Accelerating Sustainable Finance with Green, Social & Sustainability Bonds
For some years now, the market for Green, Social and Sustainability bonds has continued to grow in line with the increasingly high priority that society and businesses place on sustainable development. And in recent months, the heavy impact of the global pandemic on the debt capital market has seen sustainable bonds emerge as a key tool for raising funds for COVID-19 alleviation. At the same time, green and other emerging bond formats, such as sustainability-linked bonds, promise to be pivotal in financing a green recovery. In other words, more than enough reasons for an update on this dynamic market.
Innovative new formats
Traditionally, Green Bonds focus on financing environmental projects, Social Bonds on projects with positive social outcomes, and Sustainability Bonds on a combination of the two. However more recently, Social- and Sustainability bonds have been issued that aim to finance, for example, the healthcare sector, economic inclusion programmes and SMEs impacted by COVID-19.
The new concept of Sustainability-Linked Bonds broadens the range of companies that can attract sustainable finance. Rather than exclusively financing environmental and/or social projects, these bonds aim to supportcompanies across sectors to improve their sustainability performance. For instance, by linking one of the company’s sustainability targets to the coupon of the bond, which could potentially move up or down depending on how the company performs against that target. As it can be applied by any company aiming to improve its sustainability performance, we expect to see this bond format further expand and diversify the sustainable finance market.
Looking ahead: financing a green recovery
The recently agreed EU stimulus package has put climate change at the heart of Europe’s recovery from the COVID-19 pandemic, spurring further national and pan-EU investments aimed at achieving sustainability targets. Combined with other initiatives, such as the EU Green Deal, EU Sustainable Finance Strategy, EU Taxonomy Regulation and Green Bond Standard, this will pave the way for even more issuance of Green, Social- and Sustainability bonds, helping accelerate a ‘just’ transition to a sustainable and low- carbon economy.
ABN AMRO: leading the way in sustainable bonds
Green, Social & Sustainability bonds are a key focus area within ABN AMRO Global Markets. On the one hand advising, structuring and supporting issuers with the distribution of these bonds, while on the other meeting the growing demand of institutional investors for sustainable investment opportunities.
Already in 2020, ABN AMRO has successfully placed transactions for a wide-range of issuers in various formats and sizes, including:
- > EUR 2.6 billion tap of the Dutch State Sovereign Green Bond*
- EUR 500 million Green Bond for local energy grid operator Enexis*
- EUR 100 million US Private Placement for Xior Student Housing*
- EUR 125 million Green Bond for Belgium wastewater utility Aquafin
- EUR 750 million Green Bond for Schiphol Airport
- EUR 550 million Green Tier2 Capital for de Volksbank*
- EUR 1 billion Social COVID-19 Bond for French Financial Institution Credit Mutuel Arkea
- EUR 200 million Green Bond for Norwegian aquaculture company Mowi
* ABN AMRO supported these clients as Green Bond Structuring Advisor
For a fruitful dialogue about our Green Bonds, please contact our Green, Social & Sustainability Bonds team: Joop Hessels (left) at joop.hessels@nl.abnamro.com and/or Dick Ligthart at dick.ligthart@nl.abnamro.com.