Subdued sustainable lending volumes continue, on back of challenging market dynamics

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

  • Cumulative global sustainable lending totalled USD 123 billion at the end of April 2023, a 51% increase on March. However, cumulative sustainable lending volumes do remain 48% lower vs 2022, driven by challenging market dynamics. Sustainability-linked loans (SLL) currently comprise 91% of the volumes (Figure 1).
  • Across real asset sub-sectors, sustainable lending volumes have been greatest within the utility and energy sector. SLLs remain the primary driver of volumes across all real-asset sub sectors, with green loans seeing greatest uptake within ‘utility and energy’ (45% of lending) and ‘real estate / property’ (42% of lending) (Figure 2). 
  • May has seen beverage firm Pernod Ricard sign its first sustainability-linked loan for EUR 2.1 billion. The new credit facility, to which 22 banks have committed, includes key performance indicators (KPIs) focused on reducing absolute Scope 1 and 2 emissions, as well as reducing water consumption at distilleries.

Figure 1: Global Sustainable Lending, YTD 2023 – Green vs SLL (USD Billion)

Source: Dealogic, 12/06/23

Figure 2: Share in Sustainable Lending across Real Asset Sub-Sectors, YTD 2023 (% Sustainable Lending)

Source: Dealogic, 12/06/23

Sustainable deal activity

M&G issues its return to the CLO market with Margay CLO I. M&G returned to the collateralized loan obligation (CLO) market, with its current offering that incorporates sustainability factors into the strategy. M&G’s internal ‘With-Profits’ fund, Catalyst, that allocates specifically to ESG, sustainability and impactful debt private debt and equity strategies, is sponsoring the programme. 

Larsen and Toubro (L&T) obtains ‘green guarantee’ as part of its green hydrogen project at NEOM. The sustainable guarantee ensures financial assistance for L&T’s development of wind and solar farms, crucial for green hydrogen generation. The green hydrogen project is expected to make a significant contribution to carbon emissions reduction and foster sustainable development in Saudi Arabia, as well as aid the country’s ongoing efforts to decrease reliance on oil.

Climate and ESG announcements by Sponsors (as of 7 June 2023)

Australia-based Carbon Growth Partners to raise US$200m for carbon credits fund

Specialist carbon market investor ‘Carbon Growth Partners’ (CGP) has reopened its Carbon Growth Fund, seeking to raise US$200 million by mid-2024, including an initial US$20 million before the end of June 2023. The fund targets a 20% annual return by investing in a diversified portfolio of carbon credits and carbon offset projects. [1] [2]


Actis launches $500m renewables business in Japan and makes first acquisition  

Actis, a global investor in sustainable infrastructure, has launched Nozomi Energy, a new US$500 million Japan-focused renewables platform. Nozomi will target 1.1GW of onshore wind and solar power generation by 2027. The investment is made from Actis’ fifth, and latest, energy infrastructure fund, which represents $6 billion of investable capital. [3] [4]


Schroders launches carbon offset share classes

Schroders has announced the launch of carbon offset share classes. This innovation will provide clients with the choice to offset carbon emissions associated with their underlying fund holdings. These share classes will be available as part of the Schroder International Selection Fund (SISF) Global Climate Leaders, focused on investing in companies which evidence ‘climate change leadership’.

Schroders will aim to ensure that the offsets purchased will equate to the Scope 1 and 2 emissions of the portfolio companies attributable to the share class. For example, if the share class holds 1% of a company, Schroders will calculate 1/100th of that company’s Scope 1 and 2 carbon emissions. [5] [6]


Phoenix Group unveils its net zero transition plan with its full £3 trillion investment portfolio in scope to decarbonise 

Phoenix Group is today publishing its Net Zero Transition Plan which details how it plans to collaborate and drive forward the change that will be necessary to achieve a net zero economy by 2050. The Net Zero Transition Plan is built on science-based targets and is aligned with the UK Government’s Transition Plan Taskforce (TPT) disclosure framework and guidance from the Glasgow Financial Alliance for Net Zero (GFANZ). [7] [8]


