ESG, finance, and building back better: a silver lining for COVID-19?

 

Conference gathers pivotal stakeholders in the global and in particular Asian green, social, and sustainability bond markets in Tokyo and online via Zoom to exchange views and practical expertise on how to foster and develop the market for sustainable financial instruments, with a particular focus on the ways the market has changed under COVID-19.

(TOKYO, Japan) 13 November 2020 The International Capital Market Association (ICMA) and the Japan Securities Dealers Association (JSDA) held their joint conference on the “Developments in bond markets contributing to sustainability under COVID-19 – globally and in Japan”— this time in a hybrid format.

Since 2017, the ICMA and JSDA have been jointly hosting full-day conferences on developments in green, social, and sustainability bond markets in Tokyo, and this year’s fourth iteration of the conference was adapted to respond to the COVID-19 pandemic — both in format and in content. The hybrid conference attracted more than 700 registrants (both virtually and in person), which highlights the broad reach of and overwhelming interest in these markets.

This year’s event came at a trying time for financial markets, where COVID-19 tested the limits of capital market resiliency. While the pandemic brought with it market disruption, it too highlighted the necessity and critical role of financial market involvement in addressing social challenges. Against this backdrop, the potential for sustainable financial products found their way into the spotlight, as evidenced by the immense growth of sustainable debt markets to surpass USD250bn in issuance in H1 2020 alone (vs. USD341bn for the full year of 2019; Source: Climate Bonds Initiative). Part of this growth was due to the issuance of COVID-19 social bonds, a testament to the ways in which the capital market can be tapped into to finance socially- and environmentally conscious recovery in times of crisis.

Whether this trend is permanent or only temporary remains to be seen. However, there are distinct achievements and changes in the landscape — such as the ICMA’s updates to the Social Bond Principles, the new Sustainability-Linked Bond Principles, and regulatory movements in the official sector — that indicate this is not just a fleeting development.  

In this context, the conference served as an arena for an exchange of expertise and information sharing amongst the practitioners in the rapidly-growing area of sustainable finance, in particular addressing how this space has been propelled to the forefront since COVID-19. The event connected key stakeholders in the markets for sustainable finance — including issuers, underwriters, investors and policymakers — who offered their unique perspectives on the prospects and challenges for these markets going forward, as well as the movements in both the public and private sectors to promote these bonds in practice.

Shigeharu Suzuki, Chairman and CEO of the co-host JSDA, had this to say about the event: “It is my great hope that green and social bonds serve as effective tools for overcoming the global challenges brought about by the pandemic, toward the realization of a sustainable world.”
 
Speaking at the event, Martin Scheck, ICMA’s Chief Executive, remarked: “As countries and regions develop their funding and investment programmes to rebuild their economies it has been gratifying to see that environmental considerations have been hard wired into these both on the funding and disbursement sides. So, the green bond market continues to grow rapidly, and the pace is only increasing.”

While the precarious circumstances brought about by COVID-19 poses immense challenges for all market participants and stakeholders, it too provides an opportunity for discussion — a silver lining for how to transform finance to truly build back better. The 13 November conference confirmed that while the growth of the market for sustainable finance is still nascent, there are lasting effects of the move of the markets toward a greener, and more socially aware, type of finance that are expected to develop further over time.

The JSDA and ICMA will continue to build upon the growing interest in the field of sustainable finance, including but not limited to supporting all the stakeholders of green, social, sustainability, and sustainability-linked bonds going forward.

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