressures caused by inflation and the banking shake-ups at UBS and Credit Suisse, sustainable finance activity saw an upward trend in the first part of the year. Although Nick and Sabrina stop short of making any predictions about where volumes will land by the end of the year, they do note some interesting dynamics in the market: green use of proceed bonds remain strong, social and sustainability focused bonds are down slightly, and sustainability-linked finance appears to be gaining some ground again despite continued market scrutiny. Scrutiny Continues for Sustainability-Linked Bonds Despite the rebound in sustainability-linked bond (SLB) activity in Q1 this year, concerns remain about this sustainable debt instrument. Several recent articles and reports discuss the credibility of SLB targets, whether coupon rates offer enough of a penalty if targets are missed, and whether the performance targets and indicators have an impact on sustainability. There’s also some media coverage on SLB issuers missing their stated sustainability performance targets. Although not ideal, missed targets among SLB issuers could be viewed as a sign of their rather than an indication of something being fundamentally wrong. For issuers considering sustainability-linked debt instruments and seeking additional guidance, check out the latest market references from Climate Bonds Initiatives (CBI). The Sustainable Sovereign Debt Club Continues to Grow CBI’s 2022 market summary highlights the growth of sovereign bond issuances. This is great to see because sustainable debt from sovereigns catalyzed the market in many cases. Sabrina highlights the recent activity from Turkey, Austria, Italy, and Cyprus as well as the sovereign green bond program being considered by the Australian government. In addition to more countries seeing the opportunities in sustainable debt instruments, regulators across a growing number of jurisdictions are ramping up sustainable finance activities in their countries. Developments are ongoing in India, Indonesia, Malaysia, Sri Lanka, Japan, and Vietnam to name just a few.   Key Moments 0:00:59 Market overview 0:02:07 Q1 market overview 0:03:25 CBI 2022 state of the market report 0:05:22 Continuing SLB scrutiny 0:06:46 Climate transition plan transparency 0:08:34 More updates to the EU taxonomy 0:09:34 Additional articles and reports to read (see links below) 0:11:34 SLB and SLL overview 0:14:15 Audience questions 0:18:14 Green bonds overview 0:21:13 Green loans overview 0:22:30 Social bonds and loans overview 0:23:25 Labeled products, transition bonds and regulatory updates     Links to Select Resources Climate Bonds Initiative – Green and Other Labelled Bonds Fought Inflation to Amass USD858.bn Volume in 2022 Climate Bonds Initiative – Sustainable Debt: Global State of the Market 2022 Environmental Finance - ‘It’s time to stop step-up-only sustainability-linked bonds’ Environmental Finance – Union Investment: SLBs Can Have Impact Environmental Finance – CBI Launch Sustainability-Linked Bond Certification Scheme Energy Monitor – Are We About to See a Surge in Sovereign Sustainability-Linked Bonds? Environmental Finance – Sustainability-Linked Targets Could Add ‘Discipline’ in Green Bond Markets Retail Banker International – CaixaBank Rolls Out Metaverse Initiative to Promote Sustainability Responsible Investor – Market Hails ‘Surprisingly Helpful’ SFDR Clarifications from European Commission GreenBiz – Should Sustainability Teams Report Directly to the CEO? Climate Action 100+ - Climate Action 100+ Releases the Latest Evolution of the Net Zero Company Benchmark Financial Times – New Standards Keep the Greenwash off Green Bonds The Strait Times – Companies Risk Penalties as Asia and Australia Target Greenwashing Environmental Finance – ‘Greenwashing is rife’ in Green Bonds, Says EU’s Tang IPCC – AR6 Synthesis Report: Climate Change 2023 Environmental Finance – Nature-Related Sovereign Issuances Set to Grow, Insight Predicts Climate Bonds Initiative – Sustainability-Linked Debt Instrument Certification Sustainalytics Second-Party Opinions Hera Group’s Green Financing Framework Second-Party Opinion Council of Europe Development Bank Social Inclusion Bond Framework Second-Party Opinion More Episodes

Host: Curtis File, Editorial Manager, ESG and Sustainable Finance Featuring: Sune Andersen, Manager, Stewardship Simon Butler, Associate Professor, University of East Anglia Gayaneh Shahbazian, ESG Research Manager, Biodiversity The statistics are concerning. The International Union for the Conservation of Nature (IUCN) estimates that up to 28% of all species are at risk of extinction. Given these alarming figures, it is crucial for investors to take action and ensure their investments do not further harm our vulnerable ecosystems. Join us on the latest episode of ESG in Conversation, where we delve into the critical question: how can investors effectively address biodiversity loss? Gain valuable insights from Dr. Simon Butler, an esteemed professor specializing in acoustic ecology, whose work underscores the urgent need to tackle biodiversity issues. Additionally, hear from Morningstar Sustainaltyics' stewardship and ESG research teams, providing valuable perspectives on investor engagement on biodiversity loss and the challenges faced by corporations in disclosing nature-related risks.      

Episode Summary  Hosts:  Nishant Bhagchandani, Sales Manager, Sustainable Finance Solutions  Nicholas Gandolfo, Vice President, Corporate Solutions     Regulation, Guidance and Taxonomy Updates Keep Market Participants on Their Toes   In this episode, Nick and Nishant discuss the flurry of updates in the sustainable finance regulation and guidance space. The European Union has reached a long-awaited deal on the first set of comprehensive rules for issuing green bonds. Although voluntary, the EU Green Bond Standards will help investors identify high-quality green bonds and may set a precedent for other jurisdictions.   The Green Loan Principles, Social Loan Principles, and Sustainability-Linked Loan Principles were also recently updated to align more closely to current market practice and provide additional guidance to borrowers (e.g., recommendations that borrowers obtain an independent external review of their green, social and sustainability-linked loan processes). Other updates include recommendations for the sustainable finance taxonomies being developed in Australia and Canada, as well as the new draft version of the Taskforce for Nature-related Financial Disclosures (TNFD) framework.         What the Final TNFD Framework Could Mean for Sustainable Finance   With the release of the fourth beta framework from the TNFD, market participants eagerly await the final version, due to be published this fall. This latest beta release includes a full draft reporting framework and a set of disclosure metrics, along with assessment metrics to be used by companies. The disclosure metrics will also include some core measures which are applicable to all sectors. The final framework will help to standardize the sustainability metrics companies report on, making them usable in sustainability-linked instruments and speeding up the framework’s adoption.     Key Moments  0:00:59  Market overview  0:02:32  Market forecast  0:03:22  SVB failure and climate tech  0:04:05  Morningstar Sustainalytics launches Low Carbon Transition Ratings  0:04:37  Relinking in sustainable finance  0:05:11  TNFD release beta version 4 of framework  0:05:56  Insights from Kanga News Sustainable Debt Conference  0:06:30  Taxonomy developments in Australia and Canada  0:07:24  Agreement of EU Green Bond Standards  0:08:33  High Seas Treaty will boost blue bond issuance  0:08:45  SLBs as a hedge against sustainability policies  0:09:00  Transition finance standards  0:09:12  Updated principles for green, social and sustainability-linked loans  0:10:58  SLB and SLL overview  0:13:48  Audience questions  0:17:43  Green bonds overview  0:20:56  Social bonds and loans overview  0:22:40  Labeled products, transition bonds and regulatory updates      Links to Select Resources  JD Supra – Asian ESG Debt Markets Take a Breath After Record Run  Bloomberg – Green Bonds Turbo Charge ESG Debt Sales to Busiest February Ever  ESG Clarity – Natixis Q&A: ‘Liquidity Will Be Driven by ESG Transparency and Clarity’  Environmental Finance – Credit Suisse: Another Headwind for 'Green' AT1 Bonds   Morningstar Sustainalytics Launches its Low Carbon Transition Ratings  Bank of China Ltd Announcement – Sustainability Re-Linked Notes Coupon Adjustment: Annual Coupon Adjustment of Sustainability Re-Linked Notes  Environmental Finance – Forthcoming TNFD Metrics Would Work in Sustainability-Linked Instruments  Environmental Finance – Traffic-Light System Recommended for Australia's Taxonomy   Environmental Finance – EU Green Bond Standard: Provisional Deal on Landmark Regulation Agreed   ESG Clarity – High Seas Treaty Will Boost Interest, Access and Issuance of Blue Bonds  Climate Bonds Initiative – India’s Debut in the Sovereign Green Bond Market: First Deal Landed a Greenium!  IRENA – Investments in Renewables Reached Record High, But Need Massive Increase and More Equitable Distribution  International Energy Agency – Global CO2 Emissions Rose Less Than Initially Feared in 2022 as Clean Energy Growth Offset Much of the Impact of Greater Coal and Oil Use  Climate Bonds Initiative – Climate Bonds Standard Expands With New Agri-Food Transitions Criteria: Commodity and Supply Chain TWGs And IWGs Now Onboarding    More Episodes  

With all the noise about ESG in the news, it can be hard to discern what is really going on. We know that the increased demand for companies to address ESG issues has meant that organizations have had to make significant changes to how they work. But when it comes to addressing, managing and reporting on ESG issues, what’s really going on behind corporate doors?   In this episode of ESG in Conversation, we explore that question by examining how the roles of CSR and sustainability professionals are evolving to address material ESG issues. You’ll hear about the results of the Morningstar Sustainalytics Corporate ESG Survey, with insights about the challenges, concerns, and evolving roles of CSR and sustainability professionals around the world.  View the show notes in full detail at the Sustainalytics Resource Centre.    Read the full Morningstar Sustainalytics Corporate ESG Survey Report 2022   Download the report to learn about the ESG challenges companies face around the world and the resources CSR and sustainability professionals are using to meet them, key steps to ESG maturity, where companies are focusing their ESG investments, and how companies are using their ESG ratings and scores. 

Episode Summary  Hosts:  Winnie Chung, Senior Associate, Corporate Solutions  Nicholas Gandolfo, Vice President, Corporate Solutions   Growing Innovation with Sustainable Finance Instruments  In this episode, Nick and Winnie chat about the latest news and transactions in the sustainable finance space. With a focus on innovation, they discuss the new ways in which issuers are leveraging sustainable finance instruments to fund their green and social projects. For instance, the World Bank’s recent bond issuance will forgo investor coupon payments, instead using the funds to finance a project manufacturing water purifiers in Vietnam. Using purifiers will replace biomass burning (traditionally used to boil water to make it safe to drink), resulting in lower carbon emissions. The carbon emissions saved will be turned into carbon credits and sold to fund a coupon payment to bond investors. Nick also notes innovation picking up in the areas of blue bonds and the maritime economy as well as biodiversity-focused finance activities.    Investors Swing Back to Use of Proceed Instruments  Winnie and Nick also touch on the growing ambivalence towards sustainability-linked instruments. In 2022, sustainability-linked bonds and loans seemed to lose some of their appeal as scrutiny of targets and performance indicators intensified and accusations of greenwashing arose. Adding to the discontent – slipping targets. Analysis from Barclays finds that nine out of 12 SLBs with target measurement dates in 2023 are off track to hit those targets. Consequently, we’re seeing a swing back toward traditional use of proceed instruments. This is particularly true within the green bond market which took less of a hit compared to other types of labelled bonds in 2022. With more green bond disclosure guidance and regulations expected from more jurisdictions, such as India, Bolivia, EU and Latin America, investors will likely continue to seek security in the more structured green bond market.   Key Moments 0:02:20  Market overview  0:02:37  Expected market rebound  0:03:15  Innovative structure from World Bank  0:04:03  Swing back to use of proceeds?  0:04:23  Innovative structure from ENEL  0:05:10  Blue and biodiversity activity  0:05:31  Continued scrutiny of SLLs and SLBs  0:06:40  ASEAN developments  0:07:34  New CBI reports  0:08:04  SLB and SLL overview  0:11:52  Green bonds overview  0:17:35  Green loans overview  0:17:57  Audience questions  0:21:05  Social bonds and loans overview  0:22:03  Labeled products, transition bonds and regulatory updates    Links to Select Resources Bloomberg – ESG Bond Sales Hit 12-Month High; Debut Deals Pile Up  Environmental Finance – Sustainable Bonds Insights 2023 Published Environmental Finance – World Bank Issues ‘Unique’ Carbon Credit-Linked Bond Environmental Finance – IFC adds ‘Blue’, Biodiversity Projects to Green Bond Framework UN Environment Programme – Countries Search for Financing to Counter Biodiversity Crisis  Responsible Investor – SLB Issuers ‘Likely to Miss Majority of 2022 and 2023 Targets’ Environmental Finance – SLB Issuers ‘Lose Their Halo,’ says HSBC LSTA – Drafting Guidance for Sustainability-Linked Loans (Feb 17, 2023) Environmental Finance – Philippines Opens Consultation on Sustainability-Linked Bonds Standards Financial Times – Sustainability Bond Market Stumbles as Investors Get Picky CarbonCredits.com – JBS “Green Bonds” and GHG Emissions Under Investigation  Bloomberg – Barclays Sees Real Greenwashing Risk in ESG Debt-Swap Market Climate Bonds Initiative – Sustainable Agriculture Brief Climate Bonds Initiative – Scaling Credible Transition Finance – ASEAN Edition Capital Monitor – Why Japan Embraces Transition Bonds  Business Standard – SEBI Asks Issuers for Additional Disclosure in Guidelines on Green Bonds ESG Clarity – Mandatory Climate Finance Disclosure ‘Evens Playing Field’ for Australia Sustainalytics SPOs: Nokia Sustainable Finance Framework Second Party Opinion State Bank of India ESG Financing Framework Second-Party Opinion Hertz Green Finance Framework Second-Party Opinion    More Episodes  

Episode Summary Hosts Nicholas Gandolfo, Vice President, Corporate Solutions Sabrina Tang, Sales Associate, Corporate Solutions In this episode, Nick and Sabrina reviewed what’s new in sustainable finance and shared some notable deals and transactions that have hit the market. They discussed the overall decline of global bond markets and expressed some optimism for the year to come, as sustainability is a central issue for investors, companies and governments and is still closely tied to capital markets. They also shared research on the carbon performance of food producers and a report on how to scale credible transition finance among countries in Southeast Asian.  Sustainable Market Hopes for 2023  If you’ve been following sustainable finance market activities, it’s no surprise that 2022 was not a great year overall. Markets were down in volume for the first time in 11 years. According to figures from Environmental Finance, total annual sustainable bond issuance fell 19%, from US$1.05 trillion in 2021 to US$845 billion in 2022. Social, sustainability and sustainability-linked bonds were hit hardest – down about 25% compared to 2021, while green bonds fared a bit better with a more modest 14% issuance decline.  Despite the lower issuance volumes, there is hope for a rebound in 2023 as overall markets stabilize and issuers seek financing. This year may see use of proceed instruments like green bonds continue to gain ground compared to performance based, sustainability-linked bonds. We may also see more transition deals, social and biodiversity focused activity, as well as more complicated transactions going to market. It’s still early days, so let’s see how things develop.  Updated Standard for Reporting Financed Emissions in Sovereign Debt  If you’re a bank trying to figure out how to report on your financed emissions, be sure to read through Partnership for Carbon Reporting Financials’ (PCAF) recently updated standard. Global GHG Accounting and Reporting Standard for Financed Emissions addresses demands from financial institutions and provides a methodology to help investors in sovereign debt account and report greenhouse gas emissions. The methodology on sovereign debt includes bonds and loans of all maturities, however, only debt issued by the central bank on behalf of the sovereign would be covered. The methodology also requires reporting of scope 1, scope 2 and scope 3 emissions and recommends getting the information from countries’ reported data via the United Nations Framework Convention on Climate Change. Key Moments 0:01:16 Market overview 0:03:24 COP15 insights 0:04:22 Australia sustainable finance taxonomy 0:05:04 BNP Paribas social impact bond 0:05:16 TPI paper on food producers' carbon performance 0:06:53 Updated PCAF standard 0:07:31 Banks' transition planning under scrutiny from ECB 0:08:05 Activity in carbon markets 0:08:45 Austria launches green commercial paper program 0:09:14 CBI paper on transition finance in ASEAN 0:10:17 SLB and SLL overview 0:15:34 Audience questions 0:21:00 Green bonds overview 0:23:56 Green loans overview 0:25:06 Social bonds and loans overview 0:27:38 Labeled products, transition bonds and regulatory updates   Links to Select Resources Environmental Finance – Annual Sustainable Bond Issuance Falls for First Time Since 2011 Bloomberg.com – Global Debt Market Lost at Least $75 Billion of Business in 2022 Reuters – ESG Watch: Despite Setbacks, Green Finance Ends 2022 in Good Health Global Capital – High Hopes for Corporate Issuance in 2023 Environmental Finance – COP15 Agreement 'Significant,' but Credit Impact Depends on Implementation Environmental Finance – Climate Change Litigation: 11 Key Cases for Insurers to Watch Australian Sustainable Finance Institute – Taxonomy Project Global Capital – Saving Biodiversity: The Next Mountain for Capital Markets Transition Pathways Initiative – TPI Carbon Performance Assessment of Food Producers: Discussion Paper Environmental Finance – PCAF Sovereign Debt Methodology Plugs Gap in Emissions Accounting, Says Allianz European Central Bank – Supervisory Priorities and Risk Assessment for 2023-2025 Environmental Finance – Carbon Markets Can Help Provide Nature-based Solutions The Hindu Business Line – Sovereign Green Bonds Will Act as Benchmark for Private ESG-linked Debt: RBI’s Rao Global Capital – Austria to Launch Green Commercial Paper in 2023 Climate Bonds Initiative – Scaling Credible Transition Finance – ASEAN Edition Sustainalytics SPOs: UNIQA Green Bond Impact Report Mosaic Solar Green Use of Proceeds Securitized Bond (2022-3)

