What comes to mind when you think about sustainability? Usually, it isn’t a bank, but in reality, financial institutions are playing an important role in achieving climate change goals because of their central position in the economy as lenders and providers of specialised sustainable financing expertise.
Sustainability linked-bonds seen reaching $610 bn in 2021
Banks can decide to allocate their capital in a responsible way to companies that contribute positively to the energy transition. By supporting the market for "green" bonds to raise funds for sustainability projects, banks are helping drive the change to a more environmentally-friendly world. UniCredit is committed to being part of the solution in the transition from "brown" to "green", helping to progressively create a more sustainable economy and society.
The "green" bond market is one of the most visible ways banks are making a difference in the sustainability space. Global issuance of bonds to finance green, social, sustainability and sustainability-linked projects reached a new record at the start of this year. We expect the Environmental, Social and Governance (ESG) bond market to continue to grow in 2021 and the global issuance of green, social, sustainability and sustainability-linked bonds to reach $610 bn. Green bond supply is expected to set a new record of $300 bn in 2021.
Source: Climate Bonds Initiative, Bloomberg, UniCredit Research
Why is the ESG bond market growing?
The COVID-19 pandemic has shifted attention to social topics. Another key driver in 2021 is likely to be the new EU Taxonomy, a classification system that makes it easier for investors to evaluate ESG criteria. Stricter climate targets and increased focus by issuers across all sectors on overall sustainability performance are two other main drivers. Sovereigns and supranational, sub-sovereign and agency (SSA) issuers will be the key players in the ESG bond market in 2021 and are expected to launch highly rated, liquid ESG bonds with large volumes.
UniCredit - your partner for sustainable finance
Roberta Marracino, UniCredit’s Head of ESG and Impact Banking, explains how customers' appetite for ESG products varies by market.
"The appetite and market opportunity for ESG are growing across the board, which is further driven by regulation, the changing behaviour of investors and the significant amount of upcoming national and supranational investments. ESG needs of course differ by market and this is something that we always stay mindful of and adjust our approach accordingly Nevertheless, there has been a continued increase in ESG appetite across all our markets and client segments, including CEE, as ESG progresses from something previously seen as a “soft” topic to “hard” with increasingly concrete metrics as well as common rules and definitions. Read the full interview to know the bank’s continued commitment to ESG"
HEAD OF GROUP ESG STRATEGY & IMPACT BANKING
Our expertise in corporate finance for ESG investing and funding
UniCredit is playing a central role in facilitating the transition to a more sustainable economy in line with the European Commission's view that the goal of green finance should be to act as a tool towards improved environmental conditions.
In January 2021, over 1,100 of our clients attended the fully-digital events held in Italy, Germany, Austria and the CEE region, to listen to experts from issuers, investors, rating agencies and UniCredit talk about the impact of ESG on the future of corporate financing and practical issues relating to green financing, such as regulation, ratings and reporting. Read more about our ESG on the road project.
Joining up with Italian Stock Exchange
Businesses must address climate change, conserve biodiversity, use natural resources efficiently and assure an ample water supply. As a commercial bank, we can play a key role in addressing these issues and will continue to work to facilitate sustainable development, encourage job creation and foster social inclusion.
UniCredit has joined the new program launched by the Italian Stock Exchange 26 January 2021 to support the development of innovative corporate sustainable finance solutions in Italy. Find out more.
Sustainability-linked loans are any type of loan instrument and/or contingent facility that provides an incentive to the borrower to achieve ambitious, predetermined sustainability performance objectives. Find more about sustainable fashion trends and clean energy
UniCredit bookrunner for SURE debut
Social bonds and sustainability bonds which combine green and social assets, are attracting attention in the market - making up around 19% of all issued use-of-proceeds bonds. The European Union aims to finance 100 per cent of its SURE (Support to Mitigate Unemployment Risk in an Emergency) programme through the issuance of social bonds. It plans to issue up to €100 billion by 2021 to preserve employment in the region. UniCredit was the joint bookrunner in the debut transaction of the SURE programme.
The way in which we achieve results is as important as the results themselves
UniCredit Group's 2020 Integrated Report will be available on our corporate website from 24 March. It sets out and illustrates how ESG is integrated in our business and operations as well as wider purpose as a company, helping us create value for all stakeholders. In a changing context, playing our role as part of the solution is crucial and our ESG ambition, strategy and targets help us do so, always in a responsible and sustainable way, in line with our core principle of 'Do the right thing!'
ITALY'S FIRST GREEN AND SOCIAL MINI-BOND
Fabio Maruzzi is Finance Manager of Loccioni, a company founded in 1968 that specialises in developing automatic systems for measuring the quality of products and industrial processes. It has over 450 employees and offices in Germany, USA, China, Japan and India.