Annual sustainable lending volumes show signs of plateauing as we approach year end

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 308 billion at the end of September 2023, a 1.5x increase since March, while cumulative sustainable lending volumes remain 42% lower vs 2022, driven by challenging market dynamics. Sustainability-linked loans (SLL) currently represent 86% of total sustainable lending volumes (Figure 1).
  • Cumulative sustainable lending volumes year-to-date (YTD) have also shown an annual decline, 34% lower vs 2021 and 42% lower vs 2022 (Figure 2). This is due to greenwashing concerns and ESG backlash in the US, which comprises 30% of the global market. Sweden has also seen a notable retraction over the last year with an 85% reduction in sustainable lending due mainly to higher rates and borrowers prioritising financial risk over transition efforts.
  • Compared to May 2023 (see the May edition of our newsletter), the Forestry & Paper industry has seen the greatest increase in SLLs, with one in five loans now being an SLL (vs 1 in 10  previously). Whereas the Utility & Energy industry has seen green loan volumes triple over the same period, comprising 6.5% of all lending, the most in any of the assessed industries.

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

Dealogic, 02/10/23

Figure 2: Cumulative Global Sustainable Lending – 2021 vs 2022 vs 2023 (USD Billion)

Source: Dealogic, 02/10/23

Sustainable deal activity

Hafnia receives financing secured by nine chemical tankers. Singapore product tanker group Hafnia has added more sustainability-linked financing to its portfolio in a deal stretching to early 2029. The BW Group-backed company said the revolving loan facility is worth USD 303m through a syndicate of eight banks. The deal is secured by nine chemical tankers acquired as part of the deal to take over Oaktree’s 32-ship Chemical Tankers Inc. fleet.  

Alternergy to raise P 12 billion for 2 wind projects. Alternergy Holdings Corporation is seeking to raise Philippine peso (P) 12 Billion in debt financing to build its Tanay Wind Power Project and Alabat Wind Power Project, and has selected BPI Capital, RCBC Capital, and SB Capital as the trio of investment banks that will arrange and structure the debt. According to Alternergy, this would be the largest project financing deal in its history. The company expects to close the deal before the end of 2023, with the resulting construction of the two wind projects expected to be completed by 2025.

Gold Fields ties up A$500m ESG-linked loan in Australia. Gold Fields said it has agreed a new sustainability-linked syndicated credit facility with Australian lenders which represents the first of its type for the country’s gold sector. The five-year A$500m syndicated credit facility sees Gold Fields receive a margin adjustment based on its performance against sustainability goals such as increasing female representation in its workforce, reducing carbon emissions and using more recycled water.

Climate and ESG announcements by Sponsors (as of 28 September 2023)

RGreen Invest backs EV charging business with €47m financing

SWISH, a French company in the management of charging stations for electric vehicles, has announced the completion of a €47 million equity and quasi-equity financing round, provided by INFRAGREEN V, a fund managed by RGreen Invest. The fund is certified Greenfin and classified Article 9 under the Sustainable Finance Disclosure Regulation (SFDR). The transaction marks the first in "pure" EVs for RGreen’s InfraGreen V fund, the fifth vehicle in this strategy. The fund is currently fundraising, targeting €1.2 billion. [1] [2]


La Banque Postale launches €1 billion energy transition infrastructure fund  

La Banque Postale, LBP AM and CNP Assurances are ramping up their commitment to energy transition with the launch of an impact infrastructure debt fund, backed by CNP Assurances, totalling €1 billion. According to La Banque Postale, the new impact debt fund, classified as Article 8 under the SFDR regulation, will provide long-term support for projects that make a substantial contribution to mitigating climate change or that are committed to decarbonising their operations. It will be deployed over a three-year period. [3] [4]


Allianz to invest over $20 billion in climate and cleantech solutions by 2030

Insurance and investment group Allianz announced a series of new climate-focused commitments and targets, including a goal to invest €20 billion (USD$21 billion) in climate and cleantech solutions by 2030. The new goals were released with the publication of Allianz’s first comprehensive net-zero transition plan, outlining the company’s strategy to achieve its climate goals. Allianz has committed to achieving net-zero emissions by 2050 in its proprietary investment and P&C underwriting portfolios, and by 2030 in its own operations. [5] [6]


Just Climate launches 'natural climate solutions' strategy

Just Climate, an investment business established by Generation Investment Management to address the net-zero challenge at scale, announced its expansion to natural climate solutions through a dedicated investment strategy. Consistent with its existing Industrial Climate Solutions (ICS) strategy, Just Climate’s Natural Climate Solutions (NCS) strategy aims to direct capital at scale globally to businesses that can generate the highest climate impact and attractive financial returns. It will focus on avoiding emissions from agriculture, forestry and other land use (AFOLU), as well as sequestering emissions through restoration of soil, forests and wetlands. [7] [8]