Episode Summary Hosts Nicholas Gandolfo, Vice President, Corporate Solutions Aditi Bhatia, Senior Regional Sales Manager, Corporate Solutions In this episode, our hosts Nick and Aditi discuss the recently held COP27 and COP15 conferences and what their outcomes could mean for green and social financing globally. They also touch on the concept of blended finance and how that might be used to support climate adaptation in emerging markets. Increasing activity among sovereigns is also discussed, as countries come to market more frequently with sustainable debt. Lastly, Nick and Aditi share a rundown of other notable sustainable finance transactions.  Climate High on the International Agenda  Given the current climate crisis, expectations were high for COP27. From an environmental standpoint, the final agreement was seen as a disappointment by some observers. However, the conference closed with a ground-breaking agreement to set up a loss and damages fund, which aims to provide financial assistance to countries vulnerable to, or impacted by, the effects of climate change. COP15, the United Nations Biodiversity Conference, also concluded late last year with a landmark agreement that includes measures to halt and reverse nature loss – such as putting 30% of the planet and 30% of degraded ecosystems under protection by 2030. The plan also includes a target of mobilizing at least US$200 billion per year from public and private sources for biodiversity-related funding. Finally, the G20 conference in Bali also turned its attention to issues around climate change, low-carbon transition, and climate adaptation.  Innovative Solutions to Fund Sustainable Development  With an estimated US$9.2 trillion needed to meet global climate and environmental goals,1 private and public sectors are looking for more ways to funnel money to finance mitigation and conservation efforts. To address this need, market participants are discussing innovative solutions like blended finance, which is the strategic use of development finance (such as public or philanthropic capital) and private investment capital to fund sustainable development projects in developing countries.2  A new crop of instruments is also emerging to offer potential solutions. This includes instruments like debt-for-nature swaps, a financial mechanism that allows portions of a developing country’s foreign debt to be forgiven, in exchange for commitments of investment in biodiversity conservation and environmental policy measures.3 We anticipate seeing more variety in the types of instruments being developed to support conservation and climate adaptation in countries most vulnerable to climate change.  Check Out Our Special Episode on Sustainable Finance in the Metals and Mining Sector  In case you missed it, we recently took a deep dive into the sustainable and transition finance opportunities within the metals, mining and commodities sector. Our panel discussed key considerations for banks, issuers and investors interested in using sustainable finance instruments to help fund improvements across the sector and mitigate potential risks. The sector is incredibly important because of its crucial role in the global transition to a low-carbon economy. However, these companies face numerous environmental and social challenges, which if not managed effectively could negatively impact their access to capital. Listen here: Sustainable Finance Insights: Special Episode on Sustainable Finance in the Metals, Mining and Commodities Sector   Key Moments 0:00:51 Market overview 0:01:38 COP27 insights 0:03:48 G20 Summit 0:04:35 COP 15 insights 0:05:00 State of the bond market and outlook for 2023 0:05:56 Sovereigns’ ambitions in sustainable finance 0:06:33 Social taxonomy update 0:06:52 Green bond tokenization 0:07:12 Emergence of blended finance 0:08:02 More activity in transition finance market 0:08:19 Market scrutiny of SLBs 0:10:08 ICMA paper on sustainable repos 0:10:34 Food security as social use of proceeds 0:10:54 More activity around carbon markets globally 0:11:15 PCAF publishes second version of Global GHG Account and Reporting Standard 0:11:48 CBI principles for transitioning agriculture sector 0:12:23 SLB and SLL overview 0:17:39 Audience questions 0:23:26 Green bonds overview 0:26:51 Green loans overview 0:28:50 Social bonds and loans overview 0:31:04 Labeled products, transition bonds and regulatory updates   Links to Select Resources IFLR - COP15: Financial Firms Look to Scale Up Nature Finance Bloomberg - Global ESG Bond Issuance Headed for First Full-Year Decline Ever GlobalCapital – Record Volumes Spark January Debate in FIG Market Responsible Investor – World Bank: Only 31 Southeast Asian Companies Have Issued Sustainable Debt Since 2017 OMFIF – Sovereigns Need to Show More Ambition With ESG Bond Frameworks GlobalCapital – ESAs Call for Evidence of Greenwashing Open Access Government – Social Taxonomy: A Step Towards Social Sustainability Environmental Finance – Banks Urged to Rework Financing Instruments for Climate Adaptation Blockchain News – HK to Issue Tokenized Green Bond, Open Market for Virtual Assets ETFs Trading China Dialogue – China’s Central Bank to Focus on Transition Finance The Manila Times – ASEAN Launches Sustainable and Responsible Fund Standards Bloomberg Law – ESG-Linked Bonds Seen Stalling on Greenwash and Legal Fears Environmental Finance – Snam’s Return to Transition Bonds ‘A Big Sign’ SLBs are Under Pressure GlobalCapital – Crunch Time Coming for SLBs as First Step-Ups Appear The Business Times – ESG is Taking Over the Loan Market Environmental Finance – ICMA Principles Could be Adapted for ‘Sustainable Repos’ Climate Home News – John Kerry: Carbon Offsets Can Help Wean Developing Countries Off Coal World Economic Forum – Climate Adaptation: The $2 Trillion Market the Private Sector Cannot Ignore Responsible Investor – Scope 3 Emissions Key to Financial Sector Net Zero Plans, says GFANZ Climate Bonds Initiative – Principles and Hallmarks for Transitioning Agri-Food Systems: Opportunities, Pathways and Actions Sustainalytics SPOs: AIB Green Bond Framework Second-Party Opinion Storebrand Green Bond Framework Volkswagen Aktiengesellschaft Green Finance Framework Second-Party Opinion City of Atlanta Social Bond Framework Second-Party Opinion CABEI Green and Blue Bond Framework Second-Party Opinion VPBank Social Finance Framework Second-Party Opinion   Sources 1Roston, E. 2022. “McKinsey Pegs the Price Tag for a Livable Climate at $9.2 Trillion a Year.” Bloomberg. January 25, 2022. https://www.bloomberg.com/news/articles/2022-01-25/mckinsey-pegs-price-tag-of-livable-climate-at-9-2-trillion-a-year 2 See OECD: https://www.oecd.org/development/financing-sustainable-development/blended-finance-principles/ and Bank of America: https://about.bankofamerica.com/en/making-an-impact/blended-finance 3 See Earth.org: https://earth.org/debt-for-nature-swaps/  

Episode Summary Host: Curtis File, Editorial Manager, ESG and Sustainable Finance Featuring: Melissa Hudson, Associate Director, Research Products Liam Zerter, Associate Director, Quantitative Research Manager In this episode of the Sustainalytics Podcast, Curtis explores cybersecurity and data privacy issues, with commentary from Melissa Hudson and Liam Zerter about the real impact of cyberattacks on businesses. You’ll learn about the 2021 United Kronos Group ransomware attack, cybersecurity trends that organizations should monitor, how cyberattacks affect the bottom line, and why companies should invest in developing robust cybersecurity and data privacy policies. The Current Cybersecurity and Data Privacy Trends Companies Should Monitor Within the last two years in particular, both the frequency and severity of cyberattacks against businesses have continued to climb. As companies have modernized and expanded their digital infrastructure to remain competitive, they have also increased their vulnerability. High-profile data breaches have led to increased pressure from regulators, consumers, and the insurance industry, who increasingly view such incidents as market failures. Why Having a Strong Cybersecurity Policy is Important Perhaps most importantly for a company’s bottom line, Morningstar Sustainalytics’ researchers found that companies that had robust data privacy and cybersecurity policies were able to recover faster from a cyberattack compared to peers with poor or weak policies. Beyond providing a boost to recovery, companies must also invest in their cybersecurity infrastructure in order to keep up with the rapidly changing regulatory landscape. Those that don’t take immediate action will be left behind. Read Our eBook, Data Privacy, Cybersecurity and ESG: Managing Risks in a Changing Business Environment Download the ebook to learn about the types of data privacy and cyber threats companies are facing, the potential ESG risks for companies that do not properly address data privacy and security, and how organizations can manage and mitigate data privacy and security risks. Key Moments   00:00 United Kronos Group Ransomware Attack 01:54 Introduction to the Cybersecurity and Data Privacy Landscape 03:35 Five Global Events Driving Cybersecurity and Data Privacy Trends 05:18 Consequences of Under-Investment in Cybersecurity 06:40 The Increasing Frequency and Severity of Cyberattacks 08:00 How Cyberattacks Impact Stock Price 09:45 The Importance of Strong Data Privacy and Cybersecurity Policy 10:34 A Developing Regulatory Landscape 12:09 Looking Forward Transcript 00:02 Curtis File: In December 2021, a group of cybercriminals sent panic across the United States. United Kronos Group, a payroll and HR software company, was targeted by a ransomware attack. The attack took out its Kronos Private Cloud platform, and this left major retailers and state governments scrambling to pay employees as the holidays approached. But worse, a number of hospitals were affected. Kronos was a mission critical provider of administrative services for hospitals across the United States. From small, remote hospitals to urban medical systems, the attack interrupted services and, in many cases resulted, in delayed health care delivery. So why was this able to happen? 00:46 John Riggi: In response to the pandemic, hospitals rapidly deployed and expanded network-connected and internet-connected technologies to accommodate a surge of COVID patients and a remote administrative workforce. So, what this did is create many more opportunities for bad guys to penetrate our networks. It's what we call an expanded attack surface.1 01:18 CF: That was a clip of John Riggi, Senior Adviser for cybersecurity and risk for the American Hospital Association. At the time of the Kronos attack, he spoke openly to media about his concern for the cybersecurity threats the health care industry is facing. He told NPR: “As we always do, hospitals and health systems will get it done and care for patients, but under additional stress and burden they don't need right now.” The incident highlighted the real impact of cybersecurity breaches when corporations and government systems are attacked, our coworkers, friends and family are the collateral damage. I'm Curtis File, Editorial manager with Sustainalytics and your host for today as we look at cyberattacks and what they mean for ESG risk management. Cybersecurity and data privacy have become hot button issues, particularly in the last two years. Consumers have become more informed about data privacy issues, demanding companies take accountability for how they process user data. At the same time, there's been a significant increase in the number and severity of cyberattacks against businesses. To better understand the concrete business impact of cyberattacks, Sustainalytics’ experts set out to create a report based on our own research and data, asking, “does a major cybersecurity incident have a meaningful impact on stock price returns?” And it turns out... 02:45 Melissa Hudson: The answer is yes. 02:47 CF: That's Melissa Hudson, Associate Director, Research Products and one of the authors of the report. You'll be hearing more from her today, along with another Sustainalytics expert, Liam Zerter, Associate Director, Quantitative Research Manager. We'll be taking a closer look at the results of the report to get a better understanding of cybersecurity and data privacy. But before we get into the data in numbers, let's take a broader look at cybersecurity as an ESG risk. Melissa Hudson explains. 03:15 MH: If I could sum up what we're seeing, it's that both data and digitization have become a double-edged sword. They are key drivers of value and efficiency, but they also create a significant new target commodity and increased corporate vulnerability. We see five recent global events as key. First, COVID 19 and the unprecedented disruption and movement to remote work that came with it. Second, the 2020 SolarWinds attack, a game changer that Microsoft CEO called the largest and most sophisticated attack the world has ever seen. Then came the 2021 Colonial Pipeline hack that showed the U.S. public the real-life, real-time impact of a cyberattack on critical infrastructure.  Fourth, the Russian invasion of the Ukraine earlier this year, which led many to fear the possibility of cyber warfare. Finally, over the course of this time-period, we've seen the emergence of ransomware and in particular its productized form known as “ransomware as a service”. So, on the one side, disruption, sophisticated technologies, supply chains and critical infrastructure attacks are placing an increased focus on how vulnerable our integrated cyber ecosystem has become. While, on the other, ransomware is leveling the playing field in terms of risk. Companies and industries once considered immune are having to deal with business interruption and extortion as ransomware is made available to less sophisticated actors. In short, we're reckoning with a significant realignment in global cyber security risk. And the pace of corporate investment in cybersecurity has not kept up. 05:29 CF: That underinvestment in cybersecurity is a critical issue. The frequency of cyberattacks only continues to climb, and so does the severity of losses. As a result, stakeholders are being taken off guard as they're suddenly confronted with significant transition risks. And the public costs of underinvestment in cybersecurity are increasingly being viewed as market failures in much the same way as environmental issues. These costs are driving increased regulation, stronger enforcement, and pressure from the insurance industry. 05:59 MH: Marsh and McLennan see an inflection point in the market comparable to that faced by property insurers 30 years ago following Hurricane Andrew in Florida. Following Andrew, almost a million policyholders lost coverage after their insurance companies went bankrupt. In today's context, we are seeing a cyber-insurance market with increasing premiums, more exclusions, and, in a signal that mirrors our own analysis, coverage availability tightly linked to implementing industry standard cybersecurity safeguards. 06:40 CF: With regulators and insurers increasingly scrutinizing companies’ cybersecurity practices. Sustainalytics researchers wanted to know: Are cybersecurity incidents really increasing in number and severity? Do cyberattacks impact share price? And if so, how? And do strong privacy and security practices pay off? Let's start with the first question. Liam Zerter has the answers. 07:03 Liam Zerter: Let's take a look at the data privacy and security incidents that Sustainalytics tracks. If we take a look at 2013, moving to 2021, data privacy and security has been growing at a cumulative aggregate growth rate of 37%. If you compare this to the total incident growth rate, which is influenced by a coverage, that's been growing at 24%. We have a pretty clear double-digit growth that's occurring. But the more interesting story is when you look down at the risk level from before 2018 and post 2018. So, from 2013 to 2017, those high-risk business incidents have been going for about an average of, you know, five per year. But in 2019 to 2021, now you're averaging 26. So, you're looking at what might be a 5x increase and those big write tail events occurring. 08:00 CF: To get a better understanding of what that fivefold increase in incidents means, Sustainalytics researchers put together an event study to look at the price reaction to news of a major cyberattack. They compared a portfolio of companies that had been involved in a high-risk cybersecurity incident against the S&P 500 and a global sector benchmark. 08:20 LZ: From day zero going forward, in the first four days, you have a -2.3% drop in the first four days and a partial rebound. Some companies start getting some confidence back in the market, but this is short lived. The absolute bottom that occurs is 60 trading days in. This is particularly interesting because some analysts and news anchors on BNN Bloomberg for example, will actually reference that, if a big controversy happens to a company, you know, wait three months and sometimes the market forgets about that controversy, even occurring. That's very interesting to see that this also aligns to that type of saying. 09:06 CF: But that's not the end of the story. The real surprise for researchers came when looking at the long-term impact. One year later. 09:14 LZ: The incident portfolio is actually still negative in absolute terms returns. But it's even worse off when compared to the S&P 500 and the sector benchmark. Now we have a scenario where, you know, it's clearly showing that there is a drag being placed on these companies for a longer-term period. Some studies may, that are out there, may actually say it could take up to two years for some companies that have been severely cyber attacked to start acting normal again. 09:45 CF: The reports are bleak. Malicious actors don't just deal from corporations, they damage the relationship between companies and their stakeholders. So, what can companies do to protect themselves? Liam says having robust security and data privacy policies can buffer the negative impact. 10:02 LZ: When we looked at data privacy and security policy management scores, those companies that had really strong scores, 75 to 100, 1 year after the incident actually traded pretty close in line with their relative benchmark. They actually weren't affected all too much in most cases. But those companies that had a score of zero or no score available at all because the industry that they participate in, they were down nearly -5%. So, there's a significant gap difference. 10:34 CF: Beyond providing a boost to recovery, the regulatory landscape is changing. Taking a casual approach to cybersecurity and data privacy is no longer an option. New and stricter data privacy regulations are on the horizon, with many nations looking to the EU GDPR as an example. On the cybersecurity front, laws, design requirements and reporting standards are continually evolving. Melissa says organizations must pay close attention to both data privacy and cybersecurity regulations to ensure they maintain compliance. 11:05 MH: In general, we're seeing a broad convergence towards GDPR-like regulatory regimes, at least in the developed world. California's New privacy laws have set a high bar for the U.S. and the majority of states now have their own. Canada, for example, is in the process of amending the breadth and depth of its privacy law to meet or closely aligned with GDPR standards. While Australia has just greatly increased the fines for privacy breaches in light of at least two major incidents. On the cyber security front, we have also begun to see significant developments related to freestanding cybersecurity law, technology design requirements, and increasing attention to critical infrastructure standards and reporting. A trend that has only accelerated with the SolarWinds and Colonial Pipeline attacks. 12:09 CF: Those attacks have highlighted that as a society, we have greatly underestimated cybersecurity risk. While digitization has made it easier for businesses to scale and operate more efficiently. It's also made it easier for malicious actors to exploit vulnerabilities—as demonstrated by the Kronos attack. Going forward, organizations are going to be facing increased pressure and scrutiny from government regulations, the insurance industry and stakeholders conducting due diligence on cybersecurity risks. As a result, companies are going to have to both increase their investment in cybersecurity, and increase their level of disclosure around risk mitigation, with particular attention to controls related to privacy and security management. Companies that failed to do so may ultimately face operational and remediation costs, financial penalties, reputational damage and lost business. That's it for this episode of the Sustainalytics podcast. If you'd like more information about data privacy and cybersecurity threats companies are facing around the world, and how your company can better manage these risks, head over to the resource center at www.sustainalytics.com and read our e-book Data Privacy, Cybersecurity and ESG: Managing Risks in a Changing Business Environment. We'll put the link in the show notes. Alternatively, you can check out the full report, The Impact of Cyberattacks on Stock Prices authored by Melissa Hudson and Liam Zerter. Or watch their in-depth webinar Cyber Attacks, Corporate Exposure and Material ESG Risk. If you have any questions, or suggestions for topics you'd like to learn more about, email us at [email protected]. Thanks again to Melissa and Liam for providing their insight. And thank you for listening. References 1. CyberMed Summit. “Cyberattack Preparedness and Hospital Readiness Across American Healthcare.” YouTube Video, 22:37. February 6, 2022. https://www.youtube.com/watch?v=0gfSxfHSzzI   

