Thursday

June 22, 2017

  June 22, 2017

Green Bond Mania Spurs Demand to Back Up PromisesBy Katie LinsellThe green-bond market has boomed on the allure of investments that help the environment. Now, the industry is trying to show that the reality matches these ambitions.

Advisers and rating companies are starting to track the environmental effect of projects funded by green bonds, such as the impact on air pollution. The services may help investors move away from relying on bond-sale promises — which are hard to check and often legally impossible to enforce — and boost confidence in a market where sales will surge 30 percent this year to a record $123 billion, according to a Bloomberg New Energy Finance forecast.

“If we buy a green bond, how do we know that it is really green?” Robert

Parker, Credit Suisse Group AG’sformer senior adviser, said at a recent conference in Luxembourg. “There are some big issues to make sure it is compliant.”

Attempts at standardization include a green-bond label introduced this week by

a group backed by the LuxFlag,Luxembourg government and the nation’s stock exchange, which lists more than 50 percent of green bonds worldwide. Issuers requesting the label have to meet criteria including an independent assessment of a project’s environmental impact, according to LuxFlag’s website.

"Investors need to be reassured that if they buy a fund or a bond that says it’s green or sustainable, it is doing what it says,” said deputy director general at the Anouk Agnes, Association of the Luxembourg

which helped found LuxFlag.Fund Industry,   At the end of last year, about 80 percent of green bonds issuers were committed to

reporting on the use of bond proceeds and the environmental impact, or to undergo external review, up from about 70 percent in the first quarter of 2015, according to Bloomberg New Energy Finance.  

“We’ve seen significant demand from investors for these tools,” said Michael Wilkins,a managing director at which debuted a service in April to S&P Global Ratings,evaluate how much green bonds benefit the environment, as well as their governance. “We’re trying to provide greater transparency because investors aren’t getting much information about how their bond proceeds actually impact the environment.”

Moody’s Investors Service started assessing green bonds last year. The company has assessed 16 bonds and all were awarded the highest grade partly because borrowers are able to work on matching Moody’s scorecard, according to Henry

a senior vice president in New York.Shilling, To help investors make use of this data, is supporting a Rockefeller Foundation

“carbon yield” methodology that acts as a way of comparing the environmental impact of different investments. The tool relies on estimating how much carbon-dioxide pollution is avoided. “The thirst to understand what impact people’s investment is having is becoming ever more concentrated, particularly as the impact of climate change is becoming more visible to the man on the street,” said Christopher Egerton-

a partner at merchant bank Lion’s Head Global Partners, which helped Warburton, develop the tool. Full story on web

Number of the Week

33Number of poultry factories that

, the largest U.S. Tyson Foods Inc.meat producer, said it will begin monitoring independently by remote video auditing. Customers and investors have increased their scrutiny of animal welfare practices at U.S. agricultural firms in recent years.Full story on terminal

Man Group Plc,Investing: the world’s largest publicly traded hedge-fund firm, named Steven Desmyter as head of responsible investment.  

Environment: Oil companies risk wasting $2.3 trillion of investments should demand peak in the next decade.

Social: After seven years of progress, gender equality has taken a step back in the board room.

Inside

Bloomberg Radio: New research shows falling battery costs will make electric vehicles cheaper than fuel-powered ones in the U.S. and Europe as soon as 2025. Colin

head of advanced McKerracher,transport for Bloomberg New Energy Finance, joins Bloomberg Markets AM to discuss the details.

Why Can't Your Company Just Fix The Gender Pay Gap?

