sustainable investment

Sustainable finance and its surrounding infrastructure offers growing potential for deals and green innovation.

By Tom Evans, Paul Davies, David Walker, Ignacio Domínguez, Michael Green, Aaron Franklin, Laura Kichenside, and Catherine Campbell

The global sustainable finance market has expanded rapidly in recent years, approaching US$320 billion in new issuances in the first 10 months of 2019. Sustainable finance — which is dominated by green bonds, but also includes sustainable bonds, sustainability-linked bonds and loans, and social bonds — represents a growing opportunity for private equity-backed businesses to tap into burgeoning demand from asset managers to put capital to work in investments that meet sustainability criteria. Further, recent M&A activity in environmental, social, and governance (ESG) ratings businesses demonstrates an increasing demand for ESG measurements and metrics from investors and regulators, presenting new PE investment opportunities. In our view, sustainable finance and its surrounding infrastructure — especially companies that support and assess compliance — offers potential beyond mere demonstration of green credentials.

The FRC has published a shorter and sharper Code which clarifies requirements for accountability, workforce engagement, and board diversity.

By Claire Keast-Butler, James Inness, Richard Butterwick, and Anna Ngo

The revised Code will apply to all companies with a premium listing on the London Stock Exchange for accounting periods beginning on or after 1 January 2019.

The key points are:

  • Board leadership and company purpose: The revised Code focuses on regular engagement with major shareholders, with companies

By Paul Davies, Michael Green and Ei Nge Htut

The High Level Expert Group on sustainable finance  (the Group), which the European Commission (the EC) established, published its interim report on 13 July 2017. The report sets out the key steps required to create a financial system that supports sustainable investment, as well as identifying areas for financial policy reform. The EC vice presidents welcomed these initial recommendations. In addition, the EC praised the recommendations’ “great potential” to enable the bloc to lead on green finance.

The Group acknowledged that the recommended investment requirements (including the €177 billion required annually to meet the 2030 climate and energy targets) might appear “overwhelming”. However, the Group emphasised that private capital is currently “available and willing” to back such recommendations.

The Group’s recommendations include: