2019

Green Bond
European Investor
SurveyThis report was prepared by the Climate Bonds Initiative, with analysis support from Henley Business School.

Sponsored by Luxembourg Stock Exchange, Credit Suisse, Lyxor Asset Management and Danske Bank.

Introduction
This is Climate Bonds Initiative’s (CBI) first green bond investor
survey in what is planned to become a series of surveys. To begin
with, CBI targeted Europe-based investors because Europe
appears to have the most established pool of dedicated green
bond and ESG asset managers. In the future, we plan to survey
North American, Asian and Latin American investors.
We asked investors how they perceive the green bond market.
The goal of the survey is to identify actions and approaches thathave the potential to accelerate the issuance of green bonds bothin Europe and globally. It explores the drivers, challenges andrequired tools and incentives which could encourage investors tobuy (or buy more) green bonds and support market growth. Since
investment decisions are complex and depend on many factors,
we have tried to isolate the factors that pertain to the green bondmarket, i.e. ceteris paribus.
CBI surveyed 48 of the largest Europe-based fixed income asset
managers to gain a comprehensive understanding of how the
fixed income investment community is addressing or intending toaddress climate change through investment decisions. The total
assets under management (AuM) of respondents is EUR13.7tn,
and their total fixed income AuM is EUR4.3tn, with an average of
EUR90bn and median of EUR34bn.
The overall response rate is 45%, but rates differ by region. Over
60% of the investors approached in Benelux and the Nordics took
part, while in Central Europe and UK & Ireland half participated,
and in Southern Europe the figure dropped to less than a third.

Response rate suggests differingcommitment by region
ParticipatedBenelux

Declined / No answer

9 3

Nordics

5 3

UK & Ireland

13

Central European
Southern European

13
18

3

18

7

More details on the response rate, respondents and the survey
methodology are provided in Appendix 1.
Asset owners were not invited to participate unless the funds
were internally managed. Acknowledging that this constituency
will be critical in increasing the demand for green bonds, asset
owners will be surveyed separately at a later point.

About Climate Bonds Initiative
CBI is an investor-focused not-for-profit, promoting investmentin the low-carbon economy. CBI undertakes advocacy andoutreach to inform and stimulate the market, provides policy
models, market data and analysis, and administers theinternational Climate Bonds Standard & Certification Scheme.
CBI’s green bond database is based on alignment with the
Climate Bonds Taxonomy, which excludes all fossil fuel power.1
Climate Bonds Certification is a labelling scheme. Rigorous
scientific criteria ensure that it is consistent with the 2oC
warming limit of the Paris Agreement. Certification requires
initial and ongoing third-party verification to ensure the assets
meet the metrics of sector criteria.2
Green Bond European Investor Survey Climate Bonds Initiative

Contents
3

Summary of findings

4

Investment policy overview

4

Green bond investment preferences

6

Preferred investment categories

9

Investment decision-making

10 Moving the market forwards
15 Emerging markets
16 More on: the green halo, private placements,
other ethical/SRI bonds, information channels
17 Conclusions
18 Appendices

Glossary of terms and abbreviations
AuM – Assets under Management.
UoP – Use of Proceeds define the intended allocation of the bondproceeds by category of investment. CBI assesses what assets
and/or projects each bond will (re)finance and determines the
UoP by reference to the eight categories defined by the Climate
Bonds Taxonomy. To the extent possible, allocations to adaptation
and resilience (A&R) measures are also distributed by category.
Throughout this report, UoP refers to allocations to the categories
defined by the Climate Bonds Taxonomy and to unallocated A&R.
Sectors – BICS (Bloomberg Industry Classification System) or GICS
(Global Industry Classification System) sectors define the issuer’s
industry, i.e. the economic activity used to support therepayments of the bond. Throughout this report, we refer to BICS
or GICS, as appropriate.
EM – Emerging Markets. CBI follows the MSCI market
classification (https://www.msci.com/market-classification).
DM – Developed Markets. CBI follows the MSCI market
classification (https://www.msci.com/market-classification).
Climate-aligned issuer – Bond issuers that derive at least 75% of
their revenues from green activities, whereby activities areassessed against the Climate Bonds Taxonomy. Where such bonds
are labelled as green, they are referred to as green bonds in CBI
research and data. Where not labelled, they are referred toclimate-aligned bonds and/or bonds from fully-aligned issuers.
TCFD – The Task Force on Climate-related Financial Disclosures,commissioned by the Financial Stability Board, has developed aset of recommendations for voluntary and consistent climaterelated financial risk disclosures in mainstream filings.
TEG – Technical Expert Group on sustainable finance set up by the
EU to develop unified metrics for climate-friendly investments.
The EU’s TEG published the first part of the EU Taxonomy forsustainable finance in June 2019.
NGFS – The Central Banks and Supervisors Network for Greening
the Financial System seeks to share best practices and develop
climate risk management while mobilising global climate finance.
Page 2

Key issues for green bond investment
Asset
Owners

PolicyStandardisation• Definitions / taxonomies• Transparency / reporting

Asset Managers
Policy and more issuers needed
to satisfy investor demand

Incentives for issuers and investors• Tax incentives over susbsidies• Lower issuing costs (issuers)• Different capital requirements for lowvs. high-carbon assets (investors)
Sovereign green bonds

Prefer green bonds if
competitively priced
Seeking:• Issuer diversity• Transparency / reliability• Minimum size / liquidity

Coherent climate policy andwider regulation

Issuers
More green bonds from more diverse issuers
Transparency / greenwashing
Lack of knowledge and education
ISSUER TYPES• Non-Financial
Corporates• Sovereigns

Issuer Types (ranking comparison)
Current
GB Market

Investor
Preference

Development
Bank

Non-Financial
Corporate

Financial
Corporate

Financial
Corporate

Non-Financial
Corporate

Sovereign

ABS/MBSSECTORS• Industrials• Consumer Discretionary(e.g. Automotive)• Materials• Consumer Staples(e.g. Agriculture)

Sectors (ranking comparison)
GHG emissions

Investor Preference*

Current GB Market

Energy / Utilities

Energy / Utilities

Energy / Utilities

Industrials

Industrials

Buildings

Consumer Discretionary

Consumer Discretionary

Transport

Consumer Staples

Materials

Waste

Development
Bank

Real Estate

Real EstateLand Use / Agriculture

Local
Government

Local
Government

Materials

ICT

Industry

Sovereign

ABS/MBS

ICT

Consumer Staples* Refers to Non-Financial Corporates
GHG emissions and Investor Preference in terms of GICS sectors; Current GB Market in terms of UoP categories.

Green Bond European Investor Survey Climate Bonds Initiative

Page 3

Summary of findings
Survey results indicate a lack of adequate supply of green bonds,
with 67% of respondents overweight against the market. See p. 4
Investors regard transparency very highly and green bonds arewell positioned to play an increasingly important role.

Investors want deals with high climate impact
There is a broad positive correlation between the level of interest
from respondents in industry sectors with the greenhouse gas(GHG) emissions of those sectors. This suggests that respondents
are informed of climate change issues and are looking to invest
capital in sectors that need to lower their GHG emissions themost. See pp. 6-7•

When asked to identify the non-financial corporate sectors inwhich they would like to buy more green bonds, respondents
highlighted Industrials, Energy and Utilities, Consumer
Discretionary, and Materials as the top sectors. See pp. 6-7•

Respondents are supporting all UoP categories, as defined
under the Climate Bonds Taxonomy. The Taxonomy excludes
certain assets and projects that are not ambitious enough oraligned with a 2-degree future, most notably investments infossil fuel power generation and related technology, given theexistence of a viable alternative (renewables). See p. 6•

Compared to their GHG emissions, Industry and Land use
appear to be the most under-funded sectors at a global level.
Governments could step in with supportive policy initiatives
and possibly sovereign bonds, especially since respondents
expressed strong demand for this issuer type. See pp. 7-8

Investors value green credentials
The most important factor for making a green bond investment
decision is satisfactory green credentials at issuance. See p. 9•

Accountability and discoverability (i.e. ease of identification)
are among the main advantages that green bonds bring to thecapital markets.

•

Respondents demonstrated high expectations of integrity,with 79% saying they would not buy a green bond if theproceeds were not clearly allocated to green projects at
issuance. By the same token, 55% would definitely sell if postissuance reporting was poor, and 30% would be more likely to.
See pp. 9-10

Investors want more issuance from corporates
Deals from financial and non-financial corporate issuers represent
45% of current outstanding green bonds, whereas 93% of
respondents highlighted corporate issuance as one of theirpreferred investment channels. See p. 5•

Non-financial corporate and sovereign issuers represent a
substantially lower share of currently available bonds
compared to stated demand from respondents. See p. 5•

Respondents identified Industrials, Energy and Utilities,
Consumer Discretionary, and Materials as the top sectors
where they want to see more green bond issuance. From the
top five bond issuers in the top five sectors – i.e. out of 25
bond issuers – only six have issued green bonds. This points tosignificant potential for unmet demand to be fulfilled throughscaling up green bond issuance. See pp. 6-7 and p. 21

Investors view policy as key to scaling up
Respondents view policy as the most effective way to scale up thegreen bond market, with standardisation of definitions being apriority. See pp. 10-14•

The EU’s TEG is establishing a classification system forsustainable finance which will help to standardise green
definitions in the EU and internationally.

•

Policies such as tax incentives and differentiated capitaltreatment of low- versus high-carbon assets, designed tochannel investment from high- to low-carbon assets, are also
regarded as having high potential. See p. 11

Credit rating agencies and similar institutions may play a criticalrole by developing integrated ratings and encouraging smaller
investors to increase their green bond investments. See pp. 10-11

EM green bonds are viewed favourably but
investors want more and bigger deals
Respondents value the transparency and comparability that green
bonds bring and welcome the opportunity for closer scrutiny thatgreen bonds provide, especially in EM. See p. 15
82% of respondents can buy EM debt. However, the limited
availability of EM green bonds is exacerbated by respondents’restrictions on credit rating, currency exposure, and minimum size
requirements. See p. 15

Respondents in the lowest AuM tercile tend to have a larger proportion of green bond holdings% green bonds

Fixed income AuM (EUR bn)

800

60%

700

50%

600
40%

500
400

30%

300

20%

200
10%

100
0

0%
EUR150m - EUR21bn
Small investor

EUR22bn - EUR64bn
Medium investor

Green Bond European Investor Survey Climate Bonds Initiative

Green bond holdings as % of FI AuM

FI AUM (EURbn)

EUR68bn - EUR731bn
Large investor
Page 4

Investment policy overview
To start off, respondents were asked to describe how green
bonds had impacted investment decisions and how much of their
fixed income AuM were green bonds.3 Since multiple options
could be chosen for the first question, the figures below add up
to more than 100%

Around 67% of the respondents are overweight against the
global green bond market, highlighting unmet demand for green
bonds. The share of green bonds in the global fixed income
market is around 0.5%, but 88% of respondents invest 0.5% ormore of their fixed income AuM in green bonds.4

Almost two-thirds of respondents (64%) said they prefer green
bonds where available and competitively priced (over vanillaequivalents). Over half of these also have a specific green bondfund and/or mandate, suggesting that their interest in green
bonds permeates their other funds and mandates, not just the
dedicated ones.

