diff --git "a/8dba6448-7a68-43c9-b89a-2848f909465e.json" "b/8dba6448-7a68-43c9-b89a-2848f909465e.json" new file mode 100644--- /dev/null +++ "b/8dba6448-7a68-43c9-b89a-2848f909465e.json" @@ -0,0 +1,40 @@ +{ + "interaction_id": "8dba6448-7a68-43c9-b89a-2848f909465e", + "search_results": [ + { + "page_name": "World's largest banks raked in $3bn from green debt last year", + "page_url": "https://www.thenationalnews.com/business/banking/2024/01/05/worlds-largest-banks-raked-in-3bn-from-green-debt-last-year/", + "page_snippet": "Lenders extended $583 billion in green bonds and loans last year, compared with $527 billion of fossil fuel debtEuropean banks led the transition, with BNP Paribas topping Bloomberg\u2019s green debt league table. Meanwhile, Wall Street dominated fossil finance, with Wells Fargo and JPMorgan Chase generating the biggest earnings from oil and gas deals. Overall, banks extended $583 billion in green bonds and loans last year, compared with $527 billion of fossil fuel debt. In 2022, banks channelled $594 billion into environmental projects, and $558 billion into oil, gas and coal, the Bloomberg data show. European banks led the transition, with BNP Paribas topping Bloomberg\u2019s green debt league table. Getty Images \u00b7 European banks led the transition, with BNP Paribas topping Bloomberg\u2019s green debt league table. Getty Images European banks led the transition, with BNP Paribas topping Bloomberg\u2019s green debt league table. Getty Images ... For the second year in a row, global banks made more money underwriting bonds and providing loans for green projects than they earned from financing oil, gas and coal activities.", + "page_result": "World's largest banks raked in $3bn from green debt last year
Tuesday 12 March 2024READ OUR E-PAPER

World's largest banks raked in $3bn from green debt last year

Lenders extended $583 billion in green bonds and loans last year, compared with $527 billion of fossil fuel debt

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European banks led the transition, with BNP Paribas topping Bloomberg\u2019s green debt league table.\u00a0Getty Images

European banks led the transition, with BNP Paribas topping Bloomberg\u2019s green debt league table.\u00a0Getty Images

Bloomberg
Jan 05, 2024
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For the second year in a row, global banks made more money underwriting bonds and providing loans for green projects than they earned from financing oil, gas and coal activities.

The world\u2019s biggest lenders generated a total of about $3 billion in fees last year from lining up debt for deals marketed as environmentally friendly, according to data compiled by Bloomberg. By comparison, the sector brought in less than $2.7 billion in aggregate earnings from fossil-fuel transactions.

European banks led the transition, with BNP Paribas topping Bloomberg\u2019s green debt league table. Meanwhile, Wall Street dominated fossil finance, with Wells Fargo and JPMorgan Chase generating the biggest earnings from oil and gas deals.

BNP, the European Union\u2019s largest bank, got close to $130 million last year from its green finance business. Credit Agricole was next with $96 million and then HSBC Holdings with $94 million.

On the other side of the energy divide, Wells Fargo earned fees of $107 million from arranging bonds and loans for the fossil fuel sector, followed closely by JPMorgan and Mitsubishi UFJ Financial Group, both with $106 million. MUFG was also last year\u2019s top arranger of global green loans.

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The development coincides with stricter regulations in Europe, where both the European Central Bank and the region\u2019s top banking authority have made clear they want the finance industry to speed up its green transition.

Lenders in Europe now face the threat of fines and higher capital requirements if they mismanage climate exposures. In response, many banks are imposing explicit restrictions on fossil finance.

In the US, meanwhile, the regulatory outlook remains uncertain and fragmented as many Republican states place hurdles in the way of the green transition.

Banks suspected of withholding financing from the oil and gas sector increasingly face retaliation, with Texas among states threatening to cut off Wall Street firms that embrace net-zero emissions goals.

Against that backdrop, the global finance industry has fallen well short of where it needs to be if the goals of the Paris Agreement are to be met.

According to an analysis by BloombergNEF, four times as much capital needs to be allocated to green projects as to fossil fuels by 2030 to align with net zero emissions targets.

Yet at the end of 2022, that ratio was just 0.7 to 1, largely unchanged from the previous year, BNEF\u2019s latest figures show.

Bank financing isn\u2019t \u201canywhere close\u201d to the transition levels needed, said Trina White, sustainable-finance analyst at BNEF, when the December report was published.

US climate envoy John Kerry warns time is running out

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The perceived foot-dragging by global banks has environmentalists sounding the alarm.

\u201cBanks still aren\u2019t keeping pace with the rate of transition that\u2019s required to avoid catastrophic climate change,\u201d said Jason Schwartz, senior communications strategist at Sunrise Project, a non-profit focused on the financial sector\u2019s contribution to global warming.

The shifting trends of the past year are \u201cmore indicative of broader macroeconomic trends than any proactive efforts in the banking sector to reduce financing for carbon-intensive energy\u201d, said Adele Shraiman, senior campaign strategist at Sierra Club.

\u201cThe reality is that banks aren\u2019t transitioning their energy financing quickly enough to meet their own climate goals.\u201d

Last year was the hottest on record, according to the Global Carbon Project. The group, which represents an international collaboration of scientists, estimates that carbon dioxide emissions from burning fossil fuels rose 1.1 per cent to a new high in 2023, putting the planet on track to exceed its carbon budget for 1.5\u00b0C of warming by the end of the decade.

Overall, banks extended $583 billion in green bonds and loans last year, compared with $527 billion of fossil fuel debt. In 2022, banks channelled $594 billion into environmental projects, and $558 billion into oil, gas and coal, the Bloomberg data show.

For several years now, the world\u2019s biggest banks have published reports showing the vast sums of money they say they\u2019re allocating toward a greener, fairer planet.

