Bond issuers appear to be reviewing the merits of tapping the environmental, social and governance (ESG) debt market, based on an assessment that the lower financing costs the label generally brings aren’t worth the risk of being exposed to greenwash accusations.
“There’s a number of issuers that are reconsidering the cost benefit trade-off,” Jason Taylor, managing director for sustainability advisory and finance at National Bank of Canada, said in an interview.
“When you define a successful sustainable finance transaction, there’s a lot of dimensions by which you can analyse it,” he said.
“One is the cost savings from the greenium. But if it comes with a high level of scrutiny post transaction, it can cause some people to really second-guess whether that one or two basis points is really worth the risk of having perhaps a couple of very uncomfortable articles written.”
For now, much of the regulatory crackdown on greenwashing has centred on asset managers. But the finance industry has itself repeatedly raised concerns around the risks lurking in some corners of the market for ESG debt.
Goldman Sachs Group’s NN Investment Partners is among asset managers getting pickier and is increasingly rejecting ESG debt pitches, it said last month. Isobel Edwards, a green bond analyst at the firm, said she and her team are often incredulous when they see some of the claims issuers make.
“We tend to call it a greenwash when it comes to the market with everything 100 per cent aligned and everything is the greenest it can possibly be, the sustainability plan is the best on the market,” she said in a July interview.
And in June, a manager at JP Morgan Chase revealed his misgivings over many of the ESG loan pitches crossing his desk.
Issuers increasingly have to contend with the reputational risk of sending ESG debt to market that may not yet be fit for purpose.
Chanel — best known for its No 5 perfume and iconic tweed suits — was recently called out for missing an interim renewable energy target for 2021 on a sustainability-linked bond.
And last year it emerged that an ESG bond issued by Tesco, the UK’s biggest grocery chain, was based on targets that covered only 2 per cent of its annual emissions.
In September, Bloomberg News published an analysis of over 70 sustainability-linked revolving credit lines and term loans arranged in the US since 2018, revealing that over a quarter contained no penalty for falling short of stated goals, and only a minuscule discount if targets were met.
“Greenwashing across the board is going to be more and more scrutinised as we head into 2030,” Mr Taylor said.
With investors and regulators increasingly alert to the risk of exaggerated ESG claims, fund managers are also growing more cautious.
In Europe, a case in point is the evolving language that asset managers are using around a product called Article 8. Defined within EU sustainable finance disclosure regulations as a product that “promotes” sustainability, a number of investment managers are nonetheless choosing not to attach an ESG label.
“The whole industry across the board is perhaps becoming a little more cautious and thinking through reps and warrants being made,” Mr Taylor said.
Issuers aren’t necessarily foregoing labelling altogether, but taking their time to make sure that if they tap the ESG market, they haven’t overlooked any metrics that could morph into PR embarrassments, he said.
Greenwashing across the board is going to be more and more scrutinised as we head into 2030
Jason Taylor,
managing director for sustainability advisory and finance at National Bank of Canada
Some companies have expressed reservations about issuing ultra-long green debt in particular, citing a fast-changing regulatory landscape and reputational risks.
Green bond issuers could opt to reduce tenors to avoid jeopardising their green credentials as market thresholds tighten, according to Maia Godemer, associate at BloombergNEF.
The International Capital Market Association, a financial industry group, released more stringent — albeit voluntary — standards for sustainability-linked debt earlier this summer, and European legislators are in the process of creating a green bond standard.
But both issuers and asset managers need to navigate continuing changes to ESG rules, and companies risk inadvertently misstating their ESG metrics, according to Mr Taylor.
“Greenwashing isn’t necessarily always voluntary,” Taylor said.
But “standards are also developing at a faster rate so those grey zones are dissipating more and more. Over time, the market’s going to tighten up on its own”, he said.
Our family matters legal consultant
Name: Hassan Mohsen Elhais
Position: legal consultant with Al Rowaad Advocates and Legal Consultants.