On average, respondents have invested 4.6% of their fixedincome AuM in green bonds. Large respondents have a smaller
percentage (2.8%) of holdings invested in green bonds comparedto small asset managers (7.4%).
•

Nordic investors have access to plentiful green bondopportunities in their local currencies (e.g. 243 SEKdenominated bonds totalling SEK235bn/USD28bn) and/orfrom local issuers. Nordic respondents invest the highest
percentage of holdings in green bonds (6%).

•

Respondents from the UK invest less (3%), which isunsurprising given the woeful lack of green bonds
denominated in GBP (21 bonds totalling GBP6bn/USD8bn).

Two thirds prefer green bonds whereavailable and competitively priced
No impact2%

Plans to incorporate

8%

Prefer where available
Mandates and/or targets
Specific fund(s)

64%
34%
48%

Almost half of the respondents (48%) have a specific green bondfund, and a third (34%) have specific mandates or targets. Somehave both, as overall 56% of respondents had either specificfund(s) or mandates.
Just 2% said that green bonds have not impacted theirinvestment decisions, and 8% had plans to incorporate them intheir investment decision-making.

A lack of suitable assets is impeding the growth of the green
bond market. Results from this survey are provided by a group ofinvestors overweight against the green bond market, which may
have influenced their decision to participate. However, thisreinforces the fact that investors are eager to support thismarket and that the lack of available assets could be a barrier toentry for potential new entrants to the market.
“We prefer to source green bonds in the primary market
where possible, since it is challenging to find scale in thesecondary market.”Thomas Back – Senior Portfolio Manager, Swedbank RoburGreen bond investment preferences
Preferred channels for green bond investment

Respondents prefer corporates,
development banks and sovereigns

Respondents were invited to describe their preferred channels forgreen bond investment, which include a mixture of issuer types,
instruments, and business activities. Respondents were asked to
select all that applied.

Corporate

Development bankSovereign

Climate-aligned

Private placement

Green loan

Over 90% of respondents expressed a preference for corporates,
followed by development banks and sovereigns. A third expressed
an interest in bonds from climate-aligned issuers, and some areinterested in private placements (9%) or green loans (4%).
Respondents that actively invest in green bonds (56%) tend not toprefer bonds from climate-aligned issuers and have lower
preferences for green bonds issued by development banks. On theflip side, they have higher than average preferences for private
placements and green loans.
Respondents with 1% or more of their AuM in green bonds are
three times more likely to include sovereigns among theirpreferred channels. Sovereign bonds are typically larger in size,
thus offering more opportunity for investments.
Only large respondents show interest in green loans, possibly
because of the resources required to evaluate such instruments.
Green Bond European Investor Survey Climate Bonds Initiative

93%
76%
57%
35%
9%
4%
0%

20%

40%

60%

80%

100%

“Local governments could issue green bonds to develop
infrastructure for low carbon transport such as hydrogen
fuelling stations.”
Andreas Dankel – Head of Credit, Danske
Page 5

35% of respondents highlighted climate-aligned issuers as apreferred investment channel. Climate-aligned bonds without thegreen label may not be suitable for investors with dedicated green
bond funds, since the green bond label is used to identify thepermitted assets according to the policy guidelines of such funds.
However, they could be slotted into a broader responsible
investment strategy, and there is plenty of opportunity to do so.

Demand vs supply of green bonds by issuer type
Development banks, financial corporates and non-financial
corporates are each responsible for about a fifth of green bondissuance by value.

Development banks and corporates
dominate current green bond issuance

CBI analysis from September 2019 revealed USD859bn ofoutstanding bonds from climate-aligned issuers, compared to
USD569bn of labelled green bonds (as of the cut-off date).5
Private placements were chosen by 9% of respondents. Most
respondents said they were not permitted to or preferred not tobuy private placements because of liquidity constraints.

1% 2%

Non-financial corporates emerged as the clear preference among
respondents, followed by financial corporates. Apart from thehighest average score, non-financial corporates also exhibit thelowest variation of answers, suggesting it is a priority issuer typefor most respondents.

Corporates and sovereigns are the mostdemanded issuer types
Average

2

MBS

ABS

Local gov

Dev bank

1
EM sov

DM sovereign

Current GB market

Respondents expressed higher demand for issuance from
Developed Market (DM) sovereigns over EM sovereigns. This is
likely related to the higher risk, currency restrictions, lack ofliquidity, and possibly lower transparency associated with EM.
The greatest variation in demand is for green ABS and EM
sovereign issuance, closely followed by development banks andgreen MBS.
In relative terms, some issuer types are under- or overrepresented relative to the demand described by respondents. It
is precisely these types of relative imbalance that this survey aims
to understand and highlight.
In absolute terms, there is too little issuance across issuer types,
according to investors.
“Too much issuer concentration makes it hard to construct
a well-balanced green bond portfolio. Issuers from a wide
variety of sectors are needed to diversify risks.”
François Millet – Head of ETF Strategy, ESG and Innovation,
Lyxor Asset Management

Green Bond European Investor Survey Climate Bonds Initiative

Local government
EM sovereign

Comparing respondent preferences with current green bondavailability points to opportunity particularly for non-financial
corporate and sovereign issuers to bring more green bonds to themarket. In both cases, policymakers will be instrumental in
addressing the barriers to issuance that exist among these issuer
types (e.g. potential extra costs of issuing green bonds,
identification of suitable projects, etc.). The Moving the Market
Forwards section contains more detail on this topic.

3

DM sov

Government-backed entity

USD569bn

Loan

Most

Fin corp

ABS

19%Median4

Non-fin corp

Non-financial corporate

13%

Respondents were asked to assign a score between one and fiveto eight named issuer types, according to the intensity of theirdemand for each, 1 being the lowest and 5 the highest.

5

20%

19%

Preferred issuer types

Score

Financial corporate

5%
8%
13%

Development bank

Least

Respondent Preference

DevelopmentbankNon-financial
corporate

Financialcorporate

Financialcorporate

Non-financial
corporate

Sovereign

ABS / MBS

Development
bank

Local
government

Local
government

Sovereign

ABS / MBS

High

Low

Note: Comparison excludes government-backed entities and green loans.

Respondents expressed demand for both DM and EM sovereigns.
The momentum in sovereign issuance, if sustained, could help tonarrow the supply/demand imbalance. Germany, Spain, Egypt,
Peru and Colombia have indicated an interest in issuing sovereign
green bonds, while the Netherlands, Hong Kong and Chile entered
the market with green sovereign bonds in H1 2019.
Development banks are pioneers and prolific issuers of green
bonds, so comparing the size of this issuer type to demand from
respondents indicates a relatively adequate supply. From an
investor standpoint, and relative to other issuer types, perhaps
this suggests development banks could more effectively support
the market’s growth “indirectly” rather than as green bond issuers
themselves, e.g. through de-risking tools (such as credit
guarantees and insurance policies), anchor investing (for instance
via private placements or junior debt), providing technicalassistance, etc.
Page 6

Preferred investment categories
Preferred use of proceeds by sector

80% of issuance to date is allocated toEnergy, Buildings and Transport

Respondents were asked to disclose the use of proceeds of theircurrent investments, and which UoP categories they would like tofinance. The UoP sectors are categorised according to the Climate
Bonds Taxonomy.1

0.2%

0.4%

12%

Majority of respondents show interest in
most UoP categories

37%

16%
EnergyTransport
Buildings
Water
Waste
Land use
Industry
ICT
Adaptation

96%
87%
85%

26%

77%

UoP categories define the assets or projects being financed, i.e.
what the proceeds will be spent on and hence the sources of GHG
emissions to be addressed.

53%
43%
38%
20%

40%

60%

EnergyBuildings
Transport
Water
Waste
Land use
Industry
ICT
Unalloc. A&R

Preferred non-financial corporate sectors

68%
64%

0%

0.4%

4%
4%

80%

100%

The Adaptation category in the chart above is a catch-all
preference category for investor willingness to fund investment in
adaptation and resilience (A&R) measures. While A&R measures
can be – and often are – financed together with mitigation
measures for a specific sector, the survey specifically asked about
A&R as such measures may involve funding programmes rather
than specific assets and there are issuers who have raised funding
specifically for A&R investment (e.g. flood prevention andprotection, coastal defences). The Netherlands sovereign green
bond is a recent example.
“Our green bond investments are currently focused on
mitigation. We would increase our holdings in Adaptation/ Resilience if there were more opportunities available.”
Johann Ple – Fixed Income Portfolio Manager,
AXA Investment Management
There is currently more demand for bonds financing mitigation in
preference to adaptation, although there is clearly interest in
buying green bonds with UoP financing all categories:•

Mitigation investment preferences: Energy is most popular,
followed by Transport and Buildings. ICT and Industry are lesspopular UoP categories, but there is still material interest.

•

Adaptation investment preferences: Water and wastewater
management was cited most often. However, only 38% of
respondents are investing or intend to invest in A&R, mainly
due to lack of opportunities and/or lack of clear metrics.

•

Medium-sized respondents seem to be more selective about
the activities they finance, showing less intention to buy green
bonds in every UoP category.

No categories seem to be excluded by investors, suggesting they
are willing to support all areas of the market. The UoP categories
that respondents said they invest or would like to invest in broadly
correspond to UoP allocations of issued bonds. This is possibly
influenced by limited investment choices and/or the fact that the
UoP is not necessarily related to the issuer’s sector.
Green Bond European Investor Survey Climate Bonds Initiative

Industry sectors define the business activity or economic function
supporting the debt repayment. A company from any sector may
issue a green bond to finance an UoP category, at least in theory.
For example, Apple is classified in the Information Technology
sector according to GICS6 (Technology, according to BICS7), but
the UoP of its recent green bonds pertains to Buildings, Industry
and Energy, as those were the types of projects financed.
As investors tend to analyse investments by sector rather thanUoP category, certainly among non-financial corporates, we
explored investor preferences for industry categories as well.
Respondents were asked to list the top three non-financial
corporate sectors in which they would most like to buy green
bonds. We categorised these according to the commonly used
GICS. Whilst this was often straightforward, some responses were
ambiguous: for example, ‘Transport’ could mean either Industrials(e.g. rail transport) or Consumer Discretionary (e.g. automotive). It
is also worth noting that the preferences refer to non-financial
corporates, not necessarily to the overall preferences (i.e.
including other issuer types).
The frequency of each industry sector cited, as well as the share of
total AuM, were measured and compared to the contribution of
GHG emissions from each sector.8 A more detailed explanation of
our methodology and assumptions is provided in the endnotes.9,10
Investors want to see more issuance particularly from thefollowing five sectors (by GICS category):
1.
2.
3.
4.
5.

