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Markets regulator <keyword id="19901201" type="General" weightage="20" keywordseo="Sebi" source="keywords">SEBI</keyword> has proposed expanding the <keyword id="22367248" type="General" weightage="20" keywordseo="sustainable-finance-framework" source="keywords">sustainable finance framework</keyword> in the <keyword id="20922662" type="General" weightage="20" keywordseo="securities-market" source="keywords">securities market</keyword> by introducing a new category of financial instruments. This category will include <keyword id="20518791" type="General" weightage="20" keywordseo="Social-Bonds" source="keywords">social bonds</keyword>, <keyword id="22623575" type="General" weightage="20" keywordseo="Sustainable-Bonds" source="keywords">sustainable bonds</keyword>, and <keyword id="22623576" type="General" weightage="20" keywordseo="Sustainability-linked-Bonds" source="keywords">sustainability-linked bonds</keyword>, in addition to the current <keyword id="22819966" type="General" weightage="20" keywordseo="green-debt-securities" source="keywords">green debt securities</keyword>. It aims to provide issuers with flexibility in raising funds for projects that align with environmental, social, and governance (ESG) objectives. In a consultation paper released on Friday, SEBI proposed that issuers, in addition to existing green debt securities, should be allowed to raise funds through issuance of social bonds, sustainable bonds, and sustainability-linked bonds. These bonds will collectively be known as ESG Debt Securities. This will enable issuers to raise money for more sustainable projects, assisting in closing the funding gap for the Sustainable Development Goals. SEBI said it received representations from market participants including the Confederation of Indian Industry to expand the scope of the regulatory framework pertaining to sustainable finance to include social bonds, in addition to existing green debt securities as a mode of raising sustainable finance, in line with global practices. As per the consultation paper, SEBI said, it "proposed to introduce the concept of sustainable securitised debt instruments for the purpose of providing originators of the underlying credit facilities which are within such international or domestic frameworks for sustainable finance, and thereby provide investors as well an opportunity to participate in the sustainable securitised debt instruments". The consultation paper also addressed the initial and continuous disclosures for sustainable securitised debt instruments that would be based on international frameworks. Initial disclosures could be made in the offer document for the securities, while continuous disclosures might be included in annual reports or other mandated formats. The markets watchdog also suggested that issuers of ESG debt securities and sustainable securitised debt instruments appoint an independent external reviewer or certifier, to facilitate transparency and credibility. The review could take various forms including, second-party opinions, verification, certification, or scoring/ rating. The <keyword id="19901204" type="General" weightage="100" keywordseo="Securities-and-Exchange-Board-of-India" source="keywords" meta.keywordsubtype="org" meta.entityname="Securities and Exchange Board of India" meta.hostid="261" meta.entityid="Securities and Exchange Board of India">Securities and Exchange Board of India</keyword> (SEBI) has invited comments and suggestions from the public on the consultation paper by September 6.