Episode Summary Hosts Nicholas Gandolfo, Director, Corporate Solutions Aditi Bhatia, Regional Sales Manager, Corporate Solutions In this episode, Nick and Aditi highlight developments in the sustainable finance markets as 2022 winds down. They note that global cumulative green bond issuance has surpassed the US$2 trillion threshold, marking another milestone for sustainable finance. They also discuss the diversification of key performance indicators used in sustainability-linked instruments, the growing opportunities for using sustainable finance as a tool to fund climate adaptation in emerging markets, and regulators’ increasing focus on reporting for scope 3 emissions. Finally, they respond to audience questions about impact investing and sleeper sustainability-linked loans. Cumulative Issuance of Climate-aligned Bonds Passes $2 Trillion Mark According to the Climate Bonds Initiative, to date over US$2 trillion in greens bonds have been issued globally, marking another major milestone in sustainable finance. Despite broader market conditions resulting in lower volumes year-over-year, use of proceed bonds, such as green bonds, are rebounding slightly.  Using Sustainable Finance to Support Funding in Emerging Markets  When thinking about how to ensure a just transition, a recurring question is, "How can market participants initiate more financing for adaptation, resilience, and development, to help countries who most vulnerable to climate change, but that are not major contributors to it?" One answer is sustainable finance. Sustainability-labeled debt can provide opportunities to drive and scale financial flows in emerging markets. Though issuing a green bond doesn’t eliminate the liquidity, currency or country risk facing some emerging market nations, hopefully more funds can be leveraged under the sustainable finance umbrella to drive additional financing and a just climate transition for these countries.   Growing Regulatory Focus on Scope 3 Reporting  Regulators globally continue to push for disclosure and reporting of scope 3 emissions. In October 2022, the International Sustainability Standards Board (ISSB) voted unanimously to require companies to disclose scope 1, scope 2 and scope 3 greenhouse gas emissions, and will develop relief provisions to help companies apply the scope 3 requirements.2 This follows the U.S. Securities and Exchange Commission’s proposal for climate disclosure published earlier this year which includes reporting on Scope 3 for large U.S. companies.   0:00:51  Market overview  0:01:24  Use of proceed rebound  0:02:15  CBI conference outcomes  0:03:22  Green bond issuances pass US$2 trillion globally  0:04:08  FCA report on fund labeling  0:04:58  CBI reports and consultations  0:05:36  Scope 3 reporting in the news  0:06:21  Sustainable finance for emerging markets  0:07:01  Funding instruments to support conservation - blended finance and debt to nature swaps  0:09:00  Green and social loans tied to banks SLL pools  0:09:46  SLB and SLL overview  0:14:04  Audience questions  0:19:47  Green bonds and loans overview  0:25:40  Social bonds and loans overview  0:29:05  Labeled products, transition bonds and regulatory updates  Links to Select Resources Environmental Finance – World Bank Warns of SLB Greenwashing Risk From 'Structural Loopholes' Environmental Finance – Climate Bonds Standard Extension to SLBs to 'Fire Integrity' Global Capital – French Agencies Struggle to Tighten Green Deals Environmental Finance – EM Financial Institution Green Bond Impact Reporting Study Published IISD - AfDB Report Assesses Feasibility of Debt-for-Nature Swaps in Africa Environmental Finance – Investors Calling on TNFD to Address Nature Restoration Environmental Finance – Inflation Reduction Act 'Could Transform Bond Market', Conference Hears Global Capital – Bonds Tied to Banks’ SLL Pools Could Spread in 2023 Global Capital – Dearth of Climate Adaptation Bonds Spurs Call for New Asset Class Delano – Green Bonds Issuers Adapt to EU Taxonomy: LuxSE Climate Bonds Initiative – 101 for Policymakers Climate Bonds Initiative Hydrogen Production Criteria Sustainalytics SPOs: Uruguay’s Sovereign Sustainability-Linked Bond Framework Second-Party Opinion CEMEX Sustainability-Linked Financing Framework Second-Party Opinion PT Semen Indonesia (Persero) Tbk Sustainability-Linked Finance Framework Second-Party Opinion Government of Chile Sustainability-Linked Bond Framework Second Party Opinion Japan Bank for International Cooperation Green Bond Second-Party Opinion IIFL Home Finance Limited Sustainable Finance Framework Second-Party Opinion Georgian Renewable Power Operations Green Bond Framework Second-Party Opinion Carmila Green Bond Framework Second-Party Opinion First Help Financial Social Bond Framework Second-Party Opinion    More Episodes

Episode Summary Hosts Aditi Bhatia, Regional Sales Manager, Corporate Solutions  Nicholas Gandolfo, Director, Corporate Solutions   Nishant Bhagchandani, Sales Manager, Corporate Solutions  Vanessa Tang, Sales Associate, Corporate Solutions  In this special episode, we focus our lens on sustainable and transition finance opportunities within the metals, mining and commodities sector, amid growing interest from companies and investors. The sector is incredibly important because of its crucial role in the global transition to a low-carbon economy. The demand for minerals used in clean energy technologies is expected to increase four-fold by 2040 to meet climate goals.1 However, mining is also resource intensive, contributing to between four and seven percent of global greenhouse gas emissions,2 and affecting water resources. The various social challenges the sector faces greatly impact local communities, even after mines are closed. As with other harder-to-abate sectors, maintaining access to capital amid a long list of environmental, social and governance risks can be a challenge.    Listen to our panelists discuss key considerations for banks, issuers and investors interested in using sustainable finance instruments to help fund improvements across the metals and mining sector and mitigate potential environmental, social and regulatory risks. They share insights on the trends they’re seeing in the market, the conversations they’re having with issuers and banks, and what’s next in sustainable finance for the metals and mining sector.    Key Moments 0:00:57 Introductions 0:02:44 Overview of Sustainalytics’ approach to sustainable finance  0:04:29 Exploring the growing interest in sustainable finance for the mining sector  0:08:42 Use of proceeds or linked finance? Considerations for mining companies and banks  0:12:48 Applying the Climate Transition Finance Handbook  0:15:24 External reviewer landscape – how does Sustainalytics compare?  0:19:38 The benefits of labeling transactions from the mining sector 0:26:13 How Sustainalytics supports banks’ sustainable finance activities  0:29:45 Sustainable finance questions from banks  0:37:08 A look at transaction trends and market developments   0:45:03 Green Bond Impact Reporting – The next frontier in sustainable finance  0:53:17 Outlook for sustainable finance in the metals and mining sector    Links to Select Resources International Energy Agency (IEA) – The Role of Critical Minerals in Clean Energy Transitions  International Capital Market Association (ICMA) – Climate Transition Finance Handbook  World Bank – Minerals for Climate Action: The Mineral Intensity of the Clean Energy Transition   ICMA – Registry of key performance indicators for sustainability-linked bonds  ICMA – Principles, Guidelines and Handbooks  Loan Syndications and Trading Association (LSTA) – Sustainability-Linked Loan Principles  Task Force for Climate-Related Financial Disclosures (TCFD)  Taskforce for Nature-Related Financial Disclosures (TNFD)  Global Reporting Initiative (GRI) – Sector standard project for mining  Sustainalytics Bond Impact Reporting  Sustainalytics Corporate Impact Reporting  Sustainalytics Supply Chain Solutions – ESG Assessment Platform  Sources 1 IEA. 2021. “The Role of Critical Minerals in Clean Energy Transitions.” May 2021. https://www.iea.org/reports/the-role-of-critical-minerals-in-clean-energy-transitions.  2 Delevingne, L., Glazener, W., Gregoir, L., and Henderson, K. 2020. “Climate Risk and Decarbonization: What Every Mining CEO Needs to Know.” McKinsey Sustainability. January 28, 2020. https://www.mckinsey.com/capabilities/sustainability/our-insights/climate-risk-and-decarbonization-what-every-mining-ceo-needs-to-know.    More Episodes

Episode Summary  Hosts  Nicholas Gandolfo, Director, Corporate Solutions   Sabrina Tang, Sales Associate, Sustainable Finance Solutions   Despite continued pressure on global financial markets, our hosts Nick and Sabrina highlight some bright spots within sustainable finance. From the array of green bond transactions coming to market in recent months, to sovereigns exploring sustainable finance opportunities to fund biodiversity, marine conservation and social programs, the sustainable finance market continues to push against market headwinds.   Biodiversity Rising on Sustainable Finance and Corporate Agendas  With COP27 ending and the UN Conference on Biodiversity (COP15) coming up in December, the issue of biodiversity continues to resonate among sustainable finance market participants. Companies are starting to focus more on biodiversity issues and their impact, and the Taskforce on Nature-related Financial Disclosures has also updated its beta framework. Sovereigns, such as Uruguay, are also joining the movement by funding efforts around biodiversity using sustainability-linked bonds.   Use of Proceed Instruments Increase as Sustainability-Linked Instruments Faces Scrutiny Contracting global financial markets has put pressure on the bond market. However, Nick does note a slight uptick in the number and variety of labeled use of proceed bond issuances in recent months relative to sustainability-linked bond issuances. This could be due, in part, to the growing scrutiny of linked bond instruments. Should they be more nuanced? Do the benefits of the pricing dynamics outweigh the penalties for not meeting targets? These are all valid questions being raised about these financing instruments that have seen tremendous growth over the last few years. It remains to be seen whether these questions translate into new norms for the market.   Key Moments 0:00:57 Market overview 0:01:29 GSSS market pressures 0:02:40 Biodiversity and sovereign SLBs 0:03:51 Continuing scrutiny of SLBs 0:04:25 FCA consultation paper 0:05:15 Banks explore funding pools of SLLs 0:05:45 Singapore banks commitments to Net Zero 0:06:32 New reports from Climate Bonds Initiative 0:07:55 SLB and SLL overview 0:13:39 Audience questions 0:17:56 Green bonds overview 0:20:47 Green loans overview 0:22:25 Social bonds and loans overview 0:23:46 Labeled products overview 0:24:50 Transition bonds overview 0:26:41 Regulatory and country updates List of Select Resources Investment Magazine: Responsible Investment Hits Record in 2021   Investment Week: S&P Global Ratings Downgrades GSSSB Forecast by 16%  Environmental Finance: Sustainable Bonds Take Record Market Share Environmental Finance: NatWest: Biodiversity-linked Sovereign SLBs Could Be 'Powerful' Environmental Finance: HSBC: COP15 Will See More Green Bond Focus on Biodiversity  Environmental Finance: SLB Step-ups Have Almost No Correlation With Credit Quality  Environmental Finance: Sovereign Sustainability-linked Debt Initiative Launched  Financial Conduct Authority (FCA): Sustainability Disclosure Requirements and Investment Labels  Finance Asia: Social Risks Can Be Credit Risks: Evaluating the 'S' in ESG  Finextra: Greenwashing is a Systemic Problem at UK Banks  Climate Bonds Initiative: New Social and Sustainability Bond Database: Enhanced Screening Capabilities for Full GSS+ Market  Sustainalytics SPOs: Uruguay’s Sovereign Sustainability-Linked Bond Framework Second-Party Opinion  More Episodes

Episode Summary Hosts Nicholas Gandolfo, Director, Corporate Solutions Sabrina Tang, Sales Associate, Sustainable Finance Solutions In this episode, Nick and Sabrina examine some of the interesting transactions and developments in the global sustainable finance market. Despite a general slowdown in the volume of issuances, there are still innovative transaction structures being proposed and sustainability-linked instruments (i.e., bonds and loans) continue to perform well. Green bonds continue to anchor the sustainable debt market, with several notable transactions in the blue bond space. Finally, audience questions are addressed, regarding clarity on whether sustainability-linked instruments can be structured in a program and the difference between social bonds and social impact bonds. Blue Bonds Making Waves in Sustainable Finance More corporate and sovereign issuers are exploring blue bonds to help finance their environmental conservation efforts. A blue bond is a debt instrument similar to a green bond, but with a focus on marine and ocean-based projects. In their market overview, Nick and Sabrina highlight blue bond proposals from the Securities and Exchange Board of India, the issuance of the first blue bond in Japan, and blue bond-related activities in Indonesia. The protection and conservation of oceans, waterways, and the life within them is essential for both business and society. “Sleeping” Sustainability-Linked Loans: A Concern for the Sustainable Finance Market? Nick notes the emergence of “sleeping” sustainability-linked loans, in which companies seek to build into their conventional loan documentation the ability to convert to an SLL at a later date. The key performance indicators (KPIs) and sustainability performance targets (SPTs) are also set at a later date. These types of loans are raising concerns among market participants around transparency, as its important to make sure that SLLs are not labelled as such until they have KPI and SPTs in place. The credibility of sustainability-linked instruments and sustainability washing is an area of evolving interest and scrutiny in the market. As defined by the Sustainability-Linked Loan Principles, SLLs “incentivize the borrower’s achievement of ambitious, predetermined sustainability performance objectives.” Sustainability performance is measured using predefined sustainability performance targets (SPTs), as measured by predefined key performance indicators (KPIs). It is also recommended that borrowers and lenders have the appropriateness of the SPTs, and the methodology applied to assess them, reviewed by an external party as a condition preceding the loan. Details of U.S. Inflation Reduction Act Show Promise for Renewables  The recently passed Inflation Reduction Act in the United States aims to control inflation by reducing the deficit, lowering prescription drug prices and investing in domestic energy. A key component of this last goal is the promotion of clean energy. This legislation will result in the biggest infrastructure spend on renewables in recent history, hopefully setting the tone for the future. Government stimulus like this could be significant in paving the way for more rapid acceleration towards net zero. Key Moments 0:01:29 Market overview 0:01:29 CBI half-year market review 0:02:44 Major issuance locations - China, Germany, Netherlands, U.S., France 0:03:58 U.S. Infrastructure Reduction Act good sign for renewables 0:04:58 Nuclear popping up 0:05:10 ESG increasingly being linked to remuneration 0:05:32 More green taxonomies being developed 0:05:56 Sustainability being integrated into leveraged loan market 0:06:19 China Green Bond Standard 0:06:36 Diversifying nature of sustainable bonds across Asia 0:06:55 "Sleeping” sustainability-linked loans on the market 0:07:58 SLB overview 0:11:28 SLL overview 0:15:52 Audience questions 0:22:03 Green bonds overview 0:28:20 Green loans overview 0:29:25 Social bonds and loans overview 0:31:17 Labeled products overview 0:33:27 Transition bonds overview 0:33:36 Regulatory and country updates   List of Select Resources Climate Bonds Initiative: Sustainable Debt Market Summary H1 2022 Environmental Finance: Rise of SLBs Helps Labelled Debt Retain 19% Share of European Market Bloomberg: Green Bond Sales Drop to 19-Month Low on Tight Issuance Windows The Edge Singapore: Economic Uncertainties a Boost for SGD Bonds The Telegraph: Fund Nuclear Power With Green Bonds, Treasury Told NT News: ESG Looms as Potential Remuneration Hurdle, UBS Says Environmental Finance: Half of European ESG Leveraged Loans Have 'Weak' Target Promises Caixin Global: China’s New Green Bond Standards Aim to Curb ‘Greenwashing’ China Dialogue: China’s New Green Finance Guidelines Have a Deforestation Blind Spot Environmental Finance: Comment: Sustainability-Linked Finance - Failure Must Be an Option Bloomberg: 'Sleeping' ESG Loans Are a Worrying Trend, BNP Says IntraFish Finance: Maruha Nichiro to Issue Japan's First Blue Bond as it Reports 25% Earnings Hike Responsible Investor: Indian Blue Bond Mining Provision Draw Market Scepticism Sustainalytics SPOs: Berlin Hyp Sustainability-Linked Bond Framework Second-Party Opinion Wells Fargo Sustainability Bond Framework Second-Party Opinion Lenovo Group Limited Green Finance Framework More Episodes

Episode Summary  Hosts  Nicholas Gandolfo, Director, Corporate Solutions   Aditi Bhatia, Regional Sales Manager, Corporate Solutions   In this episode, Nick and Aditi share recent developments in the global sustainable finance market. They touch on the cooling bond market and the shifting geographic split in green bond issuance, noting that EU dominance is waning as other jurisdictions close the gap. Nick gives his thoughts on the impact of the forthcoming EU green bond standard on what future bond frameworks will include, what will be reported, and the level of external review required.   In her update on sustainability-linked loans and bonds, Aditi highlights a couple of transactions, notable for their use of gender-based KPIs aiming to increase the number of women in management positions. Finally, Nick applauds Sustainalytics’ Corporate Solutions business for providing the most second-party opinions in the first half of the year, as cited by Environmental Finance.   Study of Greenhouse Gas Targets Used in Linked Finance    Environmental Finance recently published a report analyzing the types of key performance indicators being used in sustainability-linked bonds and loans. Across sustainability-linked instruments, carbon and greenhouse gas emission reduction KPIs accounted for about 75% of KPIs used, with other environmental issues, such as water, making up 10%, social issues another 10% and less than 5% related to governance issues. This makes sense, given the quantitative nature of GHG and carbon emission metrics. The report also noted the emergence of KPIs tied to scope 3 emissions, which is a promising trend given the high impact of scope 3 emissions for some industries.   Focus on Supply Chain Sustainability Improvements  For organizations looking to support ESG and sustainability improvements in their supply chain, it’s important to understand suppliers’ needs and motivations. Some large players in food and agriculture are offering financial incentives to farmers to implement sustainable practices. Others are supporting programs to pilot and scale innovative sustainability solutions. Still others are working to advance social goals, such as furthering opportunities for minority and female entrepreneurs. Sustainalytics’ Corporate Solutions is working more and more with clients to support their evaluation of suppliers – from KPIs connected to suppliers to ESG assessments of their suppliers.      Key Moments  0:00:48  Market overview  0:02:01  Changing geographic in green bond market  0:02:25  Sustainalytics leads SPOs in H1 2022  0:02:55  Green/social split tranche instead of sustainability issuance  0:03:40  Nuclear back on the radar  0:04:33  Malaysia Islamic financing  0:04:45  EU Green Bond Standards coming soon  0:05:29  Guidance for finance sector decarbonization  0:06:05  Updated Climate Bonds Initiative methodology  0:06:41  Securitization and structured deals  0:06:45  Sustainable finance and supply chain  0:07:21  New NNIP social bond fund  0:07:39  More articles on biodiversity  0:08:00  KPIs used is sustainability-linked instruments  0:09:52  SLB and SLL overview  0:13:54  Audience questions  0:18:32  Green bonds overview  0:22:52  Green loans overview   0:24:28  Social bonds and loans overview  0:26:15  Labeled products overview  0:27:40  Transition bonds overview  0:28:25  Regulatory and country updates    List of Select Resources  Environmental Leader: Sustainable Finance Markets Cool After Record-Setting Year  Investment Executive: As markets wobble, sustainable finance suffers too  S&P Market Intelligence: Europe's dominance in green bond market fades amid record growth in China  Environmental Finance: Sustainalytics delivers most SPOs in first half of 2022  Asia One: New World Development offers world's first USD social and green dual tranche bond in public markets totalling USD700m  Bloomberg: Once-Unthinkable Nuclear Green Bonds Are Coming to Europe  Environmental Finance: Issuers opt for SLBs as EU tightens green bond rules, says BdF  Environmental Finance: Focus on banking transition plans as priority, IIGCC recommends  Environmental Finance: CBI tightens green bond criteria and readies social expansion  Green Biz: Supply chain emissions are top of mind for food and ag  Environmental Finance: Green securitisations 'under-utilised in Europe'  Funds Europe: NN IP launches SDG-focused social bond fund  Environmental Finance: Sustainability-linked Debt - Carbon Emissions KPIs    More Episodes

