ESG Bond Barometer

Every quarter, the ESG Barometer brings you fresh sustainable finance news, with a specific focus on the ESG debt market. It contains two long exclusive interviews with sustainable leaders, who share their views on the market and explain their sustainable strategy. In this edition, Ferde and Teva take the stage.


New research shows pricing benefits for ESG-labelled bonds

The Climate Bond Initiative (CBI) released a ground-breaking report proving that green, social, sustainability and sustainability-linked bonds (SLBs) witnessed better pricing conditions than their vanilla equivalents during the second half of 2022. The ESG nature of bonds helped issuers to attract investors even during last year's sluggish debt market.

The CBI report also indicates that 67% of ESG bonds were allocated to self-described “responsible investors”. It also finds that ESG bonds, notably  green bonds, experienced better spread compression than vanilla products. While another study from Bloomberg Intelligence found that approximately 25% of high-yield issuance in Europe is ESG-labelled, the market is expecting this positive trend to continue in 2023.

The TNFD published its final framework with 14 core biodiversity metrics

The Taskforce on Nature-related Financial Disclosures (TNFD) released its fourth and final recommendations for businesses to report on nature-related impacts, dependencies, risks and opportunities. This framework will contribute to the harmonisation of reporting practices on biodiversity factors, while allowing for a degree of flexibility. All companies are prompted to, at least, use the global core indicators. In addition, the framework also suggests additional and sector-specific metrics.

Summary of five years of climate reports from IPCC: wasted time and missed opportunities

“There is a rapidly closing window of opportunity to secure a liveable and sustainable future for all.” It seems hard for experts and scientists to conceal their pessimism and keep proposing solutions to tackle humanity’s greatest challenge. The temperature has already risen 1.1° and will likely hit 1.5° within the coming  decades. The IPCC assesses that current climate policies will increase global warming by 3.2° by 2100, which would certainly generate catastrophic living conditions and devastating natural disasters.

This Synthesis Report is the summary of all reports of the IPCC’s 6th Assessment Cycle that were published between 2018 and 2023. Experts alert on escalating risks and adverse impacts and stress the urgent need to act in the coming years. They also indicate that these consequences will disproportionally affect vulnerable populations and less-developed countries, creating a cycle of increased poverty. As public and private financial flows are still greater for fossil fuels than for climate-friendly solutions, it seems that only drastic measures could reverse this destructive process.

Views from our partners

Every quarter, we give the stage to two of our issuers to discuss about their challenges and ambitions.

Are climate concerns igniting a new protectionist war?

Since the announcement of the Inflation Reduction Act by Joe Biden in August 2022, tensions have been high between the US and its commercial partners. At the White House, this Act is described as an opportunity to move from fossil fuels to a greener economy. However, it contains protectionist measures that infringe international trade rules: the EU sees this as a way to attract green industry leaders to  US soil. As an example, tax reduction would only apply to goods produced in the country, which would hinder European exportations and increase the cost of green products for US customers.

The Union reacted in early 2023 by refining the European Green Deal, its roadmap to achieve global climate objectives. Although announcements have been made to facilitate State aids toward green projects, there is officially no intention of derogating from the free-trade principles. Large green subsidy programs are being set also in Europe, but with no distinction as to where the goods are produced. Carbon taxes too, are set to be an essential part of the Union decarbonisation mechanism.

In March, the European Commission also proposed the Net Zero Industry Act to “create better conditions to set up net-zero projects in Europe and attract investments”. The objective is to produce, in the EU, more than 40% of the green technology needed for the climate transition. Relying mostly on targeted investments, shorter permitting procedures, innovation sandboxes and carbon sequestration incentives, this initiative is not as aggressive as the US Inflation Reduction Act, which might prompt European companies to transfer green production capacities to  the US in order to benefit from lower taxes.

Steep rebound of ESG bond issuances in Q1 2023


Regulatory news in a nutshell

  • The European Commission drafted a Green Claims Directive to prevent companies from making misleading claims about the environmental benefits of their products.
  • The European Union opened a public consultation on its proposal for technical screening criteria covering the four remaining environmental objectives: sustainable use of water, circular economy, pollution prevention and biodiversity.
  • EU Green Bond Standard: a provisional agreement was struck between the Parliament and the Council in February, which will lead to a voluntary standard for green bond issuers, while concerns about the usability of the EU Taxonomy persist.

Sustainability-Linked Bonds are becoming mainstream for corporates

  • Since 2022, 38% of inaugural ESG bonds from corporates are SLBs
  • Since 2022, 41% of corporate benchmark bonds (>€500m) are SLBs
  • Euronext SLB issuers come from various sectors: energy, real estate, pharmaceutics, food & beverage, retail distribution, cosmetics, utilities, automotive, construction, shipping, communication, raw materials, luxury goods, etc.