• Despite the onset of summer in the northern hemisphere, global sustainable lending volumes remained robust with $47.6bn of financing confirmed for the month of July.
• Despite July volumes being marginally lower than July 2021, this hasn’t stopped the proliferation of sustainable lending with 15.4% of transactions incorporating sustainability features in the month of July 2022 compared with 11.0% in July 2021.
• As the global economy decarbonises and moves towards a net-zero future, real assets such as infrastructure and real estate will play a pivotal role in determining whether we are successful in meeting those ambitions. It’s no surprise, therefore, to see the uptake of sustainable lending across all of the key real asset sub-sectors with the Utility & Energy sector seeing the greatest uptake (22%).
• Interestingly, across the top 10 sustainable lending markets by volume, the real asset sub-sectors driving sustainable lending activity, differs quite considerably. In both the US and Hong Kong, Real Estate/Property is a significant contributor to growth whilst in Spain, telcos are a major driver. Equally, we see that over 90% of sustainable lending activity in Australia is attributable to real assets whilst in France, the contribution is only 16%.

Global Sustainable Syndicated Lending $Billion: July 2022 Year-to-Date (YTD)

Global Sustainable Lending across Real Asset Sub-Sectors (% in Sub-Sector)

Sustainable Lending Activity across Real Asset Sub-Sectors: Top 10 Sustainable Lending Markets (% of Lending in Country)

• French investment manager RedTree Capital signed a €200m green facility to finance the acquisition and refurbishment of an office building near Paris. The proceeds will be used to invest in smart buildings and building operating systems as part of the refurbishment process.
• PGIM Real Estate closed on $295m in green financing on behalf of its flagship core real estate fund in the US. The green proceeds of the facility are linked to PGIM’s acquisition of West Edge (39-storey Leadership in Energy and Environmental Design (LEED) programme-certified luxury apartment tower located in Seattle).
• BYD Dynasty 2022-3, an auto Asset-Backed Security (ABS), launched in July 2022. The issued notes pay a fixed rate and are backed by a static pool of electric vehicle loan receivables.
• Cathay Pacific secured the first sustainability-linked Japanese Operating Lease with Call Option (JOLCO) in Asia Pacific, with targets focused on the proportion of new generation aircraft in the fleet and the increased usage of Sustainable Aviation Fuel in the carrier’s fuel consumption.

We analysed 24 major investment managers in the UK, USA, Germany, France, Sweden, Australia and Jersey, who are active across all private assets i.e. private equity; private debt; infrastructure.

Investment managers included within the analysis vary in size with Asset Under Management (AuM) ranging from $0.2bn to $880.9bn with an average AuM of $170.6bn.

Key Findings

A) Initiatives & Commitments

The majority of investment managers included within the sample pool have signed-up to the Principles of Responsible Investing (PRI), which highlights the pre-eminence that the UN PRI holds within the investment industry. However, managers are also signing-up to other initiatives in an effort to further differentiate their sustainability ambitions vs peers.

B) ESG Integration Practices
 

Around 80% of managers analysed have a responsible investment policy in place in addition to 50% of the managers implementing exclusionary policies. More sophisticated methodologies such as climate scenario analysis are also beginning to be utilised by alternative managers (46%).

C) ESG Reporting Practices

Whilst most managers published an ESG report, only four have linked remuneration to ESG objectives and taxonomy-related disclosures are not adopted by the majority of managers.

D) Average number of Key Performance Indicators (KPIs) reported by region

We observed significant divergence between regions with regards to topics covered by quantitative disclosures. European managers consistently reporting significantly more climate-oriented KPIs in light of Sustainable Finance Disclosure Regulation (SFDR) whilst US-based firms have led the way with regards to the disclosure of social KPIs where diversity features prominently.

BlackRock makes $700 million investment in Australian battery storage

• A fund under the management of BlackRock Real Assets is set to acquire Akaysha Energy, an Australian firm that develops battery storage and renewable energy projects. BlackRock said it intended to commit in excess of AUS$1 billion (around $700 million) of capital “to support the build-out” of more than 1 gigawatt of battery storage assets.
• The acquisition is the first battery storage investment made by BlackRock’s Climate Infrastructure business in the Asia-Pacific region
• Looking ahead, BlackRock said Akaysha had plans to develop energy storage projects in a range of Asia-Pacific markets, including Japan and Taiwan. Akaysha Energy’s six other projects under development have not yet been made public. It also plans to add green hydrogen assets to its portfolio.
• Find out more about BlackRock’s investment in Australian battery storage: cnbc.com; pv-magazine.com

HSBC, Temasek launch sustainable infrastructure financing company

• HSBC and Singapore-based investment company Temasek announced today the launch of Pentagreen Capital, a new debt financing platform focused on accelerating the development of sustainable infrastructure in Asia. The new company is being launched with $150 million of capital provided by founding shareholders HSBC / Temasek and aims to deploy $1 billion in loans within five years.
• According to the founding partners, the new platform aims to help bridge the funding gap for sustainable infrastructure needed to address the challenges and opportunities presented by climate change. Pentagreen intends to remove the barriers to capital for marginally bankable and innovative sustainable infrastructure projects through active collaboration, providing technical assistance and project advisory services, and the deployment of blended finance at scale.
• Learn more about the launch of Pentagreen Capital here

