Climate Investment Newsletter 2/13 - 2/19

Individual Deals and Market Watch

S&P downgrades Exxon and Chevron on climate risk, dour earnings [Yahoo Finance]

• In case you missed it the week before last -- and we did -- S&P Global Ratings cut the credit ratings of top U.S. oil producers Exxon Mobil Corp, Chevron Corp and ConocoPhillips by a notch, citing massive quarterly losses and the pressure to tackle climate change.

The Next Plant IPO: Oatly Reported To Be Seeking $10B Valuation In U.S. Listing This Year [Green Queen]

• Oatly could be seeking a value of US$10 billion in a U.S. initial public offering that could come as soon as May, according to a new report from Bloomberg. The Swedish food tech behind one of the recognisable plant-based milk brands on the market has been backed by the likes of Oprah and Blackstone, and is said to be working with advisers on going public as soon as May of this year.  

Ubben seeks $8 billion for new hedge fund amid talks with Exxon - sources [Reuters]

• Jeffrey Ubben, a hedge fund veteran in talks to join Exxon Mobil Corp’s board, is seeking to raise as much as $8 billion for his new socially and environmentally conscious fund, according to people familiar with the matter.

CaixaBank issues second Green Bond for €1 billion and opens the 2021 Spanish senior issue market [CaixaBank]

• The bond will be used to finance renewable energy projects and energy-efficient buildings.
• Caixa reports demand of more than €3.7 billion for the new issue.  This Green Bond is the fourth issue within the SDG framework: two Social Bonds, in September 2019 and July 2020, and a Green Bond in November last year.

Goldman Sachs Issues its First Sustainability Bond in $800 Million Offering [ESG Today]

• Goldman Sachs announced the issuance of its first Sustainability Bond, in an $800 million offering, with proceeds to be allocated towards projects and initiatives aimed at accelerating the climate transition and advancing inclusive growth.

Hyundai Capital issues US$600 million green bonds [The Asset]

• Hyundai Capital Services, South Korea’s largest auto-finance company, has returned to the US dollar bond market, pricing green bonds amounting to US$600 million. The offering closed with a 1.25% coupon at a spread of 92.5bp above five-year US Treasuries. The coupon rate is lower than initial price guidance by 37.5bp, and the company secured the lowest spread and interest rate among all global bonds it has launched.

Hotel giant Whitbread launches £550m green bond push [Business Green]

• Whitbread has launched two green bonds totaling £550m this week, as the Premier Inn-owner continued to drive forward with its sustainability efforts despite the headwinds from the coronavirus pandemic.

LIFE Programme: EU invests €121 million in environment, nature and climate action projects [EU]

• The European Commission today announced an investment of €121 million for new integrated projects under the LIFE programme for the Environment and Climate Action. This funding will promote the green recovery and help Belgium, Germany, Ireland, France, Hungary, Italy, Latvia, the Netherlands, Poland, Portugal and Slovakia to reach their green targets.  

Murphy introduces $100 million investment in clean energy, new climate-focused office [The Daily Targum]

• Gov. Phil Murphy (D-N.J.) last week announced the investment of more than $100 million into statewide clean transportation efforts and the signing of an executive order creating the Office of Climate Action and the Green Economy.
• Murphy said this investment furthers the promise that the state made when they signed legislation in September 2020 to help protect residents’ rights to a cleaner environment.

Fuel cell systems company Loop Energy Inc. files prospectus for $100M IPO - [Fuel Cell Works]

• Loop Energy Inc. announced that it has filed, and obtained a receipt for, a preliminary long-form prospectus for the proposed initial public offering of common shares of the Company (the “Offering”) with the securities regulatory authorities in each of the provinces in Canada. The gross process of the Offering are expected to be $100 million.

Renewables fund hits €100m investment milestone [renews.biz]

• ThomasLloyd’s Sustainable Infrastructure Income Fund (SIIF) has surpassed €100m in assets under management.
• The SIIF is first fully regulated, open-ended public infrastructure fund, listed on the Luxembourg stock exchange’s Green Exchange, a dedicated platform for green, social and sustainable securities.

Macro Commitments

BlackRock unveils climate disclosure expectations, engagement plan for companies [S&P Global]

• The planet’s largest asset manager and dominant player in index funds, BlackRock Inc. has offered more details about its climate-related expectations of companies this year in a paper that ranges from disclosure expectations to setting targets and the factors that may cause the firm to vote in support of shareholder resolutions.