SEBI proposes expansion of sustainable financial framework in securities market

Green Bonds and Sustainable Finance

<ul class="summary-list"><li>Goldman Sachs forecasts muted S&amp;P 500 gains, with a 3% annual return over 10 years.</li><li>Mega-cap tech stocks and AI enthusiasm have led to high index concentration.</li></ul>The <a target="_blank" class="" href="https://markets.businessinsider.com/index/s&amp;p_500">S&amp;P 500's</a> bullish run over the past year, with an over 38% return, may come at the expense of its future performance, according to Goldman Sachs.An October 18 note, led by David Kostin, forecasts muted gains for the foreseeable future. The index could post an annual return of only 3% over the next 10 years; it's well below the average consensus estimate of 6% based on 21 asset managers tracked by the investment bank. Still, all outlooks look grim: in comparison, the index posted a <a target="_blank" class="" href="https://www.businessinsider.com/personal-finance/investing/average-stock-market-return">13% average annualized return</a> over the past decade. The bank's most bearish scenario would see the S&amp;P 500 decline by an annual 1%, while its more positive calls for a gain of 7%.You can thank the dominance of a small group of mega-cap tech stocks. Investor enthusiasm for the prospects of AI has cornered them into a handful of names, bringing the index's concentration to its highest in over 100 years, the note reads. That can make things a bit shaky at the top, especially since the attractiveness of AI darlings like <a target="_blank" class="" href="https://markets.businessinsider.com/stocks/nvda-stock">Nvidia</a> rides on hypergrowth and wide profit margins. The catch-22 of this type of setup is that such extreme growth comes in bouts followed by periods of normalization.Even if the AI darlings remain on the top for the next decade, they may not be able to sustain the same growth margins, which is the reason investors are willing to pay a premium for them.The forward-looking outlook of 3% is so muted that even <a target="_blank" class="" href="https://www.businessinsider.com/personal-finance/investing/what-is-a-bond#:~:text=However%2C%20our%20opinions%20are%20our,a%20fixed%20period%20of%20time.">lower-risk bonds</a>, like the 10-year Treasury, are expected to outperform with a 4% yield. Goldman pegs the likelihood that bonds will beat the index over the next 10 years at a whopping 72% probability.There's also a 33% chance the index won't outpace a 2.2% inflation rate. While it's a much lower probability, it's still at more than double the historical average of 13%. Even if it outperforms inflation, the base case would only provide real returns of 1%.The chart below shows the distribution of returns on the index since 1930, demonstrating the rarity of such muted expectations.<div type="image" title="Chart showing distribution of S&amp;P 500 annualized returns between 1930 to 2024" height="980" width="1474" msid="114460245" hostid="261" sizebytes="44734"></div>Indeed, it's a rare outlook considering that since 1930, equities underperformed the 10-year Treasury in only 13% of the time on a rolling 10-year basis, according to the note. The chart below shows the range of outcomes for the index's performance relative to bonds and inflation.<div type="image" title="Chart showing S&amp;P 500 forecast relative to inflation and bonds." height="1206" width="1848" msid="114460243" hostid="261" sizebytes="54884"></div><h2 id="8d89832d-671f-48e8-bb32-6fe097fd4578">So what should investors do?</h2>The key word moving forward will be diversification.The timing could be ripe for a rotation to broader market exposure. Simply put, history shows that the equal-weighted S&amp;P 500, which spreads the contribution of each stock to the basket's overall performance equally, outperforms the aggregate index over the long term. This outperformance is even sharper in the periods that follow peak stock-market concentration. This was the case during the 10 years following the bear market of 1973 and the dot-com bubble of 2000, according to the note.The chart below demonstrates the annualized 10-year returns of the equal-weighted S&amp;P 500 relative to the aggregate one, with returns fairing better in the former on a long-term outlook and in sharper bouts following peaks of elevated concentration.<div type="image" title="Chart showing equal-weighted S&amp;P 500 versus aggregate S&amp;P 500 performance." height="882" width="1486" msid="114460244" hostid="261" sizebytes="59466"></div>Adding an exchange-traded fund that tracks the equal-weighted S&amp;P 500 could be one way to go about it. This also means investors will increase their exposure to small-cap stocks, another perk in a reversion-to-the-mean type scenario, where this sector has room to catch up.Furthermore, investors should consider a more mixed asset portfolio of stocks and bonds without tilting toward one more than the other. This would create better risk-adjusted returns. Factoring in the types of yields across bonds is another option. Consider the 10-year US Treasury at a yield of 4%, investment-grade bonds at 4.8%, and high-yield bonds at a 7% yield.Finally, be open to readjusting the allocation tilt based on macroeconomic shifts. This flexibility is referred to as a "strategic tilt," according to a May 28 note led by the head of asset allocation research, Christian Mueller-Glissmann. For example, in an environment where economic growth is strong but there's a risk of inflation, leaning more into equities, especially stocks with strong cash flows, may be the right direction. Meanwhile, if growth is slowed and inflation is muted, consider further allocation to bonds.

