Breakfast briefing “The Path to COP16 – Mobilising Private Finance for Nature” - Wednesday 16 October at Coutts, London

We’re delighted to give you the opportunity to hear directly from the authors of two recently launched reports ahead of the landmark COP16 summit in Cali. WWF-UK will share their recommendations around ‘National nature-positive pathways to guide policy and private sector action’. Then Cambridge Institute for Sustainability Leadership (CISL) will share insights on ‘Scaling Finance for Nature’.

The breakfast briefing will run from 07:45 to 10:00, with the opportunity for some informal networking after the panel – register here.

The ESG evolution – social bonds beyond the 2021 boom: challenges and opportunities ahead

Following recent research on Sustainability-Linked Bonds (SLBs) and transition plans, we come back to thematic analysis, this time from the “S” perspective. Social bonds represent a young and developing market that’s gained focus as attention expanded to the human aspects of sustainability. The total market for this category of sustainable finance is ~$1.1tn, making up less than 20% of total GSS/S bonds, and only one-third of the green bonds market – read more.

Sustainable Finance policy and regulation round-up

Our Sustainable Finance policy and regulation round-up covers the recent UK&EU elections and projected policy paths for sustainable financing – read more.

IFRS Foundation publishes guide for companies as investors call for voluntary application of ISSB standards

IFRS[1] Foundation has released a guide to support companies in adopting ISSB[2] Standards in response to global investor demand for companies to voluntarily apply ISSB Standards, despite no regulatory mandate in some regions.

The guide, published during New York Climate Week, will be particularly useful for companies in jurisdictions without regulatory requirements to apply ISSB Standards.

It works alongside tools like the ESRS-ISSB Standards Interoperability Guidance[3] for companies to meet both investor demand and regulatory needs globally – read more.

ICMA publishes new paper on the role of commercial paper in the sustainable finance market

This week ICMA[4] published a new paper on the role of commercial paper in the sustainable finance market. As we’ve discussed before, the emergence of these guidelines marks an important milestone in the development of the Sustainable Commercial Paper (CP) asset class.

Sustainable CP, i.e. all forms of ESG labelled commercial paper, has a growing role in issuers' overall sustainability strategies as they seek to embed sustainability features across their capital structure (not just in term debt instruments).

These guidelines present initial suggestions and illustrate the use of sustainable market standards, like ICMA Green Bond Principles and ICMA Social Bond Principles for ‘Use of Proceeds’ Commercial Paper.

NatWest Markets served as a joint coordinator of the ICMA Sustainable Commercial Paper Working Group and played an active role in creating this guidance – read more.

TPI publishes State of Transition Report 2024

TPI (Transmission Pathway Initiative) Centre has published its State of Transition Report 2024 which reviews progress that over 1,000 of the world’s highest-emitting public companies, worth around USD 39 trillion, have made on climate change.

The report also shows the extent of the corporate climate action gap, which considers the distance between where TPI companies are now and where they need to be in order to achieve the international temperature goals set by the Paris Agreement.

TPI has also informed us that they’re set to update their assessments by the end of October, so corporates covered by their analysis should expect to see updated assessments soon – read more.

CDP and the Net-Zero Data Public Utility expand partnership to support net-zero transition

CDP and the Net-Zero Data Public Utility (NZDPU) have expanded their partnership to make core climate data from over 10,000 companies publicly accessible.

This data represents more than 50% of global market capitalisation and includes key climate metrics like GHG emissions and reduction targets.

The initiative aims to enhance transparency, streamline reporting, and avoid data duplication for global stakeholders.

CDP, the largest global environmental disclosure system, will serve as the primary data provider for NZDPU.

This partnership supports the goals of the Paris Agreement by making critical climate data freely available to the public – read more.

MSCI launches new Carbon Credit Project Ratings

MSCI has launched MSCI Carbon Project Ratings to help market participants evaluate over 4,000 carbon offset projects, by assessing projects based on emissions impact and implementation integrity, using a seven-point scale from AAA to CCC.

With only 5% of current projects considered to have high integrity, this rating system aims to provide transparency, aiding investors in making informed decisions and managing risks.

This initiative responds to the growing demand for credible carbon credits as companies pursue net-zero goal – read more.

Primary and Secondary Market

For analysis and information on the Primary Market, along with updates on the Secondary Market, please take a look at the full monthly newsletter on Market Insights. If you do not have access to Agile Markets, please contact us here.