Episode Summary Hosts Nicholas Gandolfo, Director, Corporate Solutions Sabrina Tang, Sales Associate, Sustainable Finance Solutions In this episode, Nick and Sabrina recap recent developments in the global green, social, sustainability, and sustainability-linked market. They highlight a major milestone for Morningstar Sustainalytics’ sustainable finance team, which delivered its 1,000th second-party opinion in the spring. They also discuss the ever-evolving regulatory environment around ESG disclosures and reporting, the prevalence of measuring impact in the green, social, sustainability and sustainability-linked (GSSS) bond market, and share some of the updated GSSS guidance coming from International Capital Markets Association (ICMA).       ESG and Sustainable Finance Regulations Continue to Roll Out Globally   As noted in previous episodes, the regulatory train continues to roll along for issuers, investors, and service providers in the sustainable finance space. In the U.S., the Securities and Exchange Commission is proposing greater corporate disclosures related to climate and scope 1, 2, and 3 emissions. Also, in Europe, negotiations for the EU Green Bond Standard continue. Finally, there are continued calls for regulation of ESG data and ratings providers as this information is increasingly integrated into global investment decisions. Companies and investors should continue to monitor the shifting regulatory landscape and be prepared to disclose more when it comes to climate and other ESG-related issues. Reporting on Impact: The Next Big Thing in the GSSS Market It’s a promising sign that a growing number of issuers are funding green and social projects with labeled bonds, but investors also want to know that proceeds from their GSSS bonds are having a positive impact. So, more and more issuers are crunching the numbers on the impact of their sustainable bonds and loans. During its annual conference, the ICMA released new and updated guidance for GSSS bonds, which includes new metrics for impact reporting for green and social projects. Sustainalytics’ Corporate Solutions offers Impact Reporting for Bonds and Loans providing issuers with analysis of the expected and achieved impacts of their financed projects. Growing Focus on Biodiversity The Taskforce for Nature-based Financial Disclosures has published the next iteration of its reporting framework, which is looking at issues related to biodiversity and metrics. The International Finance Corporation and World Benchmark Alliance are also working to help advance the biodiversity finance market. Nick anticipates that we’ll start to see and hear more about companies being “nature positive,” how that can be measured, which KPIs should be targeted and tracked, and which use of proceeds are eligible. With over half of the world’s GDP at risk due to biodiversity loss, it’s great to see a growing spotlight on biodiversity. Key Moments 0:01:25 Market overview 0:01:36 Sustainalytics’ 1,000th SPO 0:02:07 Bond market headwinds 0:03:12 Mainstreaming of sustainable finance 0:03:35 Blue carbon credits 0:03:40 Scrutiny over greenwashing continues 0:04:41 EU Green Bond Standard 0:05:11 Measuring impact in the GSSS bond market 0:06:13 Nuclear, gas and the Green Taxonomy 0:06:41 SEC proposal for scope 1, 2, and 3 disclosures 0:07:02 TNFD published next draft framework 0:07:36 GFANZ released guidance for decarbonizing portfolios 0:07:59 ICMA guidance updates  0:10:14 Australian Sustainable Finance Initiative taxonomy 0:10:51 FIFA World Cup going carbon neutral? 0:11:09 New reports from CBI 0:11:51 SLB overview 0:15:14 SLL overview 0:19:40 Audience questions 0:25:00 Green bonds overview 0:31:45 Green loans overview 0:34:09 Social bonds and loans overview 0:35:33 Labeled products overview 0:36:35 Transition bonds overview 0:38:07 Regulatory and country updates List of Select Resources Sustainalytics – The Road to 1,000th SPO: How We Got Here and What’s Next in Sustainable Finance Environmental Finance - 'Strong rebound' in EM Sustainable Bond Issuance in 2021 Oilprice.com - Could Blue Carbon Credits Be the Future of Sustainable Financing? Market Screener - European Green Bonds: Proposed Regulatory Tightening Aims to Curb Greenwashing Portfolio Adviser - ‘Clear rationale’ for Regulating ESG Ratings, says FCA TNFD - TNFD Releases Second Iteration Beta Framework Including Initial Guidance on Metrics Environmental Finance - IFC Launches Biodiversity Guide Draft for Bonds Glasgow Financial Alliance for Net Zero (GFANZ) - GFANZ Releases Guidance on Credible Net-zero Transition Plans and Seeks Public Input to Accelerate Action ICMA - The Principles Announce Key Publications and Resources in Support of Market Transparency and Development Regulation Asia - Australia to Start Work on Sustainable Finance Taxonomy in July Doha News - Will the FIFA World Cup be Carbon Neutral? Advocates Cast Doubt Climate Bonds Initiative ASEAN Sustainable Debt Market 2021 China Green Bond Market Report 2021 Launch (Event Recording) Sustainalytics SPOs: The Ministry of Finance Singapore Singapore Green Bond Framework Second-Party Opinion BDO Sustainable Finance Framework Second-Party Opinion More Episodes

Episode Summary Host: Adam Gorley, Marketing Manager, Corporate Solutions Featuring: Upasna Handa, Senior Associate, Product Commercialization Henry Hofman, Associate Director, Corporate Governance Research In this episode of the Sustainalytics Podcast, Adam talks with Upasna and Henry to explore what it means to link executive compensation to ESG metrics and how to meet some of the key challenges. You’ll learn about how tying ESG performance to compensation can enhance a company’s accountability and transparency, the types of metrics firms use, industries and regions with high pay-link adoption, existing and proposed regulations, steps to make your company’s program credible and transparent, and more. What ESG Metrics Are Companies Using To Assess Executive Compensation? The metrics a company will use in its ESG-linked compensation program will depend on the nature of the business, but there are common themes. Perhaps it’s no surprise that there is a particular focus on environmental issues, such as emission levels, sustainable production, energy efficiency, and waste management. But companies are increasingly using metrics to focus executives’ attention on social and governance issues like diversity and inclusion, culture, employee engagement, shareholder relations, and board composition. Challenges To Adopting ESG-Linked Compensation If your organization is tracking ESG metrics, you may have already dealt with some of the main challenges: determining the most material ESG issues for your company, setting targets and KPIs, and measuring your efforts. Nonetheless, this remains new territory for many, and any organization planning to set up an ESG-based executive incentive program should take a step back to understand what is required in order to make the program credible, transparent, and effective. Read Our eBook, Real ESG Accountability: Tying Your Company’s ESG Performance to Leadership Compensation     Download the ebook to discover how linking executive compensation to ESG metrics can support corporate goals, the current state of ESG-based incentives from Sustainalytics’ research, why ESG-linked compensation is a practical step forward on accountability, details on what any firm can do to execute a credible and transparent ESG pay-link.     Key Moments 00:20 Episode overview 01:50 Intro to sustainability-linked compensation 02:11 Commonly used metrics in ESG pay-links 03:15 Key challenges and questions 04:10 Long-term and short-term incentives 05:30 Accountability and transparency 06:30 Regional overview 07:54 Industry overview 08:40 Regulatory outlook 09:08 UK Investment Association “Principles of Remuneration” 09:22 EU Shareholders Rights Directive II 09:48 U.S. Tax Code amendments and SEC comments 10:18 Meeting the challenges of ESG pay-links 11:34 Setting up credible and transparent pay-links 12:44 Looking to the future   Transcript 00:07 Adam Gorley: Hello and thanks for tuning into the latest episode of the Sustainalytics Podcast! I’m Adam Gorley, Producer with Sustainalytics, and I’ll be your host today as we look at sustainability-linked compensation.   Many companies around the world are introducing programs and practices to improve their sustainability with respect to the environment, social issues, and corporate governance. These organizations are examining the ESG issues that are most material to them, setting goals and targets to address those issues, and developing methods to measure the results so they can understand their progress.   But despite all that valuable effort, it’s also essential to put in place a process to align action with those goals. To effectively meet this challenge, many organizations are starting to incentivize executives by linking a portion of their compensation to the company’s performance on specific ESG metrics. Is this something your organization has introduced or considered implementing? We’d love to hear your thoughts. You can get in touch at [email protected].   In this episode, you’ll hear about ESG-linked compensation from two of Sustainalytics’ in-house experts on the topic: Upasna Handa, Senior Associate, Product Commercialization, and Henry Hofman, Associate Director, Corporate Governance Research. We’ll be looking at how tying executive compensation to ESG performance can enhance a company’s accountability and transparency and the challenges organizations are facing. We’ll also talk about the types of metrics firms use for ESG-linked compensation programs, how you can ensure your company’s ESG-based incentive program is credible and transparent, and much more.   But first, let’s take a closer look at what sustainability-linked compensation means. In essence, it’s a variation on the standard practice of linking executive compensation to financial and operational metrics, such as profit, growth, employee turnover, customer churn, and so on. The key difference is that sustainability-linked compensation is tied to non-financial ESG metrics. Upasna outlines some of them: 02:11 Upasna Handa: While the details of ESG-linked executive compensation vary from company to company, and also from sector to sector, there are some common issues or common metrics that performance is measured against. For example, across the environment pillar, we often see emission levels, sustainable production, energy efficiency, and waste management. Across social and governance, we see diversity and inclusion, culture, employee engagement, and community. And across the governance pillar, we see corporate governance, shareholder relations, and board composition pretty often across industries. 02:45 AG: Companies may be choosing these particular ESG issues to respond to stakeholder pressure, meet or prepare for regulations, enhance their reputation, reach new markets, and other reasons. But, as Upasna notes, the specifics will depend on the individual firm. Henry adds: 03:02 Henry Hofman: Ultimately, we expect the firms to be able to identify which metrics are most important to them and most relevant to their business model to ensure that executives are being incentivized in the correct way to achieve meaningful change. 03:15 AG: Unfortunately, while ESG pay-links are based on a tried-and-tested business practice, they come with several unique and important challenges. While most companies understand clearly the strategic financial and operational risks they face, their targets and key performance indicators (KPIs), and how to measure them, the same cannot be said for the material ESG issues (or MEIs) companies face. Basically, this is unfamiliar territory for many organizations. Upasna explains some of the core challenges facing companies when it comes to tying executive compensation to ESG metrics: 03:49 UH: The major challenges in incorporating ESG metrics into executive pay includes structuring the ESG-linked pay. So, clearly articulating material ESG issues, ensuring the board understands them, deciding on appropriate KPIs, and also measuring the success of these ESG programs based on those.   Another important component would be the time period that we're looking at when it comes to structuring to effect meaningful changes. An important question here would be: will a short-term or a long-term timeframe be the most effective for our company? Is it better to set ambitious well-calibrated one-year targets rather than vague long-term ones? And also, because companies looking to progress on core strategic priorities need to incentivize top leadership to think more long-term, so are we going to have those KPIs as more long-term incentive plans? Environmental goals sit comfortably within long-term incentive plans as of now because of the long-term orientation, but some ESG targets, such as health, safety, gender pay targets, and even diversity and inclusion targets, can be calibrated over a single year.   So, for example, BP uses ESG metrics in both its annual bonuses and its long-term incentive plans. Starting in 2020, the bonus has a 15% weightage on safety, which was a well-established metric, and on the environment, which relates to short-term emission reduction targets. The long-term incentive plan now has a 40% weighting to strategic goals including input measures around renewables, energy transition, etc. 05:24 AG: We’ll come back to how companies are meeting the challenges in a few minutes. Before that, I want to explore the important question of value. Specifically, how can linking executive pay to ESG metrics enhance a company’s accountability and transparency? 05:38 UH: When we talk about accountability, tying variable compensation to ESG performance provides an additional tool for firms and boards to hold their executives accountable, while they're communicating their principles and objectives with employees, investors, regulators, and other important stakeholders. This is especially important when it comes to companies in high ESG risk industries, which may have more difficult material ESG issues to address.   And coming to transparency, when companies incorporate ESG into incentive plans, their boards, investors, employees, communities, and other stakeholders have a valuable tool to track their progress on ESG issues. 06:21 AG: So, ESG pay-links are growing in popularity due to increased demand for accountability and transparency, but how is this trend affecting different regions and industries? Not surprisingly, some places and types of business are seeing more activity than others when it comes to linking compensation to sustainability metrics. Here’s Henry Hofman: 06:40 HH: Looking at the data, I think there's some interesting patterns that emerge. It’s probably important to note as well though that our research is obviously based on publicly disclosed information, so there is a bit of a correlation between those regions that tend to have just generally good governance disclosures and where we see stronger examples of ESG being related to pay.   But having said that, the European companies and U.S. companies based on our data are the highest adopters with 17% and 13% of our universe incorporating ESG metrics into their executive remuneration, either as a part of their long-term compensation plans or their short-term programs. There are some other countries outside of Europe and the U.S. that have particularly strong practices: Australia and South Africa both stand out as having a high adoption rate. 07:34 AG: As Henry suggests, the likely reasons for these numbers are fairly clear. Where there are strong corporate governance regimes, active stakeholders, investor pressure, effective say-on-pay mechanisms, and so on, those are the regions where you’ll find more companies implementing ESG pay-links.   But what about industries? Are organizations in some sectors more likely to adopt ESG pay-links? 07:58 HH: So, I think that's really interesting, and the data suggests that those industries that are most often in the public eye, I would say, for perhaps having ESG practices that are less than ideal — there's no hard and fast rule — but those industries do tend to have a reasonable uptake. So, we're talking about precious metals and diversified metals, oil and gas producers, refiners and pipelines, and utilities. These are the industries that we are seeing that actually have the higher takeup in terms of setting ESG metrics and linking it to executive compensation.   I would say though that, even within these industries, there's still at most only about a 30% takeup. So, there's certainly a long way still to go. 08:42 AG: This leads us to the issue of regulations. While it is common to hear about broad ESG and sustainability-related regulations — particularly with respect to reporting — the development of requirements specifically related to compensation is still in the early stages. I’ll let Upasna fill us in. 09:00 UH: There are multiple efforts from government, industry, and professional bodies around the world to establish more ESG reporting standards for disclosure, measurement, remuneration, and so on.   Starting off with The Investment Association in the UK, this body has released a document titled, “The Principles of Remuneration,” which includes guidance on how to develop ESG bonuses and compensation schemes.   We have the Shareholder Rights Directive II from the EU. These are actually say-on-pay provisions that provide shareholders with the right to vote on remuneration policies and reports. And the updated directive requires numerous additional European countries to regulate shareholders’ right to vote on executive board pay. Many more companies that have ESG pay-links must now disclose their own plans.   Coming to the U.S., we have the U.S. Tax Code. Amendments now enable firms to increase bonuses with their assessment of a company's commitment to ESG principles. Another very important change that has taken place in the U.S. is a push for ESG-linked compensation from the SEC. The SEC Commissioner Allison Herren Lee is urging corporate boards to make changes in line with the agency's push for more ESG disclosures and also tying executive compensation to ESG metrics. 10:18 AG: And this brings us back to the challenges companies face when it comes to implementing an ESG-linked compensation program — and how they can overcome the obstacles. Recall, the key challenges include: uncovering the ESG issues that are material to your organization; clearly articulating the MEIs so that the board understands their importance; determining appropriate goals and KPIs; and measuring progress.   Regulations also pose a challenge, but the good news is that the same steps an organization takes to tackle the broader challenges will also help them prepare to meet regulations. Moreover, by investing the time and effort to get it right, organizations will help ensure they are setting up their ESG pay-links in a credible and transparent way. 11:00 UH: So, companies can actually prepare by ensuring the relevance and the materiality of their key performance indicators or KPIs and the level of ambition demonstrated by the sustainable performance targets or the SPTs to ensure transparency. This is important when we look at any ESG metrics, so we need to make sure the KPIs and the SPTs are in place.   It is, of course, important to understand also what your peers are doing as well as the investor perspective. But more than that it is crucial to understand your own ESG agenda and how you want to measure the success.   To have a credible and effective ESG compensation program, that would involve multiple elements including a clear articulation of material ESG issues, solid board engagement and buy-in from senior leadership, selection of appropriate metrics supported by operational data, and the means for measuring that success.   Selecting the right ESG metrics is not an easy task, so for most board members, they find it challenging to narrow down the discussion on suitable ESG metrics out of the hundreds of options presented. The consensus is not to consider this as a “check the box” kind of exercise, but to identify metrics that are linked to more of the company's purpose and the ones that truly drive long-term sustainable value creation for the firm. 12:19 AG: While it might not be an easy task, companies that do not take meaningful steps toward “sustainable value creation” will likely have trouble growing their business over the long term. That’s essentially why practices that align executive action to strategic priorities — like ESG-based compensation — are so important: it’s one thing to set goals, but taking the necessary steps to achieve those goals is where change and growth happens.   Looking to the future, we can expect to see more companies around the world adopt ESG pay-links as good corporate governance practices advance, stakeholders take a more active role in calling for accountability, and regulators step in to guide the process and prevent greenwashing.   That’s it for this episode of the Sustainalytics Podcast! If you want more details on ESG-linked executive compensation, please visit Sustainalytics Resource Center and download our recent ebook, “Real ESG Accountability: Tying Executive Compensation to ESG Performance” or see the link in the show notes. Have a question or a suggestion on what we should talk about next? You can email us at [email protected].   Thanks again to our guests, Upasna Handa and Henry Hofman, and thank you for listening. Until next time!  

Episode Summary Hosts Nicholas Gandolfo, Director, Corporate Solutions Marika Stocker, Senior Manager, Corporate Solutions  In this episode, Nick and Marika highlight recent developments in the sustainable finance market. They note that the market is coming off a banner year — over US$1 trillion in volumes overall in 2021 —and shed light on the deals and transactions contributing to market growth. They also answer audience questions, sharing Sustainalytics’ take on where nuclear energy and mining could fit in sustainable finance. Be sure to submit your questions to [email protected]. Could Geopolitical Conflict Spur Adoption of Renewables? Discussion around the adoption of renewable energy is growing given the impact of Russia’s war in Ukraine and other global conflicts on oil and gas exports and imports. These geopolitical conflicts have exposed the risks of overreliance on producers and certain types of energy. One possible reaction to the disrupted and restricted energy supply from Russia is an acceleration of renewables deployment across Europe. This would hopefully spur broader adoption within the region and beyond.  Just Adaptation: Helping Nations Build Resilience to Climate Change As governments consider what it takes to transition to a low-carbon economy, the concept of just adaptation is also being discussed. Stakeholders are looking beyond a just transition and examining the inequity between developed and developing countries in their abilities to adapt to climate change. Developing nations are more likely to be affected and have fewer resources to adequately prepare their populations and natural environments despite contributing less to the drivers of climate change compared to developed nations. Nick notes that there is potential to use sustainable finance to balance this inequity. Hopefully, we will see an evolution in sustainable finance issuances from sovereigns and corporates, with use of proceeds and KPIs that tap into some of these issues. Real ESG Accountability: Tying Your Company’s ESG Performance to Leadership Compensation Stakeholders are increasing pressure on companies to tie executive compensation to ESG performance for enhanced accountability and transparency. Download our latest ebook to discover how ESG incentive plans can align executive action with strategic priorities. Download the eBook     Key Moments 0:00:52 Market overview 0:01:22 CBI report 2021 review 0:02:21 EF Article — GB market growth 100-fold in 10 years 0:02:50 IPCC reports 0:03:35 IFC — Guide to issuing green bonds 0:03:40 Ukraine conflict and social bonds 0:04:41 Fintech and climate tech 0:05:11 Just transition and just adaptation 0:06:13 Social taxonomy 0:06:41 EU Green Bond Standards 0:07:02 Financed emissions 0:07:36 ESG and derivatives 0:07:59 From CBI — webinar on China and new criteria for chemicals sector  0:08:36 SLB overview 0:14:14 SLL overview 0:18:10 Audience questions 0:26:09 Green bonds overview 0:30:47 Green loans overview 0:32:02 Social bonds and loans overview 0:33:42 Labeled products overview 0:34:27 Transition bonds overview 0:35:37 Regulatory and country updates   Links to Select Resources Climate Bonds Initiative – Sustainable Debt Global State of the Market 2021 Environmental Finance – “Dramatic” 100-Fold Green Finance Growth Over Last Decade Environmental Finance – IFC publishes step-by-step green bond issuance guide GreenBiz – Will Russia’s War Spur Europe to Move on Green Energy? Fintech Futures – ESG and Fintechs: How Firms are Benefiting from an ESG Focus Environmental Finance – EU GBS 'may be a step backward' for green bond impact reporting IFR – Financial Markets Wrestle with Scope 3 Requirements Deloitte – Sustainable Finance Magazine (page 10) ISDA – Pre-AGM Symposium: ESG and the Role on Derivatives Climate Bonds Initiative – Green Bond China Investor Survey 2022 Climate Bonds Initiative – Basic Chemicals Criteria Sustainalytics SPOs: Pernod Ricard Sustainability-Linked Framework Second-Party Opinion JAB Holdings Sustainability-Linked Bond Framework EU SURE Social Bond Framework Second-Party Opinion OP Mortgage Bank Annual Review (2022) Green Financing Framework for Jabil Second-Party Opinion Equinix Green Finance Framework Second-Party Opinion More Episodes