But some of those assertions are now being questioned, amid an absence of regulatory guideposts to help stakeholders make sense of such claims.

Updated: January 05, 2024, 3:00 AM
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", + "page_last_modified": " Tue, 12 Mar 2024 21:53:12 GMT" + }, + { + "page_name": "The World's Most Indebted Companies 2023 - Global Finance Magazine", + "page_url": "https://www.gfmag.com/global-data/economic-data/companies-largest-debt-world", + "page_snippet": "Loans and bonds can be used sensibly to invest but too much debtcan be catastrophic for a company, especially if the economy goes south.Expansion, diversification, growth: these things cost money. After the 2007-2009 global financial crisis, there was a universal imperative: get out of debt. The opposite happened. Central banks around the globe pushed interest rates to historically low levels to boost the economy, and businesses that borrowed money for years to either stay afloat, refinance their debt or buy back their shares did it again. To bring inflation under control, central banks raised interest rates to dampen borrowing and spending, and companies that issued billions in bonds and notes when interest rates were low (a record number of which of the lowest rating) now find themselves having a hard time servicing and refinancing their debt. Drowning in debt, low on cash and facing increasing competition during the height of the pandemic, the company established in Michigan in 1903 found itself inches away from bankruptcy. With sales plummeting and its factories partially shut, all major rating agencies downgraded Ford\u2019s credit from investment-grade to speculative-grade or junk. Down the road, the expected economic boom from the new networking standard could potentially accelerate the company\u2019s debt reduction. Yet\u2014with telecommunication firms already busy developing the sixth generation of mobile technology\u2014to stay competitive Verizon will have to keep pace with the industry\u2019s overall aggressive spending. ... The biggest bank in Germany is quite big everywhere else as well.", + "page_result": "\n\n\n\n\n\t\n\t\n\t\n\t\n\n\t\n\t\n\t\t\t\t\n\t\t\t\n\t\n\t\n\t\n\tThe World's Most Indebted Companies 2023 - Global Finance Magazine\n\t\n\t\n\t\n\t\n\t\n\t\n\t\n\t\n\t\n\t\n\t\n\t\n\t\n\t\n\t\n\t\n\t\n\t\n\t\n\t\n\t\n\t\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\t\t\n\t\t\n\t\t\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\t\t\t\n\t\t\n\t\t\n\t\t\n\tSkip to content\n\n\t
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Global news and insight for corporate financial professionals

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Home Data The World’s Most Indebted Companies 2023

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The World’s Most Indebted Companies 2023

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\n\t\t\tAuthor: Luca Ventura\t\t\t\t\t

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How much is too much?Loans and bonds can be used sensibly to invest but too much debt can be catastrophic for a company, especially if the economy goes south.

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Expansion, diversification, growth: these things cost money. After the 2007-2009 global financial crisis, there was a universal imperative: get out of debt. The opposite happened. Central banks around the globe pushed interest rates to historically low levels to boost the economy, and businesses that borrowed money for years to either stay afloat, refinance their debt or buy back their shares did it again. 

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How much did they borrow? According to data by the Institute of International Finance (IIF) and S&P Global, the debt of non-financial corporations has increased from 75% of total global gross domestic product (GDP) in 2007 to 98% last year (which along with the debt of governments, households and financial corporation brings the total aggregate worldwide debt to a record $300 trillion, a 349% leverage on the gross domestic product). 

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Not only has corporate debt grown, the quality of that debt has gotten dramatically worse. From the recovery period beginning in 2010 until today, S&P estimates that the share of investment-grade bonds fell to about 76% from over 90% during the previous two post-financial crises. Junk bonds offer a higher return, but have a higher risk of default. The issuer might not be able to pay interest and principal in a timely manner, or ever. By some estimates, at the current pace, speculative-grade non-financial global debt could soon surpass investment grade\u2014the implication being that as we try to fix the current crises we might be creating conditions for crises down the road. Furthermore, as risky credit market segments such as high-yield bonds and leveraged loans have expanded, borrowers\u2019 credit quality, underwriting standards and investor protections have weakened.

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As all this was taking place, economists were sounding the alarm louder and louder: the debt buildup and the resulting higher interest charges can become an overwhelming burden for companies (as well as governments and households), making them vulnerable to tighter monetary policies and pushing them\u2014and everyone with them\u2014closer to economic collapse.

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A new machine-learning model developed by the IMF\u2014based on 50 indicators going back to 1995\u2014estimates that out of 55 advanced and emerging economies that 38 are currently at medium risk and seven are at high risk of corporate distress spilling over into systemic economic risk. Not only are more countries at high risk of a debt crisis than before the pandemic, but the number of large economies in this category has also grown: it now accounts for 21% of world GDP in the third quarter of 2022, up from just 1% at the end of 2019.

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The rise of inflation rates globally, exacerbated by the Russian war in Ukraine, made things worse. According to  S&P Global Ratings, the pace of interest rate increases has been faster in 2022 than at any time over the past four decades globally. To bring inflation under control, central banks raised interest rates to dampen borrowing and spending, and companies that issued billions in bonds and notes when interest rates were low (a record number of which of the lowest rating) now find themselves having a hard time servicing and refinancing their debt. 

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A 2022 report by global consultancy Kearney provides striking insights into the magnitude of the problem. An analysis of the records of around 70,000 listed companies from 154 industries and 152 countries has revealed that 4.7% of them are so-called \u201czombie companies\u201d, or firms that\u2014based on their current operating profit\u2014have been unable to support the interest expenses on what they borrowed for the previous three years. The incongruity might even more severe when it comes to zombie private companies, which face less scrutiny from shareholders and regulators and do not have to release quarterly and annual reports.

