Moody’s 2023 ESG Outlook highlights the rising risk to corporate and sovereign debt from ESG factors. While near-term risks stem from climate change, social challenges, and deteriorating economic conditions, longer-term risks arise from the need to reduce waste, physical climate risks, biodiversity loss, and the need for a just transition.
As the green and sustainability-linked bonds market looks set to hit $1 trillion in 2022, it's increasingly important to understand the definition and purpose of a growing range of different structures and financial vehicles.
The latest report from trade body the Association for Financial Markets in Europe (AFME) shows a quarterly increase of ESG bond and loan issuance, but year-on-year volume is on the decline due mainly to the impacts of the Ukraine crisis.
The launch of a social bond fund by NN Investment Partners (NN IP) reflects a shift among investors towards social impact. NN expects total social bond issuance of €250 billion in 2022, which may appear optimistic based on wider market . Social bonds offer investors alignment with ten of the UN SDG goals, but care must be taken to avoid social washing claims.
The Taskforce for Nature Related Financial Disclosure (TNFD) has launched its v.2 beta framework for comment. The second version adds new metrics, sector guidance and support in terms of scoping questions, while pilot testing of the first framework started in June 2022.