Episode Summary On this episode: Melissa Chase, Content Marketing Manager, Corporate Solutions Toshi Batbuyan, ESG Research Senior Analyst, Oil and Gas Sector Research Frances Fairhead, ESG Research Senior Analyst, Mining Sector Research Shilpi Singh, Corporate Solutions Director With rising demand from investors and other key stakeholders to address the environmental, social and governance issues they face, companies are considering how they can effectively manage their most material ESG issues. In this episode, featuring insights from our recent webinar on the topic, we examine some of the key ESG issues facing companies in industries with the highest average ESG risk and explore how companies can manage those issues effectively. Companies with lower ESG risk can also learn important lessons in ESG risk management from those in high ESG risk industries. Many of these issues are common across industries, giving companies an opportunity to learn more about managing ESG risk exposure from their peers.  For more, watch the on-demand webinar or download the ebook that inspired the session, Understanding Materiality: Lessons from Industries With High ESG Risk. Key Moments 0:01:38 Episode overview 0:03:04 Explanation of how the ESG Risk Ratings are assessed 0:05:18 Overview of the industrial conglomerates industry 0:06:20 Overview of the steel industry 0:07:10 Overview of the diversified metals and precious metals industries 0:08:55 Overview of the oil and gas producers industry 0:10:53 Insights on how to manage material ESG issues 0:11:27 Environmental issues 0:12:45 Business ethics 0:13:47 Community relations 0:15:01 Occupational health and safety 0:15:33 Industry and international standards and guidance 0:17:00 The importance of ESG target setting, reporting and transparency 0:20:03 Importance of having a corporate ESG strategy 0:20:49 Takeaways from the webinar   To read the full transcript, please visit our website.   More Episodes 

Episode Summary Hosts Nicholas Gandolfo, Director, Corporate Solutions Aditi Bhatia, Regional Sales Manager, Corporate Solutions In our latest episode, we have a round-up of recent developments in the global sustainable finance market. From innovative instruments for financing conservation efforts to growing ESG activity in the private equity space, to a new taxonomy for social bonds, our hosts Nick and Aditi have you covered. Check out the highlights below or listen to the full episode wherever you stream your podcasts. Social Bonds in the Spotlight There have been some key market developments in recent months. The Platform on Sustainable Finance published its report on the EU’s Social Taxonomy providing clarification on the types of investments that would be considered socially sustainable and proposing a structure for a social taxonomy. Overall activity in social bonds issuance appears to be declining compared to recent years. This is partly due to market stabilization following a surge of issuance during the height of the pandemic and social use of proceeds frequently being included in sustainability bonds frameworks which cover both green and social projects. However, there is growing diversity in the types of social factors being addressed as more issuances come to market related to matters around gender, race, and LGBTQ issues.  Rhino Bonds: Market Innovation Support Conservation Efforts This new form of social impact bond was recently issued by the World Bank. The USD 150 million “rhino bond” or Wildlife Conservation Bond will help to fund conservation efforts for the black rhino population in South Africa. The Rhino Bond channels investments to achieve specific conservation outcomes with proceeds being used to help staff in national parks battle poachers and improve conditions for the animals. This bond offers a new model to finance conservation efforts by directly linking the outcome of rhino conservation to investor payouts, and investment success. You can read more about the bond issuance here. Recommended Reading Nick once again provides a list of his recommendations for reports on ESG, sustainable finance, climate change, and transition issues. ACT Transition Methodologies Climate Bonds Initiative – Green Bond Pricing in the Primary Market Climate Bonds Initiative – Global Green Taxonomy Development, Alignment, and Implementation Taskforce on Nature-related Financial Disclosures – TNFD Nature-Related Risk & Opportunity Management and Disclosure Framework – beta v0.1 GRI – Sector Standard for Coal IPCC – Sixth Assessment Report Environmental Finance – Sustainability-Linked Bonds and Loans KPIs Luxembourg Stock Exchange – Trends and Characteristics of the Sustainability-Linked Bond Market Science-Based Targets – Guidance for Financial Institutions Platform on Sustainable Finance – Final Report on Social Taxonomy Gain Insight on the Material ESG Issues Companies Face and Approaches for Effective Management Are you aware of the material ESG issues facing your company? Do you know how to effectively address them? Watch our recent webinar, Addressing Key Corporate ESG Issues: Lessons From Industries With High ESG Risk. Our panel of ESG sector analysts provide insight on the material ESG issues facing five high risk sectors. Learn how companies with high exposure to ESG risk manage their most material issues and how you can too. Watch the Webinar    Key Moments 0:00:46 Market overview 0:01:11 Ongoing market growth 0:01:14 Sustainable bonds in emerging markets 0:01:24 ESG performance and bond premiums 0:01:49 Social bond market under threat? 0:02:46 ESG activity in private equity 0:03:07 Implications for Ukraine conflict on green transition 0:03:49 Prevalence of sovereigns in ESG transactions 0:04:05 Sustainable securitization 0:04:44 Just transition 0:05:23 Gender-themed social bonds 0:05:56 Continuing conversation around greenwashing 0:06:31 Big pharma going green 0:07:06 Rhino bond 0:08:32 SBTi – public consultation on cement 0:08:48 Social Taxonomy Report 0:10:00 ACT Transition Methodologies 0:10:07 CBI bond pricing report 0:10:13 CBI report on taxonomies 0:10:29 TNFD beta report 0:10:57 GRI sector standard for coal 0:11:15 IPCC assessment report 0:11:33 Environmental Finance SLL/ SLB metrics report 0:12:00 SLB overview 0:15:52 SLL overview 0:18:02 Audience questions 0:22:05 Green bonds overview 0:28:16 Green loans overview 0:29:33 Social bonds overview 0:31:45 Labeled products, transition, and regulatory overview   Links to Select Resources International Monetary Funds – Sustainable Finance in Emerging Markets is Enjoying Rapid Growth, But May Bring Risks Funds Europe – Stronger Ranked ESG Companies Receive Market Premium PitchBook – On the podcast: The ABCs of ESG for PE Firms Global Capital – EBA’s Sustainable Securitization Ideas ‘Level the playing field’, says Afme International Banker – The Role of Banking in a Just Energy Transition Impact Alpha – Social Bonds Direct Proceeds to Racial Equity as the “S” Gains Prominence in ESG Sustainalytics SPOs: Government of Chile Sustainability-Linked Bond Framework Second Party Opinion L’Oréal Sustainability-Linked Financing Framework Second Party Opinion Government of Canada Green Bond Framework Second Party Opinion Pepper Money Limited Green Bond Framework Second-Party Opinion TAG Immobilien AG Sustainable Finance Framework Second-Party Opinion Mosaic Solar Green Use of Proceeds Securitized Bond New York Power Authority Green Bond Pre-Issuance Review Marui Group Social Bond Framework Second-Party Opinion More episodes

Episode Summary Host: Adam Gorley, Marketing Manager, Corporate Solutions Guest: Shilpi Singh, Director, Corporate Solutions In this special episode of the Sustainalytics Podcast, Adam and Shilpi discuss important considerations for any organization starting an ESG program and how to set up your program for success. You’ll hear about gaining leadership buy-in, planning and resourcing your program, meeting reporting requirements, communicating your progress with stakeholders, and the role of third parties, plus potential obstacles you can avoid. What Successful Corporate ESG Programs Require As with most projects, good planning and commitment are strong drivers of a successful ESG program. To make the most of their effort, companies starting an ESG program need to have a clear understanding of the ESG issues that affect them, what their impacts are, and how they relate to the business strategy. With this knowledge, a company can effectively address the issues that are most material to the business and confidently and transparently communicate its ESG activities with stakeholders. Can You DIY ESG? Can a firm plan and implement an ESG program on its own — that is, without guidance from an external ESG specialist? Yes, says Shilpi, but it’s not for every company. No third party knows your business like you, your team, and your stakeholders, so there is a lot of valuable ESG information that companies can gather and analyze — if you have the resources. At the same time, ESG specialists have a lot to offer in terms of understanding what actions to prioritize, competitive insights, and credibility. Read Our New eBook, Getting Started With ESG: What Every Company Needs to Know Download our practical guide to starting a corporate ESG strategy for additional details on the considerations we talked about in the podcast. Discover key action steps for gaining top leadership buy-in, planning and resourcing your program, developing your strategy, and reporting and communicating your progress.  

Episode Summary Hosts Nicholas Gandolfo, Director, Corporate Solutions Marika Stocker, Senior Manager, Corporate Solutions In this episode, Nick and Marika welcome special guest Simon Vacklen, Senior Manager with Sustainalytics’ Corporate Solutions  to discuss impact reporting for use of proceed bonds. As more funds are allocated to labeled and sustainability-linked bonds, there is growing demand from investors to understand and measure the positive impact of the assets and projects financed. Simon notes that while the current focus is on environmental and climate impacts, such as the amount of greenhouse gases avoided, the market is also looking toward ways to effectively quantify positive social impact. Sustainalytics Launches Impact Reporting for Bonds and Loans To support companies and investors looking for opportunities to analyze and investigate the impact of their projects and investments, Sustainalytics now offers Impact Reports for Bonds and Loans. Available for pre- and post-issuance assessments, the reports provide issuers with a credible and independent analysis of the impacts both expected and achieved by financed projects. Climate Bonds Standard Shares Criteria for Hard-to-Abate Sectors The Climate Bonds Standard announced that it will be expanding to include criteria and certification for credible transition for heavy industrial sectors, starting with the cement industry. The cement criteria will provide science-based requirements which identify when investment and activity in the sector are aligned with the transition to the Paris Agreement objectives. Throughout 2022, the Climate Bonds Standard plans to expand its criteria to support the low-carbon transition of other heavy-emitting sectors such as basic chemicals and steel.    Download Our New eBook, Understanding Materiality: Lessons From Industries With High ESG Risk The business case for addressing material ESG issues is clear: the effective management of ESG risks can contribute to superior long-term enterprise value. Sustainalytics Corporate Solutions can help you better understand how ESG risks can impact your operations. Download our analysis of the five industries with the highest ESG risk to learn how companies in any industry can find opportunities for improving ESG risk management.   Key Moments 0:01:10 Market news 0:01:52 AFME - ESG Finance Report 2021 0:02:23 Green bond market forecast for 2022 and beyond 0:02:57 Nuclear and gas debate in the EU green taxonomy 0:03:18 Environmental Finance Sustainable Bonds Insight 2022 0:03:57 Boom in sovereign green issuances 0:04:09 IFC updates guidelines for blue bonds 0:04:18 Transition bond debates continue 0:04:34 Ongoing discussion around mapping Scope 3 emissions 0:05:01 Outlook on scaling up carbon markets 0:05:35 ISSB and the harmonization of disclosures 0:06:13 Challenge directed at SBTi process 0:06:59 EU Green Bond Standards 0:07:04 CBI report on premiums for green and social bonds 0:07:52 CBI China Transition Report 0:08:06 Climate Bonds Standard transition criteria for cement sector 0:08:28 Special Guest - Simon Vacklen discusses impact reporting for green and social bonds 0:16:45 SLB overview 0:21:03 SLL overview 0:25:25 Audience questions 0:30:38 Green bonds overview 0:34:13 Green loans overview 0:35:49 Social bonds and loan overview 0:36:39 Labeled products overview 0:38:25 Transition bond and regulatory news   Links to Select Resources AFME - ESG Finance Q4 and Full Year 2021 - European Sustainable Finance Bloomberg - Emerging ESG Bond Boom Puts World on Path to Sell $1.8 Trillion DW - European Commission declares nuclear and gas to be green Environmental Finance – Sustainable Bonds Insight 2022 International Finance Corporation – Guidelines for Blue Finance South China Morning Post - Sustainable finance: why transition bonds and loans are not popular even as demand for green and sustainable products is growing Environmental Finance – The Changing Shape of the Carbon Markets BBC News - Climate Change: Top Companies Exaggerating Their Progress - Study Official Monetary and Financial Institutions Forum - Greenium set to stay, say sovereign debt issuers Climate Bonds Initiative – Transition Finance in China Sustainalytics – Maximum Impact: How Bond Impact Reporting Can Improve Corporate Decision Making Sustainalytics SPOs: Fabbrica Italiana Sintetici Sustainability-Linked Bond Second-Party Opinion Cellnex Sustainability-Linked Financing Framework Second-Party Opinion Sparebanken Sør Green and Sustainability Bond Framework Second-Party Opinion Central American Bank for Economic Integration Social Bond Annual Review iA Financial Group Sustainability Bond Framework Second-Party Opinion   More Episodes

Episode Summary Hosts Nicholas Gandolfo, Director, Corporate Solutions Aditi Bhatia, Regional Sales Manager, Corporate Solutions In this episode, hosts Nick and Aditi discuss notable trends and deals in sustainable finance – from rapid market growth, to increasing diversification of products, new taxonomies, sovereign green bonds and sustainability-linked bonds, impact accounting and reporting, and much more. Nick also tackles audience questions, offering some valuable insight on group frameworks and Sustainalytics’ approach to supporting transition finance. Rapid Growth in Sustainable Finance 2021 saw incredible growth in sustainable finance and ESG assets under management (AUM) are projected to reach US$50 trillion by 2025 and make up one-third of global AUM. Sustainable bonds already made up 10% of global debt issued in 2021, with US$1 trillion issued for the first time and a 40% increase over 2020. And 2022 is showing no signs of slowing down, with a hot start to the year and good momentum looking forward. World Economic Fund Risk Report 2022 Of the WEF’s top ten global risks by severity, five are environmental issues and the top three directly relate to climate change. View the report here. Maybe it’s no surprise that this theme is carried forward from the previous risk report, but it highlights the continued importance of funding for projects that address climate risk. Download Our New eBook Getting Started With ESG: What Every Company Needs to Know As more and more companies are thinking about incorporating ESG considerations into their strategies, Sustainalytics Corporate Solutions wants to ensure they start off on the right foot. Download our practical guide to starting a corporate ESG strategy. Discover key issues that could affect your company, the benefits of action, and the risks of inaction. Key Moments Market news 02:17 Hot start to the year: looking for $1tn ESG investment in 2022 03:31 Big year for taxonomies? ASEAN, Korea, Indonesia, plus EU changes 03:58 WEF Risk Report: top risks climate-related 05:10 ESG risk ratings scrutiny – usefulness and robustness 05:45 Fashion industry financing decarbonization and scope 3 emissions 06:20 Impact accounting 07:15 Nuclear & Gas and the EU Taxonomy 07:52 John Holland Sustainability Linked Bank Guarantee (Australia) 08:32 COVID recovery and Build Back Better 09:02 CBI report: Thailand infrastructure 09:25 World Bank report: sovereign SLB KPIs 09:51 IEA report: digitization as enabler for transition 10:20 Environmental Finance report: Green Bond Impact Reporting Green bonds overview 11:25 Sovereigns: Egypt, Cyprus, Qatar, Denmark, Uruguay 12:00 Banks 13:40 Lots of activity and diversification in India 14:50 Social bonds to fund affordable housing, microfinance, employment Green loans overview 16:15 Renewables 16:40 Property 17:05 Industrial machinery: sustainable water management SLB overview 18:10 Coal terminals: scope 3 emissions and transition plans 19:02 Construction: reducing scope 1 and 2 carbon emissions 19:38 Private equity: coverage approach, science-based targets 20:40 Telecom: scope 1, 2 and 3 reductions 22:55 Chemicals: scope 1 and 2, recycling, SBT, Transition Pathway Initiative, IEA Listener questions 24:20 Q: Can a group framework cover all the entities in the group? 26:13 Q: How does Sustainalytics sign off on transition and what’s our approach? SLLs 29:15 Sector activity: shipping, pulp and paper, finance, property, retail, telecom, rail, IT, manufacturing, chemicals, construction, and more Labeled products overview 32:30 Saudi Arabia: green deposits 32:40 Insurance connected to climate 32:58 Trade finance and solar loans Transition finance overview 33:28 Hydrogen, mining, oil companies, McKinsey report, Japan 34:50 Countries and regulations Links to Select Resources Banking Exchange: Global ESG Assets to Hit $50 Trillion by 2025 Asian Investor: Sustainable Finance Bonds Make Up 10% Of Global Debt Issued in 2021 World Economic Fund: Global Risks Report 2022 Morningstar: ESG Ratings Are Bottom-Line Focused, but Have Broader Impacts Environmental Finance: 'Impact Accounting' Bodies Launch Survey Of Existing Approaches Climate Bonds Initiative: Keeping the Momentum: China Introduces Innovative Labels Into Domestic Market Environmental Finance: Impact report quality deters green bond fund investors Bloomberg: Global Issuers Land in Canada as Nation’s Banks Fund Abroad Sustainalytics SPOs: Danske Bank Group Green Bond Framework Banco do Brasil Sustainable Finance Framework FONPLATA Sustainable Debt Framework Northland Power Green Financing Framework Sumitomo Mitsui Banking Corporation's Green Bond Framework ICG Sustainability-Linked Bond Framework Cellnex Sustainability-Linked Financing Framework Coca-Cola İçecek A.Ş. Sustainability-Linked Bond Framework The Central America Bottling Corporation Sustainability-Linked Financing Framework