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While the side effects of too much easy money and money that has become too expensive to borrow can be both catastrophic, not all debt deserves a bad name. Loans and bonds can be used sensibly to invest, hire and increase productivity. Furthermore, a higher amount of debt in absolute terms\u2014while not desirable\u2014does not translate automatically into an equally higher risk of default. In fact, small companies in fact tend to become cash-strapped more easily than their larger counterparts and some economic sectors can be more vulnerable than others. And while today the majority of the world’s biggest corporate borrowers\u2014even in such uncertain times\u2014can generally be trusted to repay their debt, it is also true that during past economic recessions many giants have fallen from grace in the blink of an eye. Just ask General Electric.

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THE TOP 10 MOST INDEBTED COMPANIES OF 2023

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1. Toyota Motor Corporation 

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It takes money to make money. In 2022, the Japanese company sold 10.5 million vehicles, retaining the title of the world’s top-selling automaker but also conquering that of the most indebted company of all. By comparison, at over $200 billion, its long-term obligations are bigger than the external debt of a small country like New Zealand.

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To stay on top, Toyota had to make massive investments in research and development and spend big on global operations and marketing. Some industry experts say toyota has been slow in transitioning away from traditional internal combustion and hybrid vehicles to all-electric cars (EVs). Yet S&P, Moody’s and Fitch do not seem terribly worried about Toyota\u2019s future judging by their high ratings of Toyota’s debt. The auto giant plans to sell about 3.5 million EVs by 2030 and remains highly profitable for now.

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2. Evergrande Group

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With projects in over 200 cities ranging from condos to theme parks, one of China\u2019s biggest\u2014and the most indebted\u2014property developers burned through cash for years. The company’s stock performance was already suffering when the global pandemic started and lockdowns hit home sales.

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Since then, everything went downhill. Last year, the company promised to come up with a restructuring plan, but missed the self-imposed deadline and has yet to come up with a new one. In the meantime, to help pay creditors, founder billionaire Hui Ka-yan had to sell personal properties and private jets, reportedly losing more than 90% of his wealth. He promised his employees that Evergrande will come back stronger than ever, but with the Chinese economy slowing and demand for housing still weak a good dose of skepticism is in order. Furthermore, all major credit rating agencies have withdrawn their ratings due to the absence of information necessary to issue one.

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3. Volkswagen AG

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It only makes sense that the second top-selling car manufacturer in the world would also be the second most indebted. Much of what is true for Toyota applies to the Wolfsburg-based company, with the major difference being that Volkswagen went all-in on its electrification push, aiming to become the world\u2019s EV market leader by 2025. Along the way, it faced scandals, labor disputes, chip shortages and other supply chain issues\u2014all of which came with a hefty price tag.

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4. Verizon Communications

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In 2013, Verizon launched the largest corporate debt sale in history: $49 billion worth of bonds used to fund the buyout of partner Vodafone Group\u2019s 45% stake in Verizon Wireless, the largest mobile telecommunications provider in the U.S. Since then, its debt has only gone up. The company had to borrow more money to fend off its rivals and invest in building out its 5G wireless infrastructure, which data exchanges at greater speeds. Down the road, the expected economic boom from the new networking standard could potentially accelerate the company’s debt reduction. Yet\u2014with telecommunication firms already busy developing the sixth generation of mobile technology\u2014to stay competitive Verizon will have to keep pace with the industry\u2019s overall aggressive spending.

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5. Deutsche Bank

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The biggest bank in Germany is quite big everywhere else as well. With over 1,500 branches across Europe, the Americas, the Asia-Pacific region and Africa and the Middle East, the Frankfurt-based investment bank and financial services company has been hit in recent years by scandals, losses and credit rating downgrades. Its turnaround has been costly: it is the most indebted bank in the world. Then again\u2014contrary to what many experts were predicting until not long ago\u2014it did not end up like Lehman Brothers.

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6. Ford Motor Company

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If Covid impacted all automakers around the globe, it had particularly crippling effects on the once-glorious American carmaker. Drowning in debt, low on cash and facing increasing competition during the height of the pandemic, the company established in Michigan in 1903 found itself inches away from bankruptcy. With sales plummeting and its factories partially shut, all major rating agencies downgraded Ford’s credit from investment-grade to speculative-grade or junk. Not only do companies given junk status find it more difficult to obtain funding in the future but, as most investment and pension funds are not allowed to hold junk bonds as part of their portfolio, the ensuing sell-off of stocks increases their risk of default significantly.

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Since then the company\u2019s earnings, revenue and overall outlook have improved, but with one-third of its total debt load, or about $44 billion, coming due this year, the automaker is still not out of the woods.

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7. Softbank

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Through its Vision Fund, the Japanese tech-investment mammoth owns stakes in WeWork, Sprint, Alibaba and many other household names. As its portfolio has grown over time, so has its debt. While the fund’s complex structure makes it difficult to determine how much debt exactly it carries, it is undoubtedly big\u2014and increasingly difficult to repay. The calamitous IPO of WeWork in 2021 and Uber’s underwhelming performance since its market debut in 2019 still weigh on the company\u2019s financials (Softbank offloaded all its remaining shares in the ride-hailing business months ago), while the trifecta of Covid, high inflation and the general tech industry slowdown has reduced the willingness of investors to invest in riskier assets and startups such as the ones the Japanese group has become known for. Last year, the company has posted quarterly operating losses of up to $23.4 billion.

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8. AT&T

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AT&T is no longer just a phone company. After the purchase in 2015 of Direct TV and the acquisition of Time Warner in 2018, the telecommunications giant was left with net debt in the neighborhood of $180 billion and the not-so-coveted title of most indebted company in the world. AT&T’s efforts to gradually reduce debt levels have been paying off and the telecom giant no longer holds that record. Yet, it still owes to its creditors $136 billion and the current high-interest rates make borrowing and refinancing much less appealing options than in the past.

