Drop in annual global sustainable lending volumes driven by tough market conditions

Breaking down trending sustainable* trades and themes to help those within Private Finance get ahead of the latest issues shaping the market.

Sustainable syndicated lending market

  • At the end of Q1 2023, cumulative global sustainable lending was USD 78 billion, with Europe accounting for 40% of total volumes (Figure 1).
  • For most markets, the % sustainable lending volumes in 2023 are lower than 2022. However, Germany, Singapore and Japan are noteworthy exceptions. These markets have all experienced an increase in share of sustainable lending (Figure 2).
  • The refinance of Trafigura’s existing USD 5.2 billion facility, was a key sustainable lending transaction from the month of March. The facility now includes key performance indicators (KPIs) around the responsible sourcing of metals (ISO 20400); growth in renewable power portfolio; and reduction in Lost Time Incident Rate (LTIR).


Figure 1: Global Quarterly Sustainable Lending Volumes, 2022 to 2023 (USD Billion)

Source: Dealogic, 12/05/23
Figure 2: Share in Sustainable Lending – Key Markets, 2022 vs Q1 2023 (% Sustainable Lending)
Source: Dealogic, 12/05/23

Sustainable deal activity

Aegon agrees to buy NIBC’s CLO platform. Aegon Asset Management has agreed to purchase NIBC’s North Westerly European Collateralized Loan Obligation (CLO) platform. NIBC made its mark on the continent for being a pioneer in ESG, with North Westerly VI acknowledged widely as the first ‘fully compliant’ ESG deal (providing ESG scoring for its CLO portfolio on a loan-by-loan basis).

UCI has closed the first residential mortgage-backed security (RMBS) transaction in Spain; aligned with the International Capital Market Association (ICMA) Green Bond Principles. UCI, as the originator, has pledged to allocate the class A and B net funds to green projects, over a five-year period. The financing will originate sustainable green loans to individuals and homeowners’ associations investing in building renovation.

Bank of China executed its first 3-month RMB 500 million green RMB reverse report transaction. CA-CIB aced as the counterparty to the trade. CA-CIB will use the funds to support its sustainable development projects. 

Climate and ESG announcements by sponsors (as of 31 March 2023)

Energy Impact Partners raise $112m for diverse owner-focused clean energy venture fund

  • Energy transition-focused venture capital investor Energy Impact Partners (EIP) announced the completion of its fundraising for Elevate Future Fund I LP, focused on accelerating the clean energy transition with a focus on diverse founders, with commitments of $111.9 million.
  • The fund invests in companies founded or run by diverse talent, driving innovation to advance the low carbon economy in areas including: supply decarbonisation, electrification, tech enabled infrastructure, reliability and resilience, and intelligent demand.

Schroders to launch fund offering investors access to energy transition infrastructure opportunities

  • Schroders Capital received approval from the UK’s Financial Conduct Authority (FCA) for the first-ever energy transition-focused Long-Term Asset Fund (LTAF), a new investment vehicle designed to give investors access to illiquid and private assets, such as renewable energy infrastructure.
  • The announcement follows the launch of the UK’s first LTAF by Schroders in March, targeting climate change and net zero-focused investments. The new LTAF will focus on renewable energy and ‘energy transition aligned’ infrastructure investments, including wind and solar.

PGGM to support climate resolutions at Shell

  • PGGM Investment Management has announced support for a resolution calling on Shell to set Paris-aligned Scope 3 emission reduction targets for 2030.
  • The asset manager said there is currently no evidence to suggest Shell will be Paris-aligned in 2030. It also fails to outline any of its decarbonisation scenarios or how it will help a global reduction in emissions.
  •  PGGM’s announcement comes as part of the launch of the research it commissioned into the largest oil and gas companies. The research aims to inform its engagement efforts and voting decisions throughout AGM season.

Goldman Sachs Asset Management wants firms to tackle controversies with social bonds

  • Goldman Sachs Asset Management (GSAM) would like to see companies use social bonds to tackle controversies in their supply chains.
  • The asset manager ‘sees firms raising social bonds that fail to address publicised problems in their supply chains’, said Isobel Edwards, executive director and vice president of green, social and impact bonds at GSAM.

Amundi launch suite of net zero funds across multiple asset classes

  • Amundi has announced the launch of ‘net zero ambition’ strategies, a suite of passively and actively managed funds across a broad range of asset classes
  • The new investment suite comprises strategies across asset classes including equities, fixed income, real estate, multi-asset, emerging markets and Exchange-Traded Funds (ETFs).
  • Circular economy 'most exciting' climate investment area, says M&G
  • The "Circular economy feels the most exciting at the moment” and it feels as if there is the “most going on from a policy and change perspective", a fund manager of the M&G Climate Solutions Fund said.
  • The asset manager is "particularly excited by" the proposal put forward by the Commission last year that all EU countries should have a deposit return scheme for all beverage containers by 2029. This is still at proposal level, as part of wider regulation on packaging and packing waste.

Lloyd’s launch £250 million private impact fund

  • Lloyd’s have announced the launch of the ‘Lloyd’s Private Impact Fund’, with an initial £250 million allocation for investment in sustainability-focused assets; targeting themes including climate mitigation, climate adaptation, circular economy and social inclusion.
  • The fund is expected to align with Article 9 principles of the EU’s Sustainable Finance Disclosure Regulation (SFDR) regulation. The Private Impact fund will invest globally (including private equity, infrastructure, natural capital and real estate).
  • The fund is the first to be launched on the Lloyd’s investment platform in partnership with Schroders Solutions, and consists of a series of select funds across asset classes.