Episode Summary Hosts Nicholas Gandolfo, Director, Corporate Solutions Marika Stocker, Senior Manager, Corporate Solutions In this episode, Nick and Marika provide a run-down of notable deals in the sustainable finance market, from sovereigns issuing sustainable debt, to corporate activity in green and social bonds and loans, to the introduction of new products and structures. They also answer audience questions about the outlook for labeled transition bonds and possible biodiversity-related indicators for linked transactions. A Premium for Social Bond Issuances? While evidence of a premium for green bonds – or greenium – continues to emerge, a similar advantage is being seen for social bond issuances. According to research, compared with conventional bond equivalents, social bonds received a yield discount of around 12 basis points at issuance. The explosion of social bond issuance in response to the COVID-19 pandemic, and the oversubscription of social bonds are contributing to this social premium or “socium” found for some social bond issues. Insight on Elements for a Just Transition The World Benchmarking Alliance published a report examining the social elements of companies’ low carbon transition. The report assessed 180 companies across three sectors – oil and gas, electric utilities, and automotive – and found that the majority of high-emitting companies are not taking action to move toward a just transition. Other key findings suggest the people most at risk are left out of decision making; companies will need to reskill their workforce as part of their transition plans; companies are not using their influence to advocate for a just transition; and that a just transition needs to be underpinned by companies’ respect for human rights. Hopefully, we’ll see some of the findings from this report reflected in the performance indicators and use of proceeds of sustainable finance transactions going forward. Download Our New eBook Getting Started With ESG : What Every Company Needs to Know As more and more companies are thinking about incorporating ESG considerations into their strategies, Sustainalytics Corporate Solutions wants to ensure they start off on the right foot. Download our practical guide to starting a corporate ESG strategy. Discover key issues that could affect your company, the benefits of action, and the risks of inaction.  Key Moments 01:45 Market news 02:09 Ideas for a "greener" holiday season 02:26 December market volumes 03:12 EU taxonomy discussions continue 03:34 Steeper borrowing costs for sovereigns slow on climate 04:21 Socium for social bonds 05:01 World Benchmarking Alliance just transition corporate assessments 05:49 Data centers and technology in green finance 06:48 Using avoided emissions as targets 06:54 SBTi report on private equity 07:22 TPI report on pathways for other high-emitting sectors 08:12 Green bonds overview 13:23 Social bond overview 15:03 Green loans overview 16:19 SLB overview 19:30 Audience questions 24:22 SLL overview 28:27 Labeled products, transition, and regulatory overview Links to Select Resources Bloomberg: Australia Seen Facing Steeper Borrowing Costs If Slow on Climate Environmental Finance: Social Bond 'Socium' Equivalent to One-Notch Credit Rating Upgrade GlobeNewswire: The Data Centre Dilemma: The Challenge of Becoming Carbon Neutral - A Look at Twenty Key Metro City Markets Treehugger: Volcano-Powered Bitcoin City Proposed for El Salvador Transition Pathways Initiative: Carbon Performance Assessment of Other Industrial Companies – Discussion Paper Environmental Finance: There Is a Market for Biodiversity - and It Is Expanding Wealth Briefing: ESG Phenomenon: Schroders Stokes "Avoided Emissions" Research; Jersey Finance Climate Bonds Initiative: Common Language on Financially-Supported Agricultural Green Development Report  

Episode Summary  Hosts  Nicholas Gandolfo, Director, Corporate Solutions  Aditi Bhatia, Regional Sales Manager, Corporate Solutions    Your hosts Nick and Aditi showcase recent deals and transactions in the global sustainable debt and loan markets, share interesting reports, and highlight new labeled products and regulatory developments in this space.      Climate Promises Made, but What Do They Mean in Practice?  Reflecting on the outcomes from COP26, Nick and Aditi highlight some of the commitments made during the conference and what they could mean going forward. Many of the delegates, including some of the world’s largest polluters, made pledges to target net-zero emissions, curb deforestation, reduce methane emissions, and ‘phase down’ coal and fossil fuels. The issue of what developed nations could and should do to support developing nations in building resilience against the impacts of climate change was also a hot topic. Some participants and observers were dissatisfied with the outcomes from COP26, and their disappointment was understandable. Though things may not be progressing as far or as quickly as needed, it is promising to see that these pressing climate issues continue to take center stage.      Bridging the Gender Gap Through Sustainable Finance  Among the recommended reading for this episode, a recent report from the International Capital Markets Association (ICMA), UN Women, and the International Finance Corporation (IFC) stands out. Bonds to Bridge the Gap: A Practitioner’s Guide to Using Sustainable Debt for Gender Equality, outlines how sustainable finance can help direct capital to reduce the financial and economic inequalities between women and men. The report offers case studies and examples of gender-related activities, targets, and key performance indicators for issuers to consider. In a blog post from last year, Sustainalytics’ Ijeoma Madueke also discussed the idea of using gender lens investing and gender bonds to finance the empowerment and socio-economic advancement of women and girls globally. It’s clear that gender is a key issue that could, and should, be included in more sustainable finance transactions. Key Moments  00:08 Introduction 00:49 Market news 01:10 Forecast for 2022 01:32 CBI Q3 report 02:55 Post-COP 26 insights 04:30 STBi - Net Zero Target Setting Mechanism 05:04 World Bank report on ways to measure GDP 05:33 ICMA, IFC, UN Women Report - Bonds to Bridge the Gender Gap 06:04 Partnership for Carbon Accounting Financials (PCAF) report 07:35 EU/China Common Ground Taxonomy 07:52 IOSCO calling for ESG ratings regulation 08:51 Green bonds overview 14:22 Social bonds and loans overview 15:05 Green loans overview 16:11 SLB overview 20:45 Audience questions 24:25 SLL overview 26:12 Labeled products overview 27:35 Transition bonds overview 29:06 Regulatory update   Links to Select Resources Bloomberg – Modi Urges $1 Trillion to Help India’s Transition: COP26 Update Market Screener – SEB's The Green Bond Report: COP26 - a Qualified Success SBTi – The Net-Zero Standard The Age – Hitting Net-Zero Requires a Major Banking Shake-up Bloomberg – Nuclear Energy Generator Splits ESG Buyers With Green Bond Global Capital – EU, China Produce First Common Ground Taxonomy Responsible Investor – IOSCO: ESG Ratings and Data Need Regulatory Oversight to “Increase Trust” Sustainalytics SPOs: Frost CMBS 2021-1 Green Securitized Bond Framework Second-Party Opinion Barclays Capital Real Estate Inc. Social Bond Framework Second Party Opinion KPN Sustainability-Linked Finance Framework Second-Party Opinion Encevo S.A Green Schuldschein Framework Second Party Opinion Empresa Generadora de Electricidad Haina, S.A. Sustainability-Linked Financing Framework Second Party Opinion More episodes

Episode Summary Hosts Nicholas Gandolfo, Director, Corporate Solutions Marika Stocker, Senior Manager, Corporate Solutions The recurring theme in this episode’s round up of market developments is innovation! Nick also offers a list of recommended reading for the month (be prepared, it’s a long one) and concludes the tale of his encounter with an elephant in Bangladesh first mentioned in October’s episode. Innovation is the Name of the Game in Sustainable Finance The thread of innovation continues throughout sustainable finance – from green cryptocurrency to ESG derivatives, and relinked sustainability instruments (sustainability-linked bonds tied to sustainability-linked loans). Ultimately, it’s good to see the market continue to develop, but caution and scrutiny are needed to ensure that labeling and the increasing complexity of financial instruments don’t lead to greenwashing. Greening of IPOs On the heels of Allbirds’ initial public offering (IPO), for which Sustainalytics provided a corporate ESG assessment of the company, there are continuing discussions about the greening of IPOs. As the number of companies going public continues to rise, they are each looking for ways to signal to investors that they are a safe bet when it comes to managing material ESG risk and overall company management. Having their ESG or sustainability performance assessed by a third-party prior to their IPO is one way to do that. Watch this space as we see how this trend develops for new IPOs in 2022. Recommended Reading Nick runs down a list of reports and research focused on reducing emissions and transition finance. IEA – Tracking Report: Methane Emissions from Oil and Gas McKinsey – Curbing Methane Emissions: How Five Industries Can Counter a Major Climate Threat IEA – Global Hydrogen Review 2021 IEA – An Energy Sector Roadmap to Carbon Neutrality in China Energy Transitions Commission – Keeping 1.5°C Alive: Actions for the 2020s HSCB – A Practitioner’s Guide to Net Zero for Banks   Key Moments 01:28 Market overview 02:00 Greening of IPOs 02:40 Google adds carbon data to flight info 03:00 Green cryptocurrency 03:32 EF conference - ESG Risk Ratings 04:08 ESG derivatives 04:46 Taxonomy report from Natixis 05:11 Nuclear power in sustainable finance 05:46 COP 26 highlights 06:19 New in sustainability-linked finance: relinked SLB 07:04 Biodiversity COP15 highlights 07:31 Green industry unicorns 08:03 Report recommendations: McKinsey & IEA methane reports 08:40 CBI interactive data tool 09:36 Green bonds overview 15:10 Social bonds and loans overview 21:21 Audience questions 28:21 SLL overview 30:53 Labeled products overview 32:16 Transition finance overview 33:30 Regulatory and country update   Links to Select Resources Natixis – The New Geography of Taxonomies CBI Interactive Data Platform CBI – China Green Securitization State of the Market 2020 Oilprice.com - EU’s Green Bond Debut Comes Out Swinging Forbes - Africa’s Seychelles Blue Bond Economy Inspires Belize Natural Gas World - Japan's Inpex Issues Its 1st Green Bonds Reuters - APICORP sells $750 million in debut green bonds Sustainalytics SPOs: Kvika Bank Green Financing Framework Second-Party Opinion The Famur Group Green Bond Framework Second-Party Opinion Autodesk Sustainability Financing Framework Second-Party Opinion OVS Group Sustainability-Linked Bond Framework Second-Party Opinion Autonom Sustainability-Linked Bond Framework Second-Party Opinion More Episodes

Episode Summary Hosts Nicholas Gandolfo, Director, Corporate Solutions Aditi Bhatia, Regional Sales Manager, Corporate Solutions In this episode, Nick and Aditi discuss hot topics in sustainable finance. As the global green, social, sustainable, and sustainability-linked market continues to thrive, our hosts take note of the growing variety in use of proceeds, the debate around sustainability-linked bond penalties, and an eyebrow-raising new SLB issuance from Philip Morris International.   Sustainable Bond Market Reaches Half a Trillion in 2021 The Climate Bonds Initiative (CBI) reported that total labelled bond issuances (green, social, sustainability, transition and sustainability-linked) hit the half trillion mark in the first half of the year. That’s a 59% increase compared by 2020. For the green bond market specifically, CBI predicts annual volumes will reach $1 trillion by 2023. Other trends noted in the report are the continued growth of social and sustainability bonds, with social bond volumes quadrupling in H1 and sustainability bonds increasing 20%. The volume of sustainability-linked bonds also continued to soar in 2021. Transition bond issuances, on the other hand, are still struggling to gain traction.  Biodiversity on the Agenda Nick notes that biodiversity continues to draw the attention of investors and issuers globally, with a growing number of reports and articles on the topic. This year also saw the UN Convention on Biological Diversity, or COP 15, wrapping up in China, and the launch of the Task Force on Nature-related Financial Disclosures over the summer. In the world of sustainable finance, we think biodiversity-related targets and use of proceeds will likely become more prominent within linked instruments and labeled bond issuances. Webinar | ESG Risk Rating in APAC: Supporting the Corporate Sustainability Journey  Join us on Tuesday, November 16, to hear from corporate and sustainable finance leaders in the APAC region. Our panelists will share their thoughts on corporate environmental, social and governance (ESG) ratings, and provide insight on how they integrate ESG ratings into their investment and sustainable finance activities.     To register for the live event or to watch the replay, click here.   Key Moments 00:02:50 Market overview 00:02:52 CBI report on H1 2021 00:04:36 Tier 2 subordinated debt 00:05:28 Greenwashing debate 00:06:33 SLBs and questions about penalties 00:07:05 Biodiversity 00:08:02 Nuclear 00:09:18 Philip Morris SLB 00:10:06 CBI report on Latin America 00:10:44 CBI annual conference 00:11:53 Green bonds overview 00:21:35 Social loans overview 00:22:58 Green loans overview 00:24:23 SLB overview 00:27:57 Audience questions 00:30:09 SLL overview 00:31:47 Transition bonds overview   Links to Select Resources Climate Bonds Initiative: Sustainable Debt Highlights H1 2021 Asian Investor: Do Fears of Greenwashing Outweigh the Evidence? Bloomberg: ESG Financing Comes With Few Penalties for Missing Goals Environmental Finance: French Financial System 'Significantly Exposed' to Biodiversity Risk European Scientist: Kazakhstan Banks on Nuclear Energy For Transition to Low-Carbon Future Climate Bonds Initiative: Latin America & Caribbean: Sustainable Finance State of the Market 2021 Climate Bonds Initiative: Climate Bonds Conference21 Videos Climate Bonds Initiative: Transition Finance for Transforming Companies discussion paper  Sustainalytics SPOs: Isle of Man Sustainability Finance Framework Second-Party Opinion Grupo Aeroportuario del Pacífico Green Financing Framework Verizon Green Financing Framework Axis Bank Sustainable Finance Framework Second-Party Opinion California Housing Finance Agency Social Bond Framework for the Purchase and Financing of Citibank, N.A. Affordable Housing Loans Bosam Social Bond Framework Rumo S.A. Sustainability-Linked Finance Framework Lilly Sustainability Bond Framework Vodafone Sustainable and Sustainability-Linked Finance Framework Second-Party Opinion CEMEX Sustainability-Linked Financing Framework Second-Party Opinion More Episodes

Episode Summary Hosts Nicholas Gandolfo, Director, Corporate Solutions Marika Stocker, Senior Manager, Corporate Solutions In this episode, Nick and Marika discuss recent developments in sustainable finance that have caught their eye. The diverse topics covered range from the growing momentum behind sustainability-linked bonds to the Tokyo Olympics’ focus on sustainability to the latest report from IPCC. They also note the continued growth of sustainable finance globally due to more issuers, markets, products, and diversification. Climate Change Considerations for Global Sporting Events With the summer Olympics behind us and the winter games only a few months away, Nick and Marika discuss the climate frameworks being developed by the International Olympic Committee and other global sporting organizations. These groups are considering the future impact of climate change on global sporting events and vice versa. The frameworks will address issues such as scope 3 emissions due to travel and transport and the effects of changing weather patterns on the locations for future events and athletes’ safety.  The Nuanced and Multidimensional Nature of ESG Ratings In response to a recent article criticizing the use of ESG scores in credit analysis, Nick touches on the nuances of ESG ratings and how they are used. He cites the multidimensional nature of ESG ratings, noting that some of Sustainalytics’ clients don’t use the top-level ESG Risk Rating score, but rather use aspects of the data to inform their models and investment approach. Earth Overshoot Day and IPCC's "Code Red" for Humanity  Two interesting and important sets of research are also highlighted. The first is Earth Overshoot Day, which fell on July 29 this year. This marks the date when the human population’s demand for ecological resources outstrips what the Earth can generate in that year. Unfortunately, the date continues to creep closer and closer to the start of the year. The second is the Intergovernmental Panel on Climate Change’s (IPCC) sixth assessment report. Climate Change 2021: The Physical Science Basis analyzes global climate science research and warns that some of the key effects of climate change, such as rising sea levels, may be irreversible for thousands of years. This work on the current state of the global climate system and the effects of climate change will make for a sobering read ahead of the COP26 conference in Glasgow at the end of October.    Key Moments 00:00:09 Introduction 00:01:18 Market overview 00:03:11 EMIA's enhanced principles for labeled bonds 00:03:58 IOC climate framework 00:05:23 Earth Overshoot Day 00:06:07 Blockchain and green finance 00:06:42 ESG score's place in credit ratings 00:07:49 IPCC climate report 00:09:25 Carbon offsets vs targets 00:11:06 Green bonds overview 00:16:21 Social and sustainability bonds overview 00:18:12 Green loans overview 00:19:49 SLB overview 00:23:23 Audience questions 00:27:27 SLL overview 00:31:29 Labelled products 00:32:33 Transition bonds overview 00:33:28 Regulatory developments   Links to Select Resources South China Morning Post: What is Driving an Almost 200 Per Cent Growth in Sustainability-linked Debt Financing Environmental Finance: EMIA Releases 'Enhanced' Principles for Labelled Bonds Earth Overshoot Day Ledger Insights: BIS, HKMA to Explore Tokenizing Green Bonds, Including Public Blockchain Environmental Finance: 'Blunt' ESG Scores Have 'No Place' in Credit Rating Process, Says KBRA IPCC: Climate Change 2021: The Physical Science Basis Environmental Finance: Initiative Launches to Build 'Integrity' in Voluntary Carbon Markets GlobalCapital: Deutsche Bank Debuts Green Label in Formosa Format The Economic Times: Axis Bank to Now Raise up to $1 Billion Via Overseas AT1 Issue Bloomberg Green: JPMorgan Plots Derivatives Path Into New Era of ESG Finance Hellenic Shipping News: NYK Issues First Transition Bonds in Japan Bloomberg: China Firms Shy Away From ESG Loans Holding Them to Account Sustainalytics SPOs: Scotiabank Sustainable Bond Framework Second-Party Opinion Concordia Financial Group, Ltd. Green Bond Second-Party Opinion Allied Properties REIT Green Financing Framework Hysan Sustainable Finance Framework Second-Party Opinion Baidu, Inc. Sustainable Finance Framework Second-Party Opinion More Episodes

Episode Summary Hosts: Nicholas Gandolfo, Director, Corporate Solutions Aditi Bhatia, Regional Sales Manager, Corporate Solutions   In this episode, Aditi and Nick highlight sustainable finance market developments that happened over the summer. From growing adoption of sustainability-linked debt in the Asia-Pacific region, to the recently published Social Loan Principles, to the continued flurry of sovereign activity in the market, there is a lot to cover. Suggested reading from this episode includes the Energy Transition Commission’s report Bioresources within a Net-Zeto Emissions Economy: Making a Sustainable Approach Possible to learn more about key environmental considerations around biomass as a fuel source.   The EU’s Sustainable Finance Train Keeps Rolling The European Commission released its renewed sustainable finance strategy, an update to its 10-point action plan from 2018. The strategy covers several initiatives to address climate change and environmental challenges, while increasing investments. It sets out of actions, including broadening sustainable finance to include transition finance and developing international sustainable finance initiatives and standards, among others. The European Commission also launched its voluntary European Green Bond Standard for corporations and sovereigns. The standard requires proceeds be used for investments that are 100 percent aligned with the EU’s taxonomy and that issuers undergo audits to ensure funds are allocated to the right projects. The European Commission also adopted the Delegated Act supplementing Article 8 of the Taxonomy Regulation. The Delegated Act specifies how large financial and non-financial companies should disclose on the share of their business, investments or lending activities aligned with the EU taxonomy. For full details, please visit the European Commission website. Climate Aligned Bond Market Much Larger Than We Think The Climate Bonds Initiative (CBI) published a few interesting reports over the summer including Climate Investment Opportunities: Climate-Aligned Bonds & Issuers 2020. The report presents research on unlabeled climate-aligned bonds (i.e., bonds not explicitly labeled as green by the issuer, but that finance climate-related activities or projects). CBI found 420 climate-aligned issuers from 45 countries with US$913.2 billion in climate-aligned bonds, highlighting sizable investment opportunities. Key Moments 0:00:54 Market news 0:01:10 Market numbers 0:02:29 Continued uptake of social bonds 0:03:19 Updated EU sustainable finance strategy 0:03:46 EU Green Bond Standard 0:05:02 EU Green Deal 0:05:53 Bioresources report from the Energy Transition Commission 0:07:05 EU Green Bond Framework 0:07:52 Market expresses greenwashing concerns 0:08:15 Sukuk transactions and sustainable finance 0:08:26 Debate around nuclear continues 0:08:51 Concept of double materiality 0:09:30 Climate Bond Initiative resources 0:10:28 Green bonds overview 0:15:27 Social bonds and loans overview 0:17:52 Green loans overview 0:19:02 SLB overview 0:23:43 Audience questions 0:26:19 SLL overview 0:28:58 Labeled products overview 0:30:45 Transition bonds overview   Links to Select Resources: Bloomberg: ESG Bond Sales Spring to $1 Trillion as Investors Force Change European Commission: Renewed EU Sustainable Finance Strategy LMA/LSTA/APLMA: Social Loan Principles The Energy Transition Commission: Bioresources within a Net-Zeto Emissions Economy: Making a Sustainable Approach Possible Raconteur: Sustainability Metrics Matter: Good Intentions Are No Longer Enough World Nuclear News: MEPs Call on EC to Recognize Nuclear as Sustainable Climate Bonds Initiative: Sustainable Debt: North America State of the Market 2021 Climate Investment Opportunities: Climate-Aligned Bonds & Issuers 2020 Sustainalytics SPOs: RBC Green Bond Framework Second-Party Opinion (2019) Virgin Media O2 Green Bond Framework Second-Party Opinion (2021) Kaiser Green Bond Framework Second-Party Opinion (2021) Shui On Land Sustainability-Linked Bond Framework Second-Party Opinion (2021) Seaspan Blue Transition Bond Framework Second-Party Opinion (2021) More Episodes