Swiss Life Asset Managers launches second renewable energy fund

• Swiss Life Asset Managers has added a second renewable energy infrastructure fund. The Fontavis ESG Renewable Infrastructure Fund II will invest in unlisted clean energy and infrastructure assets and companies.
• The fund will offer a globally diversified portfolio of direct infrastructure energy investments. The new fund follows Swiss Life Asset  Managers’ first dedicated international renewable energy fund, Fontavis ESG Renewable Infrastructure Fund Europe. Fontavis ESG Renewable Infrastructure Fund II will be classified as an Article 8 fund under the Sustainable Finance Disclosure Regulation (SFDR).
• Find out more about Swiss Life Asset Managers second renewable energy fund

Octopus Energy Group completes fundraise with existing investors, totalling US$550m

• Octopus Energy Group closes its recent funding round, securing US$325m from its existing shareholders on terms agreed during the fundraising round in December 2021. Octopus Energy Group’s investors have further backed the company’s global expansion and renewables strategy, with all of them meeting or exceeding commitments made last year.
• The company plans to use the money to further improve its energy technology platform, Kraken, and invest in products and solutions that can help solve the energy crisis and drive renewables at scale.
• Learn more about Octopus Energy Group’s recent fundraise

Renewable energy investor Low Carbon signs £230 million facility to back Solar PV development

• Renewable energy investment and asset management company Low Carbon announced this month that it has reached financial close on a new £230 million senior debt facility with commercial banks NatWest, Lloyds Bank and AIB, with a further £200 million expected to follow.
• The financing will enable the construction of large-scale solar photovoltaic (PV) projects in the UK and the Netherlands, supporting at least 1GW of capacity. The company anticipates immediately deploying the initial £230 million to support the construction of 500MW of new solar PV capacity across 17 assets in the Netherlands and the UK.
• The facility also includes an accordion feature, which gives the ability to raise an additional £200 million, to facilitate an additional 500MW of solar PV capacity. According to the company, at 1GW, the projects could provide clean energy sufficient to power more than 360,000 homes and avoid 308,000 tonnes of CO2.
• Find out how Low Carbon are backing Solar PV development

BlackRock’s eFront partners with Clarity AI on ESG Data for private market investors

ESG analytics and data science platform Clarity AI announced this month a new partnership with BlackRock’s alternative investment management platform eFront, enabling private market investors to generate quantitative sustainability assessments of their alternative investment portfolios. According to the companies, the partnership aims to “help solve the gap of sustainability metrics outside publicly listed companies,” and promote communication across Limited Partners (LP), General Partners (GP) and portfolio companies. Find out more about Clarity AI’s partnership with BlackRock’s eFront

pulsESG and private equity firm Clayton, Dubilier & Rice collaborate on ESG measurement and reporting for portfolio companies

ESG measurement platform pulsESGTM announced today a new pilot programme with private investment firm Clayton, Dubilier & Rice (CD&R), focused on advancing ESG measurement and reporting for portfolio companies. The collaboration aims to enable portfolio companies to progress towards their ESG goals, while allowing validation and benchmarking by management and stakeholders. pulsESG  is a pioneering “software as a service” (SaaS) platform offering enterprises a centralised system of record and reference for ESG metrics. Learn more about the collaboration here: esgtoday.com; venturebeat.com

Robeco opens up access to Sustainable Investing Intellectual Property (IP)

International asset manager Robeco announced today a new programme to open up access to its sustainable investing intellectual property with the launch of its Sustainable Investing Open Access Initiative. As a first step in the new initiative, Robeco stated that it will provide clients and a group of academics with free access to its proprietary Sustainable Development Goal (SDG) company scores. Robeco said that it intends to open up other sustainable investing data and IP available to a broader set of stakeholders at a later stage of the initiative. Find out more about what Robeco opening up access to their IP means

Partners Group acquires stake in VelocityEHS from CVC

Global private markets investor Partners Group announced an agreement to acquire a significant minority stake in Environment, Health, and Safety (EHS) and ESG software platform VelocityEHS from CVC Capital Partners’ CVC Growth Fund. Earlier this year, the company launched VelocityEHS ESG Solution, its new platform streamlining data collection and reporting to help businesses plan, build and optimise their ESG programmes and develop sustainable business strategies. Learn more about Partners Group’s recent acquisition

diginex launches “Worker Voice” supply chain transparency platform

Sustainability-focused data solutions company diginex announced the launch of diginexAPPRISE, a new supply chain transparency platform, aimed at enabling companies to hear directly from workers in the supply chain, in order to improve working conditions and protect workers’ rights. Find out more about how diginex is supporting supply chain transparency

NatWest – Paris ESG Day (Friday 16 September, 8:45am-2:00pm CET. Centre Étoile Saint Honoré, 21 Rue Balzac, 75008, Paris):

• Roundtables with ESG Workshops.
• Workshop topics:

Green portfolios: green asset ratio, financed emissions (including scope 3 considerations);

Energy security: including consideration over energy mix; inclusion of nuclear and gas; impact on emission plans; social taxonomy and its implications; 

Environmental risk: Taskforce on Nature-related Financial Disclosures (TNFD) and the role of Natural Capital/Biodiversity);

Carbon market: use of carbon credits, market outlook.