The US CFTC unveils guidelines for voluntary carbon credit derivatives

The Commodity Futures Trading Commission (CFTC) has introduced the first federal guidelines for voluntary carbon credit derivatives, aiming to improve market transparency and reduce manipulation, in line with the Biden administration's efforts to tackle climate change.

These guidelines ask exchanges to ensure the integrity of carbon credit derivatives, addressing concerns such as "double counting" and credibility issues, with the voluntary carbon market projected to grow from $2bn today to $100bn by 2030.

Treasury Secretary Janet Yellen and other officials like John Kerry have endorsed the initiative to standardise carbon markets, although challenges like greenwashing and the slow energy transition remain significant obstacles – read more.

Wellington voices concerns on three-year lookback period for sustainable bonds

Investment management firm Wellington has raised concerns about the growing trend of issuers using a three-year lookback period for sustainable bonds. They argue this strategy, which involves financing green and sustainable projects that started up to three years prior, is often unnecessary and ‘painful’ for some investors. The key issue lies in the challenge of tracking whether the financed projects are still making a meaningful difference three years later.

Wellington believes three-year lookback periods should be used only, if necessary, as it can complicate the evaluation of a bond’s environmental impact and lead to misalignment between financing and project timelines. Investors tend to prefer clearer bond structures that prioritise transparency and forward-looking impact. Investors want to be funding new projects – not refinancing old ones – read more.

Nature Action 100 set to release first corporate benchmark results at COP16 in Colombia

The Nature Action 100 initiative (NA100), the biodiversity-focused counterpart to Climate Action 100+ aims to drive corporates to reverse nature and biodiversity loss, to mitigate financial risk, and protect the long-term economic interests of investors’ clients and beneficiaries. Target firms include Nestlé, Novo Nordisk, Amazon, Proctor & Gamble, Rio Tinto and JBS.

The benchmark is based on six investor indicators covering ambition, assessment, targets, implementation, governance and engagement – read more.

IFC issues SEK 2.6 billion green bond to promote Blue Finance in emerging markets

IFC has designed a green bond to promote ocean-friendly projects and improve access to clean water and sanitation in emerging economies. This is their second green bond promoting IFC’s blue finance investments following a NOK 2 billion green bond. It was underwritten by SEB. This transaction further demonstrates IFC and investors’ commitment to engage and raise awareness around the topic of blue finance.

In 2022, IFC published guidelines for Blue Finance to allow financial markets to support climate-related projects based on water. Moreover, IFC expanded its green bond framework to include categories such as biodiversity and ocean and water conservation – read more.

NatWest-backed charity doubles lending to social enterprises

NatWest Social and Community Capital (S&CC) doubled its lending in 2023 to over £2 million, supporting 12 businesses, creating and protecting 118 jobs, and impacting over 14,000 people, with a focus on deprived areas in the UK.
S&CC offers tailored financial solutions to social enterprises, charities, and community groups, such as bemix and Huntly Development Trust, helping them access funding for growth and community projects that mainstream lenders typically do not provide – read more.

NatWest leaders learn how food bank is impacting local community

Senior staff from NatWest, including CEO Paul Thwaite, visited MK Food Bank to observe its operations, which have expanded to support over 5,000 families annually, with a 200% increase in visits to its mobile top-up shop in 2023.
NatWest has supported MK Food Bank through various initiatives, including an £18,000 donation from the bank’s Power of Helping Hands fund, enabling the expansion of its mobile top-up shop programme and continued collaboration on future events and campaigns – read more.

Regular articles from us on market-moving themes, and updates on what we are doing to further our ESG commitment.

• Further guidance and data tool to boost SLB market | NatWest Corporates and Institutions
• NatWest completes £2.8bn of lending to UK social housing sector in 2024 | NatWest Group
• NatWest executes £1.1bn own-asset securitisation deal as part of its renewable and transition energy lending growth ambition | NatWest Group

For the full monthly newsletter login to Market Insights. Don’t have access? Contact us here.

Or, for Corporates looking to discuss any of the above further, please reach out to our authors:

• Dr Arthur Krebbers, Head of Corporate Climate & ESG Capital Markets
• Gustavo Brianza, Head of Debt and ESG Advisory
• Rui Zu, ESG Advisory
• Thomas Gidman, ESG Advisory
• Daniel Bressler, Climate & ESG Capital Markets
• Jaspreet Singh, US Capital Markets
• Niceasia Mc Perry, Climate & ESG Capital Markets
• Isabella Crack, ESG Advisory

[1] IFRS International Financial Reporting Standards
[2] ISSB International Sustainability Standards Board
[3] ESRS European Sustainability Reporting Standards
[4] ICMA nternational Capital Market Association