How investors should navigate the S&P 500 likely trailing bonds and inflation for the next decade, according to Goldman Sachs

<ul class="summary-list"><li>Wendy Altschuler has 3 teenage sons and will soon be coping with an empty nest.</li><li>She plans trips with one kid at a time to allow her to spend more quality time with each of them. </li></ul>I'm a mother of three <a target="_blank" class="" href="https://www.businessinsider.com/mom-connected-kids-through-activities-interests-teenagers-2024-5">teenage sons</a>, and the adage "the days are long, but the years are short," has never felt more poignant. Long gone are the mornings when my boys would wrap their arms around me and give me slobbery kisses, when warm squishy limbs would curl up with me on the couch for story time, when we'd watch the seasons change on our dawdling walks to school, or when cardboard box forts, matchbox car racing tracks, or Lego pieces would blanket every inch of our floor. I ruminate on how <a target="_blank" class="" href="https://www.businessinsider.com/lonely-empty-nester-sons-went-to-college-2023-8">little time remains for us under one roof</a> as a family — especially as we've already reached the single digits for the number of summers we have left before my brood leaves the nest. It seems like my social algorithms have latched onto this sentiment as well because I keep seeing stories that call attention to the notion that, on average, by the time kids reach 18, they've already spent about 90% of their time with their parents. The remaining 10% is spread out over the decades until their parents pass. I wasn't able to find the origin of this hypothesis, but it rings true for me.Compared to childhood, where our kids spend the majority of their life at home with their families, once they grow up, move out, and start their own families and eventful lives, only vestiges of time remain for their parents. <h2 id="ce887235-2a9c-4711-babd-5f6d07365cf2">My husband and I rarely catch up with our own parents</h2>We see my husband's family about twice a month, as they live nearby. However, with my family, we only travel once every two or three years to see them, as we live several states away. When my kids were small, we took road trips from Chicago to Montana, a 1,400-mile drive that would take 21 hours.The point is: we did the best we could to visit my parents, with three small children in tow, yet as the years went by, and our lives got fuller (and more expensive), we saw them less and less. Now, as a professional travel writer, one of the perks of the job is that I rack up <a target="_blank" class="" href="https://www.businessinsider.com/personal-finance/credit-cards/how-to-book-free-travel-cheap-deals-credit-card-rewards">miles and loyalty points</a>, which I can cash in for trips around the globe. We <a target="_blank" class="" href="https://www.businessinsider.com/family-travel-tips-for-road-trips-international-vacations-2024-1">travel often as a family</a>, with all five of us, and these adventures have brought us an incredible amount of joy and connection. When we're home, however, my teens scatter and do their own things. From work schedules to afterschool clubs, to hanging out with friends to way too much screen time, sometimes it feels like I scarcely see my dear ones. But, when we're away somewhere, anywhere, they're all mine. <div type="image" title="Mom and son standing outside church in Greece" height="2000" width="2667" msid="113407682" hostid="261" sizebytes="199354"></div><h2 id="82119ac5-5b65-4132-975f-e6f25d48a92c">A one-on-one vacation with my middle child</h2>In June, I took my middle son to <a target="_blank" class="" href="https://www.businessinsider.com/empty-nester-struggled-disconnect-from-work-european-trip-2024-3">Greece on an adventure</a> for just the two of us. While I do my best to carve out alone time with each of my children when we're home — my youngest son and I play chess, my middle goes running with me, and my oldest and I will walk the hounds — sometimes routines and obligations simply get in the way, and it's difficult to find meaningful time to connect without the distractions of other siblings and the hubbub of our household. Pulling one puppy out of the feral pack and taking him on a big adventure allows us to bond while the other two pups strengthen their relationships at home and with their dad. <a target="_blank" href="https://www.businessinsider.com/mom-vacation-alone-with-daughter-after-angelman-syndrome-family-bond-2024-1">Traveling with one kid</a> at a time allows me to see him just as he is, to share and learn without any intrusions. I do this with each of my sons, but this time, it was my middle son's turn.Our trip began in Rafina, a port city near <a target="_blank" class="" href="https://www.businessinsider.com/greece-local-things-all-tourists-should-know-travel-tips-2024-4">Athens</a>. We romped around on the pebbly beach, visited the Agios Nikolas Chapel, appreciated a lovely dinner, and then went on a weeklong walking journey through Paros, Naxos, and Santorini islands. We <a target="_blank" class="" href="https://www.businessinsider.com/hike-mother-son-taught-growing-alongside-children-2024-5">adored hiking</a> along the volcanic caldera in Santorini from Fira to Oia, a six-mile cliff trail full of volcanic soil, pumice, and lava. The views of the glittery Aegean Sea in contrast to the rugged rust-hued terrain, white-washed architecture, and blue-domed churches were a highlight for me. <div type="image" title="Mother and son standing on cobblestone street in Greece." height="3475" width="2606" msid="113407681" hostid="261" sizebytes="1040346"></div>My brown-haired, beryl-eyed son loved walking from our small, family-owned and operated lodging down to the Fira Port, being careful not to get squished by the dozens of hardworking mules following the same path. We played "slap jack" cards and made little sketches of each other as we waited for our dinner. We wandered the snaking cobblestone paths in the tiny villages so my son could find the perfect yellow necklace for his girlfriend. On our evening walks, we marveled at the sunset in silence. Every time our walking guide would utter, "never, never" when describing Greek customs, we giggled — now, it's something we say to each other as our own inside yarn.<h2 id="405bc31b-867c-4034-97a3-ca2414d21add">These trips have taught me who my sons are</h2>I'm grateful that I've built a <a target="_blank" class="" href="https://www.businessinsider.com/mom-left-family-celebrate-40th-birthday-alone-switzerland-travel-solo-2024-8">career that allows me to travel</a> with each of my sons. I've gotten to know them as unique individuals apart from their siblings. What I've learned through the years of doing this with my boys, however, is that it's essential to view everyday occurrences not as chores or inconveniences, but as opportunities to click. Trips to the grocery store or jogs around the neighborhood with my middle can be just as meaningful and impactful as our lengthier romps abroad, and arguably more sustainable for our relationship as it grows. While I loved mugging for photos in <a target="_blank" class="" href="https://www.businessinsider.com/best-places-to-visit-in-greece-this-summer-2022-7">Greece</a> with my clever and intrepid guy, carving out time while at home will continue to be a priority for me, even when he becomes autonomous and <a target="_blank" class="" href="https://www.businessinsider.com/gwyneth-paltrow-worried-becoming-empty-nester-apple-moses-motherhood-parenting-2024-4">flies the coop</a>.

