ANZ Sustainable Finance Insights, Q3 2024

Sustainable finance market update  |  Notable transactions and sustainable finance updates  |  Key global updates  |  Australia  |  New Zealand  |  Asia  |  Europe  |  United States  |  Carbon market updates  |  ANZ news and updates

Sustainable finance market update

All market data is sourced from BloombergNEF as at 30 September 2024 and includes original and tapped issuance, unless otherwise noted.

Graph 1: Sustainable debt issuance ahead of last year’s run rate

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Source: BloombergNEF, for the period ended 30 September 2024 (sourced on 23 October 2024)

Notable transactions and sustainable finance updates

ANZ supported transactions

• Powerco has secured its first green loan certified by the Climate Bonds Initiative (CBI), making it the first electricity distribution business in New Zealand to achieve this under the ‘Electrical Grids and Storage’ criteria. The NZ$300 million, seven-year loan was initially aimed at NZ$175 million but was oversubscribed due to high demand. ANZ was appointed as sole Sustainability Coordinator for the development of the Green Finance Framework and green loan.
  
  
• The Hong Kong Special Administrative Region of the People’s Republic of China (HKSAR) Government priced a landmark HK$25 billion green bond issuance across RMB, USD, and EUR, attracting over HK$120 billion in orders. Notably, this issue included the first 20-year and 30-year RMB Green Bonds, extending the offshore RMB yield curve. The funds will support environmentally beneficial projects and sustainable development as per the HKSAR Government’s Green Bond Framework. ANZ acted as Joint Lead Manager. 
  
  
• Tata Communications has executed a US$200 million Sustainability-Linked Loan (SLL), its second SLL this year. The transaction was structured to be in line with the company’s SBTi-validated Scope 1-3 emissions reduction targets and their Sustainability-Linked Loan Framework which was released in early 2024. Tata Communications’ SLL framework is believed to be a first of its kind in the sector in India. ANZ acted as Sole Sustainability Coordinator, Arranger and Facility Agent.
  
  
• Invenergy secured a Green Loan for its 300MW Solar project in Warren County, Missouri. The project is slated to be acquired by Ameren Missouri from Invenergy at construction completion and will be pivotal in helping Ameren achieve its target of acquiring or building 550MW of solar energy - equivalent to producing enough energy to supply more than 95,000 average-sized residential homes. ANZ acted as Green Loan Coordinator, Joint Lead Arranger, Bookrunner, and Swap Provider.
  
  
• Invenergy also secured a Green Loan for the Top Hat wind power project located in Logan County, Illinois. Upon construction completion, Top Hat will have capacity of 204MW, and will consist of 60 US-manufactured GE turbines. During construction, the project is expected to create 200-300 construction jobs in the area. ANZ acted as Green Loan Coordinator, Joint Lead Arranger, Bookrunner, LC Issuer and Swap Provider.
  
  
• Clearway Energy secured a Green Loan for the Pine Forest project, a 300MW solar PV and 200MW battery energy storage system located in Hopkins County, Texas. Upon completion, the facility will provide power to over 90,000 homes with reliable, low-cost energy. The project also represents a major investment in grid reliability for the state of Texas and will provide much needed flexibility to the grid. ANZ acted as Sole Green Loan Coordinator, Joint Lead Arranger, LC Issuer and Swap Provider.
  
  
• NBN Co Limited (“NBN”) priced A$1.75b Australian Medium-Term Notes (AMTN), their largest A$ to date, including an A$750m 7 year Green Bond and an A$1b three-year Bond. NBN is the largest Australian corporate issuer in the Green Bond format with approximately A$6.7 billion equivalent of Green Bonds outstanding in the domestic and international markets. Proceeds from the Green Bond issuance will be fully allocated to eligible green projects in line with its updated Sustainability Bond Framework, released in June 2024. ANZ acted as Joint Lead Manager.
  
  
• Mirvac Group Finance Limited issued A$400m in 6.5-year Green Bonds, marking the Company’s first public A$ Green Bond. The proceeds of the green bond will be allocated to finance or refinance eligible green projects, assets or activities which meet the Climate Bonds Standards in accordance with Mirvac’s Sustainable Finance Framework dated March 2022. ANZ acted as Joint Lead Manager.

