• Total global sustainable lending volumes ($10bn) at the end of January were 50% lower than at the same point in 2023 ($20.1bn) reflecting, to a large extent, the tighter lending environment; a contributing factor being increased volatility governed by the current geopolitical situation and economic instability (see Figure 1).
• Green lending has been impacted more significantly than Sustainability-Linked Loans (SLLs), resulting in green loans comprising c.1% of total lending year-to-date (YTD). 
• While still early days, Italy has shown notably progressive sustainable lending activity, with an astonishing 95.6% of all lending YTD being sustainable in scope. Unsurprisingly, the US remains the largest contributor to overall volumes with almost $3.3bn of sustainable lending activity YTD 2024.

Figure 1: January Sustainable Lending Volumes ’19 to ’24 ($bn)

Mosaic Solar Loan Trust 2024-1. California-based solar and home improvement financing firm, Mosaic, is expected to securitise its pool of consumer loans backed by residential solar systems. Fitch Ratings is expected to rate notes issued by Mosaic Solar Loan Trust 2024-1 and will be informed by over eight years of performance data provided by Mosaic. 

Iberdola secures €300m EM-focused sustainability-linked green loan. The World Bank’s International Finance Corporation (IFC) and Iberdola has signed a €300m sustainability-linked green loan to finance renewable projects in fossil-fuel reliant emerging markets, including Morocco, Poland and Vietnam. In addition, the green loan also includes sustainability-linked targets tied to the interest margin on the deal. The first target tied to the loan is to reduce the company’s absolute Scope 1, 2 and 3 greenhouse gas (GHG) emissions by 60% or more by 2030 compared with 2020 levels. The second target is to more than double renewable energy capacity at Iberdrola by 2030.

SEB Bank provides a €42m green loan to Windfarm Akmenė One for project financing. SEB Bank has granted a €42 million green loan for the construction of a wind farm in the Akmenė district (Lithuania). Windfarm Akmenė One, a project of Aquila Clean Energy EMEA, Aquila Group’s clean energy platform in Europe, will use the funds to implement its 74.4 megawatt installed capacity project. The loan will help to secure the financing needs of the project and enable further expansion and partnerships with green energy providers in Lithuania.

Catalyst Capital and BPI contract a Green Loan of €11m. British Real Estate Private Equity manager, Catalyst Capital, contracted an EUR 11 million green loan from Portuguese Investment Bank, Banco Português de Investimento, to finance the refurbishment of the Diplomatic Hotel in Lisbon. The project will have sustainability concerns and objectives, in line with the strategy defined for the sector by BPI. This should reinforce its role as a financier of the project and as a benchmark financier through the adoption of innovative solutions based on sustainability principles; adding that the project was awarded an LEED Gold rating.

Brookfield announces $10bn first closing for second BGTF

Brookfield Asset Management has raised $10bn in the first closing of the second Brookfield Global Transition Fund (BGTF II), inclusive of fund commitments and strategic capital from the investor base. The fund continues to see significant support from both existing and new investors, cementing Brookfield’s position as a key transition investor among private fund managers. BGTF II is co-headed by Mark Carney, Chair of Brookfield Asset Management and Head of Transition Investing, and Connor Teskey, President of Brookfield Asset Management, and focuses on investments to accelerate the global transition to a net-zero economy while delivering strong risk-adjusted returns for investors.

Mirova raises over $280m for emerging markets-focused climate fund

Sustainability-focused investment manager Mirova has reached $282m in commitments for the Mirova Gigaton Fund. The fund is a blended finance debt fund aimed at accelerating the clean energy transition in emerging markets, reaching more than half of the fund’s $500m target per year after launching. The Mirova Gigaton Fund aims to provide medium- to long-term debt financing for clean energy projects, primarily in Africa, Latin America, the Middle East and Asia, in a bid to mobilise institutional investor support for high impact climate mitigation and adaptation, social development, economic infrastructure and gender equality investment.

