Nasdaq debuts global Sustainable Bond platform
Nasdaq this week introduced its Sustainable Bond Network, a global online platform designed to improve transparency in the market for green, social and sustainability bonds.
The online repository provides issuers of sustainable bonds across the world with a platform to voluntarily publish key information and data regarding their specific bonds, which, in turn, provides investors with the information they need to compare sustainable bonds.
Issuers from New York and San Francisco have joined the Advisory Board with the likes of banks, housing agencies and climate initiative firms to help provide advice and mold the platform into the future.
Issuers using the Nasdaq Sustainable Bond Network will be able to showcase their sustainability efforts and provide a greater level of transparency for their bonds, officials said. It also introduces a standard framework for impact reporting.
“As portfolio managers look to keep pace with investor demand, the launch of our Sustainable Bond Network will help our clients evolve their sustainable investing strategies,” Bjørn Sibbern, president of European Markets at Nasdaq said in a release. “Based on experience gained building our European sustainable debt markets and our ESG Data Portal, this launch marks the next phase of our mission to increase transparency around sustainability to issuers and investors across the globe.”
Ann-Charlotte Eliasson, European head of fixed income listings at Nasdaq, said she expects growing membership to include a large swath of U.S. municipal issuers.
The Network contains bond data from a select number of European and U.S. issuers. Eliasson said it will be continuously expanded through feedback from a global advisory board, consisting of public and private investors, expert organizations and issuers, including: Allianz Global Investors, Freddie Mac, SEB, The Nordic Investment Bank, Alecta, The San Francisco Public Utilities Commission, New York State Homes and Community Renewal, Cicero and Climate Bonds Initiative.
“The sustainable nature of our Agency’s affordable housing financings continues to draw investor interest, and becoming part of the global sustainable bond network will improve our access to capital,” a New York State Homes and Community Renewal spokesperson said.
For investors, the Network´s data collection tools address a growing need for improved data aggregation in the sustainable bond market, replacing the need for the manual collection and administration of data, Eliasson said.
In the green, sustainable, impact space, everyone is reporting in different ways and, in order to compare, the market needs more streamlined measures in a place where it is easy to find the information, Eliasson said. Since the U.S. market contains really large issuers, on-boarding more of them makes sense to her.
“We're not really in the market, we as an exchange, to provide this data on our own," she said. "We see ourselves as the blue in between for the sustainable bond market to provide a delivery platform to disseminate that information.”
It is easier to be seen as a green issuer when comparisons are clearer, Eliasson said, noting that “green washing” has occurred often in the global fixed income markets and that Nasdaq believes its platform offers a solution.
“It's usually a big risk when you're issuing green bonds, if investors don't believe the self designation, there is reputational risk,” Eliasson said.
For investors, the platform provides easily comparable data points that the various issuers voluntarily submit.
As it evolves, Eliasson said she will be working with members of the Advisory Board to further build out criteria and data points needed to flesh out the platform.
Eliasson said issuers will be charged per year to host their information on the platform and Nasdaq will also charge the investor to access it.
Green bond issuance reached $117 billion in the first half of 2019, a 47% year-over-year increase, according to Nasdaq.
In 2015, Nasdaq Nordic launched one of the world’s first Sustainable Bond Markets, which has grown since then to include a 112% volume growth from 2017 to 2018, which Nasdaq expects to continue.
In September, Nasdaq secured a spot as the only stock exchange operator on the Dow Jones Sustainability North America Index for the fourth consecutive year.