• While Sustainability-Linked Loans (SLL) continue to dominate global sustainable lending volumes, the share of green loans has steadily increased in H1 since 2021 (Figure 1), partly attributed to the lower reporting burden and costs as compared to SLLs
• This trend is not however observed on a month-to-month (m/m) basis, as the recent contraction in global sustainable lending volumes has reversed in June (Figure 2), governed by several large SLL transactions in the Machinery and Energy sectors (including Siemens and Axpo Holding)
• 2024 has seen over 20% of all private capital fundraising being allocated to ESG-labelled funds (Figure 3), with North America and Europe observed as key investment destinations
• In particular, green lending has been linked to investment activity in key sectors driving real-world transition activities, such as real estate, whereby investment managers have increasingly embedded sustainability improvements within value-add ESG oriented funds
• In Europe, total investment volumes in real estate reached €86.5bn in H1 2024, an increase of 10% as compared to H1 2023, led by all major sectors, including Living (€18.3bn), Office, and Industrials (€16.1bn), and Retail (€13.5bn) and Hotels (€9.9bn)
• Additionally, infrastructure-themed ESG funds have raised more than 32% of all ESG fundraising to support investments in projects encompassing data centres and renewables

Figure 1: Global Sustainable Lending Volumes H1 2021 – 2024 ($bn), with Green and SLL as a % of Total Sustainable Lending

Figure 2: Global Sustainable Lending Volumes H1 2024 m/m ($bn)

Figure 3: Distribution of ESG integration across 2024 funds vintages

Clifford Capital prices $508m infrastructure ABS

Singapore-based specialist infrastructure financing provider Clifford Capital, has announced the pricing of its fifth CLO issuance, Bayfront Infrastructure Capital V (BIC V), at $508.3m. BIC V is backed by a portfolio of project finance and infrastructure loans and bonds to projects in Asia-Pacific, the Middle East, Africa and the Americas, and features a $145m sustainable tranche backed by a portfolio of green and social assets including, renewable energy, digital infrastructure, transportation, education and desalination.

Mercedes-Benz issues first green asset-backed security

German firm Mercedes-Benz has raised CNY765 million ($105 million) from its first green asset-backed security (ABS), which is also believed to be the first instrument of this type from an overseas carmaker in the Chinese market. The Class A Notes have a size of RMB765 million (€100 million), with an oversubscription of three times, a weighted average life of 1.42 years and a coupon rate of 1.87%.

ArcLight launches North America-focused renewables investment platform

ArcLight, a leading infrastructure investment firm focused on investing in energy and related infrastructure, has launched a renewables investment initiative ‘SkyVest Renewables’, which will target investments and the operation of utility-scale wind and solar assets in North America. ArcLight has provided an initial $500m capital commitment for new investments and brownfield developments.

Candriam launches Article 9 water fund

Global multi-specialist asset manager Candriam has announced the launch of a new Sustainable Equity Water Fund, aimed at tackling the global water crisis. The Sustainable Finance Disclosure Regulation (SFDR) Article 9 fund aims to address the escalating global water challenge by investing in companies that provide solutions to treat, transport, distribute and valorise water as well as companies that, through their own processes in high water use sectors, lead the reduction in water intensity.

NBIM buys £330m stake in wind farm from Macquarie fund

Norges Bank Investment Management (NBIM), the investment division of Norway's central bank, has secured a 37.5% share in the 573MW Race Bank offshore wind farm, located off England's east coast, in a transaction valued at £330 million. The deal was struck with Macquarie Asset Management and Spring Infrastructure Capital.  Situated approximately 27 kilometres from the Norfolk coastline, the wind farm features 91 turbines, each with a 6.3MW capacity. Collectively, they produce sufficient electricity to power 510,000 UK households annually.

Swen secures €100m for third debt fund

SWEN Mezz Flex 3, a mezzanine debt fund managed by independent investment manager SWEN Capital Partners, has hit the €100 million fundraising mark. The fund aims to support the growth of small and midcap firms in France and Europe through a hybrid approach of mezzanine and equity financing. To date, the fund has made eight investments totalling €50 million, indicative of its target size. The fund focuses on investing in sectors like future production and services, well-being and health, and technology. Notable investments include Afitexinov, Eklo, and the Redpill group. The fund also emphasises ESG criteria and is classified as Article 8 under the SFDR.