Global transactions and developments

• According to BloombergNEF data, the largest labelled issuance for Q3 2024 was the US$7.9bn sustainability-linked ‘Warehouse Credit Facility’ for the global data centre developer, owner and operator CyrusOne. Announced in July 2024, the facility is aligned to target reductions in Greenhouse Gas Emissions.
  
  
• The largest recorded labelled bond issuance for Q3 2024 was the European Investment Bank’s EUR5bn 10-year Climate Awareness Euro Area Reference Note (EARN), issued in August 2024. With this Climate Awareness Bond, the EIB’s cumulative issuance of Climate and Sustainability Awareness Bonds has surpassed a total of EUR100bn equivalent through issuance in 23 different currencies.
  
  
• The World Bank has issued an innovative bond structure with interest linked to reforestation-based carbon removals. The US$225 million Amazon Reforestation-Linked Bond is the largest World Bank outcome bond issued to date.
  
  
• European Commission president Ursula von der Leyen has announced a ‘Green Coupon Facility’, which will see Europe part-subsidise coupons for green bond issuers that face very high interest rates. In a speech to the Heads of State and Government of the Alliance of Small Island States in New York, the Commission president said the facility would allow green bond markets in smaller countries to grow much faster.

Key global updates

• The Climate Bonds Initiative (CBI) released updates to its green bond taxonomy to include the Climate Bonds Resilience Taxonomy (CBRT), which specifically addresses climate resilience investment opportunities. The CBRT methodology document explains the core principles, definitions and eligibility checks used to guide the identification of resilience investments.
  
  
• On 10 July 2024, the Science Based Targets Network (SBTN) released guidance on setting science-based targets for nature. This comprehensive guide helps businesses set nature-based targets and understand their impacts and dependencies on nature. The guidance, based on a corporate pilot programme that concluded in June 2024, includes technical resources and best practices for setting these targets.
  
  
• S&P Global Ratings has extended its ‘shades of green’ methodology to assess the credibility of companies’ climate transition plans. S&P’s Climate Transition Assessment, launched in July 2024, assesses the transition plans of companies against their in-house methodology. This assessment can be used as an extension of labelled debt assessments (eg. alongside Second Party Opinions), or to demonstrate alignment of transition commitments at the entity level.
  
  
• The Global Reporting Initiative (GRI) and the Taskforce on Nature-related Financial Disclosures (TNFD) have together published an interoperability map and guidance document which show that the TNFD Disclosure Recommendations and the GRI Standards, including GRI 101: Biodiversity 2024, are highly aligned.
  
  
• The TNFD has also published the final versions of: (i) its first set of additional sector guidance covering sector specific metrics for eight real economy sectors; and (ii) additional guidance for financial institutions. Updated guidance on value chains was also published this past quarter, which aims to help organisations identify and assess impacts, dependencies, risks and opportunities in their upstream and downstream value chains with regard to nature and biodiversity.
  
  
• In October 2024, Sydney hosted the first Global Nature Positive Summit. The Summit brought together global delegates including ministers, environment groups, First Nations peoples business, scientists and community leaders, to consider how to supercharge investment in projects that repair nature. Key themes that emerged from the Summit include: (i) nature needs to be factored into economic and business decisions, (ii) clear and consistent metrics are important, (iii) indigenous leadership is key to sustainability, and (iv) nature-positive and net-zero objectives need to work together.
  
  
• The UNEP Finance Initiative (UNEP FI) has provided the G20 Sustainable Finance Working Group with key recommendations to advance a nature-positive economy and ensure a just transition. These recommendations aim to integrate environmental and social considerations into financial practices, promoting sustainable and equitable economic transitions. Further, the “Finance for Nature Positive” discussion paper led by UNEP FI and the Finance for Biodiversity Foundation has been published, aiming to gather feedback from the financial sector on a proposed working model for integrating nature-positive practices. This model seeks to operationalise the “Nature Positive” concept, providing definitions and guidance to help financial institutions contribute to the global goal of halting and reversing biodiversity loss.
  
