GSS primary supply fell versus January, in line with a drop in overall supply: €5.8bn printed across six transactions. However, the strength of the GSS deals executed was notable, as four of the six labelled transactions landed flat to fair value, underpinned by higher-than-average oversubscription (o/s) for GSS transactions. The GSS primary market is poised for revival in March with several issuers looking to tap the market to de-risk their funding and take advantage of strong demand for the GSS label. EUR currency hosted all of the action in February as issuers preferred Green tag and Senior format for their labelled transactions (€5.3bn / 5 transactions), whilst BPCE raised €500m through 12NC7 Social Tier-2.

Green, Social and Sustainability / Sustainability-Linked (GSS/S) supply continues at a steady pace, despite being down (19%) in 2024 year-to-date (YTD) versus 2023 YTD. This is in part due to transactions being accelerated to Q4 last year. Green issuance (c. €18bn) represents 89% of GSS/S issuance in 2024 YTD, continuing its longstanding dominance to an even greater extent when compared to the past few years (80% in 2023 and 85% for 2022). Social issuance is at 8% followed by Sustainability at 3%. Senior issuance dominated the market, with an almost equal split between Senior Non-Preferred (29%) and Senior Preferred (28%), followed by Covered format (41%), along with a small contribution from GSS Capital issuance (2%).

• EUR Senior: YTD GSS issuance is €11.5bn (-36% vs 2023 YTD), with total senior supply at €80.7bn (-10%); resulting in a significant decrease of GSS as a % of total issuance to 14% (2023 YTD: 20%).
• GBP Senior: YTD GSS issuance is nil vs £0.5bn in 2023 YTD, with total senior supply at £4.6bn (-65%); resulting in GSS as a % total issuance of nil.
• EUR Covered: YTD GSS issuance is €7.0bn (+16% vs 2023 YTD), with total covered supply at €66.4bn (-4%); resulting in a small increase in GSS as a % of total issuance to 11% (2023 YTD: 9%).
• GBP Covered: YTD issuance is nil, which is the same as 2023 YTD, with total covered supply at £2.5bn (-52%); resulting in GSS as a % of total issuance of nil.

Barclays published a revised Climate Change Statement, which includes additional restrictions on unconventional oil and gas financing. In addition, Barclays released a Transition Finance Framework to help facilitate the transition finance needed to decarbonise high-emitting sectors.

ABN AMRO recently published its updated Green Bond Framework (first update since April 2018). ABN AMRO is the first commercial bank to have aligned its framework with the criteria of the recently approved EU Green Bond Standard, evidenced by an external best-effort opinion provided by ISS Corporate.

Natixis CIB announced that it has joined the ESG Integrated Disclosure Project (ESG IDP). The ESG IDP aims to improve transparency and accountability of disclosure of key ESG indicators in private credit and syndicated loan transactions.

CaixaBank's social bank (MicroBank) announced that it has completed 144,473 financing transactions in 2023, with a total social impact valued at €1.38 billion; representing increases of 44% and 36.2% on the previous year respectively.

BBVA announced that it set a ‘record annual figure’ for sustainable business in 2023: €70 billion (+39%). Of the total sustainable business mobilised in 2023, 78% was allocated to climate action, while the remaining 22% went into promoting inclusive growth. 

Schroders announced the launch of its Greencoat Global Renewables+ Long-Term Asset Fund (LTAF). The new fund will target infrastructure supporting the energy transition across the UK, US, and Europe. It will deploy capital across wind and solar assets, as well as a range of energy transition assets including hydrogen, heating and storage.

BNPP AM announced the launch of two funds: BNP Paribas Easy Sustainable EUR Corporate Bond and BNP Paribas Easy Sustainable EUR Government Bond. These funds leverage BNPP AM’s proprietary ESG methodology, exclusion policies and active engagement.

GSAM announced the launch of the Goldman Sachs Global Green Bond UCITS exchange traded fund (ETF). The fund provides exposure to the Solactive Global Green Bond Select Index and will make disclosures under Article 9 of Sustainable Finance Disclosure Regulation (SFDR).

The European Parliament and European Council reached a provisional agreement on a proposal for a regulation on ESG ratings. The new rules aim to strengthen the reliability and comparability of ESG ratings.

The European Central Bank (ECB) has published a report on the risks from the misalignment of banks' financing with the EU climate objectives.

The European Banking Authority (EBA) has launched an industry survey to receive input from credit institutions on their methodologies to classify exposures to ESG risk. The deadline to respond to the industry survey is 29 March 2024.

MSCI has launched MSCI Private Company Data Connect, a centralised hub that provides general partners access to private companies' sustainability and climate data and disclosures.

S&P published a report which anticipates sustainable bond issuance will increase modestly to around $1 trillion in 2024. In addition, it was highlighted that green bonds will continue their dominance, with transition and blue bonds also expected to gain traction.

ISS ESG released its annual global outlook report, ‘Actionable Insights: Top ESG Themes in 2024’. The report highlights 10 key trends that sustainable investors will likely be focusing on through 2024. 

As always, if you would like to discuss any of the above further, please reach out to our authors:

• Caroline Haas, Head of Climate and ESG Capital Markets
• Doug Shuffman CFA, Vice President, Climate and ESG Capital Markets
• Jake Hallam, Vice President, Climate and ESG Capital Markets
• Pulkit Khurana, Associate, Climate and ESG Capital Markets
• Siobhan Wartnaby, Analyst, Climate and ESG Capital Markets

*For further analysis and information on the Primary Market, take a look at the full monthly newsletter on Market Insights. If you do not have access to Market Insights, please contact us here. Also, for any unfamiliar terms used within this article please refer to our insights glossary.

1. Includes European Bank & Insurance GSS/S Issuance
   
2. Source: NatWest Markets Syndicate (05/03/24), includes Global Financial Institutions EUR & GBP Issuance.