NYC Climate Week: CBI and ICMA working on joint label, as ‘climate-aligned’ bond market hits $895bn

New CBI report sets out market target of $1trn by 2020.

The Climate Bonds Initiative and the International Capital Markets Association (ICMA), the body which oversees the Green Bond Principles, are working together on a “joint, conjoined” label, according to Climate Bonds founder Sean Kidney.
He said perceived problems with a proliferation of standards in the green bond market was “rubbish” and that “we are all consulting together”. It comes as a set of standards from the ASEAN region is just about to come out.
Kidney was speaking at a Climate Week event in New York at which he presented the latest ‘State of the Market’ report on green bonds, which identifies an $895bn universe of ‘climate-aligned bonds’ (of which $221bn are labelled green bonds). That is up by $210bn on the 2016 number.
Climate-aligned transactions account for just under 4% of total volume in the debt capital markets, the report says.It sets out a target of $1trn in green bonds by 2020, although Kidney said the market needs deal flow given that there is “demand on steroids” from investors.
Separately, Sarah Wilson, Director, ESG Investing at TIAA Investments, the US manager, described how it is developing its first ever report on green bond reporting for its Social Choice Bond fund. The report will likely be a widely anticipated document given that TIAA has $18bn invested in ESG related strategies and $2bn in green bonds.
Wilson has surveyed the market to try to build up a comprehensive picture of reporting on green bond use of proceeds, saying: “I’ve gathered up literally everything I could find, I’ve really run the gamut.” She is focused on quantitative, comparable metrics and she has found it hard to aggregate data. The report is due out in the fourth quarter of this year and it is hoped that it will reassure and encourage issuers that their reporting is not just going “out into the void” but is being used by investors.
She also told the event – organised by HSBC – that she is not only “working on a lot of new product” but that green bonds are getting wider take-up across TIAA, not just within the ESG funds.