Apple to launch euro-denominated Green Bonds

The US tech company Apple (AAPL) launched last week two euro-denominated Green Bonds with maturities of 6 and 12 years. According to the company the aim of the new Green Bonds is to foster energy efficiency in the company supply chain and products and cut carbon emissions. Total amount is 2 billion euros.

The company has three environmental priorities in its framework which the bonds are targeted also:

  1. Climate change: Mitigate the company impact on climate change by reducing the comprehensive carbon footprint.
  2. Smarter Chemistry: Pioneer the use of greener materials in the company products and processes.
  3. Resources: Conserve Earth’s resources by transitioning to recycled and renewable materials in the products, and by minimizing water and waste in the company operations and throughout the product lifecycle.

Apple said also that it intends to list the bonds in the Nasdaq Bond Exchange.

The Green Bonds markets have been growing steadily this year and it is expected that the overall issuance will reach over 200 billion dollars this year.

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Highlights of the year 2018 – Brexit, trade talks and green finance

The year 2018 was a year of Brexit, electric cars and trade talks. It included special moments in the financial markets and in the company side. Green Bonds and Green Finance were getting more attention in the markets and trade talks and Brexit were the topics during the year 2018 along. Climate Change and low carbon landed also in the agenda of central banks.

Investors were also asking what is the role of the City as a global financial hub. Should it have its own rules in spite of the Brexit? In the financial hub competition, Frankfurt and Paris were the European cities to get more new financial offices as financial companies were moving some operations to the EU side.

The UK Parliament is expected to vote of the Brexit during Janury 2019 after very intensive debate about the deal during the year.

Climate Change has become part of the everyday life in the financial markets and for example one of the biggest insurance companies in the US, Berskhire Hathaway informed in February 2018, that it has got 3 billion dollars losses of the natural catastrophies, the hurricances in the US. Several central banks, including the European Central Bank and some Asian ones, have also agreed about the co-operation in the climate issues and how to monitor the impact on the markets.

In the tech-side augmented reality and ioT were the themes for the year. Apple, Amazon, Google, Tesla, Intel  and Samsung  were one of the tech-companies to deliver new services related to the new technology. On the other side of the topic, Facebook was dealing with the privacy issues globally. New tech- companies listed in the markets were for example Spotify and Xiaomi.

Year 2018 was a year of electric cars in many countries. The e-cars breakthrough with charging issues was one of the tech topics as well. Telsa founder Elon Musk was the leading industry sector figure as he estimated that Tesla would make one million cars by 2020 in February 2018.

Also the German automakers announced new investments and concept cars. For example the BMW Group launched an autonomous driving campus in Munich in March 2018.

Year 2018 was also a year for luxury goods and services. The Basel World 2018 -fair announced its good selling and for example the CEO of Hublot, Ricardo Guadalupe,  told ComteamPUB+ that the company expects double digit growth for the year and that the Chinese customers will be the leading segment.

In the debt markets the US Uber and Netflix issued their junk bonds to investors. Uber, the ride-sharing company, is said to plan an IPO for the year 2019 according to the secret filings to the SEC.

One of the biggest infrastructure projects ever, the China Silk Road, is getting more attention from the green investors side, while the organization made its first announcement of the green principles for the project co-operation and operators. The ancient Silk Road is expected to rise the GDP growth by 4 % or 240 billion dollars in the countries invlolved according to Credit Suisse analysis.

The aim of the Roman time Silk Road is to connect the western Europe with the eastern coast of China and to renew the infrasturcture in between. This means also that the 10 world largest container ports are located along the route.

Trade talks between different countries have continued lively during the year. US and China have been in the headlines, but also the EU with its agreement with Japan.  The political situation and rising volatility in the financial markets tell the direction for the next year. Geopolitical easing is needed.

Päivi Härkönen, co-founder, ComteamPUB+

 

 

Business Finance Lifestyle

Central banks: Climate risk is on the agenda

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Central banks are starting to integrate climate risk management into monetary policies globally.  Central Banks and Supervisors have establised a working group called “The Central Banks and Supervisors Network for Greening the Financial System (NGFS)”.

This is a voluntary group, but the idea to share best practices and to contribute to the development of environmental and climate risk management in the financial sector. One of the targets is also to support the transition towards sustainable ecnonomy and green finance.

According to the network, climate-related risks are a source of financial risk. It is therefore within the mandates of Central Banks and Supervisors to ensure the financial
system is resilient to these risks.

Some Central Banks have also started to scale up green finance by accounting for climate and environment-related factors in their investment strategies.  According to the network findings some Central Banks, regulators and local authorities have introduced incentives for banks to increase green lending and for issuers to issue green bonds.

The Secretariat is permanently provided by Banque de France and the chairman is Mr Frank Elderson, member of the Governing Board of De Nederlandsche Bank.

The network has structured its work into three dedicated workstreams: Supervision (chaired by Ma Jun from the People’s Bank of China), Macrofinancial (chaired by Sarah Breeden from the Bank of England) and Mainstreaming green finance (chaired by Joachim Wuermeling from the DeutscheBundesbank).

