Responsible Investing

  • Pool diversification to insulate covered bonds from flood risk

    Pool diversification to insulate covered bonds from flood risk

    The recent floods in western and central Europe could have an impact on covered bond pools. However, despite uninsured losses expected to total in the billions, covered borrowers are likely to remain insulated thanks to the diversification of their pools.

  • CarVal comes Clean on ESG CLOs

    CarVal comes Clean on ESG CLOs

    CarVal Investors has launched a new CLO platform that looks to advance the sophistication of investing along environmental, social and governance lines in US capital markets.

  • BlueBay grows ESG team in London

    BlueBay grows ESG team in London

    Fixed income investor BlueBay Asset Management has added to its environmental, social and governance (ESG) investment team in London with an external hire and a move from within.

  • BlackRock voting change raises hopes of further progress

    BlackRock voting change raises hopes of further progress

    BlackRock, the world’s largest investor, has upped its game on engaging with companies about environmental, social and governance issues this year, especially climate change, under a new manager. But responsible investment supporters are still hoping for more progress, and that the big investors will make the link between their engagement activities and their support for capital markets issues.

  • Dry landscape: investors lack ways to shed water risk

    Dry landscape: investors lack ways to shed water risk

    Electric cables have melted, tarmac buckled, businesses closed. Forests and towns have burned. The western US and Canada are in the grip of a savage drought. It ought to be called a once in a lifetime event; unfortunately, that is unlikely to be the case.

  • World Bank issues Sofr cat bond for Jamaica storm risk

    World Bank issues Sofr cat bond for Jamaica storm risk

    World Bank has raised $185m in a catastrophe bond to provide financial protection to Jamaica from the economic damage of tropical storms for the next three years. It is among the first cat bonds to be linked to the Secured Overnight Financing Rate.

  • ECB going slow but getting there

    ECB going slow but getting there

    Pundits in the ESG space are already levelling disappointed criticisms at the ECB’s new green monetary policy strategy. But while it may not be perfect, it is important to recognise that the ECB has taken a valuable and important step forward.

  • Social dimension brings greater depth to ESG

    Social dimension brings greater depth to ESG

    While the initial focus of sustainable finance efforts was largely on environmental action, social factors have grown increasingly prominent in recent years — underscored by the establishment of the Social Bond Principles in 2017. Subsequently, Covid and racial tensions in the US have each highlighted social disparities that are leading issuers and investors to treat diversity and inclusion as key parameters too.

  • Ramping up ESG regulation

    Ramping up ESG regulation

    Originally a self-regulated sphere in which voluntary principles underpinned activity, ESG debt is attracting increasing regulatory focus — especially in Europe, where the EU’s ambitious Action Plan on Sustainable Finance is creating a demanding new framework around the market. What does this imply for issuers and investors? And are other regions in step with European developments? Clifford Chance and Latham & Watkins clarify the state of play.

  • Fixing the tragedy of the horizons

    Fixing the tragedy of the horizons

    Central banks have become integral to the fight against climate change in financial markets. Participants now expect them to wield their immense influence through many avenues of their work — economic analysis, metrics, supervision, investment and even monetary policy.

  • Tracking the ESG trajectory

    Tracking the ESG trajectory

    Pivotal players in capital markets through their credit ratings, rating agencies are responding to investors’ increasing focus on environmental, social and governance (ESG) factors by providing ESG ratings too. But how do the two products differ and is there room for both, given ESG’s growing influence on credit risk? Experts from Moody’s ESG Solutions explain their approach.

  • EC sustainable finance Strategy: big on ideas, short on action

    EC sustainable finance Strategy: big on ideas, short on action

    The European Commission signalled this week that it would extend regulation into many more aspects of sustainable finance, driving an agenda that could change the role of capital markets in society. But although responsible investing experts welcomed it, the complex package of at least 30 measures is likely to provoke a wide variety of reactions, from enthusiastic support to complaints that it is too slow and unambitious, to outright opposition. Jon Hay reports.

  • ECB monetary policy to go green — slowly

    ECB monetary policy to go green — slowly

    How to respond to climate change and environmental sustainability were “of central importance” in the European Central Bank’s review of its monetary policy framework, the ECB said on Thursday as it published the results of the long-awaited review. It has designed a detailed roadmap for incorporating climate considerations across its monetary policy activities, including corporate bond purchases — but environmentalists are likely to be disappointed with the slow pace of reform.