DWS fined $19m by SEC over 'materially misleading' ESG statements

Deutsche Bank’s asset management arm DWS has agreed to pay $25m in penalties to settle two charges by the Securities and Exchange Commission (SEC) into alleged ESG “misstatements” and anti-money laundering violations. The ‘materially misleading’ statements refer to how ESG factors were factored into the research and investment recommendations for ESG-integrated products. The SEC’s investigation found that DWS had marketed itself as a ‘leader in ESG’, however during a three-year period between August 2018 and late 2021, it had failed to implement provisions of its global ESG integration policy, despite leading its clients and investors to believe it would do so. [9][10]


US asset managers decline to back 'over-reaching' E&S resolutions

Support for environmental and social shareholder resolutions fell by 10 percentage points in the 2023 proxy season, with asset managers arguing the motions were often ‘overly prescriptive’ or ‘redundant’, Morningstar Manager Research has found. This is especially true amongst the ‘Big Three’ – BlackRock, Vanguard and State Street – which all raised concerns that resolutions were too constraining. [11]


Blackstone closes record energy transition private credit fund at over $7 billion

Alternative investment manager, Blackstone announced the final close of its energy transition credit fund, Blackstone Green Private Credit Fund III (BGREEN III). BGREEN III closed at its hard cap of $7.1 billion. Dwight Scott, Global Head of Blackstone Credit, said: “Blackstone has built a premier platform focused on private credit in the energy transition and infrastructure markets. We are grateful for the trust from our limited partners and look forward to investing in this favourable market environment.” [12][13]


Investors failing to act on just transition, Fidelity International says

Institutional and intermediary investors lack understanding and conviction when it comes to moving to a "just transition" economy, according to a survey by Fidelity International. Fidelity said a lack of awareness and conviction regarding a just transition might explain why only 35% of those familiar with the term already have or are developing a dedicated investment strategy devoted to it, with those in Europe ahead of their counterparts in Asia. [14][15]


Green steel plant raises €1.5bn in largest private placement in Europe this year

In the largest private placement in Europe this year, H2 Green Steel has raised over €1bn for a GW-scale electrolyser project in Sweden. The developer has raised €1.5bn in equity from an investor group led by Altor, GIC, Hy24 and Just Climate. The plant will deliver steel with up to 95% less CO2 emissions compared to steel produced with traditional blast furnace technology. [16][17]


Nuveen launches $525 million sustainable commercial real estate lending fund

Investment manager Nuveen, and its sustainable commercial real estate financing solutions business Nuveen Green Capital (NGC), announced the launch of the Nuveen CPACE Lending Fund, aimed at enabling insurance investors to finance energy efficiency and sustainability projects for commercial real estate. The fund is launching with allocations of $525 million from an initial investor group of six major insurance firms. The new fund, designed for the unique requirements of insurance investors, aggregates the financing of C-PACE projects that reduce buildings’ environmental impact by increasing energy efficiency, and providing the insurers with a capital-efficient opportunity to access investment grade clean energy assets. [18][19]


$150trn investor groups call on Australia to adopt ISSB standards

Australia's new climate reporting rules should match global best practice by including standardised and decision-useful transition plans, according to three alliances of investors, collectively worth an estimated $150 trillion. The three groups – Investor Group on Climate Change, UN-supported Principles for Responsible Investment as well as the Carbon Disclosure Project – released a joint statement highlighting a lack of standardisation and regulatory guidance, which currently means that most companies’ disclosure of net zero strategies is "incomplete or inadequate" for investor needs. [20]


'Landmark' Global Biodiversity Framework fund launched – but with $40m shortfall

A 'landmark' Global Biodiversity Framework fund was finally given the go ahead, but after just two governments (UK and Canada) made funding commitments, a further $40 million needs to be found by the end of the year. The fund, which will contribute to the goal of protecting 30% of the world’s land and water ecosystems by 2030, has been set up by the Global Environmental Facility (GEF), a multilateral financial partnership. [21][22]


ESG data, articles and market initiatives

ESG private credit reporting project aims to bolster SFDR alignment

The ESG Integrated Disclosure Project (ESG IDP) has welcomed the "positive reaction" from loan market participants to its template for private credit sustainability reporting, as it looks to bolster alignment with the EU Sustainable Finance Disclosure Regulation (SFDR). The ESG IDP was formed by the Alternative Credit Council (ACC), the private credit affiliate of the Alternative Investment Management Association (AIMA), the Loan Syndications and Trading Association (LSTA), and the UN Principles for Responsible Investment (PRI) in co-operation with a group of leading alternative asset managers and credit investors. The ESG IDP is also supported by a coalition of market stakeholders. [23] [24]


