Inaugural UK Sovereign Green Bond Sale Rejected by Ethical Investing Stalwart
(16 September 2021 – United Kingdom) Dutch money manager Triodos Investment Management has refused to acquire the United Kingdom’s (UK) debut sale of green sovereign bonds, asserting “they are not green enough”.
Part of a bank at the early forefront of sustainable investing since 1968, Triodos applies stricter criteria than other environment, social and governance (ESG) investors, yet that has not impeded the group from purchasing sovereign green bond from other European countries debt markets including France, Italy or Germany.
Despite the new green funding allocation, Britain remains a laggard for global green bond issuance with most western European countries including Ireland, Spain and Belgium having already sold green debt. A boom in issuance looks set to take global ethical debt issuance toward US$1 trillion in 2021.
Investment is primarily diverting towards carbon capture, relating to burying carbon dioxide deep underground. The technology is controversial because it is unproven on a large scale and activists argue it could become a distraction from reducing emissions. Blue hydrogen is made from natural gas and requires by-product carbon dioxide to be captured, whereas green hydrogen is produced from renewable sources through water. Green gilts can finance both green and blue hydrogen.
East & Partners latest Global Insight Report “Finding the Value in Green Banking” outlines best of breed providers of sustainable/ESG finance across all products and services in addition to CFOs most pressing green finance concerns based on direct interviews with the top 100 revenue ranked corporates in eight countries.
“The UK green bond framework is the first one we consider not to be green enough according to our standards. We have a serious problem with these types of projects because we don’t think carbon capture projects will add to carbon reduction in the end” commented Triodos Investment Management Director of Impact Equities and Bonds, William de Vries.
“We have had doubts and questions with other green bond frameworks, for instance the Belgium one, but after consulting with them we decided to give them the benefit of the doubt. The UKs allocation to carbon capture solutions makes this not possible” de Vries added.