S&P Global Ratings speaks to Environment Analyst on its growing ESG focus and the impact of COVID-19 on sustainable investment

As S&P Global Ratings expands its London-based specialist Sustainable Finance team to incorporate ESG and climate risk, Michael Wilkins, Global Head of Analytics & Research, Sustainable Finance, and Paul Munday, Associate Director, Climate Adaptation and Resilience Expert, speak to Environment Analyst on the team’s new mandate, and how COVID-19 is impacting the ESG space.

While broadening the scope and scale of its ESG Evaluation, S&P Global Ratings’ Sustainable Finance team has also been building a team of experts in their respective fields. For instance, the latest addition to the team, Paul Munday, joined early 2020 to provide technical expertise on adaptation and resilience. Munday’s key role is to mainstream climate risks into the agency’s existing products, projects and programmes, as well as support external engagements and thought leadership.

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S&P Global Ratings’ Michael Wilkins explores the green potential for telecom bonds in Aldersgate Group’s blog

As investors and corporations alike begin to see the financial benefits of managing their environmental exposure, some unlikely sectors are beginning to engage in green finance.

With three major telecom companies – Verizon, Telefonica, and Vodafone – issuing green bonds in 2019, Michael Wilkins, Global Head of Analytics & Research, Sustainable Finance, S&P Global Ratings, considers the environmental contribution of these bonds in an article for Aldersgate Group.

While the emissions-heavy telecom sector could well benefit from green bonds as a means to invest in modernising its infrastructure and technology to reduce emissions, says Wilkins, investors have expressed concerns that these issuances may be opportunistically seeking a green label to fund projects that may lack positive environmental contribution.

Read the full article here.

S&P Global Ratings’ Noemie de la Gorce talks to Investments & Pensions Europe on the rise of new sustainable investment vehicles

Sustainability is increasingly becoming a priority, for investors and companies alike. With the rise in financing options available on the capital markets to fund environmental, social, and governance (ESG)-supportive growth, corporates around the world have access to a broader toolbox than ever before to align with Sustainable Development Goals.

Speaking to Investments & Pensions Europe (IPE), Noemie de la Gorce, associate director, sustainable finance at S&P Global Ratings says that new instruments – such as sustainability-linked bonds – can help investors “diversify their contribution to sustainability objectives.”

While tied to different incentive mechanisms, some investors may see these instruments as having the potential to be stronger drivers of change than green bonds – since vehicles like sustainability-linked bonds can give companies financial incentives to advance their sustainability agenda, by linking the cost of funding to specific sustainability objectives.

“Some investors see sustainability-linked bonds as more powerful than green bonds in embedding sustainability into a company’s strategy, because the environmental and social objectives apply to the whole company, instead of a specific transaction,” says de la Gorce.

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S&P Global Ratings outlines potential credit risk for GCC posed by the energy transition, covered by specialist press

A lack of economic diversification, coupled with a sometimes-lower availability of external funding sources, means that a decreased oil and gas prices and shifting investor appetite could contribute to deteriorated creditworthiness for some GCC banks. That’s according to S&P Global Ratings, in its recent report mini-series exploring the credit risks that the transition towards cleaner energy sources could have on the GCC’s banks and overall economy.

While GCC economies have somewhat diversified away from oil since 2012, S&P Global Ratings’ hypothetical long-run stress test suggests that the average rating of a Gulf sovereign could fall by two notches from ‘BBB+’ to ‘BBB-’ if oil prices fall below US$40 by 2040, highlighting that the current pace of economic and fiscal diversification is insufficient to counter the decline in oil prices.

Following outreach by Moorgate-Finn, the research was covered by Trade Arabia, ZAWYA, AMEInfo, and The Peninsula Qatar.

S&P Global Ratings’ sustainable debt forecast covered by the specialist press

Driven by an expansion of the pool of financing options for investors, the sustainable debt market will likely surpass US$400 billion in 2020, said S&P Global Ratings in the latest edition of its annual sustainable debt outlook.

According to the outlook, the strengthening of key market trends such as rising absolute global fixed-income issuance and private financing, as well as the regulatory and political push in Europe, will likely push green-labelled bond issuance to US$300 billion in 2020. Meanwhile, as investors continue to explore ways to contribute to sustainability objectives, the market will continue to diversify and innovate, with more nascent sustainable financing instruments complementing the continued expansion of the green bond market.

