October 2022 | Sustainable Finance Market Highlights

The SPO team delivered over 30 external reviews in the third quarter, including some innovative transactions:

First Abu Dhabi Bank (FAB): Provided FAB with an SPO on their new Sustainable Finance Framework, a combined document covering the funding instruments that can be issued by the bank, as well as the financing products offered to their clients, such as loans, trade finance tools, securitizations and sustainability-linked products. See SPO here.

Anglo-American: The UK mining company adopted a sustainability-linked framework based on three KPIs – Absolute GHG emissions scope 1 & 2 reduction (-30% from 2016 by 2030), abstraction of freshwater in water stressed regions (-50% from 2015 by 2030), and jobs created/supported off-site for every job on-site (5 offsite jobs for every job onsite by 2030).  See SPO here.

Swiss Confederation: The Alpine country has adopted its framework to finance projects supporting its national strategy on sustainability in the fields of clean transportation, renewable energies, sustainable agriculture and forestry, international cooperation and others. See SPO here.

As well as the above transactions, we are pleased to hear the market interest for the recent bond issued by Nordea, based on a use-of-proceeds structure where its underlying assets are sustainability-linked loans (SLL). In June 2022, we provided a bespoke external review for this innovative concept, guided by best market practices in terms of transparency, analyzing the structure of the Framework and the portfolio of SLLs. See reports on this transaction by Environmental Finance and Nordsip.

Turning to regulation and market standards development, CBI issued its report ‘Green Bond Pricing in the Primary Market H1 2022’, verifying that green bonds show better pricing dynamics and liquidity in the secondary market. This research also indicates that sustainability-linked bonds benefit from a “greenium”, suggesting that investors reward entities with robust transition plans; while according to HSBC, the greenium for green, social, sustainability and sustainability-linked (GSSS) bonds disappeared, at least in Asia, repeating the trend we observed in Europe in H1 2022.