ESG & Sustainable Investing

The Net Zero Banking Alliance (NZBA) has formally ceased operations as a member-based organisation, following a vote by its remaining members. This marks the end of what we believe is one of the most significant collective efforts to align global banking with the goal of net zero emissions by 2050.

The Net Zero Banking Alliance (NZBA) has been the flagship climate initiative for banks to advertise their commitment to aligning their investment and lending portfolios with net-zero targets by 2050 or sooner. However, in recent weeks the NZBA has been hit with the withdrawal of all its major Wall Street banks.

In the past 10 days the European asset-backed securities (ABS) market has welcomed five debut issuers across multiple jurisdictions and asset classes, with the most notable being Europe’s first public solar green ABS from Enpal.

Back in April we looked in detail at the challenges and potential outcomes facing Thames Water, the debt-laden UK utility company battling to avoid government intervention. On the back of a lacklustre set of financial results and being placed into a “turnaround oversight regime” by the regulator Ofwat, Thames Water’s situation took a further turn for the worse last week.

The term ‘fossil fuel financing’ refers to the provision of capital (including loans, investments, and other forms of capital) to companies involved in the exploration, extraction and production of coal, oil and natural gas.

Following yesterday’s release of Italian energy company Enel's 2023 annual sustainability report, it was confirmed that they had failed to meet the emissions reduction key performance indicator (KPI) linked to a number of their sustainability linked bonds (SLBs).

We previously blogged about Thames Water in July last year but it’s rapidly refloated to the top of UK credit market concerns. Following more recent events, where do we think Thames Water go from here?

Much like the European market, Australian ABS has started 2024 with considerable momentum, with over AU$12bn in issuance year-to-date and a significant pipeline building. But how are its green credentials?

Within the European ABS landscape, Volkswagen Leasing has solidified its role as a benchmark issuer under the Volkswagen Compartment Leasing (VCL) platform. Volkswagen uses this platform – with over 25 years of history – to finance standard German auto loans. It is probably one of the least exciting platforms but also one of the most liquid ABS investments you can buy.

Thames Water has been in the headlines for all the wrong reasons in the past week. In our latest blog, Johnathan Owen explores their operational struggles, how the potential nationalisation raises concerns for investors and the wider implications for green bonds.

We look at the ECB’s plans to ‘green’ their asset purchasing program going forward, and what this could mean for credit spreads.

Collateralised Loan Obligations, or CLOs, are bond instruments issued to fund a specific pool of loans, typically senior secured or ‘leveraged’ loans, to companies.