The HKGFA New Trends Beyond Green, Social, and Sustainability (GSS) Bonds Webinar was well attended on 6 August 2020, where International Capital Market Association (ICMA) presented the Sustainability-Linked Bonds Principles and experts shared the latest trends in GSS Bonds and beyond.

Presenter

• Ms. Simone Utermarck, Director, Sustainable Finance, International Capital Market Association (ICMA)

Moderator

• Mr. Ricco Zhang, Senior Director, Asia Pacific, ICMA

Speakers

• Ms. Luying Gan, Head of Sustainable Bonds, Debt Capital Markets, Asia-Pacific, HSBC
• Ms. Judy Li, Partner, Climate Change and Sustainability Services, Financial Services, Ernst & Young Greater China
• Mr. Quanlei Liu, Deputy General Manager of Treasury Department, Bank of China
• Mr. Gabriel Wilson-Otto, Head of Stewardship APAC, BNP Paribas Asset Management

Key takeaways from the webinar

• The ICMA Sustainability-Linked Bonds Principles listed out 5 major categories for issuers to pay attention to – the selection of Key Performance Indices (KPIs), calibration of Sustainability Performance Targets (SPTs), bond characteristics, reporting, and verification for both pre- and post-issuance.
• Sustainability-linked bonds are expected to grow with the prerequisite of more explicit commentary or support from the government and regulators. On the GSS bonds side, the boom in investment and issuance is expected to continue in the coming years, especially for Social Bonds and Sustainability Bonds
• In China, especially the Greater Bay Area (GBA), regulators are working to develop the area into an important green finance center through harmonization and convergence of international standards in the bonds market.

Ms. Luying Gan, Head of Sustainable Bonds, Debt Capital Markets, Asia-Pacific, HSBC, has high hopes on continuous growth in the global GSS bonds market but remarked that it will take time for the Sustainability-linked bonds to reach a similar scale as GSS bonds. She concluded that the former requires the issuers to be forward-looking in setting medium-long term commitments, which is different from the backward-looking situation in most GSS bonds currently in the market.

Ms. Judy Li, Partner, Climate Change and Sustainability Services, Financial Services, Ernst & Young Greater China,  suggested  Sustainability-linked products could assist more issuers with ESG targets to join the market. In terms of GSS Bonds, she encouraged actions in improving the confidence of investors through higher transparency and disclosure of ESG-related information to attract a wider base of international investors.

Mr. Quanlei Liu, Deputy General Manager of Treasury Department, Bank of China, suggested that GSS bonds have a comparative advantage to senior debts. Issuers in China are increasingly aware of the advantages of GSS bonds to deliver a better image in taking up social responsibility. He hopes that both regulatory and industry policies could be stepped up to help issuers on managing and issuing their products, and to further facilitate the process of certification and information release.

Mr. Gabriel Wilson-Otto, Head of Stewardship APAC, BNP Paribas Asset Management, in the view of an international investor, saw steps towards convergence with international green bond standards, that could help increase participation from international investors in the domestic market. He expects the green bond market will continue to thrive and anticipates growth of broader GSS bonds.