Following outreach by Moorgate-Finn, the report was covered by Financier Worldwide, Markets Media, Environmental Finance, ImpactAlpha and International Financing Review.

Nuclear power is “dead and alive” says S&P Global Ratings, covered by the specialist press

A recent report by S&P Global Ratings has concluded that growing competition from cheap renewable electricity, safety concerns, and rising costs of new plants are slowly undermining the viability of nuclear power.

“We see little economic rationale for new nuclear builds in the U.S. or Western Europe, owing to massive cost escalations and renewables cost-competitiveness, which should lead to a material decline in nuclear generation by 2040,” said Elena Anankina, the report’s author.

Despite these challenges, however, nuclear still has its role to play in the energy mix – largely due to the continual development of new nuclear capacity in Russia and China, supported by energy policies and significantly lower construction costs. Moreover, with regions such as Europe installing more intermittent sources, nuclear is playing a crucial role in ensuring grid stability.

Following outreach by Moorgate, news of the report was covered by Republic World, Stockhead here and here, NucNet, IREI, Euractiv, ESI Africa, Power Engineering International, and World Nuclear News.

Adani Green Energy’s proposed US$362.5 million green bonds score E1/90 in S&P Global Ratings’ Green Evaluation, covered by specialist press

S&P Global Ratings scored Adani Green Energy Ltd. Restricted Group 2 (AGEL RG2)’s proposed US$362.5 million green bonds E1/90 under its Green Evaluation – the highest score on the Green Evaluation scale of E1-E4, comprising a Mitigation score of 90, a Transparency score of 89, and a Governance score of 93.

The bonds will be used to finance and refinance solar photovoltaic (PV) power plants and related transmission infrastructure in Karnataka and Rajasthan, India.

“AGEL RG2’s intention to use 100% of the proceeds for solar PV power projects is the main driver of the high score,” said Cheng Jia Ong, the primary analyst of the Green Evaluation.

Following Moorgate’s outreach, news of the Green Evaluation was covered by Renewables Now and PV-Magazine.

 

S&P Global Ratings’ Michael Wilkins discusses the future for green project bonds on TXF Proximo’s latest podcast

Green bonds have proliferated since the first green debt instrument was introduced in 2007, with banks and corporate bond issuers leading the pack. However, project bond and emerging market issuers have been more hesitant.

Speaking on TXF Proximo’s podcast, “Transmissions”, Michael Wilkins, Global Head of Analytics and Research, Sustainable Finance, S&P Global Ratings, argues that this may not be the case for much longer.

“Because there is interest among investors to benchmark according to environmental contribution as well as credit quality, there may be opportunity for green project bonds in emerging markets to grow,” said Wilkins.

Meanwhile, he believes that green project bonds may well see a surge in market interest if the high level of environmental contribution that S&P Global Ratings generally sees from the asset class is made explicit in offering circulars.

To listen to the podcast, please click here.

S&P Global Ratings publishes first Green Evaluation in Canada, covered by the specialist press

S&P Global Ratings recently scored a proposed C$750 million issuance from public-private partnership (PPP) Mobilinx Hurontario General Partnership E1/87 under its Green Evaluation.

The E1/87 score represents the highest on the Green Evaluation E1-E4 scale, and comprises a Governance score of 83, Transparency score of 77, and a Mitigation score of 91.

As well as being the first Green Evaluation in Canada, the score also marks S&P Global Ratings’ first Green Evaluation on a PPP.

Proceeds will be used to design, build, finance, operate, maintain and rehabilitate the Hurontario Light Rail Transit (LRT) project in Ontario, Canada.

Following outreach by Moorgate, the Green Evaluation was covered by: IJGlobal, Proximo, and InfraNews.

S&P Global Ratings’ Michael Wilkins considers the EU green taxonomy for Responsible Investor

 

According to S&P Global Ratings, the development of the EU’s proposed green finance taxonomy is one of the most important developments in the world of sustainable finance in recent years.

However, as with any major change, questions surrounding the implications for the capital markets abound. In an article for Responsible Investor, Michael Wilkins, Global Head of Analytics and Research, Sustainable Finance, S&P Global Ratings, considers the “pain points” that the taxonomy will have to overcome if it is to be successfully implemented and effectively drive capital towards sustainable objectives.

Namely, according to Wilkins, defining what can and cannot be defined as a sustainable economic activity should be the main focus of the taxonomy’s development, if it hopes to effectively engage the broader market.

To read the full article, please click here.