Industrials (e.g. transportation, machinery, services)Utilities (e.g. electric, gas, water)
Consumer Discretionary (e.g. automotive, retail, electronics)
Energy (e.g. oil & gas, but for renewable energy projects)
Materials (e.g. metals & mining, chemicals, forestry
products, construction materials)“We would welcome more green bonds from sectors suchas Capital Goods, Healthcare, and Basic Industries toenable greater diversification. Green bonds could enable
capital markets to support companies from these sectors
in their transition to low carbon business models.”
Scott Friedman – Credit Analyst and Portfolio Manager,
Newton Investment Management
Page 7

Respondents broadly show more demand for bonds in the highest emitting sectors - such as
Energy/Utilities and Industrials - although the relationship is not perfect

Interest (frequency, i.e. unweighted)

100%

80%

Energy / Utilities

Industrials

60%

40%

Consumer Discretionary
ICT

Real Estate

Materials

20%

Healthcare

Bubble size represents
contribution to GHG
emissions

Consumer Staples

0%

0%

20%

40%

60%

80%

100%

Interest (weighted by AuM)

How to read this chart
The level of interest is based on the number of respondents (vertical axis) as well as the respondents’ share of AuM (horizontal axis). The
sector’s contribution to GHG emissions is represented by the size of each bubble.
One can therefore infer the level of demand relative to respondent size by comparing the position of each bubble with the trend line.
Sectors below the line, such as Consumer Discretionary and Materials, are more in demand by large respondents relative to those above
the line, such as Real Estate and Industrials.

The comparison with GHG emissions, shown above, is to assess
whether there is a relationship between the sectors respondents
want to invest in, and their level of pollution. There cannot be aperfect match between the two because the activities of some
sectors lend themselves to debt financing better than others, andcompanies in those sectors are thus more able to issue green
bonds. Notwithstanding this, the results are interesting.
There is a broad positive correlation between the level of interestin sectors with their GHG emissions. This is likely due to the higher
need for green investment being precisely in the most polluting
sectors, and the fact that green bond issuance is severely lacking
in some high-emission sectors like Industrials and Metals/Mining.
Even so, Materials – and to some extent Industrials – garnered
relatively more interest from respondents than their emissions
would suggest, whilst Consumer Staples (e.g. agriculture) seems tobe less demanded relative to its level of pollution. It is also
noteworthy that Consumer Discretionary is considerably more in
demand than Consumer Staples, despite similar GHG emissions,due to substantial demand for automotive bond exposure.
These results point to a sophisticated investor base, with theknowledge and capital needed to address climate change issues
through investment decisions. Issuers, particularly those insectors with the largest GHG emissions, can absorb this capital byissuing green bonds to fund their transition to a low carbon,
climate resilient business model.

Where’s the green?
Appendix 5 shows the five sectors (BICS) where respondents said
they would most like to buy more green bonds. The five largest
bond issuers by amount outstanding (in USD) in each sector wereidentified. The current combined size of the bonds from these 25
issuers is USD1.5tn, almost thrice the size of the entire green bondmarket as of April 2019.
Green Bond European Investor Survey Climate Bonds Initiative

However, it was determined that only 8 of the 25 issuers haveissued green bonds: one from Industrials (railway company SNCF
Reseau), five from Utilities (EDF, Duke Energy, State Grid of China,
Enel SpA, and The Southern Co.), and two from Consumer
Discretionary (Volkswagen and Toyota Motor) as of Q1 2019.
There are no green bond issuers in the top 5 in the Energy andMaterials sectors. We note that while GICS classifies renewableenergy as Utilities, BICS does so under Energy, so the top five BICS
Energy issuers could include renewable energy producers (andgreen bond issuers). In any case, fossil fuel producers could invest
in renewables and respondents expressed a preference for this.
There is therefore potential for unmet demand to be satisfied
through large scale green bond issuance, as these companies aligntheir business activities and practices with a 2-degree future.
“Oil and gas companies could issue transition or energy
efficiency bonds to finance their path away from fossil
fuels and towards a sustainable future.”
Felipe Gordillo – Senior ESG Analyst,
BNP Paribas Asset Management

Funding gap: GHG emissions v green bond UoP
To identify relative funding gaps, we compared UoP categories to
GHG emissions.11 Unlike the previous comparison, which wasframed in terms of non-financial corporates’ GICS sectors, there is
no restriction on issuer type in this analysis. GHG emissions basedon GICS sectors are now compared with available green bonds
based on UoP categories, rather than to investor preferences.
The analysis is on a best-efforts basis, the results being indicative
rather than exact. Since GICS sectors do not match UoP categories
exactly, the categories in the chart below are an adapted versionof the UoP categories. More detail is provided in the endnotes.12,13
Page 8Green bonds could be leveraged to address relative sector funding gaps across the world
50%
Industry (17%)

40%
Relative need for green bonds(based on emissions)30%

Land use / Agriculture (13%)

20%
Waste (3%)

10%0%Transport (15%)

-10%
-20%

Buildings (6%)-30%Energy / Utilities (45%)

-40%
-50%

World

China

USA

EU

India

BrazilNote: brackets show global
contribution to GHG emissions.

How to read this chart
The graph shows mismatches between green bond issuance in different sectors and their contribution to GHG emissions, relative toother sectors. The sum of all sectors in a given region therefore adds up to zero. The results show relative (not absolute) imbalances.
The vertical axis represents the relative need for issuance in each sector category, given its contribution to GHG emissions in each region.
Sector categories above the 0% line thus have a “shortfall” of issuance relative to others (i.e. the share of emissions exceeds the share ofgreen bonds), whereas those below have an “excess” (i.e. the share of emissions is lower than the share of green bonds). For example,
since Industry contributes 17% to global GHG emissions but only 1% of green bonds, it has a relative shortfall of green bonds of 16%.
The most striking conclusion is that Industry is considerably underfunded across all regions given its high emissions profile, butparticularly so in China. Land use/Agriculture is also consistently
under-funded, except for Brazil where a lot of sustainable forestry
and paper product companies have issued green bonds.
On the other hand, Buildings is typically over-funded, apart fromsmall shortfalls in China and India, but especially in the USA given
the large amount of US green MBS issuance from Fannie Mae.
These findings compare with relatively high interest in Industrials
and low interest in Real Estate expressed by survey respondents.
This again suggest substantial upside potential in issuing green
bonds to finance the transition to a low-carbon economy in highemissions sectors.
There is, however, more variation for sector categories.
Energy/Utilities, for example, is relatively under-funded in China,
USA and EU but over-funded in India and Brazil. Transport isrelatively better funded in China and India than elsewhere.
Green bond issuance in the EU seems to be most in line with theregion’s emissions profile since the mismatches are smaller (<20%positive or negative). Conversely, India and the USA demonstrate
greater mismatches. Europe is the largest regional green bondmarket with investments across sectors.

decarbonising transport. Even for assets and projects that can be
more appropriately funded by the private sector, it is up to eachpolicymaker to devise supportive policy whether in the climate orcapital markets arena.
“We would like to see the commitments of the COP21
Paris agreement translated into new regulations atcountry level, to support the evolution of the green bondmarket.”Wolfgang Pinner – CIO Sustainable and Responsible
Investments, Raiffeisen Capital Management
Sovereign issuance through Q1 2019 (USD34bn) has seen quite
different allocations to sectors compared to the overall market
mix. Transport, Land use and Adaptation represent a larger share,
whilst Energy and Water are less represented. Q2 2019 issuance,
which is not included in the data as it is after the report cut-off
date, has seen more allocations to Transport (from Chile) and
Water and Adaptation / Resilience (Netherlands).

Transport, Buildings and Land use represent
75% of sovereign issuance21%

The role of government in addressing imbalances
As noted above, respondents highlighted their preference formore sovereign green bonds, which only represent 7% of issuance
as of Q1 2019. In this context, the relative funding gaps highlightthe types of projects and investments governments, and policy
setters more broadly, should prioritise.
For example, governments could direct relatively more resources
towards the under-funded sector categories in order to meet their
Nationally Determined Contributions under the 2015 Paris
Agreement. The most obvious way to do so would be to create
policies and/or issue sovereign green bonds, channellinginvestment into priority areas such as agriculture andGreen Bond European Investor Survey Climate Bonds Initiative

15%

6%

10%

22%
32%

2%
2%

Transport
Buildings
Land use
EnergyUnalloc. A&R
Waste
Water

Some categories, such as Transport, Land use and Adaptation,
thus appear particularly suitable for sovereign funding, althoughsome creativity may be required. For example, agriculture falls
within Land use but the proceeds may better be used to develop
institutional capabilities and funding programmes for sustainableagriculture, rather than directly in project implementation. Water
and Waste also show high potential for public sector issuance.
Page 9Investment decision-making
Labelled green bonds require issuers to define the UoP as green.
Most issuers also obtain an external review and declare theirintentions to report how and when the proceeds are mobilised.
One would thus expect such factors to influence investment
decision-making.

Green credentials and pricing are the mostimportant to decision-making
Average

Weighted average

MedianIT

IRMedian

3
2
1
TU

ER

Cert DivIndSec

Abbreviations:
PF = positive fundamentals, IT = issuer transparency, TU = transparent UoP,
IR = impact reporting, ER = external review, Cert = certification (CBI), Div =diversification, Ind = index inclusion, Sec = securitization

4
Score

Weighted average

4

PF

5

Average

5

Score

Respondents profess a high level of integrity and commitment togreen, expecting the same from issuers. They were asked to rank
the relative importance of seven factors for green bondinvestment decisions.

Positive fundamentals and transparency are
the most attractive features

3
Central European and UK respondents differ the most, the former
attaching much more importance to impact reporting andportfolio diversification than the latter.