HIJRA
Starring: Lamar Faden, Khairiah Nathmy, Nawaf Al-Dhufairy
Director: Shahad Ameen
Rating: 3/5
DUNGEONS%20%26%20DRAGONS%3A%20HONOR%20AMONG%20THIEVES
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Result
Qualifier: Islamabad United beat Karachi Kings by eight wickets
Fixtures
Tuesday, Lahore: Eliminator 1 - Peshawar Zalmi v Quetta Gladiators
Wednesday, Lahore: Eliminator 2 – Karachi Kings v Winner of Eliminator 1
Sunday, Karachi: Final – Islamabad United v Winner of Eliminator 2
Mohammed bin Zayed Majlis
Killing of Qassem Suleimani
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The five pillars of Islam
THE BIO
Born: Mukalla, Yemen, 1979
Education: UAE University, Al Ain
Family: Married with two daughters: Asayel, 7, and Sara, 6
Favourite piece of music: Horse Dance by Naseer Shamma
Favourite book: Science and geology
Favourite place to travel to: Washington DC
Best advice you’ve ever been given: If you have a dream, you have to believe it, then you will see it.
The years Ramadan fell in May
KILLING OF QASSEM SULEIMANI
Mohammed bin Zayed Majlis
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Essentials
The flights
Return flights from Dubai to Windhoek, with a combination of Emirates and Air Namibia, cost from US$790 (Dh2,902) via Johannesburg.
The trip
A 10-day self-drive in Namibia staying at a combination of the safari camps mentioned – Okonjima AfriCat, Little Kulala, Desert Rhino/Damaraland, Ongava – costs from $7,000 (Dh25,711) per person, including car hire (Toyota 4x4 or similar), but excluding international flights, with The Luxury Safari Company.
When to go
The cooler winter months, from June to September, are best, especially for game viewing.
Feeding the thousands for iftar
Six industrial scale vats of 500litres each are used to cook the kanji or broth
Each vat contains kanji or porridge to feed 1,000 people
The rice porridge is poured into a 500ml plastic box
350 plastic tubs are placed in one container trolley
Each aluminium container trolley weighing 300kg is unloaded by a small crane fitted on a truck
UAE currency: the story behind the money in your pockets
Killing of Qassem Suleimani
Mohammed bin Zayed Majlis
Killing of Qassem Suleimani
The%20specs
%3Cp%3E%3Cstrong%3EEngine%3A%20%3C%2Fstrong%3E3.0%20twin-turbo%20inline%20six-cylinder%0D%3Cbr%3E%3Cstrong%3ETransmission%3A%20%3C%2Fstrong%3Eeight-speed%0D%3Cbr%3E%3Cstrong%3EPower%3A%20%3C%2Fstrong%3E503hp%0D%3Cbr%3E%3Cstrong%3ETorque%3A%20%3C%2Fstrong%3E600Nm%0D%3Cbr%3E%3Cstrong%3EPrice%3A%20%3C%2Fstrong%3Efrom%20Dh450%2C000%0D%3Cbr%3E%3Cstrong%3EOn%20sale%3A%20%3C%2Fstrong%3Enow%3C%2Fp%3E%0A
Getting there
Flydubai flies direct from Dubai to Tbilisi from Dh1,025 return including taxes
UAE currency: the story behind the money in your pockets
Killing of Qassem Suleimani
As You Were
Liam Gallagher
(Warner Bros)
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Zayed Sustainability Prize
MATCH INFO
Bayern Munich 2 Borussia Monchengladbach 1
Bayern: Zirkzee (26'), Goretzka (86')
Gladbach: Pavard (37' og)
Man of the Match: Breel Embolo (Borussia Monchengladbach)
FIXTURES
Thu Mar 15 – West Indies v Afghanistan, UAE v Scotland
Fri Mar 16 – Ireland v Zimbabwe
Sun Mar 18 – Ireland v Scotland
Mon Mar 19 – West Indies v Zimbabwe
Tue Mar 20 – UAE v Afghanistan
Wed Mar 21 – West Indies v Scotland
Thu Mar 22 – UAE v Zimbabwe
Fri Mar 23 – Ireland v Afghanistan
The top two teams qualify for the World Cup
Classification matches
The top-placed side out of Papua New Guinea, Hong Kong or Nepal will be granted one-day international status. UAE and Scotland have already won ODI status, having qualified for the Super Six.