EcoVadis launches Product Carbon Emissions Tracking Solution

Business sustainability ratings provider EcoVadis announced the addition of a new feature, the EcoVadis Product Carbon Footprint (PCF) Data Exchange, into its Carbon Action Module (CAM) to unlock PCF tracking across its network of suppliers; of which 40,000 are engaged in carbon action. According to EcoVadis, the new feature aims to address one of the key barriers to companies’ carbon reduction strategies, enabling emissions reporting for products and services purchased across the supply chain. Suppliers often report their overall carbon footprint, but buyers lack the precise data to determine the portion of those emissions attributable to their purchases. [25] [26] [27]

Upcoming webinars and events

Investor Conferences UK

 The Sustainable & Social Investing Conference 2023 (20th October, Novotel London West, UK)

Sustainable investing goes beyond traditional investment methods – at a time when companies are acutely aware of their social and environmental impact. Sustainable investors contribute towards the long-term well-being of society and our planet. Whether you’re an experienced investor looking to diversify holdings or just starting out and keen to explore new avenues, this conference provides you with a live forum to gather valuable information and meet other investors. Don’t miss this opportunity to be part of a growing movement that aims to transform the investment landscape for a sustainable and equitable future.

Additional details of the event and a link to register.


Private Equity Wire – Private Equity European ESG Summit (24th October, Convene Bishopsgate, 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.

Private Equity Wire’s event will:

  • Be a closed and invite-only gathering, this means no media and a curated audience of genuine peers.
  • Bring together senior staff from across the General Partner (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.


ESG Investment Leader Europe (2nd November, America Square Conference Centre, London)

ESG Investment Leader Europe 2023 brings together the community of senior investment officers, ESG and responsible investing experts from third-party asset managers, pension funds, insurers, foundations, and endowment funds, alongside their operational, risk, and reporting colleagues, to explore both strategic insights and tactical guidance on how to design and integrate ESG investment plans, scale portfolio adaptation plans, optimise risk and reporting frameworks, access verified data, and refine portfolio holding engagement strategies.

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.


[1] rgreeninvest.com - Swish financing mobility decarbonisation 

[2] environmental-finance.com - RGreen backs ev charging business with 47m financing

[3] labanquepostale.com - PR impact infrastructure debt fund pdf

[4] esgtoday.com - La banque postale launches €1 billion energy transition infrastructure fund

[5] allianz.com- Allianz announces first net zero transition plan with 2030 intermediate targets for core business segments

[6] esgtoday.com - Allianz to invest over 20 billion in climate cleantech solutions by 2030

[7] justclimate.com - Just Climate announces natural climate solutions strategy and opens first international office in brazil

[8] gcc-compliance.com - Just Climate launches natural climate solutions investment strategy

[9] investmentweek.co.uk - DWS fined $19m by SEC over 'materially misleading esg statements'

[10] environmental-finance.com - DWS fined $19m by SEC for misleading esg statements

[11] environmental-finance.com - US asset managers decline to back 'over-reaching' E&S resolutions

[12] blackstone.com - Blackstone closes record energy transition private credit fund at over 7 billion

[13] morningstar.com - Blackstone closes record energy transition private credit fund at over 7 billion

[14] fnlondon.com - fidelity investors lack awareness of 'just transition'

[15] investmentweek.co.uk - investors lack understanding and conviction for just transition economy ambitions

[16] hydrogeneurope.eu - H2 green steel raises €1-5bn for 1GW electrolyser

[17] pe-insights.com - H2 green steel has raised about €1.5bn in equity from an investor group led by Altor, GIC, Hy24 and Just Climate

[18] esgtoday.com - Nuveen Launches $525 Million Sustainable Commercial Real Estate Lending Fund

[19] nuveen.com - Nuveen real estate launches third UK debt strategy

[20] netzeroinvestor.net - $150trn investor groups call on Australia to adopt ISSB standards

[21] climatechangenews.com - Nature fund launched but still needs 40m to get going

[22] environmental-finance.com - 'Landmark' Global Biodiversity Framework fund launched - but with $40m shortfall

[23] esgidp.org

[24] environmental-finance.com - ESG private credit reporting project aims to bolster SFDR alignment

[25] resources.ecovadis.com - EcoVadis Unveils Product Carbon Footprint Data Exchange to Transform Collaborative Decarbonization Efforts Across the Value Chain

[26] gcc-compliance.com - EcoVadis launches product carbon emissions tracking solution

[27] esgtoday.com - EcoVardis launches solution to enable companies to track product carbon emissions

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