I left my husband and 2 kids behind for a trip to Greece with my middle son. It gave us proper bonding time.

<ul class="summary-list"><li>PIMCO says that private credit investors are not being compensated enough for market risks.</li><li>Excess premium is falling as capital flows into too few opportunities, the bond giant said.</li></ul>Credit returns aren't enough to justify the risks investors are currently taking on, PIMCO said in a <a target="_blank" href="https://www.pimco.com/eu/en/insights/navigating-public-and-private-credit-markets-liquidity-risk-and-return-potential#:~:text=Liquidity%20premiums%20have%20compressed%20in,Asset%20selection%20matters.">note</a> on Wednesday.According to the bond giant, borrowers need to offer higher compensation to lenders, given the market's rising vulnerability to today's macro-conditions.What's more, less-liquid private credit is not offering high enough premiums for borrowers that lock in their investments."The compensation for providing liquidity is declining across both public and private credit markets as more capital chases too few opportunities," CIO of core strategies Mohit Mittal explained. "New investments are entering at potentially unattractive valuations, with corporate spreads across public and private credit markets near record lows."For example, the excess premium received for investing in the private sector now stands below 100 basis points: that's not even half of what should be offered, PIMCO estimates.By commiting money in these assets, investors are possibly losing out on opportunities elsewhere, and exposing themselves to the potential cash shortfall, Mittal said.Meanwhile, some corners of private credit are susceptible to an increased macro uncertainty.Among smaller firms with floating-rate debt, a cooling economy or sustained interest rate highs are rising risks, PIMCO said. While markets are betting on rate cuts to <a target="_blank" href="https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html?redirect=/trading/interest-rates/countdown-to-fomc.html">start this September</a>, such projections have been delayed multiple times through 2024.In fact, PIMCO found that higher rates are eroding the private sector's ability to cover interest rate expenses:"40% of private credit borrowers (size weighted) are not producing enough cash flow to service all debt, taxes, and capital spending needs," it estimated. "If interest rates stay elevated for longer or economic growth slows, these borrowers would be more vulnerable to further increases in leverage, declining credit quality, and higher expected losses."<div type="image" title="Chart showing rise in private credit borrowers facing difficulty in covering interest payment expenses." height="1106" width="1776" msid="111642863" hostid="261" sizebytes="39108"></div>At the same time, corporate credit is heavily centered on vulnerable sectors, such as technology and health, PIMCO noted. These come with their own risks, such as exposure to an AI disruption.In these conditions, there's "tremendous value" in public credit of high-quality and liquidity, Mittal suggested.