Generate Capital raises $1.5bn for sustainable infrastructure investments

Generate Capital, a leading sustainable infrastructure platform, closed its latest capital raise with $1.5bn in new capital commitments from preeminent global institutional investors. As of September 2023, Generate helped produce more than 320GWh of sustainable power and process more than 715Kt in organic waste. In addition to its project portfolio, Generate’s subsidiaries and portfolio companies focus on the infrastructure transition, bringing value to waste through Generate Upcycle, making the electric grid more reliable through esVolta, and expanding renewable power generation with Nexamp and Pine Gate Renewables.

BlackRock invests $500m in clean energy developer Recurrent Energy

Recurrent Energy, a subsidiary of Canadian Solar Inc. and a global developer and owner of solar and energy storage assets, announced that Recurrent Energy B.V. has secured a $500m preferred equity investment commitment, convertible into common equity, from BlackRock through a fund managed by its Climate Infrastructure business. The $500m investment will represent 20% of the outstanding fully diluted shares of Recurrent Energy on an as-converted basis. Canadian Solar will continue to own the remaining majority shares of Recurrent Energy after the closing of the investment.

Northvolt signs 'largest' European gigafactory green loan

Swedish battery developer and manufacturer Northvolt announced the signing of a $5bn non-recourse project financing to enable the expansion of Northvolt Ett in northern Sweden. The deal reportedly represents the largest green loan raised in Europe to date. In addition to the expansion of Northvolt Ett’s cathode production and cell manufacturing, the finance package will enable the expansion of the adjacent recycling plant, Revolt Ett, which is approaching the conclusion of its commissioning and is processing its first materials. This is the first loan raised through Northvolt’s Green Finance Framework created in 2023. 

Robeco to target sustainable fashion, ocean and climate sustainability, ‘forever chemicals’ in corporate engagements

International asset manager Robeco announced the introduction of ocean sustainability and phasing out hazardous chemicals as two new focus themes that it discuss with companies in its 2024 engagements, in addition to stepping up pressure on high carbon companies to align with climate goals, and engaging with fashion companies to address key sustainability issues in the sector. According to Robeco, each of its engagement topics were selected following consultation with clients. The asset manager’s sustainable investment engagements typically run for three-year periods, with engagement specialists in contact with selected investee companies to track progress against objectives.

Macquarie Asset Management acquires 50% of Enel Green Hellas

Macquarie Asset Management, on behalf of co-investors and managed funds, has acquired a 50% stake in Enel Green Power Hellas from Enel Group for a total equity consideration of approximately €2500m. Enel Green Power Hellas is a notable renewable energy developer and operator in Greece, with a 566 MW portfolio of onshore wind, solar and hydropower projects in operation or under construction across its mainland and islands.

Amundi looking to 'escalate' engagement and voting on biodiversity

Amundi is looking to escalate its engagement activity against companies that have a negative impact on biodiversity, including potential voting action at proxy season. “Our current engagement is targeting identified companies that have high controversies [surrounding biodiversity] or [have been] identified as being laggards,” said Elodie Laugel, chief responsible investment officer. While she did not name the targeted companies, she said Amundi is pushing for each of these companies to adopt best practice on identification of impact, reporting and risk management policies. 

Circular economy 'super underdeveloped', claims M&G

The circular economy will be a key investment theme for 2024, being one of the sustainable development goals that is “going backwards”, an impact investor has claimed. Highlighting interesting areas to allocate capital for in this coming year, and beyond, Ben Constable-Maxwell, head of impact investing at M&G Investments explained that “the world is increasingly less circular, and we need to recycle more and redesign those processes”. “The twelfth UN Sustainable Development Goal (SDG) – responsible consumption and production – is going backwards,” he explained. The circular economy is generally “super underdeveloped”, he argued, creating opportunities for investment. Examples of the M&G Positive Impact Fund’s assets relating to SDG12 include Australian pallets, crates and containers specialist Brambles, London-headquartered packaging business DS Smith and e-commerce company eBay.

SIX launches climate data sets to support climate-related reporting and investing

Financial market infrastructure provider SIX announced the launch of a new climate data offering, aimed at supporting investors in reporting and monitoring of climate factors, and in climate-related investment and risk decision making. The climate data sets from various data providers in a range of industries, will provide clients with modelled and reported emissions data, covering over 33,000 companies globally, and bringing together multiple data sets on regulatory, historical and forward-looking climate impacts from providers including MSCI and Inrate. SIX also announced that it has recently entered into an agreement with environmental disclosure platform CDP to offer access to its global Greenhouse Gas (GHG) Emissions Dataset across various industries.

