ICE Sustainable Finance Monthly Report
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President, Sustainable Finance & Chief Regulatory Officer, ICE
World leaders and policy makers are set to converge on Dubai next week for COP28, where it is hoped agreement can be reached to reassert commitments to limiting the global temperature rise and help vulnerable communities adapt to the effects of climate change. Colleagues from ICE and the NYSE will be helping to lead these discussions, co-hosting the Global Sustainability Forum, a half day summit with senior climate leaders from across the world.
This year’s COP gathering is also being held against a backdrop of financial markets having to adapt to rapidly changing climate risks. The recently released updates to the Network for Greening the Financial System (NGFS) Scenarios (Phase IV) are one such example, showing a heightened Transition Risk associated with their Orderly Scenarios, including the Net Zero 2050 scenario.
The ICE Sustainable Finance Team is constantly enhancing and updating our climate data and tools, helping our clients to meet the challenges of evolving climate scenarios, policy, and regulation. Learn more below.
Insights
Impact Bond Analysis Q3 2023 - Issuance slows amid macroeconomic uncertainty
While Europe remains the leader for impact bond issuance, the Asia-Pacific region continues to gain ground. In categories like social bonds, Asia-Pacific is on-track to overtake Europe. Impact bond issuance from U.S. corporates fell 60% in Q3, as macroeconomic uncertainties take their toll on issuer borrowing costs. The top use of proceeds by project value for impact bonds is renewable energy, followed by clean transportation projects and projects providing essential services.
ICE Muni Bonds Monthly Report
An overview of the physical climate risks and socioeconomic vulnerability associated with last month’s municipal bond issuances.
Product enhancements
Sovereign Climate and Impact Data product launch
Leveraging ICE’s climate risk and socioeconomic modeling expertise and geospatial intelligence platform, ICE launched its Sovereign Climate & Impact Data product. This new data analytics solution – currently available through ICE’s APEX delivery platform – provides metrics reflecting a sovereign debt issuer’s climate transition and physical risk profile, social impact characteristics, and alignment with UN Sustainable Development Goals. Key features include a Water Stress Score, Climate Vulnerability Score, and Physical Risk Hazard Metrics that can be used for assessing sovereign exposure to potential disruptions in water supply, as well as historical and projected vulnerabilities to acute and chronic climate perils. All data are made available at the sovereign debt security level.
Source: A preview of sovereign physical risk metrics in the ICE Sovereign UI available in December 2023. Product is subject to change. Activities may or may not result in the delivery of products or features.
Expanded use of proceeds for Municipal Bonds
ICE’s Expanded Use of Proceeds field captures detail on the projects financed by municipal bond issuers and obligors. This new field – which compliments the sector-level Use of Proceeds data already provided in ICE’s Reference Data product– provides information on specific project categories for which funds are being used, enabling investors to differentiate between projects with and without an explicit focus on themes related to sustainable finance. ICE parses Official Statements thoroughly to identify all project themes that can be associated with nearly 230 distinct project category labels. Some examples of Expanded Use of Proceeds labels include Pollution Control, Reduction of Waste, Wildlife Habitat / Conservation / Nature Preserve, Electric & Public Power, Oil Extraction, Solar Power, and Bioenergy. Labels are also mapped to 121 UN Sustainable Development Goals target indicators, enabling customized security-level alignment to impact investment criteria.
New Climate Transition Analytics and Metrics
ICE launched two new modules on its Climate Transition Analytics Tool discussed below:
New Portfolio Screener Module
The new Portfolio Screener can be used to screen existing portfolios by various climate and other criteria to create and save new portfolios, which can then be used throughout the Climate Transition Analytics Tool. Screening filters include carbon intensity (Scope 1 and 2), Climate Disclosure, Temperature Targets, Region, Country, Sector, and Asset Class.
Source: Net Zero Sector Subplot from the ICE Climate Transition Tool
The new ICE Portfolio Transition Indicator
The new Transition Indicators on the ICE Climate Transition Analytics Tool provide clients with a portfolio level summary of climate position and performance, including emissions and targets data coverage and disclosure metrics, historical climate performance indicators, as well as an ITR Score and On-Track with Targets Indicator.
Source: Enhanced Portfolio Reporting generated from the ICE Climate Transition Tool
Featured events
Solution spotlight
Mortgage-Backed Securities gain ESG data coverage
We recently launched ESG data coverage on over 1.5M mortgage-backed securities (MBS) boosting our total fixed income coverage to over 3M instruments. ICE’s MBS data set accounts for ~95% of all outstanding securitized real estate loan volume in the U.S. and provides CUSIP-linked climate and socioeconomic data for single-family, multi-family and commercial mortgage-related securities
Helping meet SFDR requirements
The European Union’s Sustainable Finance Disclosure Regulation (EU SFDR) requires financial market participants to identify and disclose certain sustainable impacts. To help clients meet their obligations, our data solution offers event-triggered updates for all mandatory adverse sustainability indicators applicable to investments in companies, sovereigns and supranationals.
Mortgage-Backed Securities gain ESG data coverage
We recently launched ESG data coverage on over 1.5M mortgage-backed securities (MBS) boosting our total fixed income coverage to over 3M instruments. ICE’s MBS data set accounts for ~95% of all outstanding securitized real estate loan volume in the U.S. and provides CUSIP-linked climate and socioeconomic data for single-family, multi-family and commercial mortgage-related securities
Helping meet SFDR requirements
The European Union’s Sustainable Finance Disclosure Regulation (EU SFDR) requires financial market participants to identify and disclose certain sustainable impacts. To help clients meet their obligations, our data solution offers event-triggered updates for all mandatory adverse sustainability indicators applicable to investments in companies, sovereigns and supranationals.
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