Eurazeo launches €750m for Planetary Boundaries impact fund

Eurazeo has launched a thematic impact buyout fund investing in small-to-mid market European companies, with a target size of €750 million ($814 million). The Eurazeo Planetary Boundaries Fund will invest in agriculture and food, waste packaging, water management, low-carbon energy and transport services. It will source opportunities along two main impact themes – boosting the regenerative and circular economy, and championing solutions for the transition and adaptation – which ‘reverse or adapt to the overstepping of the Planetary Boundaries’.

Redwheel acquires £1.1bn sustainable investor Ecofin

Asset manager Redwheel has moved to expand into the US with the buyout of sustainable asset manager Ecofin for an undisclosed price. Ecofin, which currently has $1.4bn (£1.1bn) in assets under management, mainly invests in companies focused on electrification, decarbonisation, and sustainable infrastructure. While the company has several UK funds and two London-listed investment trusts, the majority of its clients are in North America., with Redwheel chief executive Tord Stallvik saying that the deal would “deepen our presence in the US”.

Eurzaeo announces close of its first transition infrastructure program at over €700 million, exceeding initial target by 40%

Investment management firm Eurazeo announced that its inaugural transition infrastructure program raised €706 million (USD$770 million) in commitments at its final close, beating the strategy’s initial €500 million target by more than 40%, and only 20 months after first closing. The commitments include €663 million for the Eurazeo Transition Infrastructure Fund (ETIF), classified as Article 9 under the SFDR regulation, and focused on transitioning essential services that are delivered by infrastructure to a low carbon economy. The fund invests in transition assets across the energy, digital, clean transport, and environmental sectors.

Nuveen’s new climate-strategy fund closes with $200 million commitment

Nuveen, the $1.2 trillion global asset manager, has closed on its second global climate inclusion private equity strategy, reeling in $200 million from a mix of global investors, including Danish pension fund Velliv. Nuveen said that its second climate inclusion strategy will build on the firm’s first private equity impact strategy of “aiming to generate strong financial returns and address two of the greatest sustainable development challenges: climate change and inequality.”

Brookfield in talks to buy France’s Neoen for €6.1bn

Brookfield has reached an agreement to take a majority stake in French renewable energy developer Neoen and take the company private, in a deal that values the company at €6.1 billion ($6.6 billion).

Neoen operates an 8,000MW portfolio of wind, solar and storage assets, with a 20,000MW pipeline of development projects spanning Australia, France and the Nordics. Brookfield is to acquire a 53.32% shareholding through its flagship energy transition fund, Brookfield Global Transition Fund II, via a specialised vehicle – Brookfield Renewable Holding, with the backing of Singapore’s Temasek.

BlackRock forms a partnership to boost solar energy in Taiwan

BlackRock and Google have announced a significant partnership to advance solar energy in Taiwan. 

This collaboration involves a capital investment in New Green Power (NGP), a Taiwanese solar developer and BlackRock portfolio company. The aim is to develop a 1GW solar pipeline, accelerating the clean energy transition in Taiwan and the wider Asia-Pacific (APAC) region. According to the Taiwan Ministry of Economic Affairs, Taiwan, which currently generates nearly 85% of its electricity using fossil fuels, is targeting 20 GW of solar capacity by 2025, and 80 GW by 2050, in order to achieve its net zero goals.

BlackRock Launches Decarbonization Voting and Engagement Policy for Climate-Focused Funds

Investment giant BlackRock unveiled its new “Climate and Decarbonization Stewardship Guidelines,” setting out separate engagement and voting policies for investors specifically focused on the low carbon transition. The launch of the new policy may help BlackRock to navigate the complex pressures asset managers face, to meet growing demand to account for climate-related risk and opportunities in clients’ investment portfolios, while ensuring that their focus as a fiduciary remains on financial outcomes.

Indosuez Funds launches €70m Article 9 green bond fund

Indosuez Wealth Management has announced the launch of Indosuez Funds – Chronos Green Bonds 2028, writing that this is the first SFDR bond fund in the Indosuez range to be classified as Article 9.

The firm says that the fund makes it possible to invest in green bonds in companies that are running projects having a positive impact on the environment (e.g. renewable energy, green buildings, clean transport).

Against a backdrop of a booming green bond market, the firm writes that the Indosuez Funds – Chronos Green Bonds 2028 offers an attractive and responsible investment opportunity.

