Liontrust 20 Years of Sustainable Investing 03.2021 - Flipbook - Page 17
Sachs issuing its inaugural sustainability linked bonds and JP Morgan
its inaugural social bond in recent months.
• There has been an emerging trend of financial penalties, in the
form of higher coupon payments, being introduced for companies
failing to meet certain environmental targets, and we would
expect this to continue. Tesco issued a sustainability linked bond
with GHG emission reduction targets, with failure to meet these
resulting in a coupon step-up on the last three payments.
on Climate Change’s
report on limiting global warming to 1.5
degrees is released, bringing greater
urgency to the emissions debate.
• Sustainability-linked issuance will also increase and is particularly
appropriate for companies in ‘dirtier’ sectors that wish to display their
commitment to transitioning. These are general corporate purpose
bonds where you do not know how the money will be spent but they
penalise the issuer if certain environmental targets are not met.
Liontrust: 20 Years of Sustainable Investing - 17