Earth Capital invests £2.5m in blue technology firm

Impact investor Earth Capital has invested £2.5 million ($3 million) in aquaculture technology firm Ace Aquatec via its “co-investment syndicate”. The investment will boost the Scotland-headquartered company’s development of sustainable products, such as a camera that can quantify fish biomass using artificial intelligence to help optimise stocking density to improve the welfare of the fish. [9]

ESG data, articles and market initiatives

'Ground-breaking' CSDDD rule secures European Parliament approval

The EU Corporate Sustainability Due Diligence Directive (CSDDD) has secured approval from the European Parliament that will require companies to implement climate transition plans and disclose the impact of their value chains on human rights and the environment. The Parliament voted 366 to 225 votes in favour of the landmark legislation. Companies covered by the CSDDD will also be required to disclose transition plans outlining how they intend to reach net zero emissions by 2050. [10] [11]


Measurabl closes $93 million Series D to fuel global expansion of real estate ESG platform

Measurabl, the world’s most widely adopted ESG technology platform for real estate, announced today the close of its $93 million Series D round of venture capital. Proceeds will go towards the continued expansion of Measurabl’s ESG technology solutions for real estate, global partnerships, and continued general international expansion. [12] [13]


ESAs put forward common understanding of greenwashing and warn on risks

The European Supervisory Authorities (European Banking Authority (EBA), European Insurance and Occupational Pensions Authority (EIOPA) and European Securities and Markets Authority (ESMA) – ESAs) published their Progress Reports on Greenwashing in the financial sector. See EBA, EIOPA, and ESMA reports. In these reports, the ESAs put forward a common high-level understanding of greenwashing applicable to market participants across their respective remits – banking, insurance and pensions and financial markets. 

The ESAs understand greenwashing ‘in practice’ to be “where sustainability-related statements, declarations, actions, or communications do not clearly and fairly reflect the underlying sustainability profile of an entity, a financial product, or financial services. This practice may be misleading to consumers, investors, or other market participants”. [14] [15]


LOIM and Systemiq announce holistiQ Investment Partners

Lombard Odier Investment Managers (LOIM), the asset management arm of Swiss banking group, Lombard Odier, and Systemiq, have today announced a new partnership to build holistiQ Investment Partners (holistiQ). holistiQ will operate as a new platform within LOIM, solely dedicated to sustainable investing, and will combine Lombard Odier’s asset management heritage, commitment to sustainability and investment track record, with Systemiq’s deep analytical understanding and expertise in economic system transformation. [16] [17]


Impact Investing Institute launches just transition criteria investor tool

Impact Investing Institute launches ‘first of its kind’ practical tool for fund managers who want to invest in a transition to a net zero world. Just Transition Criteria (“the Criteria”) will make it easier for fund managers to design financial products that help advance a just transition – a fair and inclusive transition that will come with opportunities such as new green jobs and reskilling. [18] [19]


Common-ground taxonomy to be expanded

The Common-ground taxonomy (CGT) is a milestone work resulting from an in-depth comparison exercise that puts forward areas of commonality and differences between the EU and China’s green taxonomies. This updated publication covers the initial phase of work which will be expanded over time. 

The scope covers substantial contribution criteria for climate change mitigation, whilst other environmental objectives are not yet covered at this stage. Considering the difference of the environmental legislation system by different jurisdictions, other eligibility features such as Do No Significant Harm (DNSH) were not covered within scope of the first phase. [20] [21]


Biodiversity funding database FIRE prepares for launch

An online tool to ease access to funding resources for biodiversity projects, from sources including investors, is soon to be launched by the UN Development Programme. FIRE is envisioned to be a comprehensive database that serves principally all kinds of biodiversity projects (private, public or by civil society) to identify additional funding possibilities (both refundable and non-refundable). Over 200 sources are included that can be used for biodiversity conservation or addressing the causes behind the loss of nature (like deforestation or the use of chemical fertilisers). [22] [23]