Credit investments aren't worth the risk right now, says bond giant PIMCO

The Reserve Bank on Friday announced the launch of a mobile app to enable <keyword id="19972907" type="General" weightage="20" keywordseo="retail-investors" source="keywords">retail investors</keyword> to participate in government securities (<keyword id="21202837" type="General" weightage="20" keywordseo="G-Secs" source="keywords">G-Secs</keyword>) or <keyword id="20283766" type="General" weightage="20" keywordseo="government-bonds" source="keywords">government bonds</keyword> market. <keyword id="21202838" type="General" weightage="20" keywordseo="rbi-retail-direct-scheme" source="keywords">RBI Retail Direct Scheme</keyword>, launched in November 2021, gives access to individual investors to maintain gilt accounts with the <keyword id="19899808" type="General" weightage="20" keywordseo="RBI" source="keywords">RBI</keyword> and invest in government securities. The Scheme enables investors to buy securities in primary auctions as well as buy/sell securities through the <keyword id="382785" type="General" weightage="20" keywordseo="Negotiated-Dealing-System" source="Orion">Negotiated Dealing System</keyword> - <keyword id="21202839" type="General" weightage="20" keywordseo="Order-Matching-system" source="Orion">Order Matching system</keyword> (NDS-OM) platform. "To further improve ease of access, a mobile application of the Retail Direct portal is being developed. The app will enable investors to buy and sell instruments on the go, at their convenience. The app will be available for use shortly," RBI Governor <keyword id="19913110" type="General" weightage="20" keywordseo="shaktikanta-das" source="keywords">Shaktikanta Das</keyword> said, while announcing the first bi-monthly monetary policy for the current fiscal. The government is planning for gross market borrowing of Rs 14.13 lakh crore for 2024-25. Out of this Rs 7.5 lakh crore, or 53 per cent, is scheduled to be borrowed in the first half (H1). In a separate announcement, RBI permitted non-bank payment system operators to offer Central Bank Digital Currency (CBDC) wallets to encourage its wider use. Currently, CBDC pilots in the retail and wholesale segments are underway with more use-cases and more participating banks. "Continuing with this approach, it is proposed to make CBDC-Retail accessible to a broader segment of users in a sustained manner, by enabling non-bank payment system operators to offer CBDC wallets," he said. This is expected to enhance access and expand choices available to users apart from testing the resiliency of the CBDC platform to handle multi-channel transactions, he said, adding, necessary changes will be made to the system to facilitate this. In November 2022, the pilot of the wholesale CBDC, known as the Digital Rupee-Wholesale (e-W), was launched with the use case being limited to the settlement of secondary market transactions in government securities. In the following month, RBI rolled out a pilot in the retail version of the CBDC (e-R).