  • HSBC AM revamps responsible investment team

    HSBC AM revamps responsible investment team

    HSBC Asset Management has created a new sustainability office as part of a refresh of its responsible investment team after the departure of Melissa McDonald, head of responsible investment.

  • EU sustainable finance rules: clarity and muddle

    EU sustainable finance rules: clarity and muddle

    The European Commission launched on Tuesday a second big wave of regulation that will soon be controlling more aspects of sustainable finance more tightly. There is a tendency to think anything with the word “sustainable” attached to it is good. But capital markets specialists must ask themselves: will the regulations be helpful?

  • UK government turns new page on securitization regulation

    UK government turns new page on securitization regulation

    The UK government is launching a complete review of its securitization regulations in parallel with the European Union’s ambitions to reform the market. Sustainability, the 'simple, transparent and standardised' label, SME funding and risk retention are all under the microscope.

  • EU eyes SLB label in big expansion of sustainable finance rules

    EU eyes SLB label in big expansion of sustainable finance rules

    The European Commission is on the verge of launching its new sustainable finance strategy — the first major fresh initiative since the Sustainable Finance Action Plan of 2018. GlobalCapital has seen a leaked draft, which reveals that the EU will explore whether to create official labels for transition bonds and sustainability-linked bonds, whether to regulate green mortgages, and how to reinforce investors’ responsibility for the effects of their investments.

  • CEE countries top new ESG impact ranking

    Investment analytics firm Impact Cubed has launched a new ranking for ESG impact based on which countries are improving fastest — an important factor when considering the view that those that demonstrate ESG leadership will attract more investment.

  • Greenwashing is in the mouth of the investor

    Greenwashing is in the mouth of the investor

    Accusations of greenwashing have been infrequent in the 14 year old green bond market, which mainly sticks to uncontroversial assets, such as renewable energy and railways. The sustainability-linked bond market is only a toddler, but already a much more difficult child. No wonder: it is handling tougher material.

  • ECB’s Schnabel hints at shape of green QE

    ECB’s Schnabel hints at shape of green QE

    The pace at which central banks are accelerating towards skewing monetary policy to support the fight against climate change was brought home this week by a speech by Isabel Schnabel, an executive board member at the European Central Bank, in which she went further than ever before in calling for strong action and hinted at how the ECB might do it.

  • BofA forms EMEA ESG council as it seeks ‘glidepath’ to lower emissions

    BofA forms EMEA ESG council as it seeks ‘glidepath’ to lower emissions

    Bank of America has set up an EMEA ESG strategic council chaired and led by three senior investment bankers, to intensify its effort to reduce its carbon footprint and manage its climate risks. BofA made a net zero commitment in February but has not yet set out its decarbonisation trajectory.

  • UK to be torn between harmony and leadership on green regulation

    UK to be torn between harmony and leadership on green regulation

    The UK has begun the process of creating its own versions of the European Union’s sustainable finance regulations, by picking a Green Technical Advisory Group to help it draft a green taxonomy. It will face two conflicting priorities: to maximise harmonisation by staying close to EU rules; and to depart from them, for a variety of reasons including the possibility of improving on the EU’s approach.

  • BofA puts big hitters on EMEA ESG council

    BofA puts big hitters on EMEA ESG council

    Bank of America has set up an EMEA ESG strategic council chaired and led by three senior investment bankers, to intensify its effort to reduce its carbon footprint and manage its climate risks.

  • Counting down the gigatonnes: Tuffley on Citi’s low carbon transition

    Counting down the gigatonnes: Tuffley on Citi’s low carbon transition

    Leaving investment banking to join the world of impact investing and environmental NGOs is not something people do lightly. But having made that move a decade ago, Keith Tuffley has been tempted back, to help shape the response of Citigroup’s investment bank to the accelerating rise of sustainability.

  • Fillip for biodiversity as it gets its own version of TCFD

    Fillip for biodiversity as it gets its own version of TCFD

    Biodiversity — long overshadowed by climate change as the financial world has started to get to grips with environmental issues — has leapt up the agenda with the launch on Friday of the Taskforce on Nature-related Financial Disclosures.

