• Atmospheric CO2 /Parts per Million /Annual Averages /Data Source: noaa.gov

  • 1980338.91ppm

  • 1981340.11ppm

  • 1982340.86ppm

  • 1983342.53ppm

  • 1984344.07ppm

  • 1985345.54ppm

  • 1986346.97ppm

  • 1987348.68ppm

  • 1988351.16ppm

  • 1989352.78ppm

  • 1990354.05ppm

  • 1991355.39ppm

  • 1992356.1ppm

  • 1993356.83ppm

  • 1994358.33ppm

  • 1995360.18ppm

  • 1996361.93ppm

  • 1997363.04ppm

  • 1998365.7ppm

  • 1999367.8ppm

  • 2000368.97ppm

  • 2001370.57ppm

  • 2002372.59ppm

  • 2003375.14ppm

  • 2004376.96ppm

  • 2005378.97ppm

  • 2006381.13ppm

  • 2007382.9ppm

  • 2008385.01ppm

  • 2009386.5ppm

  • 2010388.76ppm

  • 2011390.63ppm

  • 2012392.65ppm

  • 2013395.39ppm

  • 2014397.34ppm

  • 2015399.65ppm

  • 2016403.09ppm

  • 2017405.22ppm

  • 2018407.62ppm

  • 2019410.07ppm

  • 2020412.44ppm

  • 2021414.72ppm

  • 2022418.56ppm

  • 2023421.08ppm

News & Views

SGX: sorting the green from the greenwashed

The Singapore Stock Exchange has launched an initiative to identify fixed-income securities that are sustainable and not promoted using exaggerated claims.

Content Tags: Fixed Income  Greenwash  Regulation  SE Asia 

Images of German officials raiding the offices of domestic financial behemoths accused of “greenwashing” remain some of the most staggering of the year gone by. The development was a reminder that “are you what you say you are?” Is a central catechism of green finance regulation.

It’s not just the financial watchdogs that are worried – anyone with a financial platform has skin in the game. Singapore’s stock exchange is one of them. The SGX Group, as it is referred to, recently launched a Sustainable Fixed Income Initiative. The initiative is aimed at helping investors undertake that deceptively complex task of identifying securities that are “sustainable” and differentiating them from those that are fronts for exaggerated claims.

The initiative is aimed at sustainability-linked fixed-income securities. As far as sustainable finance instruments go, they are often the first port of call. Issuers of these securities are usually expected to deploy the capital raised into projects that further their sustainability strategy and move them closer to a broader objective, the Paris Accord’s global warming target for instance.

In exchange, investors are expected to reward the companies by offering a pricing discount – effectively lowering the company’s cost of capital. A “greenium” as the experts call it.

What seems abundantly clear at this stage is that the allure of sustainable debt is entirely premised on the transparency of intention. The SGX initiative is noteworthy for that reason. It has broken it down into three rules:


    1. Alignment

    Firstly, to be identified under this initiative, issuers of green debt should be aligned with a set of globally recognised standards. The initiative recognises multiple standards such as the International Capital Market Association’s (ICMA’s) Green Bond Principles, the China Green Bond principles and the EU Green Bond Standard.

    Standards are a way of infusing the issuance with two core components of investor confidence in the global green debt market: transparency and integrity. They represent a common language across jurisdictions that defines what a green bond is and more importantly identifies what it is not. As an example, the ICMA expects issuers to only use the proceeds to finance a narrow set of project categories from renewables to land use.

    2. Communication

      Secondly, the SGX requires issuers to publish a report outlining how they align with the standards. It asks issuers to commit to the 3Cs of disclosure: clear, consistent and credible. According to SGX: “On an ongoing basis, to maintain recognition under the SGX Sustainable Fixed Income initiative, issuers must publish any post-issuance reports (e.g. ongoing use of proceeds reporting) required under the applicable recognised standard, as well as information on any material developments which may affect their alignment with the recognised standards.”

      3. External Review

        Lastly, the claim of alignment needs to be subject to external review. To be recognised under the initiative, companies would need to demonstrate that “a reputable external reviewer has confirmed that the fixed-income securities are aligned with the recognised standards”. Notably, the phrase “reputable reviewer” is critical in this setting. The SGX seems to suggest that the reputation can be established through evidence of an “established track record” of similar reviews.

        The review process is perhaps the most vital piece of the puzzle. The history of credit rating agencies and their “issuer-pay” business model suggests that conflicts of interest are not hard to come by. If you pay for an external review, the remuneration of the reviewer should not be driven by the expected outcome of the review. The fact that the review needs to be truly independent is a lesson that seems pertinent to recall.

        Companies from South Korea, China, Australia, New Zealand, Japan, Singapore and India are among the group of issuers already identified by SGX under this initiative. Considering the criteria, the SGX recognition is of value to investors looking to invest in these companies:

        “For investors, the recognition will enable them to easily identify sustainable fixed-income securities and to access sustainability-related information. Moreover, the criteria that SGX imposes provide investors with assurance that the GSS fixed income securities recognised under the SGX Sustainable Fixed Income initiative have been independently verified for alignment with the Recognised Standards”.

        Content Tags: Fixed Income  Greenwash  Regulation  SE Asia 

        Related Content