The Network members include:

  • Banco de España
  • Banco de México
  • Bank Al Maghrib
  • Bank of England
  • Bank of Finland
  • Bank Negara Malaysia (Central Bank of Malaysia)
  • Banque Centrale du Luxembourg
  • Banque de France / Autorité de Contrôle Prudentiel et de Résolution (ACPR)
  • Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin)
  • De Nederlandsche Bank
  • Deutsche Bundesbank
  • European Central Bank
  • Finansinspektionen (Swedish FSA)
  • Japan FSA
  • Monetary Authority of Singapore
  • National Bank of Belgium
  • Oesterreichische National Bank
  • the People’s Bank of China
  • the Reserve Bank of Australia
Business Finance

The Chinese Asset Managers get Green Finance Guidelines

The Asset Management Association of China (supervised by China Securities Regulatory Commission) has issued its first Green Investment Guidelines last week. This is systematic and voluntary standard for the Chinese Asset Management industry to implement the ESG issues into investment processes and scaling up the green investments in China.

This guidelines gives basic principles and standards for green investment activities like investment methods, investing strategies, regulations, benchmarks and evaluation. It also urges fund managers to prioritize investing in green projects.

This guidelines also ask fund managers to conduct self-assessment on an annual basis and submit the results to the Association at the end of March each year.

 

 

Business Finance

Schiphol aiming to become the most sustainable airport in the world

The Amsterdam Airport, Schiphol is aiming to become the most sustainable airport in the world.  The company has also announced that they are targeting zero waste airport by 2030 and a climate neutral airport by 2040. The targets are shown in the company´s Green Bond Framework. Schiphol has issued a 500 million euros Green Bond to finance the structural changes.

-Safety is our top priority and we will never make any concessions to ensure passengers can safely travel to and from our airports. In addition, we aim to lead by example when it comes to sustainability in the aviation sector and strive for three main objectives: a clean future for the aviation sector, future – proof airports and a healthy working and living environment, the Royal Schiphol Group N.V (Schiphol) stated.

Since 2018, 100% of energy used at Schiphol is sourced from Dutch wind energy. Travellers can access Schiphol by train or by bus, the largest electric bus fleet in Europe. Majority of the taxi fleet is also electric.

As part of the Green Bond Framework, the Company is planning in invest in new, green buildings and clean transportation. This means for example charging stations for buses, cars and airplanes. The Airport is also planning to increase the use of its bio-fuels facilities.

The senior unsecured bonds are due 5 November 2030 and carry an annual coupon of 1.5%.  The bond will be listed in Euronext, Amsterdam.

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Schiphol is the first European airport to issue a green bond.

Business Finance

Green Bonds to foster the economic growth

Green Bonds are financial instruments to foster the economic growth globally, but how the markets are really working? Last year was a record year for the over 100 billion dollars green bonds markets and for this year 2018 the expectations are about 130 billion dollars according to Climate Bond Initiative.

EU made a study of this market a year ago. The study identified key bottlenecks that hampered the further growth of the green bond market in the EU area. The biggest challenge is the lack of green bonds and green project pipelines.

The findings show that Green Bonds would be a great instrument to lead the climate mitigation and to fulfill the Paris Climate Agreement. The growth of these instruments have been mainly in China so far, but also big, listed companies and institutional investors have issued this kind of bonds.

The study also highlighted the measures of policy makers to develop the markets further- to raise the awareness on the benefits of green bonds, and thus increase supply support capacity building and knowledge sharing.

According to EarthRate, an ESG company, green bonds are new financial tools that require more climate-related information and targets from companies but at the same time they give the possibility to enlarge the investor base of a company towards more long-term base.

According to Financial Times (2.1.2018) the annual investment need for Europe, to keep the temperature rise below 2 degree Celcius, is 180 billion euros. The EU Commission is also planning to ease the capital rules for the banks in order to boost their green investments. This should be part of the new sustainable finance action plan, which should be released in March 2018.

Green Bonds are modern way of acting in the financial markets. But they also foster the underlying economic growth for further climate friendly investments.

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Finance

BoE: Climate change and the systemic risk

IMG_0869The Bank of England (BoE) has published (16th June) its updated analysis of the climate change and systemic risk. According to the bank´s bulletin the central bank is focusing on the physical and transition risk sides of the climate change. This means for example that the central bank is entering more deeper co-operation with insurance companies and also reviewing climate-related risks in the UK banking sector.

The central bank is supporting the market transition to low-carbon economy with different co-operations in global and local markets. The bank is saying that a successful transition to a lower cardon future will require the engagement of wide range of actors, including central banks and financial regulatos.

According to the study, the next fifteen years will be critical while the global economy is undertaking a deep structural transformation. This would mean that around 90 trillion US dollars will be likely to be invested in infrastructure in the world´s urban, land use and energy systems until 2030. This estimate is based on Global Commission on the Economy and Climate organization.

But also the International Energy Agency (IEA) has estimated that 26 trillion US dollars of additional investments is needed in renewables and energy efficiency between 2015 and 2040 to achieve the 2* Celcius Paris climate agreeement target.

Green Finance barriers

Green Finance and Green Bonds are seen as new financial tools to help the transition to low carbon economy.  According to the Bank of England, there are still some barriers to be solved in order to scale up the green finance.

One obstacle is  the lack of integration of environmental impact in the investment process, which will lead to sub-optimal allocation of capital. The others include for example maturity mismatch between short-term and long-term needs, lack of clarity of green definitions, lack of relevant disclosure information of environmental issues and the level of understanding of the financial implications of environmental risks.

According to the BoE, G20 leaders and TaskForce will discuss Climate Change issues and this low-carbon transition in their meeting in Hamburg, July 7.-8. 2017.

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