Green Bond Round-up March 14: ICMA and Asean Capital Markets Forum develop Southeast Asian green bond standards

The latest green bond developments


The International Capital Markets Association (ICMA), which oversees the Green Bond Principles, has partnered with the Asean Capital Markets Forum (ACMF) to create green bond standards for Southeast Asia. Asean is the Association of Southeast Asian Nations, and covers Indonesia, Malaysia, the Philippines, Singapore and Thailand. The region has been quiet on the green bond front, but many market players think it has potential to generate significant issuance, and may lead the way in Islamic green finance. The first sukuk bond was issued out of Malaysia in 2000, and there have been rumours since that the country is investigating coming to market with the first sukuk green bond, too. In a statement on the Securities Commission of Malaysia’s website, it said ACMF had endorsed plans to create green bond standards “that will be applied across capital markets in ASEAN”. The guidance is expected to be based on the GBPs, but have more detail, with a view to creating “consistency and uniformity” for issuance out of the region.

Starbucks has used its sustainability bond format to take its first steps outside the North American markets, issuing a ¥85bn ($736m) deal on Friday. The coffee giant sold the seven-year labelled notes to Japanese institutional buyers. The move follows its debut $500m deal last May, and Starbucks has committed to use the proceeds from this transaction for similar projects. Three eligible categories are identified in its framework, which has a second-party review from Sustainalytics: 1. The purchase of coffee produced in line with Starbucks’ internal sustainability standards, known as CAFE. Producers must be certified by a third-party verifier. Starbucks claims it already sourced 99% of its coffee this way in 2015. 2. The construction and operation of ‘support centres’ for farmers that offer training on how to align their practices with CAFE. 3. Provision of loans with “reasonable interest rates and maturities” to farmers. In 2015, Starbucks committed to lend $50m to farmers – not just within its supply chain – via ethical lending bodies, on the basis that financial illiteracy and unclear property rights prevent many from securing traditional loans, while borrowing costs in some developing countries are prohibitively high. Cash injections could help farmers move from outdated farming methods to more sustainable and productive ones. Starbucks claims to have loaned more than $26m overall to the sector so far. Proceeds from its sustainability bonds can be used to finance and refinance these loans. Since last year’s deal, the firm has introduced a formal 9% cap on the interest rates that can be charged to farmers under the programme.Sustainalytics says this is lower than conventional borrowing rates in the countries targeted. Starbucks has attracted criticism from some corners about using internal sustainability guidelines, rather than a globally accepted, third-party standard. It has previously said that the relevant standard did not exist when it created CAFE. In its review, Sustainalytics acknowledges these criticisms, but says CAFE practices are “aligned with leading practices in sustainable supply chain management, addressing environmental and social risks associated with growing coffee”. The transaction is Starbucks’ first deal outside North America.

Appetite for green and social finance is growing significantly in Japan. This month, the Japanese Ministry of Environment is slated to publish its first national guidelines for green bonds. The ministry is also behind the recent launch of a report from the “Working Group on Incorporating Issues Regarding Sustainability into Investing”. In November, it was announced that the Chief Investment Officer of Japan’s Government Pension Fund (GPIF) – the largest in the world – has been elected to the board of the Principles for Responsible Investment. Sustainalytics last year opened an office in Japan, citing a growing interest in ESG in the country.


The state of Queensland is in the market for a A$500m (€355.3m) green bond, which is expected to price by tomorrow. The seven-year notes are being issued by Queensland Treasury Corp, following the state of Victoria, which issued a A$300m green bond last year. National Australia Bank, ANZ and Bank of America Merrill Lynch are arranging the transaction, which will finance a series of green projects including renewable energy, energy efficiency and conservation of coral reefs in the country.


The Italian Stock Exchange has launched a new segment dedicated to green and social bonds. It mirrors similar moves by a number of other exchanges including the London Stock Exchange, which merged with Borsa Italiana in 2007 and launched its own green bond segment last year. Exchanges in Mexico, China, Luxemburg and Norway are among the growing list to have launched dedicated green bond segments in recent years. To mark the event, Italian utility Enel has listed its green bond on the segment.

Danske Bank will host a green bond conference tomorrow in Stockholm. The event will focus on the ongoing green bond inquiry in Sweden, headed by Mats Andersson, former CEO of AP4, as well as market conditions in the country and broader trends. Speakers include Per Bolund, Minister for Financial Markets and Deputy Minister for Finance, Bertrand de Mazieres, Director General for Finance at the European Investment Bank and green bond investors from Storebrand, KfW and MuniFin.