Allianz launches dashboard tracking net-zero transition progress and requirements

Leading insurance and investment group Allianz has launched a tool that outlines how the green transition can be achieved within the shrinking timeframe. The tool from Allianz Research provides granular analysis of the transition pathway needed for more than 50 industries worldwide. The Allianz SAMEpath tool charts the required emission reductions and associated investments needed to achieve the 1.5oC net-zero commitments made by countries under the 2015 Paris Agreement. SAMEpath also examines the energy mix and how the speed of implementation can vary by region, country and sector.

Better Buildings Partnership unveils revitalised Green Lease

The Better Buildings Partnership (BPP) has updated its Green Lease Toolkit to further support the delivery of sustainable buildings across commercial real estate. The toolkit offers legal clauses in nearly 20 key areas, covering topics such as building management, circular economy, waste and renewable energy. It offers drafting variations categorised as “light”, “medium” or “dark”, accommodating users at various stages of their green leasing journey. Additionally, the Toolkit introduces a new Green Lease Essentials section, outlining a vision for minimum expectations on what green leases should include. In time the Green Lease Toolkit may develop into a benchmark for investors assessing the sustainability credentials of an asset.

MSCI develops solution to centralise private market climate and sustainability disclosures

MSCI has launched the MSCI Private Company Data Connect, a centralised hub that provides general partners (GPs) access to private companies' sustainability and climate data and disclosures. The platform is designed to give investors similar levels of insight into private companies’ sustainability practices with which they assess publicly traded corporations, through standardised data driven by the ESG Integrated Disclosure Project and ESG Data Convergence Initiative.

IISD Advancing Natural Infrastructure 2024 Forum (21 February 2024, Calgary)

Hosted by the International Institute for Sustainable Development (IISD), together with WaterSMART Solutions and the Natural Assets Initiative, the Advancing Natural Infrastructure 2024 Forum is an opportunity to discuss the state of play of natural infrastructure on the prairies and shape the future of prairie water infrastructure by working with nature. Additional details of the event and link to register.

Private Equity Wire European ESG Summit (28 February 2024, London)

The Private Equity Wire European ESG Summit is a one-day retreat focusing on emerging opportunities and best practice in ESG for operations, finance, legal, product and back-office leaders across private equity, venture capital and wider private markets funds. Additional details of the event and a link to register.

Economist ninth Annual Sustainability Week (4-6 March 2024, London)

The ninth annual Sustainability Week, which this year incorporates the Energy Transition summit (ETS), will deliver vital information that you can use to hasten reducing emissions and improving your environmental impact in 2024. Topics discussed at the event will include: decarbonising business and industry; financing net zero; supply chain and circularity; innovative technology and adaptation; biodiversity and natural capital; energy Transition Summit. Additional details of the event and a link to register.

Natural Capital Investment EMEA (12 March 2024, London)

Environmental Finance will be hosting the annual Natural Capital Investment EMEA conference on 12 March in London. Nature and biodiversity are finally being given their rightful place as an integral part of sustainable finance – and hopefully of finance more broadly. Join this event to discuss the key issues involved with natural capital investment approaches, regulation and policy, data gaps and more. Additional details of the event and link to register.

PEI Infrastructure Investor Global Summit (18-21 March 2024, Berlin)

The Infrastructure Investor Global Summit will bring together 3,000+ investors, managers and strategic partners. Key themes to be explored: 

• The fundraising fightback: how managers can navigate their way back to success
• High inflation, high valuations & more: how is infrastructure’s renowned resilience shaping up?
• Capacity for climate considerations in investor portfolios
• Accelerating the transition to net-zero: energy assets in focus
• Why investment in the digital revolution has become essential for investors

For those looking to discuss any of the above further, please reach out to our authors:

• Rahel Haque, Vice President, Climate and ESG Capital Markets
• Fazl Ahmad, Analyst, Private Finance Structuring and ESG
• Javier Patria, Analyst, Climate and ESG Capital Markets

*For any unfamiliar terms used within this article please refer to our Insights glossary.