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9. Deutsche Telekom AG

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The German telecommunications company is no different from its American and international siblings: to stay competitive, it needs to spend money on acquisitions, research and development, and marketing. Yet, over the years, it has also managed to get its money\u2019s worth in form of customer and revenue growth, especially in the U.S., where it operates through its subsidiary, T-Mobile. And as a strong dollar often hurts companies with large international operations, the opposite is also true.

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10. \u00c9lectricit\u00e9 de France

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Commonly known as EDF, the majority state-owned utility giant dominates the French electricity market with an 80% share, and remains one of the largest power companies globally. Founded after the end of World War II, it has seen better times. The green transition and the war in Ukraine driving oil prices to new heights were supposed to boost the company\u2019s financials: after all, EDF operates 56 nuclear reactors. Yet, last year, more than half of them had to be shut down for corrosion problems and other technical issues. The company also suffered the decision of the government to cap energy prices, having essentially to sell energy below market price. While EDF is now in the process of becoming a fully nationalized company, it will take much longer before its finances and operations are in order.

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Economics, Policy & Regulation

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Capital Raising & Corporate Finance

\n\t\t\t\t\t\tIs Capital One Next? Corporate Deals Are Getting Nixed\u00a0As M&A Scrutiny Intensifies\n\t\t\t\t\t
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\n\n\n\n", + "page_last_modified": "" + }, + { + "page_name": "World's largest banks raked in $3bn from green debt last year", + "page_url": "https://www.thenationalnews.com/business/banking/2024/01/05/worlds-largest-banks-raked-in-3bn-from-green-debt-last-year/", + "page_snippet": "Lenders extended $583 billion in green bonds and loans last year, compared with $527 billion of fossil fuel debtEuropean banks led the transition, with BNP Paribas topping Bloomberg\u2019s green debt league table. Meanwhile, Wall Street dominated fossil finance, with Wells Fargo and JPMorgan Chase generating the biggest earnings from oil and gas deals. Overall, banks extended $583 billion in green bonds and loans last year, compared with $527 billion of fossil fuel debt. In 2022, banks channelled $594 billion into environmental projects, and $558 billion into oil, gas and coal, the Bloomberg data show. European banks led the transition, with BNP Paribas topping Bloomberg\u2019s green debt league table. Getty Images \u00b7 European banks led the transition, with BNP Paribas topping Bloomberg\u2019s green debt league table. Getty Images European banks led the transition, with BNP Paribas topping Bloomberg\u2019s green debt league table. Getty Images ... For the second year in a row, global banks made more money underwriting bonds and providing loans for green projects than they earned from financing oil, gas and coal activities.", + "page_result": "World's largest banks raked in $3bn from green debt last year
Tuesday 12 March 2024READ OUR E-PAPER

World's largest banks raked in $3bn from green debt last year

Lenders extended $583 billion in green bonds and loans last year, compared with $527 billion of fossil fuel debt

\"Plant

European banks led the transition, with BNP Paribas topping Bloomberg\u2019s green debt league table.\u00a0Getty Images

European banks led the transition, with BNP Paribas topping Bloomberg\u2019s green debt league table.\u00a0Getty Images

Bloomberg
Jan 05, 2024
Powered by automated translation

For the second year in a row, global banks made more money underwriting bonds and providing loans for green projects than they earned from financing oil, gas and coal activities.

The world\u2019s biggest lenders generated a total of about $3 billion in fees last year from lining up debt for deals marketed as environmentally friendly, according to data compiled by Bloomberg. By comparison, the sector brought in less than $2.7 billion in aggregate earnings from fossil-fuel transactions.

European banks led the transition, with BNP Paribas topping Bloomberg\u2019s green debt league table. Meanwhile, Wall Street dominated fossil finance, with Wells Fargo and JPMorgan Chase generating the biggest earnings from oil and gas deals.

BNP, the European Union\u2019s largest bank, got close to $130 million last year from its green finance business. Credit Agricole was next with $96 million and then HSBC Holdings with $94 million.

On the other side of the energy divide, Wells Fargo earned fees of $107 million from arranging bonds and loans for the fossil fuel sector, followed closely by JPMorgan and Mitsubishi UFJ Financial Group, both with $106 million. MUFG was also last year\u2019s top arranger of global green loans.

Read More

The development coincides with stricter regulations in Europe, where both the European Central Bank and the region\u2019s top banking authority have made clear they want the finance industry to speed up its green transition.

Lenders in Europe now face the threat of fines and higher capital requirements if they mismanage climate exposures. In response, many banks are imposing explicit restrictions on fossil finance.

In the US, meanwhile, the regulatory outlook remains uncertain and fragmented as many Republican states place hurdles in the way of the green transition.

Banks suspected of withholding financing from the oil and gas sector increasingly face retaliation, with Texas among states threatening to cut off Wall Street firms that embrace net-zero emissions goals.

Against that backdrop, the global finance industry has fallen well short of where it needs to be if the goals of the Paris Agreement are to be met.

According to an analysis by BloombergNEF, four times as much capital needs to be allocated to green projects as to fossil fuels by 2030 to align with net zero emissions targets.

Yet at the end of 2022, that ratio was just 0.7 to 1, largely unchanged from the previous year, BNEF\u2019s latest figures show.

Bank financing isn\u2019t \u201canywhere close\u201d to the transition levels needed, said Trina White, sustainable-finance analyst at BNEF, when the December report was published.

US climate envoy John Kerry warns time is running out

\"US

The perceived foot-dragging by global banks has environmentalists sounding the alarm.

\u201cBanks still aren\u2019t keeping pace with the rate of transition that\u2019s required to avoid catastrophic climate change,\u201d said Jason Schwartz, senior communications strategist at Sunrise Project, a non-profit focused on the financial sector\u2019s contribution to global warming.