ESMA sets out its long-term vision on the functioning of the Sustainable Finance Framework

The EU’s financial markets regulator and supervisor, ESMA, has published its opinion on the Sustainable Finance Regulatory Framework, with a range of recommendations to improve the safeguards for greenwashing and investors’ access to sustainability products. Key recommendations include minimum basic sustainability information for all financial products, the use of EU Taxonomy as the sole and common reference point for the assessment of sustainability, and inclusion of transition investments into the framework.

Investors Increasing Focus on Climate Solutions and Transition Strategies: Robeco Survey

Investors are shifting the focus of their climate investing strategies, with the majority looking to allocate funds to climate solutions and to strategies focused on ‘brown-to-green’ companies transitioning to lower emissions, according to a new survey released by international asset manager Robeco. The survey also found growing regional disparities in attitudes towards climate change, with North American investor interest lagging increasingly far behind their European and Asia Pacific peers.

IBM and JLL Collaborate on ESG Reporting and Data Management Solution for Commercial Properties

Tech giant IBM and real estate investor JLL announced a sustainability solution powered by IBM Envizi technology and delivered by JLL's sustainability services team, available globally. JLL's Sustainability Program Management, which provides sustainability services, such as decarbonization strategies to the commercial real estate (CRE) sector, will now be underpinned by ESG reporting and data management software in the form of the IBM Envizi ESG Suite.

CA100+ loses support from two more US asset managers

US-based AllianceBernstein and Allspring have become the latest asset managers to quit the Climate Action 100+. JP Morgan Asset Management, PIMCO, State Street and Invesco walked away from the initiative earlier this year, which sees investors collectively engage the world’s largest and most significant corporate greenhouse gas emitters.

ShareAction calls for stronger asset manager approach to fossil fuels

Asset managers must take a more robust approach to fossil fuel-producing companies, according to a new paper from ShareAction, as current policies could harm the transition to a lower-carbon economy. A review of 25 of the largest global asset managers by the pressure group found that, while most apply some form of fossil fuel-related investment restrictions, these are mostly limited to coal or unconventional oil and gas and mainly within their labelled funds.

ICMA, LMA release 'sustainability-linked loan bond' guidance

Two debt industry bodies have jointly published guidance for the issuance of bonds dedicated to financing sustainability-linked loans (SLLs) to develop a new sustainable finance product and support the credibility of the performance-based lending instrument. The International Capital Market Association (ICMA)-administered Principles and Loan Market Association (LMA) developed the 'Guidelines for Sustainability-Linked Loans financing Bonds'.

Clean Energy Transaction Platform LevelTen Raises $65 Million to Expand into New Markets

Renewable transaction infrastructure provider LevelTen Energy, the leading provider of transaction infrastructure for the energy transition, announced that it has secured approximately $65 million in a Series D funding round, with proceeds aimed at building out the company’s platform and expanding its geographic and market reach.

Bloomberg Introduces Sustainability Tools into its Portfolio and Risk Analytics Solutions for Investors

Business and financial markets information service provider Bloomberg announced the release of new tools to help investors measure, manage and report on the sustainability characteristics of investment portfolios. The tools are accessible within Bloomberg’s widely-used portfolio and risk analytics solutions, PORT, which is available to all Terminal users, and the premium offering PORT Enterprise, for those seeking an integrated enterprise reporting solution.

Infrastructure Investor Forum (PEI) (11 September 2024, London)

The Infrastructure Investor Forum 2024 gathers over 300 global infrastructure leaders. Key themes include energy transition, digital infrastructure, and investment strategies. Attendees will engage in networking, panels, and discussions to shape the future of infrastructure investments. Sustainability will be a central theme for panels and keynote speeches throughout the day. Click here for additional details of the event and to register.

Oxford Sustainable Private Markets Conference 2024 (16 September 2024, Oxford)

The overarching goal is to reimagine private markets to achieve fair return on invested capital, but also serve the greater public interest as well as the stakeholders of private markets by looking beyond the portfolio companies and examining the net effect and impact on larger public interest considerations. The event provides a unique opportunity to bring multi-disciplinary experts, academics and practitioners together to exchange their experience and their research in building tomorrow’s financial markets. The conference will include policy makers, investors and representatives of corporations, academics, researchers, foundations and more. Click here for additional details of the event and to register.

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
• Javier Patria, Associate, Climate and ESG Capital Markets
• Fazl Ahmad, Analyst, Private Finance Structuring and ESG

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