  
• The Network for Greening the Financial System (NGFS) has in July published two complementary reports on nature-related risk: i) the final version of the Conceptual Framework for nature-related financial risks, which aims to guide policies and action by central banks and financial supervisors; and ii) a paper on nature-related litigation, including cases concerning biodiversity loss, deforestation, ocean degradation, carbon sinks and plastic pollution.

Australia

• In Australia, mandatory climate-related reporting is set to be phased in from reporting periods commencing on or after 1 January 2025. The policy was confirmed after the Treasury Laws Amendment Act (Financial Markets Infrastructure and Other Measures) 2024 received Royal Assent in September 2024. In parallel, the first Australian Sustainability Report Standards (ASRS) were issued in September 2024, releasing two standards aligned to IFRS S1 and S2 - one mandatory and one voluntary.
  
  
• The Climate Change Authority of Australia has published its Sector Pathways Review, detailing the technology transitions and emissions pathways needed for six key sectors to achieve net zero emissions by 2050. The sectors include agriculture and land, built environment, electricity and energy, industry and waste, transport, and resources. The review identifies existing and emerging technologies, such as solar, wind, hydrogen, and engineered carbon removals, as crucial for this transition. It also highlights barriers and proposes strategies to overcome them, emphasising collaboration between governments, businesses, and communities.
  
  
• The Australian Sustainable Finance Institute (ASFI) has released its 4th annual progress tracker on the implementation of Australia's Sustainable Finance Roadmap. The tracker shows Australia has seen important progress in the last year to develop sustainable finance architecture and increase capital flows towards sustainability objectives.
  
  
• The finance ministers of Australia and New Zealand have agreed joint actions to meet climate commitments and support climate resilience in the Pacific region, including discussions on how investment and finance can be mobilised for climate change action. As part of this, the Ministers pledged to coordinate respective sustainable finance taxonomies and work on product labelling and transition planning.
  
  
• ANZ has supported the Artemis Cattle Station and Conservation Partners’ efforts to rehabilitate endangered Golden-shouldered Parrot populations in Far-North Queensland. The partnership has helped restore and protect the Parrot’s natural grassland habitat, including the use of savanna fire management on Artemis land, a method known to help lower carbon emissions by reducing the frequency and severity of uncontrolled late-dry-season fires. When done correctly, this kind of land management can qualify businesses for Australian Carbon Credit Units (ACCUs), a “tradable financial product” aimed at encouraging projects that reduce emissions. ANZ purchased ACCUs generated at Artemis to offset a portion of its carbon emissions. Read more on this project from the roundtable discussion hosted by ANZ and KangaNews.

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New Zealand

• The New Zealand Centre for Sustainable Finance (CSF) is partnering with the Government to develop a sustainable finance strategy for Aotearoa New Zealand. Announced by the Minister of Climate Change Simon Watts, this strategy aims to increase the flow of both domestic and international capital towards sustainable and transition opportunities. It will aim to align New Zealand with global sustainability trends and provide a cohesive framework for green taxonomies and innovative sector financing. This partnership is expected to help New Zealand reduce greenhouse gas emissions, build a resilient economy, and maintain access to international markets.
  
  
• Consultation on New Zealand’s Second Emissions Reduction Plan closed in August 2024, with the final plan due to be published at the end of 2024. The Government's Carbon Capture, Utilisation and Storage (CCUS) consultation also closed in August 2024, with any resulting regulatory change expected to be taken into account in New Zealand's Emissions Reduction Plan. ANZ outline the implications of the draft emissions reduction plan for the agriculture sector in an ANZ Research report.^disclaimer

Asia

• On 4 July 2024, the Monetary Authority of Singapore (MAS) published its annual Sustainability Report 2023/2024 which sets out MAS’ strategy on climate resilience and environmental sustainability. The focus is to strengthen the resilience of Singapore’s financial sector to environmental risks, develop a vibrant sustainable finance ecosystem, build a climate-resilient investment portfolio and incorporate sustainable practices in MAS.
  