The shifting trends of the past year are \u201cmore indicative of broader macroeconomic trends than any proactive efforts in the banking sector to reduce financing for carbon-intensive energy\u201d, said Adele Shraiman, senior campaign strategist at Sierra Club.

\u201cThe reality is that banks aren\u2019t transitioning their energy financing quickly enough to meet their own climate goals.\u201d

Last year was the hottest on record, according to the Global Carbon Project. The group, which represents an international collaboration of scientists, estimates that carbon dioxide emissions from burning fossil fuels rose 1.1 per cent to a new high in 2023, putting the planet on track to exceed its carbon budget for 1.5\u00b0C of warming by the end of the decade.

Overall, banks extended $583 billion in green bonds and loans last year, compared with $527 billion of fossil fuel debt. In 2022, banks channelled $594 billion into environmental projects, and $558 billion into oil, gas and coal, the Bloomberg data show.

For several years now, the world\u2019s biggest banks have published reports showing the vast sums of money they say they\u2019re allocating toward a greener, fairer planet.

But some of those assertions are now being questioned, amid an absence of regulatory guideposts to help stakeholders make sense of such claims.

Updated: January 05, 2024, 3:00 AM
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", + "page_last_modified": " Tue, 12 Mar 2024 21:53:12 GMT" + }, + { + "page_name": "World\u2019s biggest banks made $3 billion on green debt in 2023 - ...", + "page_url": "https://www.bostonglobe.com/2024/01/03/business/worlds-biggest-banks-made-3-billion-green-debt-2023/", + "page_snippet": "For the second year in a row, global banks made more money underwriting bonds and providing loans for green projects than they earned from financing oil, gas, and coal activities.For the second year in a row, global banks made more money underwriting bonds and providing loans for green projects than they earned from financing oil, gas, and coal activities. The world\u2019s biggest lenders generated a total of about $3 billion in fees last year from lining up debt for deals marketed as environmentally friendly, according to data compiled by Bloomberg. By comparison, the sector brought in less than $2.7 billion in aggregate earnings from fossil-fuel transactions. European banks led the transition, with BNP Paribas topping Bloomberg\u2019s green debt league table. European banks led the transition, with BNP Paribas topping Bloomberg\u2019s green debt league table. Meanwhile, Wall Street dominated fossil finance, with Wells Fargo and JPMorgan Chase generating the biggest earnings from oil and gas deals. ... BNP, the European Union\u2019s largest bank, got close to $130 million last year from its green finance business. Overall, banks extended $583 billion in green bonds and loans last year, compared with $527 billion of fossil fuel debt. In 2022, banks channeled $594 billion into environmental projects, and $558 billion into oil, gas, and coal, the Bloomberg data show. For several years now, the world\u2019s biggest banks have published reports showing the vast sums of money they say they\u2019re allocating toward a greener, fairer planet.", + "page_result": "World\u2019s biggest banks made $3 billion on green debt in 2023 - The Boston Globe\n\n Skip to main content

World\u2019s biggest banks made $3 billion on green debt in 2023

By Tim Quinson Bloomberg,Updated January 3, 2024, 6:51 p.m.
\"BNP,
BNP, the European Union\u2019s largest bank, got close to $130 million last year from its green finance business.Christophe Morin/Bloomberg

For the second year in a row, global banks made more money underwriting bonds and providing loans for green projects than they earned from financing oil, gas, and coal activities.

The world\u2019s biggest lenders generated a total of about $3 billion in fees last year from lining up debt for deals marketed as environmentally friendly, according to data compiled by Bloomberg. By comparison, the sector brought in less than $2.7 billion in aggregate earnings from fossil-fuel transactions.

European banks led the transition, with BNP Paribas topping Bloomberg\u2019s green debt league table. Meanwhile, Wall Street dominated fossil finance, with Wells Fargo and JPMorgan Chase generating the biggest earnings from oil and gas deals.

Advertisement

BNP, the European Union\u2019s largest bank, got close to $130 million last year from its green finance business. Credit Agricole was next with $96 million and then HSBC with $94 million.

On the other side of the energy divide, Wells Fargo earned fees of $107 million from arranging bonds and loans for the fossil fuel sector, followed closely by JPMorgan and Mitsubishi UFJ Financial Group Inc., both with $106 million. To be sure, MUFG was also last year\u2019s top arranger of global green loans.

The development coincides with stricter regulations in Europe, where both the European Central Bank and the region\u2019s top banking authority have made clear they want the finance industry to speed up its green transition. Lenders in Europe now face the threat of fines and higher capital requirements if they mismanage climate exposures. In response, many banks are imposing explicit restrictions on fossil finance.

In the United States, meanwhile, the regulatory outlook remains uncertain and fragmented as many Republican states place hurdles in the way of the green transition. Banks suspected of withholding financing from the oil and gas sector increasingly face retaliation, with Texas among states threatening to cut off Wall Street firms that embrace net zero emissions goals.

Advertisement

Against that backdrop, the global finance industry has fallen well short of where it needs to be if the goals of the Paris climate agreement are to be met. According to an analysis by BloombergNEF, four times as much capital needs to be allocated to green projects as to fossil fuels by 2030 to align with net zero emissions targets. Yet at the end of 2022, that ratio was just 0.7 to 1, largely unchanged from the previous year, BNEF\u2019s latest figures show.

Bank financing isn\u2019t \u201canywhere close\u201d to the transition levels needed, said Trina White, sustainable-finance analyst at BNEF, when the December report was published.

The perceived foot-dragging by global banks has environmentalists sounding the alarm.

\u201cBanks still aren\u2019t keeping pace with the rate of transition that\u2019s required to avoid catastrophic climate change,\u201d said Jason Schwartz, senior communications strategist at Sunrise Project, a nonprofit focused on the financial sector\u2019s contribution to global warming.

