Euromoney Are sustainable development bonds revolutionary or greenwashing?
Sales of sustainability bonds (SLBs) have already exceeded $ 25 billion this year, with borrowers in Asia following the lead of pioneers in Europe and Latin America. Growth from now on should be exponential. JPMorgan says total emissions for 2021 could reach $ 150 billion.
It’s easy to see why the format is proving so popular. Unlike traditional green, social, and sustainable bonds, which require borrowers to use the proceeds of the transaction for specific projects, the new format simply commits them to meeting one or more sustainability goals over a period of time.
This means that, for the first time, companies that would struggle to find enough sustainable projects to reach the transaction size required by large asset managers – typically $ 500 million – have a chance to leverage the growing demand for bonds with an environmental, social and governance impact. (ESG).
Yet as the market gains momentum, a leading investor has sounded the alarm on SLBs. In a recent blog post, Stephen Liberatore of US asset manager Nuveen said the structure “was lacking from an impact investor’s perspective.”
Stephen Liberatore, Nuveen
“We… feel compelled to alert investors that the credibility and strength of these transactions remains highly variable,” said Liberatore, head of the impact / ESG strategy team at Nuveen.