2
1
GCaI

P

GCpI

Min
size

CR

C

I/S

Abbreviations:
GCaI = green credentials at issuance, P = pricing, GCpI = green credentials
post-issuance, Min size = minimum size of issue/liquidity, CR = credit rating
constraints, C = currency preferences, I/S = issuer/sector constraints

The most important factor for making a green bond investment
decision is satisfactory green credentials at issuance, followed bypricing and satisfactory green credentials post-issuance. Credit
rating constraints, currency preferences and issuer/sector
constraints appear to be the least important factors in the specificcontext of green bond selection.
Comparing the mean scores with the weighted averages suggests
large respondents place less importance on green credentials atand post-issuance whilst attaching more importance to credit
metrics: credit rating constraints, currency preferences andpricing. This could be due to lower rated bonds and deals in lessrobust currencies still being considered a ‘high risk’ category andtherefore subject to liquidity concerns, i.e. less option to sell theinvestment in the secondary market if the bond ceases to meetthe investors’ requirements (limited pool of potential buyers).

Impact reporting is gaining importance within the investmentcommunity. Yet, it is still not a fundamental factor in investment
decision-making. Not surprisingly, it’s more influential for
respondents that have integrated green bonds to a greater extent.
“The ability to measure and report impact could be
developed to support investment in green bonds.”
Nathalie Rodes and Luisa Flores – Senior Portfolio Analysts,
Sustainable Thematics, Research and Portfolio
Management, La Banque Postale AM

Green integrity drives investment decisions
The vast majority of respondents (79%) said they would not buy agreen bond if, at issuance, the proceeds were not clearly allocatedto green projects. Only 13% of respondents said they would,
whilst 9% would be less likely to.15 This reflects the importanceassigned to green credentials and transparency at issuance.

Unclear green UoP strongly influences
investment decision-making

Enhancing the appeal of green bond investing

13%
9%

Respondents were asked to rank factors that could make investingin green bonds more attractive.
Positive issuer fundamentals and issuer transparency emerged as
the most important factors to increase the appeal of green bonds.
Post-issuance disclosure/transparency, impact reporting andexternal reviews follow not far behind. CBI’s Post-issuancereporting in the green bond market 2019 publication identifies thetrends and best practice for post-issuance reporting.14“Transparency and disclosure are the most importantconsiderations in green bond investments.”
Luca Terruzzi – Senior Portfolio Manager, Anima SGR
Green Bond European Investor Survey Climate Bonds Initiative

Would still buy
Less likely to buy
Would not buy

79%

Large respondents seem considerably more inclined to buy a bondwith unclear green UoP (23%). This is probably linked to the factthat they focus on credit credentials rather than green credentials
in upfront decision-making. This could mean that large asset
managers are more concerned with having an exit strategy, while
medium-sized and small asset managers are more likely to be buyand-hold investors with specific green mandates. This question
was not specifically asked in this survey.
Page 10

Lack of clarity on the UoP at issuance seems to impact theinvestment decisions of Central and Southern European
respondents more than those from the UK & Ireland, where only
61% would not buy a bond if unsure about its greenness.

Poor post-issuance reporting can lead tobond sale
15%

Over half (55%) of respondents said they would definitely sell agreen bond if post-issuance reporting was poor, and only 15% of
respondents said they would not. Interestingly, 30% would be
inclined to sell but would engage with the issuer before divesting.
One or two respondents said they may not sell the bond, butwould strip its green label, and if it were in a green bond fund,they would move it elsewhere.
This question highlighted some regional differences, too. Overall,Central and Nordic European respondents seem to place more
importance on post-issuance disclosure than those from otherparts of Europe, with none stating they would hold onto the bond.
Conversely, 67% of Southern European respondents and 31% of
UK & Irish ones would do so. This approach could also be
influenced by the relative size of the respective green bondmarkets: much larger in the former than the latter regions.

Hold
More likely to sell

55%

30%

Sell

Nordic respondents seem to have a greater culture of issuer
engagement compared to other European regions, with four offive saying they would engage with issuers before deciding to sellor keep. This could be partly due to Nordic countries having local
currency bonds and possibly stronger relationships with issuers.
Greater issuer engagement on ESG strategy is an emerging trend
in the fixed income space and green bonds appear to be
facilitating this process.

Moving the market forwards
Preferred market tools and mechanisms to scale
up the green bond market

Integrating credit ratings seen as mosteffective market tool
Average

Respondents were asked to select from a list of market tools andmechanisms which could help to scale up the green bond market.

Rating agencies and similar institutions could play a focal role inassisting investors, especially smaller ones, to increase their green
bond investments. Increasing the scale of the market means that
small respondents can grow their green bond investments. The
current supply deficit is choking this potential. The survey
suggests that small and medium-sized respondents believe thatinternational credit ratings with integrated environmental analysis
are the most effective way to scale up the market, possibly as aresult of limited resources. The same results apply to respondents
that have the lowest integration of green bonds in theirinvestment decisions and processes.
Attitudes towards sovereign bond issuance seem to be somewhat
influenced by the domicile of the respondent. For example, UK
respondents do not believe sovereign green bonds will support
growth as much as those from the Benelux. This could be linked tothe sovereign bonds already issued from Belgium in 2018 and theNetherlands in May 2019 (past this report’s cut-off date).
Anecdotally, several respondents highlighted the challenges (forissuers) of providing green bond disclosure in a standardised way
as well as (for investors) locating and comparing pre- and postissuance green bond reports. The same respondents suggested arepository for all documentation related to green bonds accessibleby all market participants, assisting issuers and investors, andpossibly even in an open access format. Some also suggested thatsuch a database could be managed by a not-for-profit or otherindependent third party.

Median4
Score

Respondents ranked integrated credit ratings16 and sovereign
green bond issuance as the most effective market mechanisms,
although large respondents show relatively more preference forinvestment guarantees. The least preferred tool is green funds set
up by international organisations, as shown opposite.

Weighted average

5

3
2
1
IR

Sov

Exch L/P

IG

GF

Abbreviations:
IR = integrated ratings, Sov = sovereign bonds, Exch L/P = exchange
lists/platforms, IG = investment guarantees, GF = green funds

At present, 17 stock exchanges including Luxembourg, Tokyo, andVienna, have, or plan to introduce, green bond platforms. Someof those (e.g. Luxembourg) provide green bond documentation
databases for bonds listed on their platforms.
In this context, the Inter-American Development Bank (IDB) is
currently developing a public Green Bond Transparency Platform
for Latin America and the Caribbean, with advisory support from a
consortium of market actors including standard-setters, external
review providers, issuers, investors and underwriters.17

Policy mechanisms are perceived as more
effective than market ones
Policymakers are shaping the vision of tomorrow through today’s
regulation. In the green bond market everything is still voluntary,
but soft law is supporting green bond issuance. CBI classifies
existing policies in a policy database.18 Existing policies are
extremely limited but include subsidies and tax incentives, whichwere two of the options presented as possible responses.

Page 11
Green Bond European Investor Survey Climate Bonds Initiative

Green bond subsidies and tax incentives(as of May 2019)

Subsidies
China has at least four regional subsidy schemes in place,including in Beijing, Xiamen, Xinjiang and Shenzhen.

Hong Kong’s Green Bond Grant Scheme provides up to
HKD800k subsidy to offset the cost of an external review.

Japan’s Financial Support Programme for Green Bond
Issuance offers subsidies of up to JPY50m (USD4.5m) tomeet costs related to green bond issuance.

Malaysia’s Green SRI Sukuk Grant Scheme permits
institutions raising funds in compliance with the SRI Sukuk
Framework to claim 90% of external review cost subject toa maximum of MYR300k (USD77.5k) per bond.

Singapore’s Green Bond Grant Scheme assists eligible
issuers with 100% of the costs of an external review up to
SGD100k (USD73k).

Tax incentives
Malaysia offers SRI Sukuk tax deduction on issuance costs
until 2020. While not related just to green bonds, it alsooffers tax incentives for green technology activities inenergy, transportation, building, waste management andsupporting services , as well as financing incentives under
the Green Technology Financing Scheme (GTFS).
Respondents view policy as the most effective way to scale up themarket, a view supported throughout responses. Asset managers
were invited to rank policy mechanisms that could be used to help
scale up the green bond market. All the policy tools listed scoredrelatively high, except for subsidies.

Policy mechanisms score higher than market
tools
Average

Weighted average

Median

5

Score

4

will help to standardise green definitions in the EU andinternationally, which could offer some clarity in this area.
Preferential capital treatment of low-carbon assets and regulatory
and legislative trends were a close second (after standardisation).
Interestingly, penalising capital requirements for high-carbon
assets – the flipside of preferential capital treatment of lowcarbon assets – was among the lowest scoring options. This may
be partly due to respondents not wanting to “shoot themselves in
the foot”, as they could be hit if this policy were implemented.
This would especially impact larger investors with comparatively
more brown assets, who unsurprisingly seemed less supportive of
this policy than smaller asset managers.
It was also suggested that penalising investment in high-carbon
assets could be avoided by selling off such assets whilst not
actually being invested in green ones. Therefore, policies
encouraging investment in low-carbon assets directly would be
more effective.
Mandatory climate-related financial disclosures and tax incentives
were the next highest scorers. Large respondents, and those witha greater percentage of green bonds, tend to be more aware andassign more importance in bringing scale to the implementation of
the recommendations of the Task Force on Climate-related
Financial Disclosures (TCFD, see next page).
Respondents seem to believe that incentives could have amaterial effect in helping the market grow, regardless if they were
for issuers or for investors. Essentially, respondents believe thatthe carrot rather than the stick will move climate finance forward.
Subsidies were by far the lowest scoring tool. A common reason
given by respondents for the lack of appeal of subsidies was thatthey believe the subsidy would simply “go in someone’s pocket”
instead of being a robust tool to scale up green investment. Whileboth subsidies and tax incentives are extremely limited in both
geography and scope, green bond subsidies are currently available
in five countries, while tax incentives, which respondents claimed
to prefer, are only active in Malaysia.
“We need simplicity and transparency. So clearer
definitions, the use of international standards andlabelling, supported by potential regulation, would
enhance growth and scale in the green bond market.”
Alban De Faÿ – Head of Fixed Income SRI Process, Amundi

3

Green bond definitions

2
1
Sta Pref LC Reg

Discl

Tax Pen HC Subs

Abbreviations:
Sta = standardisation, Pref LC = preferential treatment of low-carbon
assets, Reg = regulatory trends, Discl = mandatory disclosure, Tax = tax
incentives, Pen HC = penalise high-carbon assets, Subs = subsidies

Standardisation of definitions was the highest scoring policy
mechanism on average, with respondents less active in the green
bond space seeing more potential in this policy tool. This is likely
due to such respondents being more reliant on external
definitions of green, consistent with other survey results.
The Technical Expert Group on Sustainable Finance (TEG) isestablishing a classification system for sustainable finance which
Green Bond European Investor Survey Climate Bonds Initiative

Respondents expressed differing views on the best strategy fordefining green bonds. Half believe the definitions should become
stricter (48%), a third indicated the opposite (31%), and a fifth
expressed no preference (21%).