  • The quest for sustainable CLOs — and standards

    Sustainable securitization is moving into the mainstream, with a growing number of managers adopting ESG language in CLOs — usually through excluding specific industries from investment. What’s next in the green securitization revolution will depend on building a rigorous framework for assessing ESG factors and how to create standards. Paola Aurisicchio reports.

  • Bondholders take note: Oil will be forced green

    Bondholders take note: Oil will be forced green

    Royal Dutch Shell was on the receiving end of a landmark court ruling last week that will compel the company to take profound climate change mitigation action. Not that you’d know from Shell’s bond curve. Time for fixed income investors to pull their heads out of the oil sand.

  • Market puts Big Oil on notice: get real about transition

    Market puts Big Oil on notice: get real about transition

    Three unprecedented events this week — a landmark court ruling against Shell and shareholder revolts at Chevron and ExxonMobil — signalled that investors and society at large have rejected the oil industry’s early attempts at joining the low carbon transition and are looking for much more radical action. Oil majors retain good access to capital markets, but the clock is ticking. Jon Hay reports.

  • Minsk moment shows ESG red lines ‘blurred’ as returns reign supreme in EM

    Minsk moment shows ESG red lines ‘blurred’ as returns reign supreme in EM

    Belarus this week gave investors a chance to demonstrate the ESG credentials they are often so keen to trumpet. Few took it. Although the country’s sovereign bonds sold off in the wake of the controversial arrest of a journalist on Sunday, investors gave a number of reasons why issues such as human rights violations were no deterrent to buying an issuer’s bonds. But there are signs those excuses may not hold up for ever, writes Mariam Meskin.

  • 'Climate litigation risk' hits as court orders Shell to slash emissions

    'Climate litigation risk' hits as court orders Shell to slash emissions

    A Dutch court has ruled that Royal Dutch Shell is partly responsible for climate change and must reduce its global carbon emissions — including those caused when customers burn its products — by 45% from 2019 levels by 2030. If the ruling is sustained on appeal it would cause a seismic shift in the balance of power on climate change, with huge implications for financial markets.

  • ESG hand-wringing over Belarus is too little, too late

    ESG hand-wringing over Belarus is too little, too late

    Following the international outcry over the forced landing of a Ryanair passenger plane carrying a Belarusian dissident, some emerging markets investors are said to have had sudden doubts about the ESG characteristics of Belarusian sovereign bonds. What took them so long?

  • Deutsche lifts bonnet on sustainability engine

    Deutsche lifts bonnet on sustainability engine

    Deutsche Bank held a three hour “deepdive” into its sustainability actions for clients, investors, the press and NGOs last week, with its CEO Christian Sewing and all its business heads. It coincided with an array of announcements, which even earned a favourable comment from Moody’s, including that Deutsche is accelerating its €200bn sustainable financing target. But those hoping for more detail on how Deutsche will decarbonise its financing were disappointed.

  • EBA report reveals gaps in GAR disclosures

    EBA report reveals gaps in GAR disclosures

    The European Banking Authority has published its first EU-wide climate risk assessment. It reveals that many banks lack the granular data required to reliably estimate their green asset ratios.

  • CIFC prices a CLO and makes a donation to support racial equality

    CIFC prices a CLO and makes a donation to support racial equality

    CIFC Asset Management has issued a CLO committing $145,000, alongside other deal parties, as a donation to the non-profit organization Black Girls Code to support racial equality. CIFC Funding 2021-IV is the deal that has inaugurated the 'CLO Initiative for Change,' a philanthropic program that plans to make a contribution to different organizations each year.

  • AGL prices a CLO with ESG language

    AGL prices a CLO with ESG language

    AGL Credit Management has issued a new CLO with ESG language, a $600m deal priced via Bank of America. The manager has committed in deal documents not to invest in certain sectors that do not meet basic requirements.

  • Lat Am sovs to come under pressure as tensions rise

    Lat Am sovs to come under pressure as tensions rise

    Investors in Latin America are growing increasingly concerned that social unrest in Colombia, where tax reform plans are in tatters and more than 40 people have been killed, is a sign of things to come, with sovereigns facing severe pressure as they attempt to improve credit profiles that have been battered by the coronavirus pandemic. Yet sovereign bond markets are seeing only modest, short-lived sell-offs, given the enormous liquidity still in bond markets.