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    Impact bond quarterly update: Q1 2022

    Responsible investment quarterly update

    11 April 2022 Responsible investment, Fixed income

    Impact bond issuance continues to grow, but slows

    • Issuance of impact bonds continued to grow over the first quarter of 2022, but issuance in some categories fell relative to the same period last year, with social bond issuance down 64% and green bond issuance down 7%.1
    • Notable impact bond issuance included a $4bn green bond issue from Canada, one of the world’s largest oil producers.
    • Greenwashing, or ‘impact washing’, remains a concern, with over a third of the impact bonds analysed by Insight over the quarter failing to fulfil our expectations for sustainable issuance.

    Figure 1: Total issuance (USD) by sector1

    Total issuance (USD) by sector and by year

    Figure 2: Total issuance (USD) by year1

    Total issuance (USD) by sector and by year

    Table 1: Largest impact bond issues in Q1 20222

    Issuer Issuer type Size of issue Bond type
    Caisse d'Amortissement de la Dette Sociale Government agency €15.1bn (three issues) Social (refinancing)
    Canada Government CAD4.0bn Green
    International Bank for Reconstruction and Development


    $3bn Sustainability
    EU Government €2.4bn Social
    BNG Bank Financials €2.3bn Sustainability

    A note on responsible investment and impact bonds: Investing responsibly means taking all risks, including ESG risks, into account when designing a solution. Investing in impact bonds is one way to encourage a positive environmental or social impact with your investments, but we believe it is more effectively done when considered alongside other relevant ESG factors within the framework of a responsible investment policy and approach.

    Insight impact bonds ratings in Q1 2022

    Our analysis of 49 impact bonds issued in Q1 2022 resulted in the following ratings:

    bonds were rated dark green, indicating the bond is best-in-class with regard to its sustainability profile
    bonds were rated light green, indicating the bond fulfils Insight’s sustainability requirements
    bonds were rated red, indicating the bond does not meet Insight’s minimum sustainability requirements


    Industry Bond type ESG performance met? Bond framework criteria met? Impact criteria met? Traffic light score
    Utilities Green Yes Yes Yes

    Analyst assessment: This issuance focuses on financing renewable energy projects, specifically offshore wind farms, and their effective connection to the grid. Renewable energy projects and associated interconnectors support the transition to a low-carbon world, enabling the transmission and distribution of electricity, from renewable energy sources. The use of proceeds of the bond are strongly aligned with the issuer’s sustainability strategy and a net zero economy. Procedures are in place to mitigate and manage any ESG risks associated with the renewable energy and interconnection projects and there is a strong governance framework surrounding the management of proceeds. There is also a commitment for the majority of proceeds to be used for financing new projects. The rest of the framework is aligned with the ICMA Green Bond Principles.


    Industry Bond type ESG performance met? Bond framework criteria met? Impact criteria met? Traffic light score
    Communications Green Yes Yes Yes

    Analyst assessment: The bond's proceeds will go towards projects in a range of categories, including renewable energy projects (specifically wind and solar), power purchase agreements, energy efficiency, green buildings, sustainable water management, and biodiversity and conservation. A specific group will be responsible for project evaluation and selection, with clear processes in place. An environmental and social risk assessment will be incorporated to ensure any ESG risks are identified and managed. The process to manage the use of proceeds of the bond is clearly outlined and there is a process and commitment for reinvestment. Full allocation is expected within three years. There is a commitment for annual verified allocation and impact reporting with appropriate KPIs. We are confident the categories will deliver a positive environmental impact and are aligned with the issuer's overall sustainability strategy. We noted some categories could be strengthened through improved standards or thresholds for eligibility, and there is a lack of detail on the maximum lookback period for any refinancing.


    Industry Bond type ESG performance met? Bond framework criteria met? Impact criteria met? Traffic light score
    Consumer staples Sustainable No Yes No

    Analyst assessment: The bond’s proceeds are earmarked for a wide range of projects, including sustainable agriculture, green buildings, renewable energy and food security. However, some of the categories identified for financing from the bond’s proceeds raise questions given controversies and concerns over the company’s operations in those areas. Coupled with this, no intended allocation split is provided for proceeds across the projects. A risk assessment will be undertaken for project evaluation and selection, but this will be based on some of the company’s existing policies, and given controversies in some relevant areas we believe it is questionable how effective these policies are. We note that the issuer has committed to reporting on the impact of projects with relevant key performance indicators, harmonised with the ICMA Harmonised Framework for Impact Reporting. However, our view is that the eligible projects for the bond’s use of proceeds are inappropriate for a sustainable bond, in our view, and are unlikely either to achieve a positive social and/or environmental impacts, or to improve the ESG performance of the issuer.

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