Awards for Excellence 2018
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For our best bank for sustainable finance award, HSBC edges BNP Paribas and BAML for the range of its deals and its involvement in industry bodies that are furthering sustainable finance.
First, the deals. The headlines went to the first Belt and Road climate bond, a triple-tranche deal from ICBC; the first sovereign green sukuk, a $1.25 billion print from Indonesia; and China Resources’ acquisition of a 30% stake in the Dudgeon offshore wind farm off the UK coast, plus of course HSBC’s own $1 billion Sustainable Development Goals bond.
But perhaps the most interesting deal was one that some would not consider green at all, a $500 million energy transition bond for Capco, a subsidiary of Hong Kong power group CLP.
This is not a pure green bond because it finances a hydrocarbon-powered plant, a gas turbine generation unit at Black Point Power Station in Hong Kong. But building the plant will mean a lower level of carbon emissions intensity relative to the way CLP generates electricity today. A key part of the challenge was to convince green investors that one of the greenest things they can do is wean generators off high-emission fuel even if it does not mean no-emission fuel. And HSBC succeeded: the deal was two-and-a-half times covered, with many orders from ESG investors around the world.
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| Jonathan Drew |
Beyond the big deals, it is also encouraging to see HSBC Rural Bank bringing sustainable rural finance to farmers and microenterprises in China through 26 outlets there. HSBC’s own behaviour as an institution, requesting a probe into Noble’s palm oil operations over concerns about forest destruction (albeit under pressure from Greenpeace) and supporting 200 shareholder resolutions on ESG issues as an active steward, are also relevant.
A key figure is Jonathan Drew, who heads the infrastructure and real estate group at HSBC but has made climate-related finance a mission. Drew, who intones about the bleakness facing the world with all the optimism of the Book of Revelations, is nevertheless trying to do something about it. He chairs the green loan committee of the Asia Pacific Loan Market Association and has been instrumental in the development of the Green Loan Principles.