• Please reach out to the NatWest team (contacts below) for further details and the invitation.

Assessing Supply Chains and ESG Risk (7 September, 4:00pm BST)

• Presented by Wellhouse Consulting, hear from ESG leaders about the role of finance in transforming supply chain management across industries and learn how to manage supply chain risks in your portfolio. 
• Join this session to explore: The importance of incorporating supply chains into ESG valuations, how supply chain risks differ according to sector, the factors to consider when evaluating companies’ supply chains, engagement strategies, understanding and mitigating ESG risks in portfolio companies’ supply chains, how to educate investee companies on ESG supply chain best practices, and more.
• Additional details of the Assessing Supply Chains and ESG Risk event and a link to register

FT’s 2022 Moral Money Summit Asia

• Accelerating ESG Integration to Unlock Value and Drive Progress (Day 1, 7 September, 8:00am (Digital & In-person) – Day 2, 8 September, 5:00pm (Digital) The Westin, Singapore (what time zone? SGT?)
• This year’s Moral Money Summit Asia, featuring one day in-person in Singapore, and one day online, will analyse what to expect from Asia’s burgeoning ESG market, and how to unlock its potential. 
• Additional details of FT’s 2022 Moral Money Summit and a link to register

Integrating Circular Economy Concepts into the Investment Process (13 September, 3:00pm BST)

• Presented by Responsible Investor in partnership with ISS ESG, in this session the panel of ESG experts will explore key circular economy concepts and principles and how investment professionals can consider circularity in their investment decision-making process.
• The panel will also provide concrete examples of how investors can incorporate circularity in company-level ESG analysis across different industries.
• Additional details of the session and a link to register

Private Equity International | Responsible Investment Forum 2022, (14-15September, San Francisco, CA)

• The Responsible Investment Forum brings together the most sophisticated institutional investors, fund managers, consultants and highly recognised associations to discuss effective ESG strategies that balance the world’s sustainability with enhanced returns on investments.
• Example topics and issues to be discussed: enhancing your ESG programme; next steps in ESG reporting; data integration; ESG in private debt; avoiding greenwashing; and human rights.
• Additional details of the Private Equity International forum and a link to register

UNEPFI Global Roundtable (10-14 October, virtual event)

• The United Nations Environment Programme Finance Initiatives (UNEP FI’s) Global Roundtable (GRT) is a major global agenda-setting event on sustainable finance. Held under the theme of “Transforming Finance, Accelerating Change”, the GRT will bring together experts and thought leaders on a virtual event platform to help shape approaches to integrating ESG issues and accelerating sustainable banking, insurance and investment.
• This year's stellar line-up of speakers includes: Al Gore, Former US Vice-President and Founding Partner and Chairman of Generation Investment Management; Mark Carney (UN Special Envoy on Climate Action and Finance); Christiana Figueres (Founder, Global Optimism); Ravi Menon (Managing Director, Monetary Authority of Singapore & Chair of NGFS); Elizabeth Mrema (Executive Secretary, Convention on Biological Diversity); Oliver Bäte (CEO, Allianz; Emmanuel Faber, Chair, International Sustainability Standards Board); Diony Lebot (Deputy CEO, Societe Generale).
• Additional details of the UNEPFI Global Roundtable and a link to register

Reuters ESG Investment North America 2022: Clarity. Materiality. Impact. Leading the global economy in the green transition (1-2 November, Marriott Brooklyn Bridge, New York)

• In person event featuring 300+ CEOs and senior executives from the entire ESG ecosystem to deliver shareholder, climate, and socially-conscious investment strategies across public and private markets, that will chart the course for the future of the industry.
• Additional details of Reuters ESG Investment North America event and a link to register

Reuters ESG Investment Europe 2022: Minimize Risk. Maximize Returns. Mobilize ESG. (22-23 November; Leonardo Royal - London)

• More than 300 senior decision-makers from all corners of the ESG investment ecosystem will be brought together.
• Focus will be on delivering practical solutions to industry-wide challenges holding the financial community back from full ESG integration capable of delivering low-risk, high-return, and purpose-driven investment strategy.  
• Additional details of Reuters ESG Investment Europe 2022 event and a link 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
• 📧 Tom Cascales, Associate, Climate and ESG Capital Markets
• 📧 Vishal Saxena, CFA, Associate, Climate and ESG Capital Markets

Thank you to Grisham Bhatia for the helpful research assistance.

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