Unleash the power of green bonds

power of green

Unleash the power of green bonds



It’s undeniable. Shifting the global trillions invested in conventional bonds towards more sustainable exposures today would have a significant impact on the world we will be living in tomorrow.

Climate change, and its resulting exponential impacts and inequalities, are the greatest risks to our long-lasting financial stability. The Covid-19 pandemic has made the case – far better than we ever could – for how dependent we are on natural systems.

Green bonds are great ways of making a positive contribution to the environment, as their proceeds are earmarked solely for eco-friendly projects and assets. The importance of adding investments which take direct climate action, like our SFDR 9-approved green bond ETFs, to your portfolios cannot be overstated. Here’s what you need to know:

1.

We invented green bond ETFs…

  1. Lyxor’s Green Bond and ESG-Screened Green Bond ETFs were the first of their kind
  2. They are both Article 9 products under SFDR regulation
  3. The flagship Green Bond ETF comes with the “Greenfin” label, which guarantees investors that the financial products they buy contribute effectively to the financing of the energy and ecological transition. The ESG-screened version adds issuer-level business and controversy exclusions using data from leading ESG data provider Sustainalytics
  4. Before inclusion in our funds, green bonds have to be independently approved by the Climate Bonds Initiative (CBI) - the world’s only organisation working solely on mobilising the $100 trillion bond market for climate change solutions
  5. Indexed by Solactive, our ETFs comprise EUR & USD-denominated investment-grade, liquid bonds issued solely for climate-friendly purposes by sovereigns, supranationals, development banks and corporates

Watch ‘Why green bond ETFs are ideal for climate action’, featuring François Millet

2.

…with a little help from our friends

The CBI issues certifications and accreditations to green bonds. To be approved, bonds must comply with the Climate Bonds Standard, a framework which is fully aligned to (and to some extent exceeds) the Green Bonds Principles of the International Capital Market Association. It specifies a detailed taxonomy of eligible projects and assets, plus rigorous pre- and post-issuance requirements.
In 2020 for example, most of the proceeds from green bonds were invested into energy, green building and clean transportation projects.

Learn more from CBI

3.

Since then, the new has become the norm

Demand for green bond funds has grown significantly as attention has turned to climate and the necessity of hitting the Paris Agreement’s 1.5°C warming target. Since then, green bonds have become one of the instruments of choice for governmental and corporate entities looking to find ways to achieve their climate action and other environmental objectives. The new has become the norm with sovereign issuance of green bonds growing and diversifying as these 2020 highlights show:

  • Issuance broke new records at $269.5bn – an average annual growth rate of 60% since 2015
  • The market crossed the $1 trillion mark in December
  • The US led national issuance rankings ($51.1bn), Germany was second ($40.2bn) and France was third ($32.1bn). Perhaps surprisingly, China was fourth ($17.2bn)
  • Urban transport operators dominated the Certified Issuer Top 10, led by Société du Grand Paris. We also saw global automaker Volkswagen come to market with two green bonds totalling $2.2bn, financing the development of an extensive electric vehicle programme
  • Investment in the energy sector comprised the largest share of 2020 issuance, at $93.6bn. Low Carbon Buildings were second at $70.6bn, followed by Low Carbon Transport at $63.7bn

Learn more about the market:

4.

They can help you make a tangible difference…

One of the key aspects of green bonds as far as the CBI is concerned is clarity of reporting. It’s what allows us to show you exactly what your money achieved, or could have helped achieve, by investing in our €500m+ Green Bond ETF last year. Here are three highlights:*

  • Avoided 438,379 tCO2e – like taking 94,709 cars off the road**
  • Generated 342,878 MWh of renewable energy – like powering 27,975 homes for a year**
  • Treated 40,832m3 of water

You can read the full impact report here.

Watch ‘The impact of CLIM in 2020’ to see how our Green Bond ETF made a difference

    5.

    …so we can still finance a better future

    We may have lost the first half of the fight against climate change, but we still have time to turn things around. It’s no secret as to what we need to do, and we can start applying much of our knowledge today if we can just find the money for it.

    The good news is that we have more capital available on the planet now than ever before and large slabs of it are sitting in negative or zero interest rate bonds. That is no way to finance the future. Shifting that capital into places where it can get some kind of return – which is likely to be green over the long term – makes sense for every investor, no matter the size of their allocation.

      Take a look at our Green Bond ETF range

      Further reading

      Source: Lyxor International Asset Management, the Climate Bonds Initiative, as at April 2021
      * These indicators concern 47% of the portfolio weight, as at 08/12/2021.
      ** Source of the conversion tool: https://www.epa.gov/energy/greenhouse-gas-equivalencies-calculator