Fitch launches ESG regulations and reporting standards tracker

Fitch Group’s sustainability-focused analytics business ‘Sustainable Fitch’ announced the launch of its ESG Regulations and Reporting Standards Tracker. The tool is a dynamic digest of significant regulatory developments in the ESG space, focused on sustainable taxonomies, ESG and climate disclosure regulations and ESG fund requirements. It also tracks the most followed reporting frameworks and standards, and aims to provide a succinct summary and guidance on the new regulatory issues that could affect issuers and investors in these ESG areas. [24] [25]


EIOPA launches free app to help with physical climate risk modelling

The European Insurance and Occupational Pensions Authority (EIOPA) has launched free software in a bid to help bring climate and natural catastrophe modelling to a wider range of users. The EU authority has created the Climada-app that provides an intuitive interface to the Climada probabilistic modelling platform, developed by academics at ETH Zürich.

Climada allows researchers to estimate the expected damage – and the incremental increases from economic growth and climate change – from tropical cyclones, river flood, agricultural drought and European winter storms, at a 4km spatial resolution. [26] [27]

Upcoming webinars and events

Moody’s – Global ESG Summit 2023 – Amer Edition, (27th June, Virtual) 

Climate policy momentum in the US is driving risks and opportunities for debt issuers across sectors. Waste and pollution issues are also coming to the fore, as the threat of lawsuits and regulatory crackdowns grows for exposed companies. Meanwhile, investors and debt issuers alike face an increasingly complex ESG policy landscape.

Additional details of the event and a link to register


Moody’s – ESG & Climate Regulation Deep Dive 2023 (28th June, Webinar) 

Join Moody’s Analytics and other ESG & Climate practitioners, as they take a closer look at the ESG regulatory landscape, share first-hand insights on the current state of play, and offer solutions on how you can effectively comply.

As new deadlines to comply draw nearer, these webinars will focus on ESG & Climate regulations by segment; from key challenges faced by investors on SFDR & EU Taxonomy reporting, to banks interpreting ECB guidance and Climate risks, to corporates responding to CSRD requirements.

Additional details of the event and a link to register


Bloomberg – ESG Topics in Focus: Biodiversity and Water, (13th July, Webinar) 

Join this webinar to learn how you can start to build out your analysis in this important area by leveraging the Bloomberg Terminal, and discover the plans ahead for Bloomberg to further expand on the existing metrics throughout 2023.

Topics will include:

  • As reported metrics
  • Impact and dependencies
  • Asset level exposure analysis

Additional details of the event and a link to register


Oxford Sustainable Finance Summit (July 19th, University of Oxford) 

The University of Oxford has notable researchers and research capabilities in sustainable finance and investment. In 2023 they are hosting their second Oxford Sustainable Finance Summit, bringing together researchers from across the University with practitioners, policymakers, regulators and civil society organisations to examine and reflect on the latest developments in sustainable finance. Join them in person for two special days in Oxford this summer.

Topics will include:

  • Deforestation free portfolios
  • Net zero aligned offsetting
  • Private markets

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, Vice President, 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.