Thu Mar 15 – Netherlands v Hong Kong, PNG v Nepal
Sat Mar 17 – 7th-8th place playoff, 9th-10th place play-off
The specs
Engine: 2.0-litre 4cyl turbo
Power: 261hp at 5,500rpm
Torque: 405Nm at 1,750-3,500rpm
Transmission: 9-speed auto
Fuel consumption: 6.9L/100km
On sale: Now
Price: From Dh117,059
More coverage from the Future Forum
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GAC GS8 Specs
Engine: 2.0-litre 4cyl turbo
Power: 248hp at 5,200rpm
Torque: 400Nm at 1,750-4,000rpm
Transmission: 8-speed auto
Fuel consumption: 9.1L/100km
On sale: Now
Price: From Dh149,900
Our legal consultant
Name: Dr Hassan Mohsen Elhais
Position: legal consultant with Al Rowaad Advocates and Legal Consultants.
The five pillars of Islam
Zayed Sustainability Prize
The five pillars of Islam
1. Fasting
2. Prayer
3. Hajj
4. Shahada
5. Zakat
KILLING OF QASSEM SULEIMANI
MATCH INFO
Syria v Australia
2018 World Cup qualifying: Asia fourth round play-off first leg
Venue: Hang Jebat Stadium, Malayisa
Kick-off: Thursday, 4.30pm (UAE)
Watch: beIN Sports HD
* Second leg in Australia on October 10
When is VAR used?
• Goals
• Penalty decisions
• Direct red-card incidents
• Mistaken identity
Our legal consultant
Name: Dr Hassan Mohsen Elhais
Position: legal consultant with Al Rowaad Advocates and Legal Consultants.
Women & Power: A Manifesto
Mary Beard
Profile Books and London Review of Books
Mohammed bin Zayed Majlis
The years Ramadan fell in May
RESULTS
5pm: Maiden (PA) Dh80,000 1,200m
Winner: Ferdous, Szczepan Mazur (jockey), Ibrahim Al Hadhrami (trainer)
5.30pm: Arabian Triple Crown Round-3 Group 3 (PA) Dh300,000 2,400m
Winner: Basmah, Fabrice Veron, Eric Lemartinel
6pm: UAE Arabian Derby Prestige (PA) Dh150,000 2,200m
Winner: Ihtesham, Szczepan Mazur, Ibrahim Al Hadhrami
6.30pm: Emirates Championship Group 1 (PA) Dh1,000,000 2,200m
Winner: Somoud, Patrick Cosgrave, Ahmed Al Mehairbi
7pm: Abu Dhabi Championship Group 3 (TB) Dh380,000 2,200m
Winner: GM Hopkins, Patrick Cosgrave, Jaber Ramadhan
7.30pm: Wathba Stallions Cup Conditions (PA) Dh70,000 1,600m
Winner: AF Al Bairaq, Tadhg O’Shea, Ernst Oertel
The years Ramadan fell in May
if you go
The flights
Direct flights from the UAE to the Nepalese capital, Kathmandu, are available with Air Arabia, (www.airarabia.com) Fly Dubai (www.flydubai.com) or Etihad (www.etihad.com) from Dh1,200 return including taxes. The trek described here started from Jomson, but there are many other start and end point variations depending on how you tailor your trek. To get to Jomson from Kathmandu you must first fly to the lake-side resort town of Pokhara with either Buddha Air (www.buddhaair.com) or Yeti Airlines (www.yetiairlines.com). Both charge around US$240 (Dh880) return. From Pokhara there are early morning flights to Jomson with Yeti Airlines or Simrik Airlines (www.simrikairlines.com) for around US$220 (Dh800) return.
The trek
Restricted area permits (US$500 per person) are required for trekking in the Upper Mustang area. The challenging Meso Kanto pass between Tilcho Lake and Jomson should not be attempted by those without a lot of mountain experience and a good support team. An excellent trekking company with good knowledge of Upper Mustang, the Annaurpuna Circuit and Tilcho Lake area and who can help organise a version of the trek described here is the Nepal-UK run Snow Cat Travel (www.snowcattravel.com). Prices vary widely depending on accommodation types and the level of assistance required.
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Killing of Qassem Suleimani
MATCH INFO
Europa League semi-final, second leg
Atletico Madrid (1) v Arsenal (1)
Where: Wanda Metropolitano
When: Thursday, kick-off 10.45pm
Live: On BeIN Sports HD