Episode Summary Hosts: Nicholas Gandolfo, Director, Corporate Solutions Marika Stocker, Senior Manager, Corporate Solutions In this episode, Nick and Marika share updates on the latest deals and transactions in the global green, social, sustainability and sustainability-linked (GSSS) debt market. The market shows no signs of slowing down as the numbers for the first half of 2021 surpass all of 2020. Some forecast that the total value of the global GSSS market for 2021 may reach US$1 trillion. Nick also shares highlights from ICMA’s annual meeting and discusses the growing number of oil & gas companies delving into sustainable finance. Marika gives an overview of recent green bond activities. Responses to audience questions focus on the hot topic of sustainability-linked bonds. A Push for More Climate-Related Reporting and Disclosure Leaders at the G7 summit were urged to follow the UK’s lead and make it mandatory for companies to report on their exposure to climate risks as part of a broader effort to decarbonize global investment portfolios. Currently, investors lack information on the climate-related risk linked to the companies they invest in. The Value Reporting Foundation has also come out with more guidance around corporate reporting. The International Financial Reporting Standards (IFRS) is also working on standards around sustainability reporting. More Oil & Gas Companies Wade into Sustainable Finance As the global sustainable finance market continues to mature and evolve, companies from hard-to-abate sectors are testing the waters. With more oil & gas companies dipping their toes into the sustainable finance pool, we note a few important things for them to consider when looking at sustainability-linked debt: The extent to which scope 3 is included (or not) in the company’s sustainability strategy and framework. This is of particular importance for companies operating in hard-to-abate sectors. The extent to which offsets are included (or not) in the company strategy. In our view, they should be a minor part. The extent of ongoing exploration and capital expenditures for the existing oil & gas businesses. If it’s significant with no indication of change, then it really doesn’t align with sustainability goals and targets. Assessing the Ambitiousness of Sustainability-Linked Instruments In response to an audience question, Nick outlines Sustainalytics’ approach to assessing the ambitiousness of KPI and targets for sustainability-linked instruments. Companies should be evaluating against their past performance, against the performance of their peers and against science-based benchmarks. There are several resources in the market to help companies judge the ambition of their indicators/targets such as the Science-Based Target Initiative, Transition Pathway Initiative, ICMA’s Green Bond Principles and Social Bond Principles, among others. Key Moments 00:52 Market news 02:18 ICMA resources 03:46 Nasdaq Green Designation 04:59 Push for more climate disclosures 05:10 Value Reporting Foundation guidance 05:32 Market talk about SLBs 06:25 Sustainability-linked debt in eight metrics 07:24 More oil & gas companies in sustainable finance 08:32 Biodiversity report 09:00 CBI resources 09:42 Green bonds overview 15:04 Social bonds overview 16:24 Green loans overview 17:48 Audience questions 24:41 SLB overview 26:45 SLL overview 29:58 Labelled products   Links to Select Resources: ICMA Resource Centre Nasdaq Green Designations Environmental Finance: Sustainability-Linked Debt in Eight Metrics ESG Investor: Financial System Must Play Dual Role on Biodiversity Climate Bonds Initiative (CBI) Webinars and Resources Slovenian Sovereign Sustainability Bond Framework Second-Party Opinion UBS Green Funding Framework Second-Party Opinion LimakPort SLB Framework Second-Party Opinion TELUS Sustainability-Linked Bond Framework Second-Party Opinion Worley Limited Sustainability-Linked Bond Framework Second-Party Opinion More Episodes

Episode Summary Hosts Nicholas Gandolfo, Director, Corporate Solutions Aditi Bhatia, Regional Sales Manager, Corporate Solutions   In this episode, Nick and Aditi cover some of the recent developments in sustainable finance with market diversification being the common thread. Market volumes continue to increase showing positive year-over-year momentum. Contributing to that growth is new market entries from various sectors as well as a broader scope of activities and projects being funded. With this diversity comes greater scrutiny of the market, especially of issuers and borrowers, their projects and frameworks, as well as their lenders. In our opinion, such scrutiny and debate will ultimately lead to more robust and credible sustainable finance activities.   Climate Transition’s Influence on Sustainable Finance  Although not expressly transition, some sustainable financing frameworks and issuances are coming to market in alignment with ICMA’s Climate Transition Finance Handbook. Japan’s Financial Services Agency has also released its Basic guidelines on climate transition finance with the aim of encouraging the allocation of more funds to contribute to the country’s carbon neutrality goals. In response to a listener question, Nick notes the Handbook’s use in the sustainability-linked bond and loan frameworks of companies in hard-to-abate sectors.   More Sovereigns Move Forward on Sustainable Debt Sovereigns continue to issue sustainable bonds to support their economic recoveries. Issuances from Germany, the UK and Pakistan made headlines, as did announcements from Canada and Kenya. The principality of Andorra even got in on the action, issuing its first sustainability bond and raising EUR 500 million to finance biodiversity conservation, sustainable water management, employment generation and access to essential services, among other green and social projects. Diversification's Positive Impact on the Market Diversification within the global sustainable debt market continues and we see that as a good thing. The entry of market participants from various sectors and the financing of innovative green and social projects has led to greater debate and scrutiny of the market. Highlighted this month are transactions from companies in real estate, semiconductors, agriculture, rail, household goods, banks, technology, education and the mainstay, renewables. This diversification of sectors and types of projects financed is important for the continued evolution and improvement of the sustainable finance market.  Key Moments 00:08 Introduction 00:46 Market news 01:14 Market volumes up 01:53 Shell landmark court verdict 02:42 Exxon shareholder activism 02:59 IEA “Net Zero by 2050” report 04:36 ICMA additional recommendations for building taxonomies 05:03 ICMA additional guidance for climate transition finance 05:49 Transition bonds in danger? 06:39 Challenges to SLBs 07:28 Update to Sustainability-Linked Loan Principles 08:24 Sustainable Trade Finance 09:12 Oil and gas and sustainability-linked frameworks 10:21 New Climate Bonds Initiative reports 10:44 Hong Kong Monetary Authority guidelines on sustainable finance subsidy program 11:26 Transactions overview 14:53 Social bonds overview 15:49 Green loans and bonds overview 16:24 Sustainability-linked bonds overview 19:42 Listener question 22:11 Sustainability-linked loans overview 24:19 Transition bonds overview 25:21 Labeled products overview 26:08 Regulatory update   Links to Select Resources IEA: Net Zero by 2050 report APLMA/LMA/LSTA: Sustainability-Linked Loan Principles May 2021 Climate Bonds Initiative: Sustainable Debt: Global State of the Market 2020 Post Issuance Reporting in the Green Bond Market 2021 Reports on ASEAN region Regulation Asia: HKMA Issues Guideline on Green & Sustainable Finance Grant Scheme Air Liquide Sustainable Finance Framework Second-Party Opinion Kellogg Sustainability Bond Framework Second-Party Opinion CaixaBank Sustainable Development Goals Framework Second-Party Opinion Weir Group PLC Sustainability-Linked Bond Second-Party Opinion Seaspan Sustainability-Linked Bond Second-Party Opinion Environmental Finance: Japan's FSA publishes bond & loan 'transition finance guidelines' Forbes India: Green bonds, sustainable bonds demand picks up in India in the pandemic era More Episodes

Episode Summary Hosts Nicholas Gandolfo, Director, Corporate Solutions Marika Stocker, Senior Manager, Corporate Solutions In this episode , Nick and Marika discuss the bustling labeled bond market and its ongoing diversification in terms of the types of issuers, geographies, the use of proceeds and products. As the year rolls on, the sustainable finance market continues to produce strong volumes in terms of the number of transactions and their value. They also highlight developments around transition finance guidance as well as new and updated principles in the loan market. As always, they take a couple listener questions, this time focused on how bonds are labeled and the emergence of combined instruments. Sovereign activity in the bonds space Activity in the labeled sovereign bond market looks to be heating up for 2021. Several nations including Russia, Canada, Hungary, UK are considering issuing sustainable sovereign bonds. We’ll keep an eye on this space to see which countries come to market with green, social or sustainability sovereign bonds. Transition finance More is being written about transition finance and whether sustainability-linked bonds (SLBs) have taken their place in the market. No doubt SLBs have come on strong, but we see diversification, especially with respect to product, as important for overall market health. Nick notes some of the challenges that could account for the low number of labeled transition finance thus far but anticipates that in time we will see more transition bond issuances. Nick also highlights two transition-focused reports worth checking out - The Transition Pathways Initiative’s annual "State of Transition" and Natixis’ "Transition Tightrope" series. Continuing momentum of SLBs On the SLB front, the segment continues to grow. Transactions beget more transactions as borrowers and lenders gain confidence in the instrument. While some observers have doubted a handful of issuances due to questions around the materiality, relevance and ambitiousness of their sustainability performance targets and KPIs, the scrutiny is ultimately good and will raise the caliber of SLBs coming to market. Key moments 00:09 Introduction 00:55 Market news 02:20 TPI “State of Transition” report 03:05 Ongoing developments in China 03:55 Transition bonds vs SLB? 05:07 Natixis “Transition Tight Rope” report series 05:40 EU Taxonomy developments 06:31 Social Loan Principles released 07:07 ELFA/LMA - ESG considerations in leveraged loan paper 08:11 Bond issuance overview 13:21 Loan transactions overview 14:18 Sustainability-linked bonds overview 18:54 Questions 22:31 Sustainability-linked loan overview 27:04 Transition bond overview 29:01 Regulatory updates   Links to select resources Transition Pathway Initiative: TPI State Transition 2021 Report Natixis: Brown Industries: The Transition Tightrope European Leveraged Finance Association (ELFA)/Loan Market Association (LMA): Guide to Company Adviser to ESG Disclosure in Leveraged Finance Transactions APLMA/LMA/LSTA: Social Loan Principles (new) APLMA/LMA/LSTA: Sustainability-Linked Loan Principles (updated) Science Based Targets: Public consultation for maritime transport sector FedEx Sustainability Bond: Framework | Second-Party Opinion NAVER Sustainability Bond: Framework | Second-Party Opinion | News Release Berlin Hyp Sustainability-Linked Bond: Framework | Second-Party Opinion Environmental Finance: Amundi launches first ‘just transition’ climate fund More Episodes

Episode Summary 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. Hosts: Nicholas Gandolfo, Director, Corporate Solutions Cheryl Tay, Senior Associate, Corporate Solutions 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 Japan state of the market Malaysia infrastructure opportunities semi-annual green bond pricing dynamics report sustainable stock exchanges 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 bond overview 00:24:56 Sustainability-linked loan overview 00:26.55 Transition bond 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 ON SPO with EU Taxonomy add on Global Capital: Enel Takes Crown from AB InBev for Largest SLL Sustainalytics Published Projects: Visit our website to view the second-party opinions and annual reviews mentioned in this episode Earthday.org: Facts about bees More Episodes

In this special episode of the Sustainalytics Podcast, our host Nick Gandolfo is joined by Nicole Verkindt, Director, Sustainalytics Corporate Solutions to discuss the role of ESG in supply chains. Given the large proportion companies spend in their supply chain (about 70% on average), the environmental, social and governance (ESG) and sustainability performance of supply chain companies can not be ignored. And for suppliers, a focus on improving their own ESG performance could be a competitive advantage. Nicole and Nick also discuss the launch of Sustainalytics’ ESG Assessment Platform, a tool to help companies assess the overall sustainability of the organizations that they work with, from customers to suppliers to partners. Visit our website to learn more about the ESG Assessment Platform. Host: Nicholas Gandolfo, Director, Corporate Solutions (Commercials), APAC Guest: Nicole Verkindt, Director, Corporate Solutions

In this episode, Nick and Cheryl shares insights on recent market developments and trends such as questions around the ambitiousness of some SLB targets, implications of SFDR on investor and company reporting as well as some interesting green, social, sustainability and sustainability-linked transactions.   Hosts: Nick Gandolfo, Director, Sustainable Finance Solutions Cheryl Tay, Senior Associate, Sustainable Finance Solutions Resources mentioned in this episode: Monetary Authority of Singapore: MAS Launches World’s First Grant Scheme to Support Green and Sustainability-Linked Loans The Asset Triple A Sustainable Capital Markets Regional Awards 2020 – Best Second-Party Opinion Provider 2021 Trends Podcast Episode: Apple | Google | Spotify Sustainalytics: 10 for 2021: Investing in the Circular Economy Nasdaq: The ESG Market Could Explode This Year  Environmental Finance: Combing Sustainability-Linked and Green Bonds Would Be ‘More Impactful’ WWF – Dasgupta Review on the Economics of Biodiversity Report Sustainalytics: EU Sustainable Action Plan Resource Center ING: Singapore Green Plan 2030 – Important Steps Toward a Sustainable Future ICMA: Sustainability-Linked Bond Principles – Related Questions The Australian: Altech targets US$144m raise from listed green bond Hines: Hines and ING Agree First Green Loan Facility Reading on transition ICMA: Climate Transition Finance Handbook CBI White Paper: Financing a Credible Transition Sustainalytics: Transition Bond SPO (see under ‘Related Resources’) Transition Pathways Initiative: https://transitionpathwayinitiative.org/ IEA: https://www.iea.org/topics/clean-energy-transitions SBTi: https://sciencebasedtargets.org/ Sustainalytics: Sustainability-Linked Bonds SPO Backgrounder (see under ‘Latest Insights’) JP Morgan: JPMorgan Chase Issues $1billon Inaugural Social Bonds Asia Development Bank: ADB Issues First Gender Bond in Kazakhstan Tenge Carlyle: Announces Largest ESG-Linked Credit Facility in the US at $4.1 Billion and First-Ever Exclusively Tied to Board Diversity Business Green: Low Carbon Aluminium Producer Rusal Agrees $200m Sustainability-Linked Loan Thai Union: Thai Union Launches Inaugural Sustainability-Linked Loan Sustainalytics SPOs: Alibaba Group Sustainable Finance Framework SCSK Corporation Green Finance Second-Party Opinion Trinity Industries Leasing Company Green Financing Framework Second-Party Opinion H&M Sustainability-Linked Bonds Second-Party Opinion Constellium Sustainability-Linked Financing Framework Second-Party Opinion More Episodes

In this episode, Nick and Cheryl discuss some of the key sustainable finance deals and transactions from the beginning of the year. Environmental Finance released its annual Sustainable Bonds Insights report, which highlights a record year for green, social, sustainability and sustainability-linked bonds with more than 602 billion in issuance in 2020. Also of note in the report is that Sustainalytics continues to be a market leader with more than 30% of market share among opinion providers (based on number of issuers).   Hosts: Nick Gandolfo, Director, Sustainable Finance Solutions Cheryl Tay, Senior Associate, Sustainable Finance Solutions Resources mentioned in this episode: Environmental Finance: Sustainable Bonds Insights 2021 CBI: Record $269.5bn green issuance for 2020 (includes themes for 2021) Sustainalytics: 2021 Outlook podcast episode BlackRock: Larry Fink 2021 letter to CEOs Pension Age: Cushon launches ‘world’s first’ Net Zero Now pension Portfolio Earth: Bankrolling Extinction Environmental Finance: Are green bonds funding the transition? Environmental Finance: Green Bond Funds – Impact Reporting Practices 2020 CBI & HSBC: Sovereign Green, Social and Sustainability Bond Survey Sustainalytics Country Risk Ratings Science-Based Targets: From Ambition to Impacts Sustainalytics Sustainability-Linked Bonds Hellenic Shipping News: The Poseidon Principles Disclosure Report is good, but the disclosure could have been better Responsible Investor: Experts question credibility of the world’s first official transition bond despite high investor demand Sustainalytics SPOs: Central China Real Estate Limited Green Finance Framework BDO Sustainable Finance Framework Hudson Green Financing Framework Trinity Industries Leasing Company Green Financing Framework CSCDA Community Improvement Authority Social Bond Framework New World Development Green Finance Framework Seaspan Sustainability-Linked Bond More Episodes

In this special episode, Nick and Cheryl gaze into their crystal ball and discuss want could be on the horizon in the world of sustainable finance for 2021. They also take a deeper dive into Sustainalytics’ recently published thematic research report “10 for 2021: Investing in a circular food economy” and how the themes covered in the report connect to areas of focus in sustainable finance.   Hosts: Nick Gandolfo, Director, Sustainable Finance Solutions Cheryl Tay, Senior Associate, Sustainable Finance Solutions Resources and SPOs mentioned in the episode: 10 for 2021: Investing in a circular food economy CBI Agriculture Criteria TESCO Sustainability-Linked Bond Second-Party Opinion Starbucks Sustainability Bond Second-Party Opinion Olam: Olam International secures Asia’s first sustainability-linked club loan facility for US$500 million BNP Paribas: Danone’s Positive Incentive Financing Strategy UOB/Wilmar: UOB extends US$200 million sustainability-linked loan to Wilmar in support of agricultural sustainability in Asia COFCO: COFCO International links sustainability performance to new USD2.1 billion credit facility   More Episodes

To round out 2020, Nick and Cheryl provide an overview of the deals and developments that occurred in December. Of note is that 2020 appears was the year of the social bond with approximately EUR 130 billion issued. They also touch on developments around the EU Taxonomy, the fifth anniversary of the Paris Climate Agreement, and what the new US administration could mean for environmental protections and sustainable finance.  As always, the episode includes a rundown of notable transactions from around the globe.   If you would like to ask a question to be featured in a future episode, please send it to: [email protected]   Hosts: Nick Gandolfo, Director, Sustainable Finance Solutions Cheryl Tay, Senior Associate, Sustainable Finance Solutions Resources mentioned in the episode: ICMA transition handbook CBI: Financing Credible Transitions CBI: Green Infrastructure Investment Opportunities Philippines Environmental Finance: Concerns EU Taxonomy proposals diverge from TEG recommendations Environmental Finance: ECB to stress test banks on climate risks after finding disclosures lacking Bloomberg: Schroders CEO calls for climate ‘impact-adjusted profits’ TechCrunch: The biggest step the Biden administration took on climate yesterday wasn’t rejoining the Paris Agreement Sustainalytics’ SPOs: VodafoneZiggo Green Bond Framework Corticeira Amorim Green Bond Framework   More Episodes

In this last episode for 2020, Nick and Cheryl provide an update on recent market developments including an overview of a recent market conference in Australia, the ‘greenium’ for green, social and sustainability bonds, and the potential consequences of the EU Green Bond Standard on corporate issuances. They also provide a round-up on recent market transactions and answer some listener questions.   If you would like to ask a question to be featured in a future episode, please send it to: [email protected] Hosts: Nick Gandolfo, Director, Sustainable Finance Solutions Cheryl Tay, Senior Associate, Sustainable Finance Solutions Resources mentioned in the episode: Banking & Finance:  Hype over ESG social bond sale grows after bumper demand at debut Environmental Finance: Are banks really going green or just greenwashing? Environmental Finance: Are banks really going green, or just greenwashing, Part two Environmental Finance: Green Bond Standard ‘may lead to fewer issuance’ BunkerSpot: Climate Bonds Initiative launches shipping investments criteria I&PE: ESMA launches consultation on taxonomy KPI reporting Malay Mail: UK to sell its first ‘green’ bond in 2021, says Sunak BloombergQuint: China Opens Its Bond Market—With Unknown Consequences for World Global Compliance News: Indonesia Sustainability Series: Obligation to Submit Sustainability Report in 2021 Sustainalytics’ SPOs Industrial Bank Co Ltd, Green Bond Framework Second-Party Opinion More Episodes   The post Sustainable Finance Insights (November Highlights) appeared first on Sustainalytics.

