A Sustainable Trend
Ultimately, the world of green bonds and ESG will continue to grow at exponential rates given the interest in social and impact investing, the changing demographics of investors and the heightened urgency of addressing the clear and present dangers of climate change. Moreover, the impact of the Covid-19 pandemic has pushed the sector forward by two to three years and has skyrocketed social bonds to a level never before seen.
Issuers will need to keep an ear to the ground in order to remain compliant as the green bonds sector continues to shift and transform, and as heightened regulation looms. Whereas three years ago, sustainability was buried on page 30 of an investor deck, it’s now on page four with an entire tab dedicated to ESG and green initiatives on their websites. That upfront focus on ESG and sustainability signals the need for a change in how companies structure their executives, and the ways in which they devote time and money to their sustainability promises. The push for ESG compliance will come from every direction, and without dedicated leads within an organization, the potential for non-compliance is high.
Creating specific functions within an organization to tackle the responsibility that comes with ESG compliance—whether that’s increased due diligence with vendors, more thoughtful exploration of ESG during M&A conversations or listening to shareholder demands will demand a lot of resources for companies. Firms of all sizes can no longer afford to sweep the necessary infrastructure for ESG and green bonds under the rug as the focus on ESG frameworks and sustainability issues are here to stay.
Libby Toudouze is director at investment services company IQ-EQ.