The shifting trends of the past year are \u201cmore indicative of broader macroeconomic trends than any proactive efforts in the banking sector to reduce financing for carbon-intensive energy,\u201d said Adele Shraiman, senior campaign strategist at Sierra Club. \u201cThe reality is that banks aren\u2019t transitioning their energy financing quickly enough to meet their own climate goals.\u201d

Last year was the hottest on record, according to the Global Carbon Project. The group, which represents an international collaboration of scientists, estimates that carbon dioxide emissions from burning fossil fuels rose 1.1 percent to a new high in 2023, putting the planet on track to exceed its carbon budget for 1.5C of warming by the end of the decade.

Advertisement

Overall, banks extended $583 billion in green bonds and loans last year, compared with $527 billion of fossil fuel debt. In 2022, banks channeled $594 billion into environmental projects, and $558 billion into oil, gas, and coal, the Bloomberg data show.

For several years now, the world\u2019s biggest banks have published reports showing the vast sums of money they say they\u2019re allocating toward a greener, fairer planet. But some of those assertions are now being questioned, amid an absence of regulatory guideposts to help stakeholders make sense of such claims.

", + "page_last_modified": " Wed, 13 Mar 2024 16:07:16 GMT" + }, + { + "page_name": "A Look at Banks' Green Bond Issuance Through the Lens of Our Green ...", + "page_url": "https://www.spglobal.com/en/research-insights/articles/a-look-at-banks-green-bond-issuance-through-the-lens-of-our-green-evaluation-tool", + "page_snippet": "Even though green bonds represent a tiny proportion of bank borrowings, S&P Global Ratings expects that share to rise, supported by the fact that banks have a significant role to play in the transition to a low-carbon economy as key providers of funding. Banks have already boosted issuance ...Even though green bonds represent a tiny proportion of bank borrowings, S&P Global Ratings expects that share to rise, supported by the fact that banks have a significant role to play in the transition to a low-carbon economy as key providers of funding. Banks have already boosted issuance of green bonds in the past few years, to $27 billion in 2017 from $1.5 billion in 2014 based on data from Climate Bond Initiative (CBI) that we adjusted to include green bonds invested in large-scale hydro or clean coal projects (see chart 1 below). Banks have already boosted issuance of green bonds in the past few years, to $27 billion in 2017 from $1.5 billion in 2014 based on data from Climate Bond Initiative (CBI) that we adjusted to include green bonds invested in large-scale hydro or clean coal projects (see chart 1 below). Over the same period banks' share of green bond issuance rose to 16% from 4% and the number of banks having made their debut in the market increased to 72 from just five. Over the same period banks' share of green bond issuance rose to 16% from 4% and the number of banks having made their debut in the market increased to 72 from just five. Here, we present our findings of a review of almost all of the green bonds issued by the top 200 banks that we rate. The amount of green bonds that banks are currently issuing is small compared to the OECD's estimates of required annual green investment. Green bonds can provide the means for banks to finance green investments. At the same time, we believe banks use their status as issuers of green bonds to other ends as well, particularly to demonstrate to stakeholders their own contribution to the transition to the low-carbon economy.", + "page_result": " \n\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\t\t\t\tA Look at Banks' Green Bond Issuance Through the Lens of Our Green Evaluation Tool | S&P Global\r\n\r\n\n\r\n\r\n\r\n\r\n\r\n\r\n\r\n\r\n\r\n\r\n\r\n\t\n \n \n \n \n \n \n \n \n\t \n\t\t\n \n \n \n \n \n\n \n \n \n \n \n \n\n \n \n \n \n \n articles\n Corporate\n /en/research-insights/articles/a-look-at-banks-green-bond-issuance-through-the-lens-of-our-green-evaluation-tool\n content\n esgSubNav\n \n \t\n \t\n \t\n \t\n \t\n \t\n \t \n \n \n \n \n \n \n \n
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A Look at Banks' Green Bond Issuance Through the Lens of Our Green Evaluation Tool

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A Look at Banks' Green Bond Issuance Through the Lens of Our Green Evaluation Tool

\n \n
    \r\n
  • \r\n Author\r\n \r\n Miroslav Petkov\r\n \r\n
    • \r\n\r\n\r\n\r\n\r\n\r\n\r\n\r\n

Even though green bonds represent a tiny proportion of bank borrowings, S&P Global Ratings expects that share to rise, supported by the fact that banks have a significant role to play in the transition to a low-carbon economy as key providers of funding. Banks have already boosted issuance of green bonds in the past few years, to $27 billion in 2017 from $1.5 billion in 2014 based on data from Climate Bond Initiative (CBI) that we adjusted to include green bonds invested in large-scale hydro or clean coal projects (see chart 1 below). Over the same period banks' share of green bond issuance rose to 16% from 4% and the number of banks having made their debut in the market increased to 72 from just five. Here, we present our findings of a review of almost all of the green bonds issued by the top 200 banks that we rate.

\n\n\n\n\n\n\n
\n
Overview
\n
\n
    \n
  • S&P Global Ratings undertook a review of almost all of the green bonds issued by the world's top 200 banks.
    • \n
  • We found that issuance is growing fast but significantly below the amounts the OECD projects are needed to meet the Paris agreement targets.
    • \n
  • Renewable energy and green buildings represent the biggest share of banks' asset allocation for green bonds.
    • \n
  • Banks' green bonds are likely to receive an evaluation in the top two quartiles under our Green Evaluation because they invest predominantly in renewable energy and green buildings.
    • \n
\n
\n

According to the OECD's report \"Mobilising Bond Markets for a Low-Carbon Transition By 2035,\" annual green investment required for the 2-degree scenario will exceed $4.3 trillion. In the EU, U.S., China and Japan, which represent the best established bond markets, the equivalent amount is $2.2 trillion, with about one-third of that projected to be financed through loans. The amount of green bonds that banks are currently issuing is small compared to the OECD's estimates of required annual green investment. Green bonds can provide the means for banks to finance green investments. At the same time, we believe banks use their status as issuers of green bonds to other ends as well, particularly to demonstrate to stakeholders their own contribution to the transition to the low-carbon economy.