Shell says its carbon emissions, oil production have peaked, plans transition to cleaner energy [The Washington Post]

• Royal Dutch Shell said its carbon emissions and oil production have peaked and will decline in the coming years as the company laid out a detailed plan for its transition to cleaner energy.

Schroders publishes net-zero pathway for £17bn real estate business [IPE]

• Schroder Real Estate has outlined its net-zero carbon plan for its property portfolio as the company seeks to achieve targets in line with the United Nations’ Sustainable Development Goals.

$10 billion bill offered to power Mass. climate legislation [The Berkshire Eagle]

• Arguing that Massachusetts will not be able to meet the goals of a major emissions reduction bill without additional funding, Rep. Bill Driscoll and environmental activists unveiled a new bill aimed at raising and investing $10 billion in green infrastructure and other mitigation strategies by 2030.

Pakistan Plans First Green Bond to Fund Hydropower Projects [Bloomberg Green]

• Pakistan’s government is planning to issue a $500 million green bond in the next few months to help boost its development of hydroelectric power.

UN’s race to zero draws climate pledges from a fifth of FTSE 100 [Hindustan Times]

• Almost a fifth of FTSE 100 companies have signed up to a United Nations pledge to eliminate their carbon emissions by 2050, as UK Prime Minister Boris Johnson strives to inject momentum into domestic efforts to fight climate change.
• Nineteen members of the UK’s benchmark stock index, with a market capitalization of about 715 billion pounds ($987 billion), have committed to the UN’s Race to Zero campaign. They include AstraZeneca Plc, Vodafone Group Plc and Rolls Royce Holdings Plc, he said.

Bank of America promises net-zero emissions by 2050 [The Hill]

• To meet the ambitious goal, Bank of America will have to eliminate greenhouse gas emissions from its own operations as well as engage with the companies it lends to in order to “help accelerate their own transitions to net zero.”

Wales legislates for net-zero carbon by 2050 [The Planner]

• Ministers have laid regulations in the Senedd that formally commit Wales to legally binding targets designed to deliver net-zero carbon emissions within 30 years.

First US Bank to Center on Climate Will Cater to Sustainability-Focused Businesses [Environmental Leader]

• Climate First Bank, the first bank in the US to focus primarily on the climate, will open in Florida’s Tampa/St. Petersburg region in the spring of 2021. In addition to offering standard banking services, the company will place a special emphasis on non-governmental organizations (NGO) and businesses that are committed to sustainability.

Luxembourg launches a strategy to boost sustainable finance [Landscape News]

• Luxembourg has launched a sustainable finance strategy to encourage investments that have a greater positive impact on people and the planet. According to its coordinators, the initiative builds on priorities outlined by the Paris Agreement on climate change and the European Commission, while aligning with international commitments to “build back better” – and more sustainable – from the COVID-19 pandemic.

Jaguar and Land Rover brands to be all-electric by 2025 [BBC News]

• The company will launch electric models of its entire Jaguar and Land Rover line-up by 2030, keeping all three of its three UK plants open as part of its strategy.

Ship Giant Maersk Bids Farewell to New, Fossil-Fuel Only Ships [Bloomberg Green]

• The world’s largest shipping line is taking a historic step toward not using fossil fuels for propulsion as part of its net zero by 2050 commitment. All newly constructed vessels owned by A.P. Moller-Maersk will have to be able to use carbon-neutral fuels, such as clean methanol and ammonia, as well as traditional oil-based products, the company said in a statement.

Steel industry sets 2050 target for net zero CO2 emissions [The Asahi Shimbun]

• A Japanese steel industry group has moved up its goal of achieving net zero CO2 emissions in the industry by 50 years, with the target year now set for 2050.
• The goal brings the steel producers in line with Prime Minister Yoshihide Suga's pledge for Japan to go carbon free by 2050.

Ford to go fully-electric in Europe by 2030 [Belfast Telegraph]

• In a big move, Ford, the third largest car producer globally, has announced that every car in its European line-up will feature an EV or plug-in hybrid powertrain by 2026, ahead of the firm switching its entire range of cars to fully electric by 2030.