Allianz turns down 33 insurance customers in 2022 due to sustainability risks

  • Allianz did not proceed with insurance transactions for 33 customers due to "severe" sustainability risks.
  • Across all insurance, investments and procurement transactions, 34 were declined, out of 1,395 assessed. The oil and gas industry accounted for the bulk of such denied transactions, followed by "other sustainability and reputational issues".

LGIM votes against 32 firms in 'say on climate' proposals

  • LGIM revealed it voted against 32 firms (67%) out of 48 'say on climate' shareholder proposals in 2022, as it prepares to pressure several US banks and corporates in coming weeks.
  • The investor flagged six engagement themes for the 2023 voting season: people, nature, health, technology, governance and climate.

ESG data, articles and market initiatives

Venture capital investors launch net zero alliance to align start-up portfolios with climate goals

  • A coalition of 23 venture capital firms across the US and Europe announced the formation of the Venture Climate Alliance (VCA), aimed at supporting global climate goals by encouraging and helping to facilitate net zero pathways for start-ups, and financing climate solutions.
  • The new alliance will form part of the Glasgow Financial Alliance for Net Zero (GFANZ).
  • Members agree to a series of commitments, including encouraging portfolio companies to set targets to achieve net zero alignment by 2050 or sooner and to provide them with assistance along their net zero pathways; as well as to achieve net zero emissions in their own operations – not including financed emissions – by 2030.

LMA publishes 'vital' sustainability-linked loan drafting model

  • The Loan Markets Association (LMA) has released a model legal text to support the drafting of sustainability-linked loans (SLL), which it described as a "vital" tool for the fast-growing market.
  • he trade association said the 'model credit provisions' were intended to "reflect current market practice and provide a vital tool to protect the integrity of the SLL market by providing a basic drafting framework to assist parties in the negotiation of the document".
  • The draft text will also provide "extensive" drafting notes as guidance for lenders and borrowers to consider when undertaking an SLL deal.

Qontigo, SDI AOP launch dashboard enabling investors to assess portfolio alignment with SDGs

  • Qontigo and the Sustainable Development Investments Asset Owner Platform (SDI AOP) announced the launch of the SDI Dashboard, a new tool enabling investors to upload investment portfolios and analyse them across UN Sustainable Development Goals (SDG)-related parameters.
  • The new tool includes various dashboards, including portfolio overview for SDI monitoring and client reporting, breakdowns by SDI status, assessment of positive and negative revenue contributions, as well as research and portfolio management (such as SDI analysis relative to a client benchmark and identification of top positive and negative SDI holdings).

Diligent launches board-level ESG reporting platform

  • Launch of Board Reporting for ESG, a new dashboard-based platform aimed at providing a comprehensive view of an organisation’s ESG data and posture for reporting to executive management and company directors.
  • Key features include: Reporting dashboards (insight into relationship between company sustainability performance & stakeholder perception); information on progress against carbon targets, peer benchmark disclosures; Scope 1-3 emissions; ESG scores (Clarity AI & S&P Global)

Institutional Investors Group on Climate Change (IIGCC) publishes oil & gas standard

  • The Standard sets out a comprehensive assessment framework for investors to assess the alignment of oil and gas companies’ transition plans with net zero.
  • The Standard sets out 90 metrics and questions for an investor to use when assessing the credibility of a transition plan. It includes assessing whether an oil or gas company has a short-term target, whether it includes Scope 3 emissions, and whether the company has a target to increase green revenue.

Investor alliance prepare nature targets guidance

The EU publishes answers to regulators' SFDR questions

  • The European Commission has published responses to questions from European regulators on the SFDR, including on how to define a ‘sustainable investment’ under the rules.
  • The definition of sustainable investment in SFDRdoes not prescribe any specific approach to determine the contribution of an investment to environmental or social objectives”.
  • Instead, financial market participants must disclose the methodology they have applied to carry out their assessment of sustainable investments. 

S&P Global leads $10 million financing for impact verification start-up BlueMark

  • Impact verification start-up BlueMark announced that it has raised $10 million, in a Series A funding round led by S&P Global.
  • The firm provides independent impact verification services for investors and companies, including analyses of investors’ impact management practices, encompassing the policies, tools, and processes necessary to execute on their impact strategy, as well as on completeness and reliability of impact reporting.

Upcoming webinars and events

Responsible Investor (RI) Europe 2023 RI (June 13th, London)

Responsible Investor’s 16th annual RI Europe conference is returning in person in London.  This year’s edition of the flagship event will discuss sustainable finance developments and industry best practices.  Topics include: Accelerating net zero progress; the evolving EU regulatory landscape; getting to grips with biodiversity risk management; the future of ESG data strategy and more.

Additional details of the event and a link to register

Sustainable Investment Festival 2023 (June 14th–15th, London)

Topics include:  Exploring best practice in how asset managers engage with companies; How advisers engage with clients on sustainable investing; How fund selectors and pension professionals engage with fund managers to drive positive social and environmental change.

Additional details of the event and a link to register

Private Equity European ESG Summit: Private Equity Wire (October 4th, London)

The European ESG Summit is a one-day retreat focusing on emerging opportunities and best practice in ESG for operations, finance, legal, product and back-office leaders across private equity, venture capital and wider private markets funds. The event will:  be a closed and invite-only gathering, this means no media and a curated audience; bring together senior staff from across the GP leadership suite to discuss shared experience, problems and solutions of business leaders from across the executive suite; focus on current ESG trends, emerging themes and the likely innovations and disruptors in the next five years.

Additional details of the 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
  • Vishal Saxena, CFA, 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.


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