Financial Institutions ESG Monthly – 7 April 2022

Breaking down trending ESG* trades & themes to help Financial Institutions (“FI”) get ahead of the latest issues shaping the market.

Primary Market Activity

Although the majority of transactions remained in green format (5 transactions / €3.5bn equiv.), social issuance also resumed; headlined by a €1bn inaugural social bond from AIB. This marks a contrast to February, where every transaction was in Green format (8 transactions / €6.8bn equiv.). Notably, there has not been any Sustainability issuance since a sub-benchmark Senior Preferred from Islandsbanki in mid-January.

EUR remained the dominant currency (€4.1bn issued, 5 of 7 tranches), though the Sterling market (The Co-operative Bank) and the USD 144A market (Manulife) also saw some life. 

Given the market volatility, all FI GSS trades were in covered (€2.4bn equiv.) or senior (€2.8bn equiv.) format – average oversubscription levels were healthy at 2.4x (though there was a fairly wide range). There have not been any bank or insurance GSS capital issuances since Dec-21.

ESG-related Bond Market Overview

FI GSS issuance for March was down 30% Year-on-Year (YoY), with issuance broadly flat in February and materially up (+77%) in January, resulting in Year-To-Date (YTD) volumes balancing out at +5%.

Green continues to account for the majority of GSS FI issuance (c. €27.2bn), followed by Social (c. €7.2bn) and Sustainable (€4.8bn).

The vast majority of GSS issuance has been in senior format (Senior-Preferred (SP): 71%, Senior Non-Preferred (SNP): 15%), with Covered accounting for the remainder (13%). Capital issuance remains minimal.


2022 YTD stats in the EUR and GBP GSS Market


  • EUR Senior: YTD issuance of €11.8bn (-14% vs 2021 YTD), with total senior supply at €70.5bn (+5%), resulting in a slight decrease of GSS as a percentage of total issuance to 17% (20% for 2021 YTD).
  • GBP Senior: YTD issuance is £0.3bn (-74%), with total senior supply at £8.5bn (+4%), resulting in a material decrease of GSS as a percentage total issuance to 3% (12% 2021 YTD).
  • EUR Covered: YTD issuance of €3.9bn (-9% vs 2021 YTD), with total covered supply at €77.9bn (+236%), resulting in a material decrease of GSS as a percentage of total issuance to 5% (18% for 2021 YTD).
  • GBP Covered: YTD issuance is £0.5bn (nil for 2021 YTD), with total covered supply at £7.2bn (+620%), resulting in GSS as a percentage of total issuance at 7% (nil for 2021 YTD).

Global FI GSS Supply 2021 - 2022 YTD

Source: Dealogic (01/04/22), NatWest Syndicate (01/04/22)
Source: Dealogic (01/04/22), NatWest Syndicate (01/04/22)

FI & Banking Sector Developments

  • HSBC announced three steps they will take to turn their net zero ambition for their portfolio of clients into business transformation across the bank. The three steps include: (i) publishing a bank-wide Climate Transition Plan in 2023; (ii) science-aligned phase down of fossil fuel finance; and (iii) undertaking a review in 2022 and updating their wider financing and investment policies critical to achieving net zero by 2050. Read more.
  • TD Securities set 2030 interim financed emissions targets for high-emitting sectors: Energy and Power Generation. And, in addition, published a new paper outlining its methodology to help chart its progress along its journey to achieve net-zero greenhouse gas emissions by 2050. Read more.
  • Commerzbank announced its’ intention to further increase the volume of sustainable financial products to €207bn in 2022 (from €194bn in 2021). The commitment is to channel €300bn into sustainable products by 2025. Read more
  • Nomura joined the Partnership for Carbon Accounting Financials (PCAF). This supports Nomura’s commitment to i) align its commercial activities with the objectives of Paris Agreement and ii) achieve net zero GHG emissions for its operations by 2030 and iii) transition attributable GHG emissions from its lending and investment portfolios to align with pathways achieving net zero by 2050. Read more
  • Credit Argicole and LCL are launching ‘LCL Net Zero Carbon March 2022’, a structured product that meets European Benchmark Regulation criteria and includes a mechanism to offset investments’ residual carbon emissions. Read more
  • Santander and Enel have signed a memorandum of understanding promoting collaboration between the two groups, aimed at supplying and financing: solar facilities, lithium batteries and energy efficiency solutions, for households, SMEs and corporations. Read more
  • MUFG announced that it has reached an agreement with ENGIE to collaborate on solutions to help MUFG Bank’s customers mitigate climate change by supporting their decarbonisation strategies, including carbon credits. Read more
  • SMBC has established a sustainability division and an Environmental and Social Risk Management Department to enhance their approach to sustainability. This will reinforce SMBC’s management structure by consolidating their sustainability-related functions and expertise across the Group, strengthening and increasing their capacity to address environmental and social issues. Read more

