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Sustainability

AFTF 2021: the trillion-dollar opportunity in the transition to net-zero

ANZ Insights

Published October 13, 2021

The transition to a net-zero carbon economy is expected to generate immense opportunities for governments and the private sector to develop new technologies over the next 30 years, requiring investment worth many trillions of dollars, according to some estimates.

The response from global financial markets to catalyse investment capital towards the transition has been momentous. Issuance of green, social, sustainable and sustainability linked (GSSS) bonds and loans has surged, driven by insatiable demand from investors and lenders.

Global issuance of sustainable finance debt in the first half of 2021 rose to $US824 billion, surpassing 2020’s full-year issuance of $US760 billion, according to data from Bloomberg. The total global sustainable finance debt market now exceeds $US3.1 trillion, the data shows.

Demand from investors and lenders for GSSS product is “growing exponentially,” according to Nancy Wang, ANZ’s Director of Sustainable Finance in Hong Kong.  The importance of sustainability and climate change risk is now spilling out into the non-labelled GSSS market or “vanilla” issuance market, she said.

“Every bond issuer and loan borrower benefits from having a well-articulated sustainability strategy, even if they are issuing a vanilla loan or bond,” Wang said.

Global disclosure and reporting regimes have expanded with the establishment of the Taskforce on Nature-related Disclosures (TNFD) in June. TNFD is a new global market-led initiative which aims to provide financial institutions and corporates with a complete picture of their environmental risks and opportunities. ANZ is among more than 100 organisations to join the TNFD Forum.

The TNFD is targeting to publish a risk management and disclosure framework for organisations to report and act on evolving nature-related tasks in 2023, building on the success of the Task Force on Climate-related Financial Disclosures (TCFD).

These global initiatives to improve disclosure and transparency will help address the issue of greenwashing and scepticism in the investor market about the authenticity and commitment of companies and governments towards net zero. The International Monetary Fund also flagged this risk in its latest Global Stability Report in October.

“One of the biggest issues financial institutions face as underwriters, bookrunners and issuers of Green, Social and Sustainable debt instruments are questions around greenwashing,” Mara Chiorean, ANZ’s Director – Sustainable Finance in Singapore said.

“The role of a sustainability coordinator is to work with our customers to come up with ambitious sustainability targets, ensuring sustainable finance transactions are based on best practice and can withstand scrutiny.”

The ANZ Finance & Treasury Forum will return for its fourth year in 2021, to be held virtually across two days on October 20 and 21.

Don’t miss out – contact your ANZ Relationship Manager for your all-access pass to explore key topics of global importance to your business today, with a fantastic speaker line-up across geopolitics, sustainability, technology, pandemic outcomes and leadership.

In the lead up, during and after the event, ANZ Insights will provide coverage and insights into the key themes from the forum and beyond.

 

Progress

On its part, ANZ has a group-wide target to fund over $A50 billion worth of sustainable solutions by 2025, with the help of use-of-proceeds and sustainability linked loans and bonds, as well as transaction banking products such as guarantees and supply chain solutions.

“We’re progressing strongly towards achieving our $A50 billion Target,” Wang said.

In January 2021, ANZ acted as the sole sustainability coordinator for a $S250 million 10-year sustainability linked bond issuance for Surbana Jurong, the first public sustainability-linked bond in Southeast Asia and the first in the Singapore dollar bond market. The transaction was heavily oversubscribed.

ANZ also acted as joint sustainability coordinator for an $A1.3 billion sustainability-linked loan for Coles, a first for a supermarket operator in Australia and the largest retail sustainability-linked loan in the local market to date.

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AFTF 2021: the trillion-dollar opportunity in the transition to net-zero
Staff writer
ANZ Insights
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