https://www.wsj.com/articles/big-techno ... 1581330601
"The data point to one of the biggest frustrations critics have about the world of socially conscious investing: There is no industrywide rulebook to determine what should go into ESG funds."
Abbreviated version via email attached.
Update #1 Feb 11/20: (A) Fixed Income and (B) Institutional Investors
(A) Green Bonds
* IIRC, TD Bk was the first to borrow in Canada under a Green Bond prospectus.
* 2019 saw $255B of "Green Bonds" issued. https://www.climatebonds.net/2020/01/re ... 0-national
* The FT opines "ecological dividends from green gilts have so far been hazy at best" in the following;
Environment bonds: how green is my tally
JANUARY 20 2020
https://www.ft.com/content/36e173c0-38b ... 1a5e5568c8
Classic grumpy Brit. You have a perfectly decent global market, generating up to $400bn of issuance this year and all of it nicely aligned with cuddly capitalism. Then along comes Robert Stheeman with a large bucket of cold water. Green gilts, reckons the head of the UK’s debt management office, are unlikely to be cost effective.
The inconvenient truth is that he is quite right. Sovereigns and corporates issued an aggregate $255bn of green bonds last year, whose proceeds are supposed to help save the planet. Most trade within the yield curve for their maturity. But they remain illiquid compared with conventional bonds.
To counteract that, the UK would need to build up outstanding issuance amounting to tens of billions. But that would be hard to justify unless the financings made a genuine contribution to carbon reduction.
So far, environmental dividends from green bonds have been hazy at best. China, the second-largest issuer, is the biggest emitter of carbon dioxide. It belched out 27 per cent of global pollution in 2018 for roughly one-fifth of economic output and population.
Issuers reserve plenty of wriggle room on disbursing proceeds. Apple, the biggest corporate issuer, gave itself “significant flexibility”, adding “there can be no assurance” that funded projects meet “investor criteria or expectations regarding sustainability performance”.
The cocktail of market fashion and loose pledges is a potent one, pulling all sorts of issuers into the fray. Kenya made its debut in October with a $41m bond to finance environmentally friendly student accommodation in Nairobi. Germany plans its maiden multibillion-euro issue this year and is reportedly considering a coupon as high as 2 per cent.
Italian energy group Enel launched a “sustainability-linked” offering to raise money for general corporate purposes. It is promising to pay up to an additional 25 basis points if it fails to meet certain sustainability targets.
Most investors do not give a fig for the figleaf of greenwashing. Low standards mean environmental bonds lack credibility. Until issuers and index compilers adopt tighter criteria, big sovereigns should hang back. The UK government should listen to its bond man.
(B) Institutional Investors
Climate change pushes investors to take their temperature
Reuters JANUARY 20, 2020
https://www.reuters.com/article/us-davo ... SKBN1ZJ0KV
"...the temperature metric has been adopted by only a handful of the thousands of financial institutions worldwide but the buzz it has generated shows how investors’ concerns about climate risk are finally moving into the mainstream."
"Despite the growing enthusiasm for temperature scores, a dearth of standardized data, methodologies and disclosure makes it extremely hard to calculate a single meaningful number."
"Those numbers are then crunched with assumptions about the relationship between emissions and temperatures. "