Sustainable Financing Newsletter


Edition 6 – December 2017

Welcome to the sixth edition of our Sustainable Financing newsletter.

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Whether or not the unusually destructive hurricanes that battered the Caribbean and the southern states of the US in September 2017 were the product of global warming is unclear.

Considerable progress has been made since the Paris Agreement in December 2015, which established the goal of holding global warming to well below 2 degrees compared to pre-industrial levels, and of aiming to limit the rise to 1.5 degrees.

While arguments continue over precise numbers, everyone agrees on two things: that the amount of infrastructure investment needed to tackle climate change is very large; and that the gap between what’s needed and what’s happening currently is still too wide.

Governments, corporations, the financial system and civil society are all key stakeholders in the fight against climate change. Infrastructure investment decisions will play a key role in this fight – and they have the potential to lay the path to more prosperous growth at the same time.

When the European Investment Bank (EIB) launched its 30 year €1bn climate awareness bond in June, it was a landmark for two reasons. First, the EIB’s 2047 benchmark was the longest Green Bond ever issued by a sovereign, supranational and agency (SSA) borrower. Second, the issue coincided more or less exactly with the anniversary of the first Green Bond ever launched, which was an €600m transaction, also from the EIB.

As work to agree standards for green bonds and other aspects of green finance continues, much more needs to be done to deliver a more integrated and transparent green capital market.

We are establishing our Centre of Sustainable Finance (‘Centre’) to shape and share thinking and innovation both within HSBC and across the financial sector. This will help unlock the capital flows needed to address the world’s major sustainability challenges.

Transport contributes 15 per cent to annual greenhouse-gas emissions with traffic-congested cities a key contributor to pollution. It’s right, then, that the sector is looking at how it can decarbonise to provide sustainable mobility through innovation, artificial intelligence and by employing green finance.

By the end of Q3 2017, green bond issuance in terms of both number of deals and issuance size had surpassed FY issuance in 2016. This was on the back of a busy September (almost two-thirds of all issuance happened in the last month of the quarter). Overall, compared to Q3 2016, there was more than 50% rise in number of deals, and an 11% growth in terms of USD equivalent deal volume.

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Edition 6 – December 2017

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