• Farewell 2020! Raise a glass to these climate wins and reasons for hope
• Landmark: Green bonds hit $1 trillion (map)
• The top ten U.S. corporate green bonds and issuers of 2020 (charts)
• Players: New green-bond issues from Boston to Bangkok
• Top climate finance news — an unexpected $35 billion boost from U.S. COVID stimulus deal

Happy New Year, GBR Readers.

We’ve had a tough year. The pandemic has been brutal, the politics ugly.

And we’re still a long way from fixing climate change.

And yet, in 2020 we’ve seen some meaningful climate wins.

Major world economies have shifted to tougher climate targets: The EU has committed to net-zero emissions by 2050 and more recently specified a 55% cut to 1990 levels by 2030. Japan, South Korea and the U.K. have also committed to net-zero emissions by 2050, as have some 60 other countries around the world. President Xi Jinping of China made the ambitious pledge of carbon neutrality by 2060. In the U.S., President-elect Biden has proposed sweeping climate-change policy, including a target of 2050 for America to reach carbon-neutrality.

Green bonds have exploded: The issuance of green bonds, used to finance climate investments, has surpassed $1 trillion. Green bonds that are Climate Bonds Certified — an indicator of international market best practice — reached just under 25% of market share. The year also saw rapid expansion of the “daughters” of green bonds, using the same use-of-proceeds protocols: sustainable bonds, social impact bonds and pandemic bonds. The trend is recognition that we can leverage capital to build enduring economies and cohesive, resilient communities, better able to meet coming climate impacts.

The U.S. Federal Reserve has joined the global Central Banks and Supervisors Network for Greening the Financial System (NGFS): NGFS now has 83 members, including the U.S. Fed. The organization brings together monetary policymakers from around the globe to address financial instability expected to arise from climate risk. As part of addressing that risk, European Central Bank (ECB) President Christine Lagarde has said the ECB will consider “green quantitative easing.”

There are encouraging developments on the horizon for 2021:

New leadership in the White House: President-elect Biden has vowed to prioritize the environment and press for ambitious goals and policies to address climate change. We can expect increased domestic action, as well as re-engagement in international efforts including the Paris Agreement. One promising signal was the surprising bipartisan support for the bottom-up green technology and finance initiative as part of the U.S. COVID-19 stimulus deal.

The U.S. corporate green bond market will surge: Household names like Pepsi, Verizon and Apple have joined the ranks of energy companies, banks and real estate companies in issuing green bonds. As institutional investors increase their engagement and we see a change in the politics of climate and sustainable investment we expect market acceleration.

Soaring sovereign green bond issuance: Seventeen governments including France, Fiji, Chile, Germany and now Thailand have issued green bonds — both to fund projects that help them meet Paris Agreement goals and to show leadership on climate change. More will join the sovereign green bond club in 2021: For example, the EU has committed to issuing $250 billion to fund recovery measures and the U.K. will start a green “gilts” program. Another dozen have foreshadowed plans. 

We have much to do if we hope to shift the planet to a more sustainable path — and quickly. But as we ring in 2021, the rapid growth of green bonds gives us cause for hope.

May the force be with us,



Sean Kidney
Editor, U.S. Green Bond Review
Climate Bonds Initiative

NEW & NOTABLE

• Illinois Finance Authority, U.S. ($500 million).
  Use: Clean water revolving fund.
• The Trust for Cultural Resources of the City of New York, U.S. ($73.3 millon).
  Use: To refinance a LEED Gold-certified green museum building (Leonard A. Lauder Building), under the Whitney Museum of American Art.
• The Kingdom of Thailand (THB20 billion/US$670 million).
  Use: Construction of Bangkok Mass Rapid Transit Orange East line. Climate Bonds Certified.

Corporate sector

• Vodafone Ziggo, Netherlands (EUR700 million/$855.7).
  Use: To finance green projects in areas such as clean energy, energy efficiency, clean transportation, eco-efficient products, technology and green buildings.
• Vinci, France (EU500 million/$611 million).
  Use: For eligible projects to reduce greenhouse gas emissions and energy consumption, improve water management or preserve biodiversity.
• CTP, Romania (EU400 million/$490 million).
  Use: Finance for eligible projects in logistics properties.
• RioCan Real Estate Investment Trust, Canada (C$500 million/$388.3 million).
  Use: To finance eligible green projects under the company’s green bond framework.
• InterEnergy Holdings, Panama, ($262.6 million).
  Use: Renewable-energy projects.