When It's Too Hot For Planes to Fly, It's Time to Worry: Gadfly

Electric Cars Will Be Cheap

What to Read:

Investing

Green Bonds Transparency

Source: Bloomberg New Energy Finance

  Sustainable Finance 2  June 22, 2017

 

Investing

Man Group Plc, the world’s largest publicly traded hedge-fund firm, named

as head of Steven Desmyter responsible investment. Desmyter is a member of Man Group’s executive committee and head of sales for Europe, the Middle East and Africa. He will add head of responsible investment to his duties and chair the responsible investment committee, according to a June 20 statement from the London-based firm. Full story on terminal

ESG

Millennials and female investors' rising clout could boost emphasis on sustainability performance, according to Bloomberg Intelligence. Of all groups, millennials lead in terms of social-impact investing interest at 80 percent and in follow-through on their concerns, with 28 percent making such investments, based on a survey of high net-worth U.S. Trustinvestors released in June. Full story on terminal

Green BondsGreen bond sales by borrowers

including show the U.S. Apple Inc. pullout from the Paris climate accord has not slowed a market that almost doubled last year, the European Investment

capital markets chief said. "Two Bank’s years ago, it would have been a catastrophe but now the market has a life of its own," the bank’s head Eila Kreivi,of capital markets said in an interview in Paris last week. Full story on terminal

KfW expects to sell dollar green bonds by the end of the year. “It is very likely there will be a USD green bond coming this year as we try to be a regular issuer in core currencies,” KfW’s Doris Kramer,head of investment strategies, sustainability, said in emailed comments June 19. KfW expects to price “more than 3 billion euros" of green bonds in 2017. It sold 2 billion euros of 2025 green bonds in May. Full story on terminal    

French railway operator SNCF Reseau is discussing potential private placements of green bonds for Japanese investors, with a minimum size of about 50 million euros. "We are open to private placement in green bond format in any currency, preferably with long duration,"

, executive director Guillaume Hintzyfinancing and treasury at SNCF Reseau, said in emailed comments June 16. Full story on terminal

Tunghsu Azure Renewable Energy Co., a Chinese solar-farm operator, said it plans to sell as much as 2 billion yuan ($293 million) of green bonds. The sale of the bonds, which will have a maturity of no more than five years, must still be approved by shareholders. Full story on terminal  

Profit margins for solar companies should improve in the second half of 2017, even if it is a brief reprieve from the plummeting module prices and global oversupply borne by the industry in recent months, according to JinkoSolar

Jinko is forecasting a Holding Co.brighter outlook for its own profit margins in the third and fourth quarters as a result of a sudden rush in demand for non-Chinese solar products in the U.S. following the trade case, and Suniva Inc.stronger interest from Europe and Turkey. Full story on terminal

Brookfield Asset Management Inc., Canada’s largest alternative asset manager, sold a bond of about $475 million last week backing a portfolio of hydropower projects in New England, according to a person familiar with the matter. Full story on terminal

Renewables

is leading a rally of Vivint Solar Inc.solar installers and equipment suppliers after analysts at Goldman

upgraded the company’s Sachsshares to buy from neutral because valuations in the sector increase the probability of mergers ahead of a rebound in demand.

Vivint gained as much as 11 percent on June 20. was Sunrun Inc.up for a ninth consecutive day, and

, which makes Enphase Energy Inc.inverters that control the supply of power from panels, rose as much as 15 percent.

After recent slump in U.S. rooftop installations soured investors, growth is poised to resume as new policies in Nevada, Florida and North Carolina open create markets and costs continue to decline. That could be an early sign of a turnaround for the U.S. rooftop solar sector, said

, an analyst at Jeffrey OsborneCowen & Co.

“The new states certainly are helping,” Osborne said in an interview June 19.

Brian Lee at Goldman Sachs increased his price targets on Vivint to $6 from $3.50, on Sunrun to $10 from $9 and on 8point3 Energy

to $16 from $15. Partners LP Full story on terminal

— Christopher Martin

Vivint Leads Solar Rally on Goldman Upgrade   

Rising Interest

Source: US Trust;  More at BI ESG <GO>

Sunshine Rally

Source: Bloomberg. To see this on the Bloomberg Terminal go to  or click the G #SF. BRIEF 87image.

  Sustainable Finance 3  June 22, 2017

Environment

  Sustainable Finance 4  June 22, 2017

Environment

Oil Majors Risk Wasting $2.3 Trillion If Peak Demand Looms By Rakteem KatakeyOil companies risk wasting $2.3 trillion of investments should demand peak in the next decade as the world works toward its goal of limiting global warming, according to a report from Carbon Tracker.