\n

The amount of green bond issuance represents a very small proportion, around 0.5%, of banks' total current borrowings, and a nominal amount of total bond issuance, about 1% in 2017. By comparison, green bond issuance by corporates was 2% of the total bond issuance in 2017. What's more, green bonds have not yet become a regular channel for raising capital for many banks, with 65% having issued only one so far. Yet, green bond issuance is not confined to the big banks; a little more than one-half of banks having issued green bonds are not in the top 200. At the same time, the large majority of the top 200 banks, about four-fifths, haven't issued any green bonds yet. Banks around the world may face peer and investor pressure to ramp up their efforts in the green bond market.

\n\n

We expect all banks to continue to grow their share of green bond issuance in the near future. We think the the EU's Energy efficient Mortgages Action Plan (http://energyefficientmortgages.eu/) and opportunities offered by green securitization could provide further impetus to market growth.

\n\n

China's Big Contribution

\n

Chinese banks have contributed significantly to the increase in green bond issuance following the government's decision to build a green financial system in China and the subsequent publication of green bond guidelines by the People's Bank of China (PBoC) in 2015. Chinese banks represent more than 50% of total green bond issuance by banks and around 40% of the number of green bond issuing banks.

\n

Outside China, Europe is the most active region, representing around one-quarter of total issuance and the number of bank issuers. The geographic spread is very wide with bonds also being issued by banks in emerging markets such as Morocco, Colombia, India, and South Africa.

\n\n

What Is A Green Investment?

\n

Many banks are still in the process of defining what green assets are. Admittedly, we recognize that just identifying green investments within a bank's portfolio is challenging, as highlighted in the The UN Environment Inquiry's report \"Green Tagging: Mobilising Bank Finance for Energy Efficiency in Real Estate.\" Often, the disclosed amount of these green investments reflects the size of only the green portfolio backing the green bonds, which may not represent a bank's total green lending. There are many initiatives to define what green investments are. The reality is that there are shades of green depending on the investment's contribution to the transition to low-carbon economy. (This is the rationale for the approach we adopted in our Green Evaluation, see box). If banks understate their green portfolios, they face increased risk of unfavorable comparisons to their carbon-intensive portfolios, which some nongovernmental organizations are monitoring and reporting. As such, this could raise reputational risks.

\n

Bank issuers rely on standards to define what green investments are, particularly the Green Bond Principles (GBP), which are the most widely used. A notable exception are green bond guidelines in China, which all Chinese onshore green bonds follow. The key differences between those two frameworks are the scope of projects allowed to be financed by proceeds of green bonds. The range of projects allowed under People's Bank of China (PBoC), which applies to banks, is wider and includes projects not explicitly included under GBP, such as fossil fuel power station upgrades and clean coal. In addition, GBP is a principles-based voluntary framework, which allows some flexibility, while PBoC rules are mandatory and embedded in regulation. There are no critical differences between both regimes in the requirements for the management and reporting of proceeds, so Chinese banks can follow international standards for their offshore issuance by restricting the scope of projects financed.

\n

Strong Governance And Reporting Practices

\n

One factor that defines the level of greenness of banks' green bond issuance is their green bond frameworks. Banks typically set up such a framework to define how assets financed through green bonds are selected and how proceeds are managed. The framework also covers reporting on the use of proceeds and any external reviews performed to demonstrate compliance with the relevant green bond guidelines. The framework spells out the process a bank follows when it identifies a suitable green portfolio of existing or new green assets. The proceeds of green bonds are then used to finance or refinance the green portfolio. Often, most of the assets backed by green bonds are existing financing. In that sense, such green bonds do not generate new green assets. However, we believe the green bond market will stimulate banks' future green financings as it would allow banks to issue green bonds once they have generated sufficient volume of new green assets through their lending activities.

\n

What we also see is that banks' green portfolios are dynamic, increasing or decreasing with new issuance, redemption, and reclassification of green assets or lending. Most green frameworks allow for the possibility of the amount of the green portfolio to drop below the green bond proceeds temporarily, with the balance invested in money market instruments or other green bonds. However, in practice, the green bonds portfolio typically exceeds green bond issuance for most banks by a substantial margin. For example, the current green portfolios of some banks exceed the green bond proceeds by more than 50%. We consider the risk of green bond funds being used other than for green projects is small and, if it happens, is likely to be only temporary.

\n

Most banks operating under GBP have in place strong governance and reporting of green bond proceeds. They publish detailed green bond frameworks as well as regular green bond reporting, which normally includes allocation of proceeds, typically on an annual basis. Most of them also perform impact reporting at a portfolio level, that is, expected or achieved mitigation effects such as carbon dioxide-equivalent emissions reduction and green energy capacity, for example. The vast majority of the green bonds we analyzed were subject to external review.

\n

Investment Dominates In Renewable Energy And Green Buildings

\n

Some banks have frameworks that allow them to invest in the whole range of projects allowed under GBP, while some only focus on specific sectors, typically renewable energy or green buildings, or both. In practice, even those banks whose frameworks cover a wider range of projects predominantly invest in renewable energy and green buildings. For around two-thirds of the banks we reviewed outside China, those two sectors represent more than 90% of the allocation. In contrast, in China, pollution prevention and clean transportation represent the largest share.

