This guidance provides an outline of how investors can engage with issuers on labelled bonds to fulfil net zero commitments and decarbonise real world emissions.
Labelled bonds provide investors with an opportunity to tie fresh capital to Paris aligned climate targets and activities in line with their own commitments to decarbonise real world emissions. However, even with rapid growth in issuance, GSS+ bonds only account for 5% of total issuance volume, and the growth in sustainability-linked bonds has plateaued.
This guidance advances the IIGCC Net Zero Bondholder Stewardship Guidance by taking a more granular approach to stewardship and engagement for labelled debt, in particular green and sustainability-linked bonds, and seeks to:
- Promote best practices for aligning labelled bonds with the net zero transition
- Explore approaches to engaging on labelled bonds
Focusing particularly on green bonds and sustainability-linked bonds, the guidance identifies the opportunities and challenges for engagement beginning with issuers from pre-issuance to post-issuance and through to a wider ecosystem of policymakers and other key players.
The guidance focuses on labelled bonds and the opportunities for net zero bondholder stewardship they provide. Unlabelled debt also provides an important opportunity to finance the transition. For more on unlabelled debt, please see the IIGCC Net Zero Bondholder Stewardship Guidance and the Potential of Unlabelled Debt discussion paper.
The development of this paper has been led by Laith Cahill at IIGCC.
We are grateful to the IIGCC Bondholder Stewardship working group
members, including co-chairs Chandra Gopinathan, Railpen, and
Sarah Peasey, Neuberger Berman.