More respondents prefer stricter definitions

31%

Broad
No preference48%

Strict21%
Notably, several respondents explained that they would prefer a
two-pronged approach, with broader definitions initially to scale
up the market, followed by a progressive tightening as themarket becomes larger.
Page 12

Large respondents seem to prefer broader definitions comparedto small investors, perhaps because they are more likely to havein-house screening criteria and green assessments, relying less on
external definitions. Their apparent preference for broader
definitions may thus reflect the desire not to lose opportunities
that they can screen out anyway. This is based on a division of theanswers by terciles determined by respondent size. Looking
instead at the weighted average of answers, it is tilted towards
stricter definitions compared to the simple average.
There is a marked difference between UK and Central European
respondents. Most Central European respondents (61%) prefer astrict definition of green, while the same percentage from the UK
are in favour of a broader definition of green.

“We support clear and consistent definitions to safeguard
the integrity of the market and look for a dialogue with all
stakeholders to further grow the market.”Willem Hettinger - Senior Responsible Investment Specialist,
APG

Implementation of TCFD recommendations
The Financial Stability Board Task Force on Climate-related
Financial Disclosures (TCFD) is a market-driven initiative, set up to
develop recommendations for voluntary and consistent climaterelated financial risk disclosure in mainstream company filings.
Companies benefit from guidance in providing information toinvestors, lenders, insurers, and other stakeholders. The funding
side benefits from increased, if not yet consistent, disclosure.
Respondents were asked to describe their commitment toimplementing the recommendations of the TCFD.

Over 80% of respondents either will or havealready implemented TCFD
23%

Not aware

14%
5%

No plan to implement
Committed but waiting

58%

In place(partially or fully)

Commitment and implementation•

58% of respondents are committed to implementing but
waiting for further guidance or regulation.

•

A quarter have it in place for some or all or their portfolios.

Differences by asset manager size•

Large respondents are more likely to be implementing TCFD
(at least partially).

•

Smaller respondents are more likely than large ones to have itin place for all portfolios.

Differences by region•

In France, Article 173 of the Energy Transition Law alreadyrequires carbon disclosure for listed companies, banks andinstitutional investors. It could be used to develop a roadmap
for mandatory disclosure requirements elsewhere.

The current focus of the Network for Greening the Financial
System (NGFS) is also on improving disclosure and standardising
scenarios for climate risk. Central bank members of NGFS arecommitted to defining and promoting the implementation of bestpractices including the TCFD recommendations.

TCFD is not a game-changer for green bonds
One third of respondents believe TCFD will result in moredemand, one third that it won’t, and one third refrained fromanswering this question.
Most respondents do not believe that TCFD will directly influence
their investment decision-making, while an increase in supply
would. The clear added value of green bonds is the transparencyof assets – this is in line with TCFD – and could potentiallyindirectly affect demand and supply of green bonds.
Respondents with higher relative holdings in green bonds are
considerably more likely to buy more green bonds under TCFD
recommendations than respondents with relatively low holdings
in green bonds (88% vs 43%).

Policy is the main driver – and its lack the main
obstacle – for the green bond market
Respondents were asked to describe the main drivers andobstacles to the development and scale of the green bond market,
often giving more than one answer for each. Summary results arepresented on the following two pages.
Given the breadth of drivers and obstacles, they have beengrouped into three categories: Policy, Issuers, and Investors. Thisis based on which key stakeholder would primarily be responsible
for addressing each issue. The grouping is not always clear-cut andwas done on a best-efforts basis.
Policy is the main consideration, with most drivers and barriers
falling into this category. This emphasises that policy is crucial in
implementing the drivers as well as addressing the obstacles tothe development of the green bond market. This suggests thatwhile the growth of the market to date has been a collaborative
effort involving issuers, investors, and policymakers, it is policy
initiatives that are expected to accelerate the scale of the market.
The next most common group is issuers. However, this group is
more prevalent among the obstacles, suggesting that these areoften “experienced” by issuers, but it is via policy that they will besupported or solved.
There may be some bias in the groupings given that this is asurvey of investors and one of the categories is investors. Whilst
this may be true, as investors would likely point towards “failings”
of other categories than of themselves, it remains valid because
considerably more respondents pointed towards a lack of policy
rather than problems among green bond issuers, and even thesecan often be traced to a lack of adequate policy.

It is interesting that policy measures were so often
highlighted as crucial, suggesting the public sector is vitalfor the capital markets to address climate change
adequately and at scale.

•

Implementation is already in place (at least partially) in the
Benelux (50%), Central Europe (12.5%) and UK (9%). One
possible reason is that respondents from some regions arelikely to be more involved in TCFD discussions than others.

•

All respondents from Nordic countries are committed but
waiting for guidance.

In any case, CBI intends to conduct surveys with other stakeholder
groups in the future, such as issuers, and this question will be put
to those groups as well.

Green Bond European Investor Survey Climate Bonds Initiative

Page 13

Drivers linked to standardisation, coherent policy andissuer diversity emerge as the key drivers for scale...
1

Green funds

1Long-term view of investment

5

Investor demand driving more issuance

Investors
1

Integration with SDGs

4

Awareness and education of issuers / investors

1

Clearer additionality

1

Forward-thinking treasuries issuing green

6

Issuer / sector diversity

1

Issuance from large sovereigns

5Standardised reporting / documentation

1

Public engagement

1

Central bank policy

1Market incentives, especially tax / subsidies

1

Funding support for issuers

1

Price regulation (e.g. carbon tax, central bank support)

1

Global climate policy

Issuers

Policy3

Tax incentives / capital relief

3

Incentives for issuers / investors

9

Policy / regulation

10

Standardisation / definitions

Frequency

Green Bond European Investor Survey Climate Bonds Initiative

Page 14

...whilst lack of standardisation, issuer diversity andtransparency are the main obstacles

Investors

Issuers

PolicyLack of investor demand1

Cumbersome for invesors to track

1

Moral hazard / focus on short-term yield

2

Lack of liquidity (i.e. small deal size)

1

Lack of data to make positive arguments

1

Disconnect between isssuers’ strategies and treasuries

1

Unclear additionality

1

Fear of greenwashing accusations

2

Issuer difficulty in aggregating enough green projects

3

Lack of knowledge / education on benefits

4

Lack of issuer / sector diversity

9

Greenwashing / lack of reporting and transparency

8

Lack of public engagement

1Over-restrictive standards

1

Cumbersome issuance process1

Higher insurance costs4

Lack of robust, coherent policy

4

Lack of incentives vs. vanilla bonds

5

Lack of standardisation / definitions

11

Frequency

Green Bond European Investor Survey Climate Bonds Initiative

Page 15

Emerging markets
Participation

Preferred mechanisms to scale up EM issuance

Growing populations and increased urbanisation mean that many
EM will require large scale investments in infrastructure. This
infrastructure needs to be low-carbon and climate-resilient tocombat the risks associated with extreme weather events. Greenbonds provide a vehicle for large scale public and private sector
funding and, for those countries with direct access to capital
markets, can attract new participants from the international
investment community. Aggregation could also extend green
bonds to encompass smaller scale projects.

Respondents were asked to rank factors that could make investingin EM green bonds more attractive and bring scale to the market.

Outstanding EM green bonds, as of 30 April 2019, amount to
USD114bn, or around 20% of the green bond market. Meanwhile,
EM currently contribute 63% to global GHG emissions.19 It is thus
critical to determine how investors can support the expansion of
EM green bonds.

Strong local currencies that are not used as a primary source offunding in EM might be an obstacle to local investors.
Respondents from the Nordics and the UK are the mostconstrained when investing in EM (40%, respectively 75%).

Respondents were asked to describe their appetite for EM green
bonds and to outline what they could be receptive to buying.

Credit enhancements available from multilaterals and/or public
sector entities was the most frequently selected option, withmore than half considering it important or very important.
Respondents regarded public spending infrastructure
programmes, benchmarks for EM green bonds and dealsupporting mechanisms as less important.

Credit enhancements stand out as the mosteffective tool to drive EM investment
Score

Most respondents (82%) can buy EM debt. Nordic respondents
have the lowest participation by region at two out of five.

5

Exposure limits at country and issuer level tend to apply more to
respondents that have a greater degree of integration of green
bonds. However, the most common restrictions are credit rating(69%), currency (65%) and deal size (58%).

4

Limited opportunities in EM green bonds are further narrowed
down after accounting for currency restrictions. Among the 65%of respondents that highlighted currency as a restriction, manysaid they were limited to USD and EUR, G7, or G10, i.e. cannot
combine currency risk and asset risk. As of 30 April 2019, there
was USD48bn outstanding of EM green bonds, or 42%, in G10
currencies, predominantly in USD (29% of the total).

Most EM green bonds are not issued in G10
currencies
G10

29%

CNY
Other

42%

USD

51%

Median3
2

The preference is for G10 currencies

7%

Average

13%

EUR

0.2%

JPY

1
CreditPublic
EM green bond Deal-supporting
enhancements infrastructure benchmarks
mechanisms
spendGreen bond integrity in EM
Three quarters of respondents able to buy EM green bonds treat
EM differently from DM, stating that they require more evidence
of integrity to invest in green bonds from EM.
Respondents were then asked which features would give themmore confidence to invest in EM green bonds, regardless ofwhether they treat EM the same as DM. The fact that they namedfeatures does not mean they treat the two regions differently.
Factors were split into three groups, with some overlaps:
1. Transparency: e.g. adherence to GBP, reporting UoP
2. Reliability: e.g. external reviews (SPO, audit, certification, etc)
3. Risk: e.g. insurance/CDS/guarantees, size of issue, currency

Most respondents can and would like to buy EM green bonds, so
issuers must consider how these requirements can be reconciled.
Respondents told us that they would like to increase their holdingsin EM sovereigns. Thus far, 81% of green sovereign bonds (by USD
outstanding) have come from DM issuers.

Features linked to transparency were the most common (65%),
followed by reliability (48%) and finally risk (25%). Seven
respondents (18%), all of which treat EM same as DM, did not
mention any specific factors.