Italian Energy Giant Eni—Following Shell, Total, Occidental— Pledges Carbon Neutrality By 2050 [Forbes]

• Eni vowed on February 19 to become carbon neutral by 2050 — balancing greenhouse gas emissions by offsetting from the atmosphere an equivalent amount of carbon – joining an array of other oil majors making similar pledges.
• Eni plans to cut emissions by 25% by 2030 from 2018 levels and reduce them by 65% by 2040.

Pathways, Frameworks, Case Studies, Research

US is falling behind its peers in tackling climate change says MIT’s Green Future Index [The Hill]

• A new global scale ranks countries on how well their transition to clean energy is going, and it is meh news for the U.S.
• Run by the Massachusetts Institute of Technology (MIT) and released last month, The Green Future Index takes 76 countries into account, measuring how their infrastructures are moving toward low-carbon energy.

Sustainable Funds in US Sees Record Flows, and Outperforms Peers [NAPA]

• Sustainable investing funds in the US not only saw record flows for the fifth year in a row, but in many cases outperformed their peers, according to Morningstar.
• These funds attracted a record $51 billion in net flows in 2020, more than twice the previous record set in 2019. In “Sustainable Funds U.S. Landscape Report,” the firm also reports that sustainable fund flows accounted for nearly one fourth of overall net flows into stock and bond mutual funds in the U.S. in 2020.

US financial industry lays out low-carbon vision [S&P Global]

• Key financial trade groups laid out a vision Feb. 18 for shifting the U.S. to a low-carbon economy, saying that the industry can play a leading role in limiting the risks that climate change poses to the system.

UK launches new Oxford-led research centre to accelerate the ‘greening’ of the global financial system

• The UK is putting environmental issues at the heart of global finance with £10 million in backing to create a new Oxford-led research centre to advise lenders, investors and insurers, enabling them to make better decisions to support a greener global economy.

Industry Coalition Releases Principles for Transitioning to Low-Carbon Economy [ABA Banking Journal]

• The American Bankers Association joined 10 other financial trade associations in releasing a set of principles -- a framework for financing the transition to a low-carbon economy -- they are intended to guide the industry’s engagement with policy makers to find commonsense, market-based solutions to the challenges and opportunities related to climate risk and the ongoing transition of the economy away from carbon.

Report: Real estate sector's inaction on climate change could increase costs by $2.5trn [edie]

• According to a new briefing for investors published last week by NGO ShareAction, globally, real estate firms might incur as much as $2.5trn of additional costs in future from extreme weather damage, higher utility bills, stranded asset costs and retrofitting costs, unless they accelerate action to decarbonise buildings and to boost climate adaptation and resilience this decade.

New German carbon tax to barely dent car emissions -study [Carbon Pulse]

• Germany’s new domestic carbon pricing scheme for transport introduced this year is estimated to have a marginal impact on the country’s road-based CO2 emissions, researchers estimate.

U.S. renewables to dominate generation mix by 2030 with doubling of output by 2050 [Smart Energy Decisions]

• The U.S. Energy Information Administration (EIA) announced on Feb. 8 that it expects the share of renewables in the U.S. electricity generation mix to increase from 21% in 2020 to 42% in 2050. Wind and solar generation are responsible for most of that growth.

Net Zero Asset Owner Alliance calls for blended finance vehicles to invest in climate solutions [Investment Week]

• Alliance members will work with "a number of select asset managers" to identify priority investment segments to help finance the transition to a net zero economy, utilising blended finance to de-risk investments in climate solutions, which currently do not have the appropriate risk-return profile to attract institutional capital.

Report: Health benefits of Paris climate goals could save millions of lives by 2040 [Carbon Brief]

• The health opportunity of more ambitious climate policies is the focus of the study, recently published in the Lancet Planetary Health. They take nine globally and regionally influential countries and model the potential health gains they could achieve if they had climate policies that were consistent with the Paris Agreement.
• Deaths avoided by 2040 -- an annual reduction of 1.18 million due to air pollution, 5.86 million due to diet-related risk factors, and 1.15 million deaths avoided due to physical inactivity.

Cambridge Associates Survey Show Another Step Up In Institutional Sustainable Investments [Alpha Week]

• Cambridge Associates has released the results of its biannual sustainable and impacting investing client survey. Since the inaugural survey in 2016, there has been a 146% increase in the number of institutional investors who report making sustainable and impact related investments; more than half (61%) of 2020 respondents are actively engaged in sustainable, impact, or ESG investing, a 25 percentage-point uptick from the 36% reported just two years ago.