Investor Developments

  • NNIP hosted a webinar focused on social bonds. They outlined their approach to social bond investing which includes three steps: (i) issuer assessment; (ii) social bond framework assessment; and (iii) analysis of each social bond project category against NNIP’s proprietary eligibility criteria. It was highlighted that NNIP currently excludes around 25% of all labelled social bonds from their investment universe for failing to meet the investor’s strict eligibility criteria. Watch now.
  • Abrdn announced an evolution to its Sustainable Investing approach with the creation of a new ‘Sustainability Group’. The newly formed Sustainability Group will provide subject matter expertise to abrdn’s investment processes and support its sustainable investing value chain through generating insights; setting frameworks and standards; ensuring active ownership; and supporting product design, commerciality, client reporting and outcomes. Read more
  • Scottish Widows announced £1.5bn in divestments in a major new update to its exclusions policy. Scottish Windows will not invest in any company deriving more than 10% of its revenue from tobacco. These new divestments build on the £1.4bn-worth of previous exclusions applied to Scottish Widows’ investments, bringing the total value of the provider’s exclusions to nearly £3bn. Read more.

Government and Regulatory Developments

EU Platform on Sustainable Finance (PSF) published a report with recommendations on the Social Taxonomy. The EU PSF proposes to keep the structure of a social taxonomy close to the structure of the green taxonomy. Read more.

EU Platform on Sustainable Finance published its Final Report on Extended Environmental Taxonomy. In this report the Platform recommends extending the Taxonomy framework to classify activities under a traffic light system. Read more.

SEC proposed a new climate disclosure regime for public companies including disclosing information on climate-related risk, carbon offsets and GHG emissions. Read more.

ISSB launched a consultation on its first two proposed standards. One sets out general sustainability-related disclosure requirements and the other specifies climate-related disclosure requirements. Read more.

NGFS published a paper “Central banking and supervision in the biosphere: an agenda for action on biodiversity loss, financial risk and system stability”. Read more.

Taskforce on Nature-related Financial Disclosures (TNFD) released the first integrated approach to incorporating nature-related risk and opportunity analysis into the heart of corporate and financial decision making. Read more.

The European Central Bank (ECB) published an updated assessment of the progress European banks have made on disclosing climate and environmental risks as set out in the ECB’s November 2020 guide. Read more

The European Securities and Markets Authority (ESMA) published its final report on the European Union Carbon Market. Read more.

ESG and Credit Rating Agencies Developments

  • Fitch has published a report “Where ESG Matters for Bank Ratings”. The report provides examples of banks that have been assigned elevated environmental, social and governance relevance scores and describes how ESG issues are affecting their ratings. Read more.
  • ISS ESG announced the launch of augmented solutions that support investors with Net Zero alignment initiatives. The features include Net Zero target status and a modelled Net Zero emissions trajectories which include quality-checked company-reported Scope 3 greenhouse gas emissions data. Read more.
  • S&P Global’s President and CEO has published an open letter entitled, “Transparency and Impact: The Essential Principles of ESG”. The open letter focuses on Mr. Peterson's opinions on ESG scores, and the importance of disclosures and transparency. Read more.
  • ISS ESG announced the launch of ISS ESG Water Risk Rating. The ISS ESG Water Risk Rating features a holistic and granular assessment of a company’s exposure to and management of freshwater-related risk comprised of 11 data points per company. Read more.
  • Moody’s ESG Solutions is seeking feedback from market participants on proposed enhancements to its Environmental, Social and Governance Assessment methodology. Read more.

For those looking to discuss any of the above further, please reach out to our authors:


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

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