Sustainable finance news: Q1 update
In the year that the UK will host COP26, sustainability is not only a national priority, but has become a mainstay on the financial sector’s agenda.
Investors globally are pushing forward the ESG investment agenda and demanding transparent climate-related disclosures. Equity funds pursuing an ESG strategy have seen significant growth, and corporates and sovereigns alike are tapping the capital markets to finance the low-carbon transition.
Within this ecosystem, LSEG is well positioned to act as a facilitator, bringing together investors and issuers in three critical areas: data and disclosure, growth of the green economy, and climate transition across all sectors.
The following update provides you some insight into the green activities across London Stock Exchange in the first quarter of 2021.
LSEG’s Net Zero Commitment
LSEG established itself as the first global exchange group to commit to net zero through the Business Ambition for 1.5C. It also became member of the United Nations Climate Change ‘Race to Zero’, a global campaign to rally leadership and build momentum for a shift towards a decarbonised economy.
Expanding our Green Economy Mark universe
The volume of companies with green revenues on our markets continues to grow and there are now 95 companies and funds with a combined market cap of £140bn with the Green Economy Mark.
Foresight Group Holdings
We welcomed Foresight, an infrastructure and private equity investment manager, to our Main Market at the start of February. At admission it became only the third fund manager to qualify for the Green Economy Mark at corporate level. Read our blog to learn more.
VH Global Sustainable Energy Opportunities
Joining the Main Market in February, the fund raised £242mn at IPO. The fund will invest in a diversified portfolio of global sustainable energy infrastructure assets with a focus on the energy transition.
Admitted to AIM in March, AMTE Power plays a key role in the transition to a low-carbon economy as a developer and manufacturer of lithium-ion battery cells for specialist markets. Its customers including high-performance vehicle and specialist equipment makers.
Sustainable Bond Market
Following on from a record year for ESG bond issuance, with $536bn raised, 2021 has seen 10 issuers including 2 sovereigns, raising £7.6bn listed since the start of the year; the largest Q1 issuance to date for the Sustainable Bond Market.
Introducing the Transition Bond Segment; a world-first sustainable financing instrument
London Stock Exchange became the first exchange globally to launch a dedicated Transition Bond Segment, an expansion of our Sustainable Bond Market. For the first time, it offers financing for decarbonisation beyond traditionally ‘green’ industry sectors and supports the transition to a low carbon economy by allowing companies to reduce their carbon footprints. Learn more in our blog.
Chile becomes the first sovereign from Americas to issue international social bonds
In a continued demonstration of their commitment to climate action, Chile became the first country in the Americas to list international social bonds totalling £2.1bn. The funds will be used principally to improve its low-carbon transport.
Financing affordable housing via Sustainable Bond Market; NatWest Group’s social bond
NatWest issued its €1bn affordable housing bond, the first of its kind issued by a UK bank. The proceeds will be allocated to non-profit housing associations which provide access to affordable housing. The bonds are part of NatWest’s pledge to provide £3bn of funding to the UK’s affordable housing sector by the end of 2022.
Delivering on its sustainability goals; Whitbread’s corporate bond issuance
Whitbread’s corporate bond, which listed on our Sustainable Bond Market, raised £546mn with proceeds being used to deliver on its ‘Force For Good’ sustainability strategy. The strategy includes a climate target to halve its carbon emissions intensity by 2025 and deliver an 84% reduction by 2050.
Tesco makes history with its first sustainability-linked bond
Almost 80 years after floating on London Stock Exchange, Tesco became the first FTSE100 company to issue a sustainability-linked bond on Sustainable Bond Market. It aims to reduce its Scope 1 and Scope 2 greenhouse gas emissions by 60% by financial year 2025-2026 from a 2015-2016 baseline.
In February, ESG ETFs and ETPs listed globally reached a record $227bn. This trend has also been reflected in London’s ETF listings with almost a third of new ETFs this year being ESG ETFs.
Fidelity expanded its Sustainable Research Enhanced ETF range with the launch of 3 new funds offering exposure to; Emerging Markets, Japan and Pacific Ex Japan.
Northern Trust Asset Management celebrated the launch of two climate-focused ETFs. Representing the first FlexShares products in Europe, the ETFs were built specifically to fit within professional investors’ evolving needs to help manage portfolio volatility and target income in a low yield environment.