Insights on investors’ ESG considerations from Q1 2022

How do investors think? And, what do they prioritise, from companies issuing sustainable debt?

I. Key Themes

  • In Q1 2022, sustainability strategy (23%), alignment with standards (16%), and sustainability Key Performance Indicators (KPIs) (13%) were the top three categories of focus for investors. 
  • In this quarter, questions related to bond characteristics (9%) made it to the top 5, as investors were keen to understand the bond structure, choice of currency for an issuance, and the rationale behind choosing a particular labelled bond over a plain bond.
  • While in the last quarter we observed questions around the choice of second party opinion provider (SPO), in this quarter investors wanted to know how issuers are improving their SPO ESG scores.
  • Issuer’s plans for managing supply-chain ESG requirements (2%) were a popular concern with investors in this quarter as well. 
  • Similar to the last quarter, issuer’s environmental risk assessments (2%) on assets were an important consideration.


Split of questions by different topics

Notes: Based on 106 questions and feedback received in Q1 2022 for deals in Utilities (water, electric distribution, and transmission), Transportation, Chemicals, and Real Estate sectors. “Others” includes Second Party Opinion (SPO), ESG assessment, Stakeholder relations, Sustainable finance framework, and Environmental/Governance policies categories. See the appendix at the bottom of this article for a full breakdown of what each topic includes.

Source: NatWest, ESG-related investor feedback for corporates in Q1 2022. 

II. Example Questions

Issuer focused

Sustainability strategy

  • Please can you explain how you think about the trade-off between additional investment required for ESG? How will this be paid for?
  • For Utilities: Have you performed a climate physical risk assessment on assets contained within the green bonds and if so, has there been a conclusion or action taken to ensure that the assets are resilient to the physical risks that come with climate change?


Alignment with standards

  • Can you provide a general reflection on the new Environmental Act? How well-placed are you for present and future investments on any new environmental duties imposed?
  • For Utilities: Can you confirm compliance with the principles of the International Finance Corporation (IFC) General Environmental, Health, and Safety Guidelines for construction site activities?
  • For Real Estate: How does the company view an eligibility threshold of Leadership in Energy and Environmental Design (LEED) Silver or Building Research Establishment Environmental Assessment Method (BRREAM) Good as consistent with their strategy to rapidly address climate change and ESG policy goal to address climate change risk?


Business strategy

  • You have historically paid higher penalties than peers. Is this something inherent to the region you operate in?
  • What are the required alternative investments that are not green?
  • What type of measures are you thinking about when improving customer service? Do you have a timeframe for improving customer service?


Instrument focused

Sustainability KPIs

  • What will the impact report look like across these many different categories? Will you be reporting KPIs for all of them?
  • For Real Estate: In practice how has the company differentiated whether an improvement is significant under the green buildings’ refurbishment component of the green bond framework (activities which ‘significantly improve’ energy or water efficiency)?
  • For Transportation: Does the issuer’s ESG metrics consider discontinuation of old diesel vehicles (which can be captured within scope 3 emissions of the company)?


Bond characteristics

  • What is the rationale for moving towards green projects versus social projects?
  • For Chemicals: Please confirm why you have chosen to issue a Private Placement (PP) with an ESG-linked payment.


Sustainability projects/assets 

  • Which categories in the sustainability framework will be featured in the allocation of the issue? To which category will most proceeds go?
  • For Real Estate: What share of your buildings have solar?
  • For Electric-Distribution: Are there any proceeds that will be allocated towards Hydrogen Distribution Infrastructure?


Management of proceeds

  • Under the Framework, how much of your financing will be focused on future projects versus refinancing of existing projects?
  • Will the impact report use of proceeds (UoP) split be the same for the future?


We’ll provide regular updates on frequently asked questions posed by investors, to keep you up-to-speed with their most current views. So, please do regularly check our Insights Hub for updates.

Appendix I. Topics and Definitions

Alignment with standards

This includes all questions associated with (but not limited to) alignment with:

• The Sustainable Development Goals (SDGs)

• The EU taxonomy

• The European green bond standard (EUGBS)

• The Science Based Targets initiative (SBTi)

• The International Capital Market Association (ICMA) Bond Principles

• Regulations by industry-level bodies

• Other regulatory


Bond characteristics

This includes all questions associated with (but not limited to) the structure of the bond (tenor, pricing, etc).


Business strategy

This includes all questions associated with (but not limited to) issuer’s strategy apart from ESG.


Environmental/Governance policies

This includes all questions associated with (but not limited to) environmental and governance policies set by the issuer.


ESG assessment

This includes all questions associated with (but not limited to) environmental and other assessments conducted by the issuer.


Management of proceeds

This includes all questions associated with (but not limited to):

• the allocation and management of proceeds  

• timeframe for allocation

• committee responsible for the assessment and selection of projects

• process for review and approval

• ongoing alignment with the framework



This includes all questions associated with (but not limited to):

• reporting of impact metrics 

• reporting of impacts, methodologies, and assumptions of indicators

• reporting of progress on KPIs or historical performance

• frequency of reporting


Second Party Opinion (SPO)

This includes all questions associated with (but not limited to):

• rationale behind choosing the SPO provider

• feedback by the SPO provider


Stakeholder relations

This includes all questions associated with (but not limited to):

• supplier compliance with ESG

• third-party compliance with ESG

• customer compliance with ESG


Sustainability KPIs

This includes all questions associated with (but not limited to):

• selection of KPIs

• impacts, methodologies, and assumptions of indicators


Sustainability projects/assets

This includes all questions associated with (but not limited to):

• projects eligible for use of proceeds

• eligibility criteria

• rationale behind projects evaluation and selection


Sustainability strategy

This includes all questions associated with (but not limited to) the issuer's broad ESG strategy (both current and future) or approach towards sustainability.


Sustainable Finance Framework

This includes all questions associated with (but not limited to) structure of the framework.



This includes all questions associated with (but not limited to) assurance and auditing for the framework.

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