Many EM sovereigns, particularly in Latin America, have an
established presence in the Brady bond market and a history of
issuing in EUR or USD. This could be extended to include green
bonds. Countries such as Poland (3 bonds in EUR), Indonesia (2bonds in USD), Seychelles (USD) and Lithuania (EUR) have issued
green bonds and met with a positive reception from investors.
Chile’s USD and EUR deals came out in June-July, after the cut-off.

“More transparency around use and management ofproceeds through standardised documentation, second
party opinions, and certification would give us greater
comfort when buying green bonds from EM."Green Bond European Investor Survey Climate Bonds Initiative

Ronald van Steenweghen – Senior Fixed Income FundManager, Degroof Petercam Asset Management

Page 16More on…
The green halo

Market evolution: interest rate changes

A quarter of respondents would be more inclined to invest in avanilla bond issued by a green bond issuer. Although 72% of
respondents would not change their propensity to invest in agreen bond issuer’s vanilla bonds, the fact that some investors
would, points to the existence of a “green halo”.20 This suggeststhat issuing green bonds enhances the performance of the yield
curve and is supportive of further issuance of green bonds.

Over half the respondents believe that a rising interest ratescenario would not affect their demand for green bonds. A
quarter did not have a stance.

The larger the respondent, the more inclined it would be to buy
vanilla bonds from green bond issuers. The same is true forrespondents whose investments include a greater proportion ofgreen bonds.
The results regarding larger respondents might be influenced bytheir potential to buy more (larger ticket sizes and more bonds
from an issuer), i.e. there may be some correlation with thatfactor. To some extent, this possible bias is enhanced by the factthat smaller respondents are more likely to be boutique andtargeted ESG/responsible investors (and to hold a greater share ofgreen bonds in their portfolios). Both of these factors would makesmaller respondents less likely to invest in vanilla bonds a priori.

Private placements
Three quarters of respondents do not invest in private
placements. 68% percent of these refrain because of size andliquidity concerns, 18% for lack of resources (to identify andevaluate deals) and 9% because their mandate forbids it.

While considerations like the average duration of green bonds
versus vanilla could impact a decision, only 4% believe theirappetite would decrease. More than three times that number(15%) believe the opposite, i.e. that rising interest rates would
increase their appetite for green bonds.

Channels for green bond information
Syndicate desks play an important role as marketers of green
bonds: only one respondent does not receive market intelligencefrom underwriters or brokers.
We asked respondents how they stay abreast of climate financenews and keep track of the green bond market. More than half ofthe respondents use all listed information platforms. Not
surprisingly, large respondents tend to use more sources.
One in eight respondents cited contact with issuers. It would beinteresting to see if this share increases over time, given thatseveral respondents also said that green bonds have opened up
greater engagement with issuers on their sustainability strategies
and policies, and that they would contact issuers if post-issuancedisclosure was lacking in some respect.

This suggests that while private placements can fulfil a niche rolein the green bond market, particularly when multilateraldevelopment banks support the emergence of EM local issuers,
this will not be the source of the scale required to make thenecessary impact.
Green bond private placements to date have largely been used in
EM as a market development tool by multilateral developmentbanks. Specifically, their preference has been to support green
bond issuance by local banks, so that these have the resources
and frameworks to fund the local real economy via loans.

Other types of ethical / SRI bonds
Two thirds of respondents have only bought green bonds, while athird of those surveyed have also bought other forms of “ethicalbonds” or socially responsible investments, most of which are
categorised as sustainability bonds (80%). Given that sustainability
bonds generally include a substantial allocation to climate projects
alongside allocations to social projects, this suggests investors
may be looking beyond the green label to find ways to deploy
funds for climate solutions. Or they are interested in combining
climate and social outcomes.

98%
81%
81%
79%
69%
13%
2%
0%

20%

40%

60%

80%

100%

Underwriters/brokers
Data packages (e.g. Bloomberg/TR)
CBI material
Specialised analyst
Internal communication
Other - contact with issuers
Other - fund manager

The emergence and expansion of the sustainability / SDG / ESG
debt market – as well as of social bonds – in recent years supports
this finding. This includes both loans and bonds which identify
eligible investment categories and those that link terms withachieving key sustainability performance indicators, such as
improving corporate sustainability scores.

Green Bond European Investor Survey Climate Bonds Initiative

Page 17

Conclusions
The survey’s results describe a market
lacking adequate supply of green bonds
given the level of demand from investors.

lower GHG emissions, most notably the
relatively under-funded Industrials,
Materials and Land use sectors.

The need

Sovereigns could play a pivotal role inredistributing proceeds towards polluting
but under-represented sectors, especiallyby devising and implementing policies thatincentivise sustainability. They can also
issue green and blue bonds to fundconservation, adaptation and resiliencemeasures, and promulgating sustainable
use of land and marine resources.

At least USD2.3tn of additional capital per
year is required to fund the mitigation andadaptation necessary to meet climatechange targets, according to the IEA. For
green bonds to contribute to this, theymust appeal to specialist and mainstream
investors alike.

The current state of play
Respondents appear to be supportive, andhave the necessary resources, capital, andambition to address climate change
challenges through investments.
Green credentials are important. Results
demonstrate that respondents are notparticular about the precise UoP thatbonds are funding, because the choice iscurrently so limited. However, they doregard green credentials highly and believe
standardising terminology and disclosure
can help market growth. This is evident by
respondents’ statements that they would
overwhelmingly not buy a bond with
unclear green credentials at issuance, andthat the majority would sell a bond withpoor post-issuance reporting.
Investors want to see more issuance fromhigh-emission sectors. Respondents havepreferences for certain economic sectors.
Issuers in those sectors can bring bonds
with UoP in the areas where thedeployment of capital is most needed to

Most respondents can buy EM green
bonds, but supply is particularly sparse,
and investors have currency and deal size
restrictions which can limit their options
further. EM sovereigns and financial
institutions could issue green bonds in G10
currencies to contribute to GHG emission
reduction and lead by example.

Stakeholder positions andconsiderations for scaling up

Historically, reverse inquiry has beencommon practice for investors wanting an
issuer to bring bonds on a certain part of
the yield curve or with particular features,and issuers can be responsive. Investors
could exert pressure on issuers with which
they have existing relationships, toencourage them to come to market with agreen bond, or more green bonds.
Policy mechanisms such as standardisationof green bond definitions, consistency ofreporting, and differentiated capitaltreatment of low- vs. high- carbon assets,
are identified as factors that especiallyneed to be addressed. Disclosure – preand post-issuance, of both allocations andenvironmental impacts – is highly valued.
The results of the survey revealed apreference for tax incentives within theinvestor community. At present, only
Malaysia has developed tax incentives forgreen bond issuers and investors.

Investors have no reason not to buy green
bonds, so even those without dedicatedfunds can and are willing to be involved,
often preferring green bonds where
possible. Investors should continue todedicate capital to bonds supporting
climate change mitigation and adaptation.

Respondents said they would like to buy
more sovereign green bonds. Moresovereigns could issue green bonds tosignal support for the market. Sovereign
bonds demonstrate that governments arecommitted to supporting the green bondmarket by providing opportunities forscale at relatively low yields.

Issuers need to come to the market in all
sectors, and with all types of UoP, but
applying integrity and transparency totheir efforts. Our upcoming issuer survey
will aim to explore barriers and restrictions
applicable to this community.

Implementing the recommendations ofbodies such as the TCFD, TEG and NGFS
into public policy has the potential to unite
issuers and investors in the green bondspace and scale up the market.

Sectors of focus for green bonds
More green bonds are needed in all areas of the market. Comparing GHG emissions with respondent preference and available green
bonds highlights the sectors in which issuance is particularly lacking given investor demand:
•

•
•
•

•

Energy/Utilities is the UoP category which has received the most funding through green bonds (50%), mainly via Utilities. It is also
the sector with the largest contribution to GHG emissions and is most in demand from respondents. Therefore, Utilities issuers
should continue to bring green bonds to market at scale and Energy issuers should consider how they can transition their businessmodels to low carbon alternatives, particularly renewables.
Industrials, mainly Industry, has a large gap between GHG emissions and available green bonds. Respondents highlighted this as a
key area in which they would like to buy more green bonds. Green bond issuance needs to scale up in the Industrials sector.
More issuance is needed from the Consumer Discretionary (mainly automotive) sector to address both GHG emissions andrespondent demand.
The Materials sector, including Metals and Mining, is a large contributor to GHG emissions. There has been no green bondissuance from Metals and Mining to date and there are no defined transition trajectories. Many respondents expressed demand
for more bonds in this area.
Consumer Staples, mainly Agriculture, is under-funded by green bonds in comparison to GHG emissions. However, relatively few
investors highlighted this sector as one where they would like to buy more green bonds. Therefore, greening this sector could
perhaps more effectively be achieved through targeted government policy/support (which could include public sector issuance,
e.g. via green sovereign bonds) as well as other (non-debt) types of financing.

Green bonds send a strong signal to the market that an organisation is committed to a 2-degree future or better.
Green Bond European Investor Survey Climate Bonds Initiative

Page 18

Appendix 1: Methodology
Survey respondents
Representatives from the largest Europe-based fixed income
managers were invited to participate in the survey. Crucially, no
distinction was made between those with an establishedreputation as green bond investors, and those not yet involved in
the market.
92 organisations were contacted (sometimes repeatedly, andthrough a variety of channels).
•

44 participated in the full survey;•

4 fully or partially completed the questionnaire but did notcommit to a discussion;•

18 replied and declined to participate; and•26 did not reply.

Response rate suggests differingcommitment by region
ParticipatedBenelux

Declined / No answer

9 3

Nordics

5 3

UK & Ireland

13

Central European
Southern European

13
18

3

18

7

Data collection
We conducted pilot surveys in December 2018. The survey wasadministered between January and April 2019.

Research conducted by Influence Map found that the world's 15
largest investment management firms “have increased theirholdings of thermal coal reserves in their funds by more than 20%
since the Paris Agreement”. Four of the five with most holdings(with a 70% average increase), participated in this survey.21
The overall response rate is 45%. The total AuM of respondents is
EUR13.7tn, with an average of EUR285bn and median of
EUR149bn. The total fixed income AuM of respondents is
EUR4.3tn, with an average of EUR90bn and median of EUR34bn.
Response rates differed by region. Over 60% of the investors weapproached in the Benelux and Nordic countries participated.
Among Central European and UK & Ireland investors half of theinvited responded, while less than one third of Southern European
investors took part in the survey.
Among the Southern European investors that failed to respondwere five Spanish investors, meaning that this constituency has no
representation in the results. Some large US asset managers with
European presence were among those in the UK who did not reply.