Exxon Mobil Corp. is the most exposed oil major with as much as 50 percent of potential spending to 2025 on projects that wouldn’t be needed as the world changes its energy mix to meet climate targets, according to the report published on June 20 in collaboration with the Principles for Responsible Investment. Royal Dutch Shell Plc,

andChevron Corp., Total SA Eni SpA risk wasting as much as 40 percent of expenditure and BP Plc up to 30 percent.

The energy industry is debating the role it will play in the transition to a low-carbon world as investors raise questions about the viability of future spending amid attempts to limit global warming. Shell says oil demand may peak in the second part of the next decade, while BP thinks it could happen in the 2040s.

“There are clear signs that oil demand could peak in the early 2020s — so

companies need to start taking project options that would come on stream then off the table, and be transparent about how they are aligning with a low carbon future,” Carbon Tracker’s James Leaton, research director, said in the report. “Sticking with the growth at all costs scenario just doesn’t add up for shareholder value when the policy and technology momentum is heading in the opposite direction.”

The companies are already facing some

pressure from investors. Last month, Exxon shareholders, in a split with the company, urged the explorer to publish a detailed analysis on how carbon curbs could affect the value of its oil fields, refineries and pipelines. While Shell investors voted against a resolution asking the company to publish targets for reducing greenhouse gas emissions, it continues to face demands to raise investment in renewable energy and cut down on oil and gas. Full story on web

 

Energy News in Brief

 

The U.K. government plans to invest more than 800 million pounds ($1 billion) in new driverless and zero-emission vehicle technology as it seeks to boost its economy while leaving the European Union. Investment in research and new recharging infrastructure is intended to make Britain a “leader” in electric and autonomous vehicles, Queen Elizabeth

said June 21.    II Full story on web    

Electric Vehicles

The U.K. government announced 34.8 million pounds ($44 million) of funding toward new methods to cut the environmental impact of heating the nation’s homes and businesses. As much as 25 million pounds will be invested in developing a range of hydrogen-fueled appliances like boilers and cookers, according to a statement June 20. Full story on terminal

Energy Efficiency

South Texas is to wind, engineers have discovered in recent years, a bit like what Napa Valley is to wine and Georgia is to peaches. Not only does the state’s Gulf Coast generate strong evening gusts, but it also blows fiercely in the middle of the day, just as electricity consumption is peaking. Full story on web

Wind Power

It’s the holy grail for biofuel developers hoping to coax energy out of algae: Keep the organism fat enough to produce oil but spry enough to grow quickly. J. Craig Venter, the scientist who mapped the human genome, just helped Exxon Mobil Corp. strike that balance, with a breakthrough that could enable widespread commercialization of algae-based biofuels. Exxon and Venter’s Synthetic Genomics Inc. announced the development June 19. Full story on web

Biofuel

U.S. states and cities are doubling down on the green economy despite President

dismissal of the Paris Donald Trump's climate accord as a bad deal for the U.S.

“If you really start to scrub all your tools as an executive, you can do a lot,” Washington Gov. (D) told Jay Inslee Bloomberg BNA. “It might not make the headlines like a carbon cap, but it can establish the businesses and the technologies that are really necessary to solve this problem.”

Thirty states and the District of Columbia have renewable portfolio standards that require a significant chunk of their electricity be produced by renewable energy, according to a June 12 report from Food and Water Watch.

The state efforts are a counterpoint to Trump's argument that the Paris accord would kill the U.S. economy and cost as many as 2.7 million jobs over the next decade. Full story on terminal

Clean Energy Jobs

Social

BP Predicts Oil Demand Growth Will Slow

Source: BP Energy Outlook 2035

  Sustainable Finance 5  June 22, 2017

Social

Women Lose Ground on New Board Seats for First Time in 8 YearsBy Jeff GreenAfter seven years of progress, gender equality has taken a step back in the board room. Just under 28 percent of the 431 open board seats in Fortune 500 companies were awarded to women in 2016, down from 30 percent the year before.

