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.
International Capital Market Association Releases a Guide to Nature-related Sustainable Bonds
International Capital Market Association (ICMA) releases a guide to nature-related sustainable bonds
United Nations Principles for Responsible Investment Releases Guidelines for Responsible Investment in Securitized Bonds
United Nations Principles for Responsible Investment (UNPRI) releases guidelines for responsible investment in securitized bonds
International Finance Corporation Releases Emerging Market Green Bond Report
International Finance Corporation (IFC) of the World Bank Group and Amundi release a report on emerging market green bonds
Climate Bond Initiative Releases 2024 Global Sustainable Bond Market Report
Climate Bonds Initiative (CBI) releases 2024 Global Sustainable Bond Market Report
International Organization of Securities Commissions Releases Sustainable Bond Report
International Organization of Securities Commissions (IOSCO) releases sustainable bond report
OECD Releases Report on Climate Transition Bond Market
Organization for Economic Co-operation and Development (OECD) releases a report on climate transition bond market
Bank for International Settlements Releases Green Bonds and Carbon Emissions Report
Bank for International Settlements (BIS) releases a report on green bonds and carbon emissions
European Securities and Markets Authority Releases Consultation for External Reviewers of Regulation on European Green Bonds
European Securities and Markets Authority releases a consultation for external reviewers of Regulation on European Green Bonds
ISS ESG Releases New Sustainable Bond Rating Method
ISS ESG, the sustainable investment division of Institutional Shareholder Services (ISS), releases a new sustainable bond rating method
ICMA Releases Report on Asian International Sustainable Bond Market
International Capital Market Association (ICMA) releases a report on the Asian international sustainable bond market