24 February 2021

Last month, UniCredit asked attendees at two events in the Americas and Middle East....

2:00 Min

Last month, UniCredit asked attendees at two events in the Americas and Middle East for perspectives on the growing importance of ESG and the need for specific advisory based on ESG issues.

UniCredit continued its successful digital discussions on ESG issues for clients with the US leg of the ESG client series, following digital events in Italy, Germany, Austria and CEE, which reached more than 1,100 participants overall.

 

In the Americas, an ever-increasing market in ESG-linked sustainable finance has pushed the topic onto corporate agendas and led multinational corporates to seek funding via ESG-linked financing across asset classes. ESG discussions on bonds have dominated recent capital markets deals as it became apparent that various issuers were able to secure funding at rates even more favorable than conventional financing.

 

The US event took place on 14th January under the headline “ESG becomes inevitable - how to navigate and benefit from a changing landscape” and aimed to provide guidance and best-in-class examples to benefit from this trend. Internal experts and external panelists both from issuers’ and investors’ side gathered virtually to talk about developments in sustainable financial instruments, tackling the topic of applicability in capital markets, and addressing how issuers and investors have reacted to the challenges.

 

ESG is an increasingly relevant topic that issuers and investors cannot ignore.

 

Main insights from Americas “ESG becomes inevitable” event:

Issuer’s view from Marc Vandiepenbeeck, Vice President & Treasurer, Johnson Controls – panelist at US ESG event

“While establishing a green, social or sustainable bond framework (and related reporting) requires a material amount of internal work to design and manage, the benefits of executing the bond itself far-outweigh the perceived cost. Issuing such a bond provides for financial benefits that are very measurable at the moment, but also provides a halo effect that goes far beyond the price of single issuance. It proves and demonstrates the commitment to ESG not just for external stakeholders but also for the internal ones.”

Issuer’s view from Leila Sassi, Senior Financing & Capital Markets Manager, LafargeHolcim – panelist at US ESG event

“I can confirm that the sustainability linked bond we did was a great success in many aspects compared to a traditional bond: first in terms of diversification of our investor base, 55% of our final orders came from sustainable funds, also in terms of pricing, we priced our SLB 8 bps inside our fair value and, last but not least, it highlights the commitment of our company to sustainability and one of its biggest challenges, climate change.” 

Investor’s view from Stephan Ertz, Head of Credit, Union Investment – panelist at US ESG event

“ESG risk pricing has become an explaining factor in the Euro Credit markets. While this is currently less so in USD Credit markets, we expect this to be more significant in USD in the future as well.”

Christian Steffens, Head of Americas and the host of the US ESG event

“As a major pan-European banking Group, we feel a strong responsibility to advise and accompany our clients in increasingly steering financial transactions towards ESG transformation. The trend towards a more green and sustainable future and behaviour was noticeable long before Covid arrived and with the pandemic this trend has only accelerated and the need to take action has only become more urgent. In 2020, UniCredit supported 44 ESG-related euro bond transactions as Joint Bookrunner and we are proud to support US issuers with our expertise.”

US event moderator Antonio Keglevich, Head of Sustainable Finance Advisory at UniCredit

“The ESG financial market has taken another big step by introducing a new product “ESG-linked Bonds”, where issuers can use the proceeds for general corporate purposes but link coupon payments to pre-defined ESG-relevant KPIs – as opposed to “Use of Proceeds” green bonds where issuers have to finance or refinance green assets. Both structures well represented by Lafarge Holcim and Johnson Controls.”

The 3rd Abu Dhabi Sustainable Finance Forum took place on 20th January, as a digital event that brought together institutional investors, regulators and financial institutions active in the Middle East to share activities in sustainable finance that will aid economic recovery and the transition of global economies to a more sustainable, resilient and equitable way of business.

 

Antonio Keglevich, Head of Sustainable Finance Advisory at UniCredit was among the speakers at this Forum giving valuable insights about Social aspects of the ESG financial markets. Antonio’s speech was part of the “Innovative Financing Issuances” session of the forum, focusing on Social Bonds finance projects that directly aim to address or mitigate a specific social issue.

 

He elaborated on the first Social Bond issue of the European Union to fight the socioeconomic consequences of the Covid-19 pandemic, highlighting UniCredit’s prominent role in this transaction as a Joint Bookrunner on the front line and as a long-standing financial partner of the EU.

 

Cedric Derras, Head of MEA Region and Abu Dhabi Branch Manager at UniCredit also shared perspectives at the Abu Dhabi Sustainable Finance Forum 2021, confirming that ESG is on the radar in the Eastern hemisphere.

Cedric Derras, Head of MEA Region and Abu Dhabi Branch Manager

“When it comes to ESG-related transactions, leveraging on our strong track record already, and in front of the constantly increasing trend in the MEA Region, UniCredit has the unique opportunity to develop a close dialogue with its clients and become one of the leaders of choice for green and sustainable finance activities for the MEA client franchise and beyond. This is an ambition that not only complements the zeitgeist in the region, but dovetails with the fundamentals of our Group’s overarching strategy.”