Last year saw the first decline since executive recruiter Heidrick & Struggles started tracking director appointments in 2009. At this rate, the firm says, women won’t make up 50 percent of directors until 2032.

Boards are often looking to fill vacancies with people who have been chief executive officers or chief financial officers, said co-leader of Bonnie Gwin,the global CEO & board practice for Heidrick & Struggles. Both of those roles are disproportionately filled by men as well. “If you focus on CFOs and CEOs, you miss out on diversity, largely,” she said.

Among new directors, 50 percent were current or former CEOs and 16 percent were current and former CFOs. Three-quarters had previously served on a board, according to Heidrick & Struggles.

The other challenge is the stubborn persistence of mostly male networking circles, said CEO and Coco Brown, founder of the which Athena Alliance,was formed in 2014 to help boards find women candidates.

“I haven’t received a job through my resume since I was 23, and I’m now 46,” Brown said, citing a report from consultant that found that 87 PwCpercent of board appointments come from the directors’ network of associates. “People don’t get board seats through being in a

database. The candidate is still coming from the intimate network.”

Male directors also tend to doubt the positive business effects of having women on the board. A 2016 survey of directors by PwC found that 24 percent of men said that board diversity leads to better company performance, compared with 89 percent of women, and 38 percent of men said diversity made a board more effective, compared with 92 percent of women who did. Full story on web

Social News in Brief

   

Podcast: In 1996, only 20 percent of companies let some employees telecommute at least some of the time; now, 60 percent let their employees log in to work from their laptops at home — or anywhere with decent wifi. Letting employees occasionally work from home makes them happy, can save companies money, and there’s research to suggest it may help close the gender pay gap. But some companies, like , say remote IBMwork fosters habits that hurt collaboration, innovation and productivity. So what’s the future of work? Guest

a technology Christopher Mims, columnist and a 10-year veteran of working from home, explains why he believes companies can’t curb the trend of working from a distance.

Is Working From Home Unsustainable?

Governance

Women Wavering in Fortune 500 Companies

U.S. Ranks Just 18th in a New Global Study of Well-Being

Source: Social Progress Imperative

America leads the world when it comes to access to higher education. But when it comes to health, environmental protection, and fighting discrimination, it trails many other developed countries, according to the a U.S.-based nonprofit. Social Progress Imperative,   The results of the group’s annual survey, which ranks nations based on 50 metrics, call to mind other reviews of national well-being, such as the World Happiness Report released in March, which was led by Norway, Denmark, and Iceland, or September’s Lancet study on sustainable development. In that one, Iceland, Singapore, Sweden, and the U.S. took spots 1, 2, 3, and 28 — respectively. Full story on web

  Sustainable Finance 6  June 22, 2017

Governance

Commentary: Some Wells Fargo Directors Should Heed Warren's AdviceBy Gillian Tan, Bloomberg GadflySenator to the Elizabeth Warren's plea

to remove a dozen Federal Reserve directors may not Wells Fargo & Co.

find a receptive audience. Regardless, some of the lender's directors should heed her call on their own.

In April, 12 directors who oversaw Wells Fargo's business during the fake accounts scandal somehow emerged from the annual general meeting intact. As I it was more of a narrow warned,escape than a narrow victory. Now, barely two months later, Ms. Warren is urging Fed Chair to use the Janet Yellentools bestowed upon her by Congress to show them the exit.

Ms. Warren grandstanding. isn't merelyThe scandal shone a spotlight on inadequate risk management practices, which haven't gone completely unpunished: Excluding withheld executive compensation, settlements and fines now add up to roughly $330 million. Even agencies have felt the brunt of the scandal: Wells Fargo's primary banking regulator, the Office of the Comptroller of the Currency, removed its most senior bank examiner.

As far as the Fed is concerned, even if the fake-account spree at Wells Fargo had gone unchecked longer, it most likely

would not have threatened the bank's survival or the larger financial system. So while I'm not excusing the board's accountability or the scandal as an issue, the Fed has better ways to spend its time.

