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Clifford Chance

Clifford Chance

Sustainable finance

Sustainability is now a driving force across finance

The need to mobilise green, climate smart, environmentally friendly financing is racing at speed up the agenda of regulators, governments and the institutional investor and financial communities globally.

Whilst the commitment in the Paris Agreement to hold global average temperature increases well below 2°C above pre‑industrial levels has been extensively reported, less well known is the commitment to "making finance flows consistent with a pathway towards low greenhouse gas emissions and climate-resilient developments".

Addressing these sustainability challenges requires significant funding and investment. As part of the effort to meet these challenges, new forms of finance, with sustainability at their core and set against increasingly sophisticated and complex ESG regulation, have emerged. These bring with them both new opportunities but also further legal, commercial and reputational risks.

We are at the forefront of these developments, advising clients globally across all aspects of sustainable finance, including green bonds and sustainability-linked and other financings, and actively shape the market discussion and development through our interactions with industry bodies and regulators.

 

Our sustainable finance services

1

Green, Blue, Social, Sustainable and Sustainability-Linked Bonds

We are market leaders, advising on the full range of sustainable debt  capital markets products. These include green, social and sustainable bonds, sustainability linked financings and bespoke and innovative structures.

We regularly advise sovereigns, supranationals, corporates and financial institutions on sustainable debt issuances and are fully immersed in the latest regulatory proposals and developments as well as evolving market practices.

2

Green, Blue, Social, Sustainable and Sustainability-Linked Loans

Green, Blue, Social, Sustainable and Sustainability-Linked Loans have grown rapidly in recent years driven by the rise of ESG considerations for borrowers, banks and asset managers and developments in legislation and market standards.

This rise signals that we are in early stages of a fundamental shift in the wider economy. As the flexible use of proceeds make these loans attractive for companies keen to demonstrate compliance with environmental and social goals.

Working with our clients, we use our global expertise in this area to deliver market leading, tailored advice that works for their business. Our track record in this area and work on a range of market firsts enables us to help navigate our clients through these challenging landscapes and ensure that they operate in accordance with appropriate environmental management practices and goals.

3

ESG-linked Structured Products and Derivatives

Structured products and derivatives have seen a steady increase in growth in ESG product development and interest over the last few years. As the transition to a more sustainable  economy accelerates, the ESG derivatives market will continue to evolve to meet product demand, the risks associated and identified with sustainable financing as well regulatory demands. Likewise structured products will expand in product development and drive an ESG criteria to meet investor demand. This is a new area of global development and with one of the largest derivatives and structured products practices operating across the major ESG financing markets we are engaged with investors, originators, trade associations and regulators across product and market developments.

4

ESG-linked Funds and Investment Management

Responsible investment (i.e., an approach to investing that incorporates ESG factors into investment decisions and activity) is becoming increasingly popular. 

We have extensive experience at working with our clients to ensure that existing fund ranges comply with new sustainability requirements and that new sustainability-related products comply with the breadth of sustainability related requirements to which they are subject.

5

Sustainable Finance Regulation

Sustainable business requirements take many forms across the globe, from energy and environmental targets to guidelines on boardroom composition. Frequently, transparency and reporting requirements must also be considered and met.

Increasingly, organisations need to develop a holistic approach to these requirements, which are often geographically disparate and rapidly changing. In addition, organisations must take into account both hard legal requirements and softer guidelines, recommendations and market expectations.

Our wealth of experience at helping global organisations to operate successfully on both a global and local level means we are expertly placed to advise on the multi-jurisdictional, multi-disciplinary assessment and implementation of sustainability requirements throughout organisations' operating models.

ESG Toolkit: SEC Exams

Governing bodies and regulators are indicating the year ahead will see intense focus on ESG as it relates specifically to investments.

Our tailored advisor presentations and education, and industry-first ESG Mock Exam will help you stay abreast of new developments and prepare for inevitable examination scrutiny by US and global regulators.

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Recent client highlights

  • Advised Nordic Investment Bank on its Covid-19 response bond. The response bond framework and reporting mechanism were created from scratch, importing structures from instruments such as social and green bonds, and executed quickly. "Covid Response Bond of the Year" – IFLR, 2021.
  • Advising the underwriters on the Republic of Guatemala's $1.2 billion sovereign dual-tranche bond. Proceeds will finance or refinance eligible social investments related to the Republic of Guatemala's Covid prevention, containment and mitigation efforts. "Social Bond of the Year", International Finance, 2021.
  • LafargeHolcim on €850 million sustainability-linked bonds, the first of its kind from the building industry. The bond commits LafargeHolcim to reach its target of 475 kg net CO2 per ton of cementitious material by 2030. The Banker, European Corporate Bond of the Year 2021.
 
 
  • Advised Unibail-Rodamco on its first €650 million green loan. This was a first-of-its-kind green loan as the interest margin is not only tied to the Group’s long-term credit ratings, but also to three green Key Performance Indicators based on the Group's 'Sustainability Vision' and 'Better Places
    2030' strategies.
  • Advised the mandated lead arrangers in relation to an ESG linked revolving credit facility for Schroders, the UK asset management group. The margin is linked to three KPIs: percentage of global electricity generated from renewables, percentage of women in senior management and UN PRI Rating.
  • Advised Citi on the International Bank of Reconstruction and Development's (IBRD or World Bank) $100 million bond used to support sustainable development activities and UNICEF's pandemic response programme for children around the world. 

 
  • Advised Standard Chartered on the Republic of Seychelles' first sovereign blue bond (partially guaranteed by the International Bank for Reconstruction and Development).
  • Advising Goldman Sachs on the Republic of Ecuador's world-first sovereign social bond, issued in compliance with the ICMA Social Bond Principles and repackaged into two notes via an innovative structure designed to ensure the best pricing for the Republic. The transaction was also the first partial-credit guarantee issued by The Inter-American Development Bank in respect of a sovereign bond. This social bond has won the "Social Bond of the Year – Sovereign Award" and the "Award for Innovation – Bond Structure (Social Bond)" categories in the 2020 Environmental Finance Bond Awards.