  1. esgtoday.com: Carbon growth partners raising 200 million for carbon credit fund
  2. businesswire.com: Australia-based Carbon Growth Partners to Raise US200m for Carbon Credits Fund 
  3. environmental-finance.com: ACTIS  launches $500m Japanese renewables business 
  4. act.is: ACTIS launches 500m renewables business in Japan and makes first acquisition
  5. environmental-finance.com: Schroders launches carbon offset climate fund
  6. schroders.com: Schroders launches carbon offset share classes
  7. Phoenix Group publishes its Net Zero Transition Plan with its full c£0.3 trillion investment portfolio in scope to decarbonise
  8. environmental-finance.com: Phoenix unveils net zero transition plan
  9. environmental-finance.com: Earth Capital invests 25m in blue technology firm
  10. environmental-finance.com: Ground-breaking CSDDD rule secures European Parliament approval
  11. sustainablefutures.linklaters.com: European Parliament agrees negotiating position on CSDDD
  12. esgtoday.com: Real-estate focused ESG data provider Measurabl, raises 93 million
  13. measurabl.com: Measurabl Closes $93 Million Series D to Fuel Global Expansion of Market-Leading Real Estate ESG Platform
  14. esma.europa.eu: ESAS put forward common understanding greenwashing and warn risks
  15. environmental-finance.com: ESMA enhance transition finance to prevent greenwashing
  16. Lombard Odier Investment Managers and Systemiq announce holistiQ Investment Partners
  17. environmental-finance.com: LOIM launches sustainable fund suite holistiQ with Systemiq
  18. environmental-finance.com: Just Transition guidance issued to harness trillions in investment
  19. impactinvest.org.uk: Just Transition criteria launch
  20. Common Ground Taxonomy Instruction Report – updated (europa.eu)
  21. environmental-finance.com: Common ground taxonomy to be expanded
  22. environmental-finance.com: Biodiversity funding database fire prepares for launch
  23. biofin.org: Finance resources biodiversity FIRE pre-launched
  24. esgtoday.com: Fitch launches ESG regulations and reporting standards tracker
  25. sustainablefitch.com: ESG regulations reporting standards tracker
  26. environmental-finance.com: Eiopa launches free app to help with physical climate risk modelling
  27. eiopa.europa.eu: Opening world catastrophe models

This article has been prepared for information purposes only, does not constitute an analysis of all potentially material issues and is subject to change at any time without prior notice. NatWest Markets does not undertake to update you of such changes.  It is indicative only and is not binding. Other than as indicated, this article has been prepared on the basis of publicly available information believed to be reliable but no representation, warranty, undertaking or assurance of any kind, express or implied, is made as to the adequacy, accuracy, completeness or reasonableness of the information contained in this article, nor does NatWest Markets accept any obligation to any recipient to update or correct any information contained herein. Views expressed herein are not intended to be and should not be viewed as advice or as a personal recommendation. The views expressed herein may not be objective or independent of the interests of the authors or other NatWest Markets trading desks, who may be active participants in the markets, investments or strategies referred to in this article. NatWest Markets will not act and has not acted as your legal, tax, regulatory, accounting or investment adviser; nor does NatWest Markets owe any fiduciary duties to you in connection with this, and/or any related transaction and no reliance may be placed on NatWest Markets for investment advice or recommendations of any sort. You should make your own independent evaluation of the relevance and adequacy of the information contained in this article and any issues that are of concern to you.

This article does not constitute an offer to buy or sell, or a solicitation of an offer to buy or sell any investment, nor does it constitute an offer to provide any products or services that are capable of acceptance to form a contract. NatWest Markets and each of its respective affiliates accepts no liability whatsoever for any direct, indirect or consequential losses (in contract, tort or otherwise) arising from the use of this material or reliance on the information contained herein. However this shall not restrict, exclude or limit any duty or liability to any person under any applicable laws or regulations of any jurisdiction which may not be lawfully disclaimed.

NatWest Markets Plc. Incorporated and registered in Scotland No. 90312 with limited liability. Registered Office: 36 St Andrew Square, Edinburgh EH2 2YB. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and Prudential Regulation Authority. NatWest Markets N.V. is incorporated with limited liability in The Netherlands, authorised and supervised by De Nederlandsche Bank, the European Central Bank and the Autoriteit Financiële Markten. It has its seat at Amsterdam, The Netherlands, and is registered in the Commercial Register under number 33002587. Registered Office: Claude Debussylaan 94, Amsterdam, The Netherlands. NatWest Markets Plc is, in certain jurisdictions, an authorised agent of NatWest Markets N.V. and NatWest Markets N.V. is, in certain jurisdictions, an authorised agent of NatWest Markets Plc. NatWest Markets Securities Japan Limited [Kanto Financial Bureau (Kin-sho) No. 202] is authorised and regulated by the Japan Financial Services Agency. Securities business in the United States is conducted through NatWest Markets Securities Inc., a FINRA registered broker-dealer (http://www.finra.org), a SIPC member (www.sipc.org) and a wholly owned indirect subsidiary of NatWest Markets Plc.

Copyright © NatWest Markets Plc. All rights reserved.

scroll to top