GSS/S issuance was steady in October across all three labels (-13% compared to 2022). Green GSS/S issuance (c. $171) represents 50% of GSS/S issuance in 2023 year-to-date (YTD), with a slight lead relative to social and sustainable issuance (20% and 27% respectively). GSS/S issuance in the SSA space is led by Agencies / Local Authorities (42%) followed by Supranationals (27%) and Sovereigns (33%).

SSA GSS/S Supply 2022-2023 YTD

• Sovereign: YTD GSS issuance is $65bn, largely consisting of green bonds, but we have seen a pickup in Sustainability-Linked Bond (SLB) issuance with Chile.
• Supranationals: YTD GSS issuance is $93bn, led by sustainable bonds (61%) followed by green (29%) with social issuance lagging (10%).
  
• Agencies / Local Authorities: YTD GSS issuance is $189bn, led by green bonds (46%) followed by social (32%) with sustainable issuance lagging (25%).
  

No SSA GSS/S private placements were observed in October (BBG data). In November, the following major ESG events and conferences will occur:

The UN Climate Change Conference (United Nations Framework Convention on Climate Change (UNFCCC) COP 28) will take place in Dubai from November 30th to December 12th. The annual conference brings togethers world leaders, ministers, and negotiators to discuss climate change issues. The event will kick off with a World Climate Action Summit, which will convene heads of state and government alongside civil society leaders. This will be followed by conferences focused on various themes. The final negotiations are scheduled for December 11th and 12th.

• Brazil is escalating their focus on sustainability as they recently mandated that all public companies in the nation will be required to provide annual sustainability and climate-related disclosures, starting in 2026. 
• Scotland has announced an intention to raise funds through capital markets fo the first time by 2026. The First Minister announced that bonds will be issued to fund infrastructure projects like affordable housing. They have chosen this timeline as it takes place before the re-election of the devolved parliament. 
• Mamoura, a subsidiary of the Abu Dhabi Sovereign fund, sold their debut dollar-denominated green bond. Many cited this as an interesting test for international investor appetite for the first MENA non-Islamic bond since geopolitical escalations. Despite this, the bond saw strong demand with 9.1x oversubscription and sends a strong signal ahead of COP28 in the UAE later this year. 
• New York State has made the largest State investment into renewable energy, creating facilities to provide 6.4GW of power which would be able to supply 2.6m homes.

• The European Investment Bank (EIB) has invested €150 million in an inaugural €600 million green bond issued by Valeo. The institution is selectively assessing a number of further investment opportunities in the primary green bond markets throughout the EU.
• BlackRock has launched the Climate Transition-Oriented Private Debt Fund, which is said to be worth more than $100 billion. The fund will be managed by private debt investors, together with sustainability and transition investing specialists. This addresses Larry Fink’s concern of high-emitting assets divested by public firms getting investment by the private market.
• Japanese pension funds, managing around 90 trillion yen (equivalent to $600 billion), will join a global initiative for responsible investments. This was announced in the “PRI in Person” (principles for responsible investment) forum by Prime Minister Kishida, who is taking leadership to spearhead the transition towards a sustainable future in Japan.
• The Schroders Institutional investor study report has outlined the willingness of institutional investors to seek new opportunities in sustainable investing. 39% of investors are seeking to proactively allocate private investments into the energy transition theme. Moreover, the majority of investors are focused on thematic exposures and impact of their investments, implying the more nuanced approach to sustainable investing compared to the past.

• The EU Green Bond standard has officially been approved by the EU Parliament as a voluntary standard for issuers who wish to use the designation ‘European green bond’ for the marketing of their bonds. This adoption will bring further transparency to investors who want to direct money towards sustainable technologies and businesses.
• International Capital Market Association (ICMA) has released a paper presenting their analysis on greenwashing, following the call for evidence by the European Supervisory Authorities on this matter. Among many other points, they have noted that (1) exhaustive definition of greenwashing can risk market paralysis, (2) greenwashing-related issues have been on the decline for sustainable instruments, (3) areas of concern still exist for sustainable bonds and funds, and (4) regulators must focus on relevant actionable areas.
• The EU Commission announced its plans to postpone the adoption date for sector-specific European Sustainability Reporting Standards (ESRS) by two years. Furthermore, the Commission also proposed the postponement of ESRS adoption by two years for large non-EU companies that operate in the EU. This was done to ensure that companies have enough time to implement the first set of ESRS, as well allowing enough time to develop sectoral ESRS that are efficient.
• The Transition Plan Taskforce (TPT) has disclosed a new ‘gold standard’ disclosure framework, which provides the basis for companies to set and outline effective climate transition plans as part of annual reporting. This Framework aims to maintain consistency among company reports and reduce the level of complexity faced by firms during disclosure.

• MSCI announced its purchase agreement to acquire Trove Research, a renowned source of carbon markets. The ratings agency has emphasised the rapid development of voluntary carbon market, and the subsequent demand for robust, clear and effective decision-making tools.
• EU lawmakers have drafted a proposal to require the usage of ESG ratings from small ratings providers (market share below 5%) when using more than one dataset. The proposal aims to stimulate competition among ESG rating providers, amidst concerns over data integrity, conflict of interests and transparency highlighted by the European Securities and Markets Authority (ESMA).

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

• Manmeet Baryah, Analyst, Climate and ESG Capital Market
  
• Tonia Plakhotniuk, Vice President, Climate and ESG Capital Markets

For further analysis and information on the Primary and Secondary Markets, as well as detail of the latest SSA GSS/S private placements, 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.