Respondents participated in a telephone discussion during which
they answered the questionnaire, seen in advance. This wascomplemented by CBI desk research, to independently explore theprofile of respondents.

Data analysis
Data reliability: Cronbach’s alpha is a reliability measure for the
responses obtained. Overall, Cronbach’s alpha value of 0.75
indicates an acceptable level of internal consistency.
Respondents were divided into terciles to denote small, medium,and large investors based on fixed income AuM. These categories
are used to describe respondents throughout this paper.
CBI partnered with Henley Business School on the statisticalanalysis of the results. Some results were analysed using weighted
averages based on the fixed income AuM of respondents.22

Green bond data
The cut-off date for green bond data is end of April 2019. However,where appropriate, subsequent deals are mentioned (e.g. forsovereign green bond issuance).

Appendix 2: Participants in the survey
The following organisations have agreed to be named for their kind participation in the survey:
Aberdeen Standard Investments
Achmea Investment Management
ActiamAegon Asset Management
Affirmative Investment Management
AmundiAnima SGRAPG
AXA Investment Managers
BlueBay Asset Management
BNP Asset Management
Credit Suisse Asset Management
Danske Bank Asset Management
Degroof Petercam Asset Management

Ecofi Investissements
Erste Asset Management (Spar Invest)
Eurizon Asset Management
Foresight
Franklin Templeton Investments
Julius Baer Asset Management
Jupiter Asset Management
La Banque Postale Asset Management
Legal & General Investment Management
Liontrust Asset Management
Lyxor Asset Management
MirovaNewton Investment Management

Green Bond European Investor Survey Climate Bonds Initiative

NN Investment Partners
OP Cooperative
PGGM
Raiffeisen Capital Management
RobecoSEBStorebrand Asset Managers
Swedbank
Swiss Life Asset Management
Swisscanto Invest
UBS Wealth Management
Union Bancaire Privée
Vontobel Asset Management

Page 19

Appendix 3: Headline survey questions

Investment Policy Overview
1.
2.

To what extent have green bonds impacted your investment decisions?
What % of your fixed income AuM is currently invested in green bonds?

Market Dynamics for current and potential green bond investments
3.
4.
5.
6.
7.

What sectors do the bonds you have invested in / intend to invest in finance?
What are your preferred channels for green fixed income investments?
If you invest or intend to invest in green bonds, how important are the following factors in making an investment decision?
Rank the following issues that could make investing in green bonds more attractive: (multiple choice options)
Would you be more inclined to buy a vanilla bond from an organisation that has issued a green bond, over a vanilla bond from anorganisation that hasn’t?
8. Would you buy a green bond if it was not clear that proceeds were going to be allocated to green projects?
9. Would you sell a green bond if post-issuance green bond reporting is poor?
10. Rank the asset classes in which would you like to buy more green bonds: (multiple choice options)11. Please name the three non-financial corporate sectors you would most like to buy green bonds in:Standards and developments
12. Rank the main market tools and mechanisms that in your opinion could be developed or leveraged to support investment in green
bonds: (multiple choice options)
13. Rank the main policy mechanisms that would enable you to invest, or increase your investment in green bonds: (multiple choice
options)
14. What is your approach to the recommendations of the Task Force on Climate Related Financial Disclosures (TCFD)?
15. If implementation of the TCFD recommendations is planned or in place do you envisage that you will buy more green bonds as a result?
16. In terms of strictness of definitions, would you prefer: (multiple choice options)
17. In your opinion, what is the main driver that will enhance growth and scale of the green bond market?
18. What is the main obstacle?

Market Intelligence
19. How do you keep abreast of opportunities in the green bond market?

Emerging markets
20.
21.
22.
23.
24.

Are you able to buy EM debt?
What is your credit rating floor for doing so?
What other EM investment restrictions do you have?
What could drive your investment in EM markets?
Which green bond features would give you more confidence in investing in EM via the green bond format (for example certification,
trackable use of proceeds etc)?

Private Placements
25. Do you invest in private placements?
a) Could you describe your private placement investments terms of: currencies, size, tenor, sectors?
b) If not, what prevents you from investing?
c) If yes, what other factors would increase your exposure to private placements?

Market evolution
26. How could rising interest rates alter your appetite for green bonds?
27. Have you bought any other types of ethical bond?
28. If yes, briefly describe how you categorise these instruments: (multiple choice options)Green Bond European Investor Survey Climate Bonds Initiative

Page 20

Appendix 4: Profile of survey respondents
Green bond investing is among the more sophisticated ways to express a commitment to a responsible investment strategy. Responsible
investment, which addresses environmental and social aspects, is part of the broader universe of Environmental, Social & Governance (ESG)
investments. It is now more pervasive than ever, and investors of all types are keen to disclose their involvement on public platforms. CBIdesk research indicates that respondents are embracing responsible investment practises and that this is being openly communicated. Thissection is intended to provide more context around the responsible investment practices and transparency of responding investors.

Basic commitments
98% of survey respondents are signatories of the Principles for Responsible Investment (PRI)and 62% of the Carbon Disclosure Project (CDP). Only one respondent had not signed up toeither PRI or CDP disclosure.
Signing the PRI allows organisations to publicly demonstrate their commitment to responsible
investment and is regarded as the starting point for a responsible investment strategy which
can include green bonds. The Carbon Disclosure Project invites companies to provide
environmental information to enable stakeholders to monitor ambition and action.

62%

98%

Finding: Respondents are committed to international practices. UNPRI is the baseline.

Prominence of ESG on website
10%

An ESG policy is one way of expressing such a strategy. We searched respondents’ websites
for ESG, responsible investment, impact investing, or other related topics.

7%
10%

44%

44% displayed the information on their homepage, suggesting they assign a higher level ofimportance to responsible investment, and/or being associated with it.
29% required one click, 10% two clicks, and 7% three clicks or more.
10% of respondents had no such information on their website.

29%

Finding: The majority of respondents publicly disclose their ESG commitments.

Mention of green bonds on website
If a company specifically mentions green bonds on their web site, this suggests that they are
actively engaged with green bonds. Word searches were used on respondents’ publications
and websites: 17% of respondents are affiliated with a bank which has issued at least one
green bond.

28%
52%
20%

52% not only mention it but also publicly say they invest, 20% mention it, and 28% do nothave any information available.
Finding: Integration of green bonds in responsible/ESG investment strategies is varied.

ESG criteria/methodology
22%
47%

31%

ESG integration can be interpreted in many ways, from simple exclusion (and ESG screening)
to integration of forward-looking relative ESG scores. Mention of impact investments, which
can include green bonds, also implies a strong commitment to responsible investment. 31%
of respondents look at relative ESG scores, 47% apply ESG screening criteria that lead to
exclusions (primarily of weapons and tobacco, and, to a lesser degree, coal and nuclear
energy), while 22% of respondents did not provide an easily accessible description of their
ESG approach to investments. Separately, 37% of our investor sample include impact
investments in their equity and/or fixed income investment strategy.
Finding: The application of ESG considerations in a fixed income context differs widely, but aminority of respondents do not incorporate it into their investment strategy.

GHG foot-printing
29%

35%

36%

Public disclosure of greenhouse gas (GHG) emissions at company level is mandatory in somecountries, including the UK. This enables companies to define a baseline from which to make
improvements. 65% of respondents publicly report their GHG emissions (which may include
disclosure of CO2 only), either in a sustainability report, annual report, or press release.
Among these, 29% extended the foot-printing to their investments, although this tended toapply only to equity investments, while 36% did not. GHG disclosure for the remaining 35% of
respondents could not be found.
Finding: Internal foot-printing is common. Portfolio foot-printing, particularly for fixed income
investments, has yet to be widely adopted, but this is a recommendation of the TCFD andcould become common practice.

Green Bond European Investor Survey Climate Bonds Initiative

Page 21

Appendix 5: Top 5 sectors of interest to investors
Sector (BICS)

Industrials (USD2.5tn)

Utilities(USD2.2tn)

Energy &Utilities(USD 4.1tn)

Energy(USD 1.9tn)

Consumer Discretionary(USD 2.3tn)

Materials (USD 1.2tn)

Issuer Name

Ticker

Total
bonds

Green
bonds

Amt. out.
(USDbn)Averageterm (y)SNCF Reseau

RESFER

91

7

61.8

17.69

General Electric Co.

GE

381

0

58.2

8.51

United Tech. Corp.

UTX

39

0

37.2

8.34

John Deere Capital
Corp.

DE

95

0

36.8

3.54

Siemens Fin. Serv.

SIEGR

33

0

34.3

8.23

Électricité de France SA

EDF

56

5

72.0

16.05

Power Generation

Duke Energy Corp.

DUK

132

3

48.2

11.72

Utilities

State Grid Corp. of
China (PRC)

CHGRID

57

2

46.1

4.68

Utilities

Enel SpAENELIM

59

3

44.7

14.17

Utilities

The Southern Co.

SO

89

6

33.5

13.07

Utilities

Petróleos Mexicanos

PEMEX

101

0

85.9

4.75

Integrated Oils

BP plc

BPLN

81

0

59.6

4.54

Integrated Oils

ROSNRM

50

0

54.4

8.34

Integrated Oils

CNPCCH

39

0

53.4

3.59

Exploration &Production

Royal Dutch Shell PLC

RDSALN

36

0

47.6

8.34

Integrated Oils

China State Railway
Group Co. (PRC)

MIRAIL

160

0

254.5

7.57

Travel & Lodging

Volkswagen AG

VW

138

2

96.2

3.48

Daimler AG

DAIGR

214

0

94.3

2.52

Toyota Motor Corp.

TOYOTA

408

5

89.4

3.02

Ford Motor Co.

F

368

0

80.0

3.47

Glencore

GLENLN

34

0

23.4

5.59

Metals & Mining

BHP Billiton

BHP

24

0

21.5

18.42

Metals & Mining

China National
Chemical Corp. (PRC)

HAOHUA

35

0

20.2

3.63

Chemicals

BASF

BASGR

37

0

19.2

8.34

Chemicals

3M Co.