RBI to soon launch app to enable retail investors to participate in govt bonds

<a href="https://www.businessinsider.com/financing-a-sustainable-future-2022"></a> <div type="image" title="Headshot of Esohe Denise Odaro, IFC’s head of investor relations and sustainable finance" height="1692" width="2250" msid="91625716" hostid="261"></div><ul class="summary-list"><li>Social bond issuance reached nearly $200 billion last year, from a little over $10 billion in 2019.</li><li>These bonds can tackle societal inequities like financing affordable housing or lending to women-owned businesses.</li></ul>For people in banking and finance, the subject of <keyword id="1281116" type="General" weightage="60" keywordseo="social-bonds" source="Orion">social bonds</keyword> can induce mixed feelings. Investors may feel good about knowing their money is going to worthy causes, while skeptics wonder whether this debt is another way for companies to present as good corporate citizens. Conflicting opinions aside, there's no doubting the numbers. Social bonds, which support initiatives like affordable housing or women-owned businesses, have soared since the global pandemic has encouraged companies to help tackle societal inequalities. Roughly $192 billion worth of social bonds were priced globally last year, on top of $165 billion in 2020, according to Refinitiv data supplied to Insider. Before that, social bonds barely registered above $10 billion a year, the data showed. "The applicability of the social bond has come to shine in dire circumstances. And the pandemic has definitely helped kick that off," Esohe Denise Odaro, the <a href="https://www.ifc.org/">International Finance Corporation</a>'s head of investor relations and <keyword id="8481269" type="General" weightage="60" keywordseo="sustainable-finance" source="Orion">sustainable finance</keyword>, told Insider. "It takes real-life situations to educate people as to how to use it." The IFC played a big part in social bonds, both as an investor and an issuer. Last month, IFC invested in <keyword id="303353" type="General" weightage="60" keywordseo="sub-saharan-africa" source="Orion">sub-Saharan Africa</keyword>'s first-ever gender bond by Tanzania's NMB Bank. The $32 million deal got a $10 million anchor investment from IFC through its Banking on Women business initiative. Proceeds from the issuance — dubbed a 'Jasiri Bond' — will finance more than 2,000 women-owned small businesses in Tanzania. Back in January, the multilateral bank issued its own CA$500 million ($384 million) social bond to support low-income communities, women entrepreneurs, and small businesses in emerging markets. <h2>The emerging framework for social bonds </h2>While social bonds have taken off, they're still in their infancy, especially compared to mature ESG debt instruments like green bonds, which debuted a decade ago. For issuers, determining what can be classified as a social project can be confusing, and sometimes expose companies to extra scrutiny from market experts that will ensure these issuers come good on their social promises, Odaro said. "A lot of businesses are set up as an enterprise, not a social enterprise," Odaro said. "There's this fear of putting a spotlight on your business through issuing a social bond. And if your company's strategy is not going in the right direction, you're opening yourself up to a lot of market scrutiny." That fear, in part, comes from the reporting that social-bond issuers need to complete to ensure the proceeds from the bond are going to where they're intended. For example, the <a href="https://www.ifc.org/wps/wcm/connect/c6f3d4c9-3928-4f89-9dd3-13c4d9c98520/FY22+Social+Bonds+Factsheet.pdf?MOD=AJPERES&amp;CVID=nZB2mLK">IFC's Social Bond Fact Sheet</a> comprises strict lending requirements to women-owned businesses or lending to projects that meet the criteria outlined in the Social Bond Principles. The <a href="https://www.icmagroup.org/sustainable-finance/the-principles-guidelines-and-handbooks/social-bond-principles-sbp/">Social Bond Principles</a>, defined by the International Capital Markets Association, require issuers to keep an up-to-date list of projects where the proceeds will go. The borrowers also need to update this information on an annual basis. It's early days for social debt instruments, and while there will be inevitable growing pains, they're proving to be ideal for issuers at the earlier stages of their ESG journeys because of their simplicity. Unlike sustainability-linked bonds, which allow issuers to put the proceeds to an array of needs, social bonds are ring-fenced for a specific objective, which can make the educational process much easier for the issuer and investor. Not only is this ideal for the issuer, but investors can take comfort in knowing that the bond's proceeds are allocated toward initiatives that meet social bond frameworks. "Social bonds are better suited to early-stage ESG adopters," Odaro said. "And if you're concerned about the use of proceeds, you don't have to have too big of a concern because of the explicit restrictions that proceeds go toward pre-determined projects."

