Some Sustainability-Linked Bonds’ ESG Benefits Fall Short Of Investors’ Expectations
Only 47 per cent included a KPI considered core to their business under ICMA’s KPI registry, study finds.
After reviewing deals concluded between 2019 and mid-2020 by the world’s first 30 sustainability-linked bond issuers and their bonds’ key performance indicators (KPIs), analysts at data and ratings provider Sustainable Fitch found that only 47 per cent included a KPI considered core to their business under the International Capital Market Association (ICMA)’s KPI registry. Some 20 per cent had a KPI deemed secondary.
The study’s findings are significant because the issuance of global sustainability-linked bonds jumped more than tenfold to US$91.2 billion via 154 deals last year from US$8.3 billion through 16 transactions in 2020, according to financial data provider Refinitiv.