GREEN BOND OF THE WEEK

• Funding to mitigate sea-level rise at a community center
• Improving energy efficiency for Boston government buildings
• Aiding construction of a new Boston Arts Academy, to meet LEED Silver standard
• Renovating a well-loved community park and playground to guard against rising water

“What was most important was the greenness of the projects and that these are projects we can explain,” says Drew Smith, senior deputy treasurer for the City of Boston, in a conversation with Climate Bonds Initiative and Climate & Capital Media.

Bank of America Securities led the bond transaction with Siebert Williams Shank & Co., a minority business enterprise, as transaction co-lead. The issuance is Climate Bonds Certified.

In addition to its immediate goals, this green bond is part of a larger strategy by the seaport city to test the concept of issuing green bonds at a “greenium,” which could lead to lower-cost financing for projects that address environmental concerns and account for climate risk.

The city is aiming to be a laboratory for green finance. On December 15, Boston Mayor Martin J. Walsh announced a commitment of an additional $50 million towards the city’s environmental, social and governance (ESG) Investment Initiative, which was launched last year with an initial commitment of $150 million.

"We have created a methodology for ESG investing that can be replicated by other cities and governmental investors,” said Smith. “If this is adopted broadly, we believe that governments can earn a return while driving down the borrowing costs of companies that conduct their business in a way that respects their workers, their communities, and our planet."

GREEN FINANCE DEVELOPMENTS

• The Washington Post: U.S. stimulus bill takes aim at climate change including major investment in green tech
• The New York Times: Biden rounds out his climate and environment team
• The Washington Post: Where will Biden get the $2 trillion for his climate plan? 
• The New York Times: New York’s $266 billion pension fund is getting out of fossil fuel stocks
• The Wall Street Journal: Green bonds save borrowers money as environmental investing booms
• The Hill: U.S. Fed joins global financial leaders in fight against climate change 

• MarketWatch: Asset managers controlling $9 trillion launch net-zero emission plan
• Climate & Capital Media: Faith Ward: Financial markets not designed to get to net-zero
• Bloomberg: China revises green finance rules to boost progress on climate goals
• SPG Global: Japan delays issue of green sovereign
• Bloomberg: Backlash signals ESG movement Is too big to ignore

EVENTS OF NOTE

CPI Webinar: Paris Misaligned
Jan. 14, online
This 60-minute webinar introduces research on the alignment of recent power sector investment with Paris Agreement mitigation goals. Hosted by San Francisco-based nonprofit Climate Policy Initiative.
 

Climate Adaptation Summit 2021
Jan 25-26, online
A series of live events streamed from around the globe over the course of 24 hours, covering topics including investment and finance, infrastructure, resilient cities and more. Hosted by the Netherlands.
 

ESG and Climate Risk in Quantitative Finance Conference
March 15-19, online
Five-day training with sessions focusing on climate risk analysis, stress testing and management, ESG investing as well as sessions on how AI applies to climate risk assessment. Hosted by WBS Training Ltd., London. Sessions will be held via Zoom, with video and slides available to registered participants afterwards.

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Edited by Sean Kidney

Sean Kidney is the CEO of the Climate Bonds Initiative (CBI), an international NGO working to mobilize global capital to finance climate solutions. Working with partners in 30 countries around the world, CBI aims to reduce market friction and improve risk differentiation for green investments. Sean is a member of the European Commission’s Platform on Sustainable Finance and the French government’s Green Sovereign Bond Evaluation Council. In 2016, he was named Environmental Finance magazine’s “Personality of the Year” and for the past three years he has been voted GlobalCapital magazine’s “Most Influential Champion” of the sustainable finance market. An Irish national, Sean has four daughters and lives in London with his partner.
 

About the U.S. Green Bond Review

U.S. Green Bond Review is a joint publication of Climate & Capital Media, a global media organization that promotes the broad exchange of information about the business and finance of climate change, and the Climate Bonds Initiative, an international NGO working to mobilize global capital to finance climate solutions.