MMM

31

0

16.7

10.55

Chemicals

Rosneftegaz AO(Russian Federation)
China National
Petroleum Corp. (PRC)

Sub-group
Transportation &Logistics
Electrical
Equipment
Manufacturing
Aerospace &Defence
Machinery
Manufacturing
Electrical
Equipment
Manufacturing

Automobiles
Manufacturing
Automobiles
Manufacturing
Automobiles
Manufacturing
Automobiles
Manufacturing

Note: The table lists the top five bond issuers (by ticker) in the top five BICS sectors that respondents stated they would like to buy more
green bonds from. It is intended as a scoping exercise. Amount outstanding refers to total bonds. Data correct as of 7 October 2019.
Use of proceeds (for green bonds denoted above):
SNCF Reseau: Low carbon transport, rail energy efficiency and protection of natural resources and biodiversity
Électricité de France: Renewable energy power assets in wind, solar and biogas, hydroDuke Energy Corp.: 1. the development, construction, acquisition and operation of solar energy projects; 2. power purchase agreements
for the procurement of solar energy; 3. rebates for rooftop solar power installations; 4. solar energy storage
State Grid Corp. of China: Renewable energy
Enel SpA: Renewables, smart grid technology, sustainable mobility, smart lighting, energy efficiency, and demand response initiatives
The Southern Co.: Renewable energy (wind & solar)
Toyota Motor Credit Co.: Electric & hybrid vehicles, new retail loan and lease contracts from TMCC for Toyota and Lexus vehicle models
Volkswagen AG: Residential buildings
Green Bond European Investor Survey Climate Bonds Initiative

Page 22

About the sponsors
The Luxembourg Stock Exchange (LuxSE) has been engaged in sustainable finance since 2007, when it listed the first ever green
bond by the European Investment Bank. In 2016 it launched the Luxembourg Green Exchange (LGX), the world’s first platform
dedicated to green, social and sustainability financial products. Today, LGX displays over 500 securities from issuers all over theworld, accounting for over EUR200bn worth of green, social and sustainable investment. LGX is a global market leader, with a 50%
share in listed green, social or sustainability bonds worldwide. The continued advocacy that LGX provides towards the need forssss information has also given rise to an additional platform dedicated to ESG, green, and social funds. The continued excellence
reliable and transparent
and expertise of LGX has been acknowledged by many key experts in the field of sustainable finance. The EU Commission selected LuxSE to contributeto the High Level Expert Group (HLEG) and the creation of the Technical Expert Group’s (TEG) Green Bond Standard. LGX has also built on its expertiseand past success by publishing a hands-on Guide to ESG Reporting. LGX has been named Best Exchange at the Environmental Finance Awards forthree consecutive years, and last year was named Green Bond Listing Venue by the Climate Bonds Initiative as part of its Green Bond Pioneer Awards.
LGX will continue to develop its services to ride on the forefront of promoting reliability and transparency in sustainable finance markets.
Credit Suisse has extensive experience in impact and sustainable investing and financing, culminating in the establishmentof a dedicated Impact Advisory and Finance Department which reports directly to the group CEO. The department’s
mandate is to cultivate investment opportunities that help close the financing gap towards the UN’s Sustainable Development Goals and includes thefacilitation of new, at-scale green finance projects and initiatives for the benefit of its wealth management, institutional and corporate clients. Credit
Suisse has a strong commitment to drive investment towards projects that promote climate resilience through a broad spectrum of products andservices ranging from Green Bonds to thematic funds in addition to providing client advisory and thought leadership content, evidenced bymembership of a number of industry leading initiatives including the US Alliance for Sustainable Finance, the IFC Operating Principles for Impact
Management and the UN Principles for Responsible Banking.

Lyxor Asset Management Group, wholly-owned directly or indirectly by Société Générale and composed notably of two
subsidiaries (Lyxor AM and Lyxor International AM), is a European asset management specialist, an expert in allinvestment styles, active, passive and alternative. From ETFs to multi-management, with EUR156.7bn undermanagement
management and advisory,
the group creates innovative investment solutions to meet the long-term challenges of managing savings. Thanks
to its experts and engineering tradition and research, Lyxor group combines the search for performance and risk management.
Danske Bank wants to help societies transition to a net zero carbon economy by offering green financing and providing aplatform that supports the allocation of capital towards projects with an environmental and/or social benefit. The bank isfully committed to supporting the market for green and sustainability bonds by providing expertise and advice to issuers and investors, and by being
an active issuer on the back of its green bond framework. Danske Bank has been a signatory of the Green Bond Principles since 2014 and is the first
Nordic partner of the Climate Bonds Initiative. It recognises the importance of international commitments aimed at helping businesses to operate
responsibly, and thus among others supports the 2030 Agenda and the UN Sustainable Development Goals, the UN Global Compact, therecommendations of TCFD and the UN Principles for Responsible Banking.

Endnotes
1. Climate Bonds Taxonomy.
2. Climate Bonds Sector Criteria.
3. For the former, the results are based on the raw
answers, which could, and often did, cover multiple
options (e.g. prefer green bonds where available andcompetitively priced but also have a mandate or
green bond fund), hence why the sum is greaterthan 100%. For green bond holdings, the share wasleft blank for the five respondents for which a data
point could not be obtained.
4. With a USD100tn global bond market and USD569bn
of green bonds as of April 2019, green bonds
contribute just over 0.5% to the total market size.
5. Based on research for the Bonds and Climate
Change, The State of the Market 2019 report, due tobe released soon. USD518bn from fully-aligned
issuers plus USD341bn from strongly-aligned.
6. Global Industry Classification Standard.
7. Bloomberg Industry Classification Standard.
8. Global emissions data from C2ES (2013). Data from
Europa (2014) used to split transport emissions into
Consumer Discretionary and Industrials.
9. The Energy and Utilities GICS sectors were combined
as respondents often used them interchangeably
and it is difficult to separate the emissions of thetwo. GICS sectors Information Technology andCommunication Services were combined into asingle ICT sector. Six respondents listed Consumer
Goods as a sector, which was split evenly between
Consumer Discretionary and Consumer Staples.
In terms of emissions, data from C2ES wasreconciled with GICS sectors since emissions data
exactly matching GICS was not available. The
following assumptions were made: 50% of emissions

from manufacturing/construction assumed to fallunder Industrials and 50% in Real Estate; using
Europa data, 73% of emissions from transportation
assumed to fall under Consumer Discretionary (roademissions) and 27% under Consumer Staples (othertransport); all of Land use/forestry assumed to fallunder Materials (due to paper/forestry andmetals/mining), whilst emissions from agriculture
were classified under Consumer Staples (i.e. asfood); ICT and Healthcare emissions each assumed
as 1% of total given lack of data.
10. Whilst most respondents were able to list threesectors, two gave only one or two. In addition, two
expressed “no preference”, another two answered“sectors in low supply”, and one listed Adaptation asa sector – all of these were excluded from theanalysis below (the latter because it could not bereconciled with the sectors).
11. Data from Climate Watch (2014). It matches C2ES
data for previous chart but with some categories
aggregated.
12. Both the emissions and green bond issuance data
had to be adjusted in order to compare the same
sector categories, which differ from the previous
chart since emissions are now being compared withgreen bond issuance (UoP categories) rather thaninvestor demand (GICS sectors).
In terms of emissions data: 50% of
manufacturing/construction assumed to fall underIndustry and 50% in Buildings (same as in previous
chart); 67% of Land use emissions assumed to fallunder Industry (as chemicals and metals/mining) and
33% under Land use (as paper/forestry).

Green Bond European Investor Survey Climate Bonds Initiative

In terms of green bond UoP categories, Energy was
combined with Water into a single Energy/Utilities
category, Industry was combined with ICT into asingle Industry category, and Adaptation was
excluded as it does not fall under a specific category
and does not contribute to GHG emissions.
13. The issuance share of each sector category was
subtracted from its emissions share, with theresulting percentage point difference shown in thechart. It indicates the need for green bond issuancerelative to other sector categories, given the level ofemissions. A shortfall of issuance is thus shown as apositive value, whereas an excess is negative.
14. CBI, Post-issuance reporting in the green bondmarket, 2019.
15. Both of these were asked as a binary “Yes”/”No”
question, but some respondents answered “Maybe”
with an explanation – this option is expressed as
Less/More likely in the two charts.
16. Integrated credit ratings are credit ratings that
integrate ESG risks, providing a more holistic andaccurate assessment of issuers’ risks.
17. IDB, IDB and UK Announce Partnership to Support
Green Finance Growth, October 2019.
18. CBI, Green Bond Policy Data Set.
19. Center for Global Development, Developing
Countries Are Responsible for 63 Percent of Current
Carbon Emissions, 2015.
20. NatWest Markets, Green Halo 2.0, 2019.
21. Influence Map, Who Owns the World’s Fossil Fuels.
22. In the few cases where a figure for fixed income
AuM could not be obtained, an assumption of 50%
of total AuM was applied.

Page 23

Respondents’ fixed income
AuM by country

Finland
EUR33bn FI AuM

NorwayEUR34bn FI AuM

Number of
respondents

SwedenEUR70bn FI AuM

10+
5-10

Denmark
EUR17bn FI AuM

1-5

UK
EUR1,572bn FI AuM
Germany
EUR241bn FI AuM

Netherlands
EUR621bn FI AuM

Belgium
EUR10bn FI AuM

Austria
EUR45bn FI AuM
France
EUR963bn FI AuM

Switzerland
EUR523bn FI AuM

FI AuM stands for ‘Fixed Income Assets under Management’.
AuM data as of end 2018. Some assumptions made in case of incomplete information.
Source data from Reﬁnitiv Eikon, Bloomberg, climatebonds.net and other parties. All ﬁgures are rounded.

Suggested citation: Almeida, M., Filkova, M., Harrison, C., and Sette, P. Green Bond European Investor Survey, Climate Bonds Initiative, November 2019.
Henley Business School, analysis support: Dr. Ivan Sangiorgi, Dr. Lisa Schopohl

Climate Bonds Initiative © November 2019 www.climatebonds.net
Disclaimer: The information contained in this communication does not constitute investment advice in any form and the Climate Bonds Initiative is not an investment adviser. Any reference to a ﬁnancial organisation or debt instrument or investment product is for information purposes only. Links to external websites are for information purposes only. The Climate Bonds Initiative accepts no responsibility for content
on external websites. The Climate Bonds Initiative is not endorsing, recommending or advising on the ﬁnancial merits or otherwise of any debt instrument or investment product and no information within this document should be taken as such, nor should any information in this communication be relied upon in making any investment decision. Certiﬁcation under the Climate Bond Standard only reﬂects the climate attributesof the use of proceeds of a designated debt instrument. It does not reﬂect the credit worthiness of the designated debt instrument, nor its compliance with national or international laws. A decision to invest inanything is solely yours. The Climate Bonds Initiative accepts no liability of any kind, for any investment an individual or organisation makes, nor for any investment made by third parties on behalf of an individual ororganisation, based in whole or in part on any information contained within this, or any other Climate Bonds Initiative public communication.

Prepared by the Climate Bonds Initiative

Sponsored by ClimateWorks

Design: Godfrey Design

Italy
EUR170bn FI AuM