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March 29, 2022

What we’re reading: March 29 edition

Emily (Pexels)
Emily (Pexels)

Welcome to Sustainable Views’ knowledge hub: the section of the site where we archive useful research we have read over the past weeks, so you can improve your knowledge and easily refer back to your favourite resources

If you find this section of the site useful, we want to hear from you. Tell us how you use it by emailing sustainable.views@ft.com, and we’ll endeavour to develop this section to suit your preferences.

Governments’ ESG debt

The Association for Financial Markets in Europe, which represents banks and other capital markets players, has published data showing a record volume of green sovereign bonds issued in the last quarter of 2021, €28bn, which pushed the outstanding total of ESG debt issued by governments to €240bn. 

Though these numbers pale in comparison to similar bonds by business, they show a steady progression since the end of 2016, when AFME recorded only about €1bn-worth of green bonds. Overall, growth has been fuelled by the introduction of social bonds (the S in ESG) from the last quarter of 2020. 

The European Commission is the largest issuer of ESG bonds, followed by Germany, France and the UK. Click below for more.

Read the report

Outperforming renewables

The International Energy Agency and Imperial College London are working on a series of publications to create greater financial transparency and to guide capital and policymakers towards the energy transition. In their earlier studies, they found: “Over a 10-year horizon, a publicly traded portfolio consisting of renewable power assets has generated generally higher investment returns and exhibited higher diversification benefits (meaning that performance was less correlated to the overall market) than a portfolio consisting of fossil fuel companies. The renewable portfolio also exhibited lower volatility in some regions and displayed greater resilience than other energy investments, especially during the market downturn triggered by the Covid-19 pandemic.”

They also noted that public markets alone did not generate the clean energy investments needed to meet the world’s climate targets; and that the issue is more obvious in emerging economies because capital markets tend to be less developed.

In their study, Climate Infrastructure Investing: Risks and Opportunities for Unlisted Renewables report, they saw a similar pattern: unlisted renewable assets outperformed unlisted infrastructure portfolios over a 10-year period.

Read the report

 

A service from the Financial Times