As our Sustainable Finance Insight series hits 10 episodes, Nick and Cheryl discuss developments and deals over the months of September and October. One notable milestone was the delivery of Sustainalytics’ 500th SPO in October. Check out our retrospective on the sustainable bond market. The Climate Bond Initiative also noted that green bond issuance has surpassed USD 1 trillion and sustainable finance issuance has topped USD 2 trillion since inception.   In addition to market updates, Cheryl and Nick answer some listener questions. Submit your questions to [email protected].   Hosts: Nick Gandolfo, Director, Sustainable Finance Solutions Cheryl Tay, Senior Associate, Sustainable Finance Solutions Resources mentioned in the episode: ICMA Quarterly Newsletter – Sustainability-Linked Bond from External Review Perspective ICMA response to the EC consultation on the EU Green Bond Standard Increasing sustainable bond market scrutiny Asian Investor The Asset Environmental Finance: Science Based Targets initiative launch finance sector framework BCG: Why the new competitive advantage demands sustainability (Sustainable Business Model Innovation) Nordea: Lessons from the infant sustainability-linked bond market Wall Street Journal: Companies test a new type of ESG bond with fewer restrictions OECD: Developing Sustainable Finance Definitions and Taxonomies I&PE: International sustainable finance forum starts taxonomy work, gains IMF Sustainalytics’ SPOs adidas Sustainability Bond Framework Second-Party Opinion EU SURE Social Bond Framework Second-Party Opinion More Episodes

In this episode, Nick and Cheryl note that the cumulative volume of green bond issuance globally has surpassed $1 trillion. They also discuss the Climate Bonds Initiative’s annual conference, which focused heavily on the theme of transition finance. In addition, they note pledges from China and South Korea to become carbon neutral by 2050 and 2060 respectively, and provide updates on developments in sustainable finance and corporate sustainability commitments.   Hosts: Nick Gandolfo, Director, Sustainable Finance Solutions Cheryl Tay, Senior Associate, Sustainable Finance Solutions Resources mentioned in the episode: AIIB & Amundi: Climate Change Investment Framework BP: 2020 Energy Outlook report World Economic Forum & Deloitte: Summary of alignment discussion among leading sustainability and integrated corporate reporting organization CDP, CDSB, GRI, IIRC and SASB Environmental Finance: Defining transition finance: how to be inclusive yet specific International Energy Agency: Energy Technology Perspectives 2020 Hellenic Shipping News: The Poseidon Principles: Shipping emissions reduction efforts steer into new waters GRI Universal Standards GRI Sector Standard: Oil and Gas Natixis CIB: Report on EU Taxonomy for sustainable activities Sustainalytics SPOs: CPI Second-Party Opinion Grand Duchy of Luxembourg Second-Party Opinion Concord Second-Party Opinion Volkswagen AG Second-Party Opinion Novartis Second-Party Opinion (Sustainability-Linked Bond) Icade Sante Second-Party Opinion Sovcombank Second-Party Opinion More Episodes

In this episode, Cheryl and Nick discuss the smorgasbord of activity in the sustainable finance space, noting an increasing diversification among issuers, use of proceeds and deal structures. This as monthly green bond issuance peaked in the month of July at USD$20 billion.   Hosts: Nick Gandolfo, Director, Sustainable Finance Solutions Cheryl Tay, Senior Associate, Sustainable Finance Solutions Resources mentioned in the episode: ING: Asia’s lamentable green Covid-19 response Morningstar: Sustainable Fund Flows Hit Record in Q2 Harvard Business Review: The Challenge of Rating ESG Performance Sustainalytics’ public company ESG Risk Ratings S&P Global: Growing supply chain focus prompts interest in nascent form of ESG finance Sustainalytics: ESG Risk Ratings License Oxfam: Making Green Bonds Work Climate Bonds Initiative: Agriculture Criteria Global Impact Investing Network: R3 (Response, Recovery, and Resilience) Investment Coalition Bonds and SPOs: Alphabet Sustainability Bond Framework Second-Party Opinion Coca-Cola FEMSA Green Bond Framework Second-Party Opinion MTR Sustainable Finance Framework Second-Party Opinion More Episodes

Sustainalytics’ monthly round up of the transactions and developments in the global sustainable finance market. In this episode, Nick and Cheryl share updates on the notable deals and developments over the month and share insights on market developments over the first half of the year.   Hosts: Nick Gandolfo, Director, Sustainable Finance Solutions Cheryl Tay, Senior Associate, Sustainable Finance Solutions Resources mentioned in the episode: Environmental Finance: Sustainable debt market transformed by Covid-19 impact in H1 BBVA: How sustainability-linked bonds will breathe life into the market Environmental Finance: KPI-linked bonds webinar: Investors want ‘Paris alignment’ Sustainalytics’ company ESG ratings are now public: www.sustainalytics.com/esg-ratings Bloomberg: MetLife Makes Green Bond Sale Debut as Financials Pave the Way ESI Africa: Nedbank accounts for green bonds launched in South Africa Bangkok Post: Govt to offer B30bn of green bonds in August GlobalCapital: Moncler find fit for EU 400m sustainability-linked loan Environmental Finance: World Bank launches EM green taxonomy development guidelines More Episodes

  Sustainalytics’ monthly round up of the transactions and developments in the global sustainable finance market. In this episode, Nick and Cheryl note the uptick in social bond issues compared to this time last year. At the end of May global social bond issues amounted to USD 30.4 bn compared to USD 17.3 bn for the entirety of 2019.   Hosts: Nick Gandolfo, Director, Sustainable Finance Solutions Cheryl Tay, Senior Associate, Sustainable Finance Solutions Resources mentioned in the episode: Lexology: Sustainable Finance 2.0: Recent Developments in the Loan Market International Capital Market Association (ICMA) updates Climate Bonds Initiative (CBI): China Green Bond Market report Business Standard: State Bank of India plans to raise up to $1.5 bn via overseas bonds in FY21 Forbes: Why Hydrogen, Why Now? Because Climate, Economy and Finance Say So M Bank Second-Party Opinion Granite REIT Second-Party Opinion Ford Foundation Second-Party Opinion More Episodes

Sustainalytics’ monthly update on developments in the world of sustainable finance. In this episode Nick and Cheryl are joined by Zach Margolis, Project Manager on our Sustainable Finance Solutions to discuss some notable Green Bond transactions over the month.   Hosts: Nick Gandolfo, Director, Sustainable Finance Solutions Cheryl Tay, Senior Associate, Sustainable Finance Solutions Guests: Zach Margolis, Project Manager, Sustainable Finance Solutions Reports and resources mentioned in the episode: Second-Party Opinions on Transition Bonds South China Morning Post: Green bonds gain popularity, a defensive bet as coronavirus pandemic weighs on markets, investment managers say Environmental Finance: Leading academics outline climate-friendly Covid-19 recovery proposals The Edge Markets: World’s economists agree economic stimulus ought to be green New Guidance in the Market APLMA: Green Loan Principles and Sustainability Linked Loan Principles (updated in May 2020) ICMA: Sustainability Linked Bond Principles Bloomberg: China Purging Coal from Green Bonds Seen Luring Investors (PBOC Green Catalogue changes) Climate Bond Initiative: Hong Kong Green Bond Market Briefing Plug Power Second-Party Opinion NXP Second-Party Opinion Analog Devices Second-Party Opinion More Episodes  

In this overview of the noteworthy deals and developments in sustainable finance in the month of April, Nick and Cheryl are joined by Lili Hocke, who addresses some of the common questions we have received from issuers regarding COVID-19 related social bonds. Molly Stern also joins the episode to provide an update on regulatory developments in Europe.   Hosts: Nick Gandolfo, Director, Sustainable Finance Solutions Cheryl Tay, Senior Associate, Sustainable Finance Solutions Guests: Lili Hocke, Product Manager, Sustainable Finance Solutions Molly Stern, Manager, Sustainable Finance Solutions Reports and resources mentioned in the episode: Press release: Morningstar acquires Sustainalytics Blog: Responding to Coronavirus through social bonds Politico: Follow the green money as coronavirus spreads Truthout: A Big Oil Bailout Would Be the Opposite of the Green New Deal We Need Climate Bonds Initiative: ASEAN State of the Market Report 2019 Green Bond Treasury Survey 2020 Shipping industry criteria Environmental Finance: What makes a good corona-bond? Climate Works Australia: Decarbonisation Futures: Solutions, actions and benchmarks for a net zero emissions Australia Ministry of Economic Trade and Industry (METI): Concept Paper on Climate Transition Finance Principles APLMA/LMA/LSTA: Guidance on Green Loan Principles European Commission: Consultation on the renewed sustainable finance strategy More Episodes

In this month’s episode, Nick and Cheryl highlight some of the recent developments and noteworthy deals in the global sustainable finance market. They discuss the ongoing impacts of Covid-19 and how issuers are responding to help those in need, along with other topics. They are joined by colleagues in Europe and North America who provide updates on their markets.   Hosts: Nick Gandolfo, Director, Sustainable Finance Solutions Cheryl Tay, Senior Associate, Sustainable Finance Solutions Guests: Enrico Tessardo, Associate, Sustainable Finance Solutions Melissa Menzies, Senior Associate, Sustainable Finance Solutions Reports and resources mentioned in the episode: Sustainalytics ESG Blog – Coronavirus, oil prices and ESG: Three takeaways for investors by Doug Morrow and Kaili Mai International Capital Market Association (ICMA) – Q&A and case studies addressing COVID-19 Transition Pathways Initiative (TPI) report – TPI State of Transition Report 2020 Rainforest Alliance, Bank Track et al. report  – Banking on Climate Change: Fossil Fuel Finance Report 2020 Sustainalytics Sustainable Finance Blog – COVID-19 and Beyond: Using sustainable finance to build social resilience by Jonathan Laski Sustainalytics Sustainable Finance Blog – Responding to COVID-19 through Social Bonds by Kevin Ranney To read the posts from Sustainalytics’ Coronavirus blog series, please visit https://www.sustainalytics.com/covid-19-resource-center More Episodes

This week, Nick and Cheryl discuss the impact of the COVID-19 pandemic on the global economy and share highlights from recent reports reviewing the state of the sustainable finance market in 2019. Nick runs down some of the latest transactions and is joined by colleagues in Europe and the US who share their thoughts on what’s happening in their respective markets. Hosts: Nick Gandolfo, Director, Sustainable Finance Solutions Chery Tay, Senior Associate, Sustainable Finance Solutions Guests: Jean-Claude Berthelot, Director, Sustainable Finance Solutions Paramjot Kaur, Associate, Sustainable Finance Solutions Links to select resources: Environmental Finance Sustainable Bonds Insight 2020 Climate Bond Initiative 2019 Green Bond Market Summary 10 for 2020: Creating Impact Through Thematic Investing (see Ep. 14 for an overview) Technical Expert Group final report on EU taxonomy “Toys or weapons? The choice for sustainable loans,” Global Finance, January 30, 2020 More Episodes

  The Sustainable Finance Market Insights Podcast is a pilot three-episode series by Sustainalytics’ Sustainable Finance Solutions team. With this series, we aim to deliver piping hot insights on the latest news and developments in the sustainable finance space. In this episode, Nick Gandolfo and Cheryl Tay discuss some interesting green bond transactions as well as some noteworthy sustainability linked loans and market and regulatory developments from across the globe. Want to know more? Visit our website to learn how Sustainalytics supports issuers and banks leverage opportunities in sustainable finance – www.sustainalytics.com/sustainable-finance

This year’s installment in our 10 for series presents 10 ESG-inspired investment themes to consider in 2020 and beyond. In recognition of the fundamental role that the Sustainable Development Goals (SDGs) have come to play in shaping investors’ sustainability roadmaps, we assess each theme against the SDGs to show how investors can potentially create positive impact while pursuing upside opportunities in the global equity market. The co-authors of the report share their insights on the broader investment themes and the connections to the SDGs. For more details, please download 10 for 2020: Creating Impact Through Thematic Investing. More Episodes    

Doug Morrow, Director of Thematic Research and Enrico Colombo, Senior Associate, Asia-Pacific Research, discuss the three key ESG issues identified in our recent thematic research report on Australia: the country’s energy and climate policy, ethics in the financial sector and modern slavery in the supply chain.   For more details, please download Navigating ESG Issues in Australia: Identifying Risks and Seizing Opportunities. More Episodes    

In this episode co-authors Martin Vezer and Oshamimi Mayaki discuss findings from our ESG Spotlight report which leverages Sustainalytics’ Country Risk Ratings to analyze ESG risk among African countries. They also discuss the variation of ESG scores between countries and the correlation between sovereign ESG ratings and credit ratings.    For a complete analysis, please download our ESG Spotlight report New Frontiers: African Sovereign Debt and ESG Risk. More Episodes    

In this episode co-authors Doug Morrow and Martin Vezer discuss findings from our ESG Spotlight report which builds on investors’ mounting interest in climate risk analysis by assessing relevant company disclosures and risk mitigation programs.    For a complete analysis, please download our ESG Spotlight report Hot Assets: Global Equities and Physical Climate Risk. More Episodes    

In this episode co-authors Martin Vezer, Manager, Thematic Research and Aiswarya Baskaran, Analyst, Technology, Media and Telecommunications, discuss findings from our ESG Spotlight report which looks at ESG risks associated with emerging and developed market indices and examines the relationship between GDP growth and ESG risk.   For a complete analysis, please download our ESG Spotlight report Emerging Market Equities: Key Sources of ESG Risk. More Episodes

In this episode Martin Vezer, Manager, Thematic Research talks about our ESG Spotlight report which looks at the market downswing at the end of 2018 through an ESG lens. For a complete analysis, please download our ESG Spotlight report Beware of Bears: a look back at the downswing of 2018. More Episodes    

In this episode Sophia Burress, Senior Associate, ESG Rating Products, sits down with Moin Syed, Associate, Technology, Media and Telecommunications Research to discuss some of the material ESG issues we’ve identified for companies in the Internet Software and Services subindustry.   We take a deeper dive on this issue in volume 2 of our ESG Risk Ratings white paper series. Visit our website to access the full report. More Episodes    

In this episode, Martin Vezer, Senior Associate, Thematic Research discusses our latest ESG Spotlight Series report “Blue Investing: Searching for a Solution to Ocean Plastics” in which we examine the economy of plastics and highlight companies well-positioned to mitigate the risks of plastic pollution and deliver sustainable solutions.   Download the full report. More Episodes

In this episode, Dr. Hendrik Garz, Executive Director, ESG Ratings Products & Thematic Research, discusses Sustainalytics next generation ESG research and rating the ESG Risk Ratings. He also shares some of the findings from our first whitepaper on the Risk Ratings. To learn more about the ESG Risk Ratings, click here or contact us.   More Podcasts    

In this episode, analysts Anna Bonomi and Rita Ferreira discuss developments in the agrochemical sector and the ESG risks around the herbicide glyphosate.   More Podcasts

** Originally posted July 23, 2018. Sustainalytics' carbon and climate solutions have since been enhanced. Please visit our website for more information our Climate Solutions for investors.    In this episode we look at how investors are currently assessing the impact of their investments on climate as well as the risks climate change poses to their investments. We also discuss how Sustainalytics’ new Carbon Risk Rating can help investors to better assess carbon risk in their investments.   Learn more about our Climate Solutions here. More Podcasts    

In this episode we discuss the cannabis industry and the underexplored ESG risks that could present material concerns for management teams and investors entering the industry. Please click here to download the report. More Podcasts      

In this episode, members of our analyst team discuss insight from Sustainalytics’ ESG Spotlight Series report “Managing Data Privacy Risk: Comparing the FAANG+ Stocks.”  In their conversation, they discuss why data privacy is a growing issue for all companies, our research on top tech companies’ exposure to data privacy issues, and our assessment of how well companies manage those issues. They also share their thoughts on how the issue of data privacy could evolve over the coming years.   Please click here to download the report. More Episodes      

In this episode, Sustainalytics shares insights from our ESG Spotlight report, Assault Weapons: Assessing Exposure to the Firearms Trade. Doug Morrow, Director, Thematic Research, interviews Martin Vezer, Senior Associate, Thematic Research and the report author. They discuss the segmentation of companies on their products and markets, the extent to which these firms are represented in global ETFs and mutual funds, and compare the returns of companies that produce or sell assault weapons to civilians.   Download the full report.   More Episodes