Overview
Global ESG bond scale is smaller than ESG securities. ESG bond investors pay more attention to whether the issuer can repay the borrowings, while ESG securities investors value the future growth ability of investees. In terms of engagement, ESG bonds do not have voting rights and have weaker impacts than securities.
Whether they are green bonds, sustainable bonds or sustainability-linked bonds, they must comply with the ESG framework in terms of classification, issuance and disclosure. The International Capital Market Association has proposed a variety of ESG bond standards, and various jurisdictions are also forming their standards.
ESG Bonds Classifications
There is no universal classification method for ESG bonds. Common ESG bonds include green bonds, social bonds, transition bonds, blue bonds, sustainable development bonds, and sustainable development linked bonds.
Green bonds have the highest proportion in ESG bonds, and common green bonds include Use of Proceeds bonds, Use of Proceeds Revenue bonds, project bonds, securitization bonds, etc.
ESG Bonds Regulations
The biggest feature of ESG bonds compared to conventional bonds is that the issuer needs to disclose the purpose of the funds for investors to determine whether the bonds meet greenwashing.
Global regulators are formulating policies for the fundraising, issuance, and information disclosure processes of ESG bonds, among which the EU green bond regulation is relatively mature.
Introduction to Luxembourg Green Exchange
The Luxembourg Green Exchange was established by the Luxembourg Stock Exchange
World Bank’s Issuance Volume Based on Sustainable Bond Framework Hits Record
The World Bank has issued a record number of sustainable bonds in a week, with different currencies
Hong Kong Plans to Issue Retail Green Bond
The Hong Kong government plans to issue its first retail green bond this year
Goldman Sachs Launches Impact Fund and Green Bond Fund
Goldman Sachs Asset Management (GSAM) announced the launch of a new Impact Fund and Green Bond Fund
ESMA Releases Sustainability Disclosure Requirements in Prospectuses
The European Securities and Markets Authority issued the sustainability disclosure requirements in prospectuses
International Capital Market Association Releases a Report on Sustainability Linked Bond
The International Capital Market Association (ICMA) has released a Sustainability Linked Bond (SLB) report, providing development recommendations for the SLB market, especially high-yield SLBs
Hong Kong Issues Institutional Green Bonds
The Hong Kong Monetary Authority (HKMA) stated that it has successfully issued institutional green bonds based on the government’s green bond program, with a total value of $6 billion
PRI Releases Due Diligence Questionnaire for Fixed Income Investors
The United Nations Principles for Responsible Investment (PRI) releases the Due Diligence Questionnaire (DDQ) for fixed income investors, aiming to provide investors with an application template for responsible investment based on the fixed income perspective and provide supplement information for the overall PRI reporting framework
Hong Kong Issues Tokenized Government Green Bonds
The Hong Kong Monetary Authority (HKMA) recently announced that Hong Kong’s first tokenized government green bonds were successfully issued. The green bond is based on the government’s green bond plan and is also the first officially issued tokenized green bond in the world