\n

We see slight differences among banks' definitions of green assets, for example what constitutes green buildings. Banks use different minimum acceptable levels of building environmental certification (for example, Leadership in Energy and Environmental Design or LEED and Building Research Establishment Environmental Assessment Method or BREEAM). Another notable difference is large hydropower projects, which some banks exclude from their green portfolios. There, we see differences about what size constitutes a large hydropower project.

\n

The majority of green assets of banks operating in developed countries are located in their own region. This may have implications for reaching global climate change goals, as according to the Paris agreement developed countries are to contribute to the green transition in emerging markets. We observe that the contribution of banks in developed countries to that transition is currently limited. For some developed banks, this may be a reflection of their more limited market presence in emerging markets. For others, the key reason may be the typically higher credit risk of investments in emerging markets.

\n\n\n\n\n\n\n
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S&P Global Ratings' Green Evaluation Tool
\n
\n

S&P Global Ratings has developed its Green Evaluation to help investors understand the positive environmental contribution of financings, including green bonds. A Green Evaluation is a point-in-time assessment of the relative environmental impact of a technology to be financed compared to similar technologies globally. This assessment is based on the quality of governance and transparency of a transaction as well as a quantification of the life-cycle environmental impacts associated with it. For mitigation projects, we estimate whether we expect a project, over its life (including construction, operations, and decommissioning phases), to create a net positive or negative environmental impact based on relevant environmental key performance indicators (eKPIs). We call this a net benefit ranking. We then overlay a hierarchy, which places the net benefit ranking of the specific technology within the broader context of the sector--for instance, solar power within the green energy sector.

\n

Based on these three pillars--governance, transparency and environmental impact--the transaction receives a score between 0 to 100, reflecting its contribution to climate-related policies. The score is expressed as a quartile between E1 and E4, E4 representing projects with the lowest environmental contribution. Our Green Evaluation also applies to financings of adaptation projects that aim to strengthen the resilience of infrastructure and communities against the risk of extreme weather or changing weather patterns caused by climate change. The score of adaptation projects is expressed as a quartile between R1 and R4, with R4 representing projects with the lowest resilience benefit/cost ratio.

\n
\n

Why Our Mitigation Scores Could Be High For Banks' Green Bonds

\n

The mitigation score is the key part of our Green Evaluation because it determines 60% of the score and fixes a ceiling on the overall assessment. Because the banks we reviewed invest predominantly in renewable energy and green buildings, the mitigation score is likely to be above 50. This reflects the positive impact of our carbon hierarchy, which typically increases the scores of renewable energy above 75 and the scores of green buildings above 50. Such scores are prerequisite for E1-E2 assessments. On the other hand, a material level of investments in clean coal, allowed under the Chinese green bond framework, could lower the mitigation score to a level that pushes the overall assessment down to E3 or lower (around 10% of green bonds issued by Chinese banks invest in clean coal according to CBI data). That's because such investments are in the lowest level in our hierarchy.

\n

A key element factored in our mitigation score is the carbon intensity of the country grid where the project is located. The higher the carbon intensity the better the score, reflecting the higher environmental benefits of decarbonizing carbon-intensive economies. For bonds with significant investments in green buildings, which sit lower in our hierarchy, the carbon intensity of the country could make the difference between E1 and E2 overall assessments. However, for renewable energy projects, the mitigation score tends to be higher across all geographies as we rank these projects at the highest level of our hierarchy. This reflects the sector's relatively high contribution to avoiding and coping with climate change across all geographies.

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Our evaluation is point in time and based on the current allocation of the bank's green portfolio. We use banks' current green portfolio as a proxy for the future allocation of green proceeds as we have observed that, even though banks' green portfolios are dynamic, the allocation by sector and geography remains relatively stable in practice. Therefore, if we are asked to reassess a green bond in the future, it is likely to observe a similar mitigation score assuming that consistent levels of reporting, governance, and disclosure are maintained.

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The governance and transparency scores determine 15% and 25% of the Green Evaluation score, respectively. Generally, bank frameworks following the GBP address the key aspects of our governance and transparency assessments:

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  • There is a clear process and criteria for selecting eligible projects to be financed through the green bonds.
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  • The proceeds are tracked in a separate account.
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  • It is a standard practice for banks to ensure that the projects they finance comply with environmental regulations. Even then, some consider compliance with different industry environmental, social, and governance (ESG) standards such as the Equator principles.
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  • Banks produce regular reporting on proceeds allocation, at least on an annual basis, but some even more often. They typically disclose a breakdown of investments by type of project and geography at an aggregate level due to the confidentiality of the projects they invest in.
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A differentiating factor across both governance and transparency is the level of detail in reporting on environmental impact (impact reporting). Those reports are useful for investors to understand the environmental benefits achieved, such as carbon savings. However, the differences in the methodologies adopted to estimate those environmental benefits as well as the lack of detailed disclosure about those methodologies limit the comparability of the results. In addition, there is often no external verification of impact reporting. This may reduce the credibility of that information to investors, who may question its reliability given the complexity and recent developments of impact reporting methodologies.

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We estimate that differences in the quality of the impact reporting could reduce an overall Green Evaluation by up to around 10. While this impact is relatively small, for the overall green evaluation it may still be a differentiating factor for banks with a material level of assets outside the renewable energy sector.

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Overall, banks' green bonds that are aligned with the GBP and whose proceeds are predominantly allocated to renewable energy assets are, under our analytical approach, more likely to receive an evaluation in the upper quartile. For others with a material level of investments in other sectors high in the hierarchy (such as green buildings), the differentiation between the top and second quartile will likely depend on the carbon intensity of the grid where the green assets are located and features of their impact reporting (for example, level of detail and external verification). The Green Evaluation score of Chinese green bonds could be lower if a material level of the proceeds is allocated to efficient coal technologies. This could be somewhat offset by the high carbon intensity of the grid in China.

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