Asset Management, Private Equity, Real Estate Investment, and Infrastructure Actors: Explore our ESG press review! Discover our monthly selection of articles from national and international press!
Green Bonds: Setting Records after Records
Good news continues to pour in for the Green Bonds market. Globally, €820 billion in issuances are expected in 2024 (source: Cacib, as reported by L’Agefi), a figure surpassing the amounts of 2022 and 2023 despite elevated interest rates. The segment would remain dominated by sovereign issuers (49%) and financial institutions (29%).
A direct illustration of this excellent momentum: on January 16, France witnessed a record success for its 4th green bond issuance (article). The issuance of €8 billion (for a 25-year loan at 3.2%) attracted subscriptions totaling €98 billion, more than 12 times the proposed amount! France will carry out two more Green Bond issuances this year: attention will be paid to a potential new record…
ESG Labels: Updates on Refinements
In late January, L’Agefi highlighted in an article that the new ISR Label, which will now integrate exclusion criteria, may be impossible to obtain for ETFs starting March 1st. Besides the exclusion issue, ETFs would particularly struggle to meet criteria regarding shareholder engagement, divestment in case of non-compliant corporate behavior, and “line-by-line” portfolio tracking. These requirements can likely only be met by actively managed funds. Currently, around fifty ETFs are labeled ISR.
Still on the topic of labels, the United Kingdom is adopting a new national framework for ESG labeling, effective July 31, 2024. Interestingly, the country has opted for a strategy similar to that being pursued by the European Commission in the SFDR overhaul. Thus, UK funds can opt for one of the following four categories within the new label: “Sustainability Focus” (funds investing in the most sustainable companies), “Sustainability Improvers” (companies seeking to improve their sustainability over time), “Sustainability Impact” (companies aiming for a positive impact), and “Sustainability Mixed Goals” (a mix of the previous 3 categories). According to Morningstar, 300 funds are vying for these labels, with 46% for the “Focus” category and 31% for the “Mixed Goals” category (article).
United States: Contrary Winds, but Moderate
While Europe continues to make great strides in ESG, the subject proves more complex in the United States. In early January, the Financial Times noted that only 6 new ESG funds were launched in the United States, compared to an average of about 100 funds per year in recent years. The cause: ongoing political divergences on the topic between Republicans and Democrats, as explained by L’Agefi. However, it’s worth noting that very few “anti-ESG” bills are ultimately passed in the United States: in Texas, for example, out of 12 such bills, only one has been enacted so far, with all others being rejected.