Signs point to there being at least some action on the Fed's part, considering Yellen's statement last week that she was sympathetic to Treasury's objective to reduce the regulatory burden without compromising safety and soundness or

creating systemic risk.Still, Ms. Warren's salvo raises the

possibility that come June 28, when the results of the qualitative section of the Fed's annual stress tests are released, Wells Fargo may be the only bank to receive a failing grade, which would squash its chances of a delivering a higher payout to shareholders. Full story on web

    This column does not necessarily reflect the

opinion of Bloomberg LP and its owners.    

 

Governance News in Brief

 

Proxy adviser Glass Lewis & Co.blasted Toshiba Corp.’s board for poor governance amid repeated scandals and recommended investors vote against all directors at the company’s shareholders meeting later this month.

In a 25-page report, the U.S. firm detailed years of accounting troubles at the Japanese icon, clashes with accountants over financial statements, weak internal controls and management missteps that have put investors at risk of seeing their shares delisted from the Tokyo Stock Exchange.

 Toshiba said in 2015 that it had overstated profits, only to reveal this year that it would have to take a writedown of more than $6 billion. Full story on web

Board GovernanceRenault SA shareholders voted 53 percent in favor of 7 Carlos Ghosn’smillion-euro ($7.8 million) compensation for last year over the objections of the French government, which argued that the automaker’s chief executive officer is overpaid. Full story on web

One of Europe’s biggest pension funds is adding its voice to the list of investors shaming executives they think earn too much. the 52-year- Christian Hyldahl,old Dane who has been running ATPsince January, says he wants to use his job to shine a torch on what he characterizes as an unsustainable pay culture. He says greedy CEOs put democracy and capitalism at risk. Full story on web

CEO Pay   Blue Apron Holdings Inc.’s three-tiered stock structure could provide a model for other young firms looking to maintain founder control even after going public.

The meal-kit delivery company plans to issue 30 million shares of common stock that will each carry one vote while Blue Apron’s chief executive officer and other holders of a second share class get 10 votes each, giving them control of voting outcomes. A third class of stock without voting power is not being sold now but could be later.

Stock structures with unequal voting rights have become more popular. Snap Inc., the company behind the Snap Chat messaging app, recently became the first in the U.S. to go public with stock lacking any voting rights. Full story on terminal

Share Voting

Calendar

Time to Say Goodbye? 

Wells Fargo's shareholder voting sowed a level of dissatisfaction with the bank's directors who were present during the fake-accounts scandal. 

  Sustainable Finance 7  June 22, 2017

  

DATE(S) EVENT ATTENDEES OF NOTE LOCATION

July 11-13 International Corporate Governance Network See website for details. Kuala Lumpur

July  19-20 Impact Capitalism Summit Kenneth Mehlman, KKR; Sandra Urie, Cambridge Associates Nantucket

July 19-20 CSR Investing Summit See website for details New York

August 30 Women in Green Forum See website for details. Los Angeles

Sept. 13-15 Yale Sustainability Leadership Forum See website for details. New Haven

Sept. 18-19 The Future of Energy Summit: EMEA Tord Lien, Minister, Petroleum, Energy, Norway; Antonio Luis Mexia, EDP London

Sept. 19 Sustainable Investment Forum See website for details. New York

Sept. 19-21 Verge 17 See website for details.  Santa Clara

Sept. 25-27 PRI In Person See website for details.  Berlin

Sept. 27 Bloomberg Sustainable Business Summit See website for details.  Toronto

Oct. 4-6 Companies vs. Climate Change: Europe See website for details. Brussels

Oct. 12-13 Bloomberg Sustainable Business Summit See website for details. New York

Nov. 1-3 2017 SRI Conference: All In For Impact See website for details. San Diego

Nov. 13-14 Sustainable Innovation Forum See website for details. Bonn

Nov. 13-15 Impact Investment Summit Asia Pacific See website for details.  Sydney

Nov. 30 High Water Women, Investing for Impact See website for details. New York

Nov. 30 SASB 2017 Symposium: Moving the Market See website for details. New YorkThe "event" column links to websites, where available. To submit an event, email echasan1@bloomberg.net

   

Calendar

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