Transition debt is next leg of Canadian ESG markets rollout - BNN Bloomberg

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Debt to finance companies’ plans to reduce pollution is likely the next phase in the environmental, social and governance-labeled debt markets in Canada, one of the world’s largest oil and natural gas producers.

Several companies are laying the groundwork to issue transition bonds by building frameworks, which typically detail criteria and investor disclosures needed to sell the debt, said Jonathan Hackett, head of sustainable finance and co-head of the Energy Transition Group at Bank of Montreal’s capital markets unit.

Canadian dollar ESG bond sales reached $17.8 billion so far this year, up from $17.6 billion in the same time period last year after CPPIB Capital, a unit of the country’s largest pension fund manager, raised $1 billion on Aug. 24 by selling green bonds due in 2028. Among major developments this year, Canada’s federal government sold its inaugural green bond and Ontario Power Generation sold the country’s second nuclear-power green notes.

While proceeds from sustainability-linked bonds can be used as long-term financing for the issuer’s general funding needs, the debt’s interest rates face a potential step-up should the borrower fail to meet a target, such as a reduction of carbon emissions by a set date.

 

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ESG IS A SCAM

ESG=Bankruptcy. Social justice calls for cheap energy and support for oil&gas industry not obstacles and vilification

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