  
• Singapore’s Ministry of Trade and Industry (MTI) tabled the Energy Transition Measures and Other Amendments Bill for its first reading in Parliament in August 2024. The Bill will amend the Energy Market Authority of Singapore Act, Electricity Act, and Gas Act to support the nation's net-zero ambitions by 2050. Amongst other measures, the proposal includes establishing a Future Energy Fund with an initial injection of S$5 billion, centralising gas procurement through a new Central Gas Entity, and granting the Energy Market Authority control to recover costs for energy security, market development and decarbonisation related initiatives.
  
  
• The Hong Kong Green Finance Association (HKGFA) hosted its 2024 Forum with the theme "Financing Asia's Net Zero Transition". The Forum evaluated the region’s progress to net zero, development of transition taxonomies, and practical considerations for implementing transition plans. HKGFA also shared a preview of its soon-to-be launched "Green Technology Landscape in Hong Kong: Opportunities for Finance" survey findings at the Forum, showcasing how finance can unlock the potential of emerging technologies.
  
  
• The Glasgow Financial Alliance for Net Zero (GFANZ) Hong Kong Chapter has officially launched in October 2024, following the initial announcement of the Chapter in August 2023. GFANZ Vice Chair Ms. Mary L. Schapiro noted during the HKGFA conference that the GFANZ Hong Kong Chapter will collaborate with local financial institutions, policymakers, and the HKGFA to support the dialogue and capacity needed to scale transition finance.
  
  
• ICMA has published The Hong Kong Code of Conduct for ESG Ratings and Data Products Providers in October 2024, aiming is to establish and promote a globally consistent, interoperable, and proportionate voluntary code for providers offering ESG ratings and data products and services in Hong Kong. 

Europe

• The Nature Restoration Law came into force on 18 August 2024 and aims to restore degraded ecosystems across Europe, combining an overarching restoration objective for the long-term recovery of nature with binding restoration targets for specific habitats and species. These targets include restoration of at least 20% of the EU’s land and sea areas by 2030, with the goal of restoring all ecosystems in need by 2050. The law supports biodiversity, climate neutrality by 2050, and food security, with initiatives including measures for urban green spaces, river restoration, and reversing pollinator decline.
  
  
• The European Securities and Markets Authority (ESMA) has published an opinion on the EU Sustainable Finance Regulatory Framework, suggesting long-term improvements to enhance investors’ access to sustainable investments. Key proposals include positioning the EU Taxonomy at the core of the Framework, developing a social taxonomy, defining “transition investments,” and requiring basic sustainability KPIs for all financial products.
  
  
• On 21 August 2024, ESMA also published translations in all official EU languages of its guidelines on funds using ESG or sustainability-related names. These guidelines aim to protect investors from unsubstantiated or exaggerated sustainability claims in fund names and provide clear criteria for asset managers. The guidelines will apply from 21 November 2024, with a transitional period for existing funds until 21 May 2025.
  
  
• The Ecodesign for Sustainable Products Regulation (ESPR) came into force in Europe on 18 July 2024. This regulation aims to improve transparency and encourage sustainable products in the EU by improving their circularity, energy performance, and overall environmental sustainability. It replaces the previous Ecodesign Directive and sets requirements for product durability, reusability, upgradability, reparability, and resource efficiency. 

United States

• New York Climate Week 2024 brought together over 100,000 visitors to New York City as well as a wide range of global stakeholders to roundtable discussions on actionable climate solutions. The conversation this year emphasized a more practical, collaborative and realistic approach to transition efforts, and encouraged a strong push for government, financial institutions and companies to integrate nature, AI, and greater transparency in their development of climate strategies. Some recurring themes include:
  
  
  1. The critical role of nature-based solutions and its investment potential – as highlighted by the Mobilizing Capital for Nature event, institutions are increasingly cognizant of incorporating nature into net-zero plans, with regulators also recognizing nature-related financial risks. Biodiversity-rich regions were also showcased as strong investment opportunities that aligns both climate mitigation and economic opportunity.
     
     
  2. The prominence of AI, including its role in addressing the challenges of corporate emissions through energy efficiency optimization and predictive analytics for weather events was framed as a powerful tool in supporting resilience to climate risks. However, the need to reconcile the energy-intensiveness of AI systems and innovation with sustainable practices was a forefront concern in discussions.
     
