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    Responsible investment quarterly update

    Responsible investment quarterly update

    October 25, 2021 Responsible investment, Fixed income


    • The 26th UN Climate Change Conference (COP26) will focus on trying to secure alignment with the Paris Agreement objectives
    • The UK and Spain each issued their first green bonds during Q3
    • Green and sustainable bond issuance continued to accelerate, with more than US$800bn issued in 2021 so far

    News highlights: Q3 2021

    COP26 took place in Glasgow in late October/early November, with some commentators and participants suggesting that it represents the last opportunity for the world to successfully meet the Paris Agreement objectives, limiting global warming to well below 2C, preferably less than 1.5C.

    • In the US: Major legislation, including significant climate and sustainable initiatives, neared approval; Walmart launched a US$2bn green bond, the largest corporate issued green bond in the US market; and the SEC flagged disclosure gaps in corporate reporting.
    • In Europe: The European Commission published its ‘Fit for 55’ policy package, proposing to cut greenhouse gas emissions in the EU by 55% from 1990 levels, by 2030; and the Commission announced its first COVID-19 green bond.
    • In the UK: The UK’s first green gilts were issued; the Chancellor published “Greening Finance: A Roadmap to Sustainable Investing”; the UK Competition and Markets Authority issued a Green Claims Code to tackle greenwashing; and the FCA published guiding principles for ESG and sustainable funds.

    For more information on our approach to responsible investment, please visit our dedicated responsible investment page.

    Impact bond issuance continues to accelerate

    • Issuance of impact bonds has continued to grow, with governments, supranational bodies and financials still to the fore. As we enter Q4 2021, more than US$800bn has been issued in the year to date, with sustainable bond issuance already almost double the level of 2020.
    • The UK government launched its first green bonds to spearhead its green financing plan, raising more that £16bn, and with further issues anticipated in coming quarters.
    • Spain launched a new green bond during the quarter, joining the club of sovereign green bond issuers, raising almost €6bn.

    Figure 1: Total issuance (USD) by sector23

    Total issuance (USD) by sector and by year

    Figure 2: Total issuance (USD) by year24

    Total issuance (USD) by sector and by year

    Table 1: Largest impact bond issues in Q3 202125

    IssuerIssuer typeSize of issueBond type
    UK government Government €13.7bn Green
    Spanish government Government €5.9bn Green
    Caisse d'Amortissement de la Dette Sociale (CADES) Government agency €5.9bn Social
    International Bank for Reconstruction and Development (IBRD)* Supranational €5bn Sustainability
    German government Government €4.1bn Green

    *There were 16 responsible investing related issues by the IBRD, in different currencies, in Q3 2021, of which this was the largest.

    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 Q3 2021

    Our analysis of 70 impact bonds issued in Q3 2021 resulted in the following ratings:

    bonds were rated dark green, indicating the bond meets Insight’s minimum sustainability requirements
    bonds were rated light green, indicating there are weaknesses in the bond with regard to sustainability
    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
    Energy Green Yes Yes Yes

    Analyst assessment: This issuance focuses on financing renewable energy projects, that is strongly aligned with the issuer’s sustainability strategy. Environmental Impact Assessments (EIAs) will be undertaken to mitigate and manage any ESG risks associated with the renewable energy projects. The rest of the framework is aligned with the ICMA principles.


    Industry Bond type ESG performance met? Bond framework criteria met? Impact criteria met? Traffic light score
    Utilities Green Yes Yes No

    Analyst assessment: This issuance focuses on financing green buildings. It was rated light green as the impact criteria of a green building could be improved and there was a lack of disclosure for the policies and processes in place to mitigate other ESG risks associated with the green buildings. The rest of the framework is aligned with the ICMA principles and the company has a strong ESG performance. 


    Industry Bond type ESG performance met? Bond framework criteria met? Impact criteria met? Traffic light score
    Utilities Traditional No Yes Yes

    Analyst assessment: We believe the use of proceeds (UoP) from this issuance is inappropriate for a green bond. The UoP will not have a positive impact or help to tackle some of the environmental crises that the world is facing. 

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