     
  3. Businesses were encouraged to avoid ‘greenhushing’ and to openly discuss the challenges and solutions faced in decarbonization, as part of a broader call to embrace transparent and comprehensive climate transition plans that goes beyond traditional targets. Open discussion and publicization of these plans allow companies to build credibility in their climate-related advocacy and guide financial institutions in enabling policy conditions to support their customers.

Carbon market updates

• ANZ Research reported^disclaimer that strong demand helped push the price of Australian Carbon Credit Units (ACCUs) to a 16-month high in September 2024. Generic ACCUs traded at A$37/t in mid-September, and trading in Human Indued Regeneration and Savanna Fire Management ACCUs showed greater price convergence with these Generic ACCUs. In August 2024, the ACCU market experienced significant growth, with traded volumes soaring to 2.8 million units, marking the third-highest monthly total on record and more than double July’s volume. The spotlight was on Human Induced Regeneration ACCUs, with these credits capturing 44% of the market, propelled by robust demand.
  
  
• On 31 July 2024, the Singapore Economic Development Board (EDB) and IETA (formerly the International Emissions Trading Association) launched the Singapore Carbon Market Alliance (SCMA). As reported in the joint EDB and IETA press release, the SCMA is the first platform in Singapore aimed at helping companies obtain access to high-quality Article 6 carbon credits.
  
  
• Singapore's GenZero and Keppel Ltd. and the Philippines' ACEN have signed a memorandum of understanding for the generation and utilization of carbon credits, called transition credits, to support the early closure of a coal-based power plant. 

Additional reading

• On 30 July 2024, the Science Based Targets initiative (SBTi) published four technical papers as an early step in its revision of the Corporate Net-Zero Standard, including a Scope 3 discussion paper, and reports on carbon credits. A draft Corporate Net-Zero Standard will be released for public consultation towards the end of Q4 2024. The SBTi also launched a science-based decarbonisation framework for companies and financial institutions in the buildings value chain.
  
  
• In September, the Chief Executive Women Senior Executive Census 2024 report was released, finding that companies that have a gender target are 3.6 times more likely to achieve gender balance in leadership than those without.
  
  
• The Transition Pathway Initiative (TPI) released its State of Transition Report 2024 reviewing the progress of 1,000+ of the world's highest-emitting public companies in responding to climate change.
  
  
• The ICMA Executive Committee of the Principles has published an updated version of the Harmonised Framework for Impact Reporting for Social Bonds.
  
  
• The International Energy Agency, United Nations Environment Programme and Environmental Defense Fund have published a framework for tracking emissions progress in the oil and gas sector. The report outlines a comprehensive new framework for supporting and reporting progress by oil and gas companies around the world towards the emissions and flaring targets they have set.
  
  
• A report released by Climate Group and Ramboll, ‘The Steel and Concrete Transformation: 2024 market outlook on lower emission steel and concrete’, reveals that close to 50% of global businesses that were surveyed for this report are prepared to pay a premium for lower emission steel and concrete. To encourage growth of zero and low-carbon materials, the World Business Council for Sustainable Development has launched a new Centre for Decarbonization Demand Acceleration.

ANZ news and updates

As a global bank supporting sustainable finance market growth, ANZ is working with customers to help them transition to net zero emissions by 2050. ANZ’s sustainability highlights for the quarter include:

ANZ research and publications^disclaimer

• Carbon Market chartbook
  
  
• Carbon Market: NZU auction Q3 2024
  
  
• Quick reaction: Australia's emissions decline 0.9% in the year ending June 2024
  
  
• Commodity Call: compliant demand (ACCUs)
  
  
• Commodity Call: clouds overhead
  
  
• NZ Carbon Market: Emissions Trading Scheme settings
  
  
• ANZ Institutional Insights: The road ahead for EVs

ANZ sustainability news (see more here)

• The first step toward green issuance: SA Power Networks ‘On Air’ podcast episode
  
  
• ANZ support: Banking on an endangered parrot
  
  
• ANZ and KangaNews’ roundtable 'Nature Next’ must become ‘Nature Now'
  
  
• ANZ’s SDG Bond Use of Proceeds report has been published. See here.