Social bonds are on the rise, but issuers and investors are still learning the merits of this new-age debt instrument

<a href="https://www.businessinsider.com/financing-a-sustainable-future-2022"></a><div type="image" title="Financing a Sustainable Future Event 2" height="880" width="1760" msid="90866623" hostid="261"></div><ul class="summary-list"><li>The UN's Sustainable Development Goals are not being met because the <keyword id="12011554" type="UNKNOWN" weightage="60" keywordseo="esg" source="Orion">ESG</keyword> bond market is way behind.</li><li>Both regulators and investors are supporting transparent measuring and reporting of ESG initiatives.</li><li>The conversation was part of Insider's virtual event "Financing a Sustainable Future - Funding the Energy Transition to Net-Zero" which took place on Tuesday, April 12, 2022.</li></ul>The ESG — environmental, social, and governance — bond market may have <a href="https://www.mckinsey.com/business-functions/sustainability/our-insights/the-net-zero-transition-what-it-would-cost-what-it-could-bring">doubled every year over the last couple of years, growing to more than $1.6 trillion last year</a>, according to McKinsey. But funding is still way behind when it comes to the environmental aspect, said Karen Fang, the managing director and global head of <keyword id="13301622" type="UNKNOWN" weightage="60" keywordseo="sustainable-finance" source="Orion">sustainable finance</keyword> at Bank of America."According to the <keyword id="11896449" type="UNKNOWN" weightage="60" keywordseo="united-nations" source="Orion">United Nations</keyword>, it costs anywhere between $3 to $5 trillion a year to accomplish the <a href="https://sdgs.un.org/goals">17 UN Sustainable Development Goals</a>. According to a recent McKinsey study, the total number of dollars needed between now and 2050 is a whopping $275 trillion, which is over $9 trillion a year," Fang said during Insider's recent virtual event, "Financing a Sustainable Future: Accelerate the Net-Zero Transition," which took place on Tuesday, April 12. In this hour-long boot camp in partnership with Bank of America, Insider's finance correspondent Aaron Weinman spoke with Fang and other sustainable finance experts and business leaders about how the world of <keyword id="12092830" type="UNKNOWN" weightage="60" keywordseo="corporate-finance" source="Orion">corporate finance</keyword> can accelerate the net-zero transition and how the markets are funding the energy transition to net zero.Sophia Mendelsohn, the chief <keyword id="11896309" type="UNKNOWN" weightage="100" keywordseo="sustainability" source="Orion">sustainability</keyword> officer and global head of ESG at technology consultancy Cognizant, said that <a href="https://www.businessinsider.com/green-bonds-financial-tools-help-companies-set-sustainability-goals-2022-3">regulators are now paying close attention to ESG reporting</a> because it's highly relevant to investors' financial decisions."ESG has become a critical part of a company's financial structure, strategy, infrastructure investments, so it's, therefore, no surprise that it's now at the level of attention of large investors and therefore the SEC," she said.From a banking perspective, Fang said that reporting on the use of proceeds, at least annually, is critical for higher benchmarks in ESG financing instruments, like green bonds and sustainability bonds or loans."Issuers could be doing more in terms of having even more transparency to show progress on how they're reducing emissions and how they're helping improve the circular economy," she said."Another very important topic is how they're improving both climate transitions but also not losing the focus on nature and biodiversity," she added.Kathleen McLaughlin, the executive vice president and chief sustainability officer at <keyword id="11893281" type="UNKNOWN" weightage="60" keywordseo="walmart" source="Orion">Walmart</keyword>, said that ESG issues are connected to the long-term prospects of any company."We consider the planet one of our stakeholders at Walmart," she said. "You won't be able to deliver value to the shareholder if you haven't satisfied the customer, engaged and delighted your associates, and developed them to do the things we need to do to run our business."McLaughlin said that Walmart has high ESG ambitions as a company and eventually wants to become regenerative. Sustainable debt and equity financing are key pillars of that strategy."The $2 billion green bond was part of a broader portfolio of $7 billion worth of issuance — and actually, that $2 billion tranche had the highest demand," she said."If there's an opportunity for investors to align their capital to action that's in those [ESG] arenas and can be producing results, that's attractive to people."

Execs at Bank of America, Cognizant, and Walmart share how they think about, measure, and finance sustainability goals on the path to net zero

<a href="https://www.businessinsider.com/financing-a-sustainable-future-2022"></a><div type="image" title="A speaker talks in front of a monument in Montreal, Canada, about climate refugees as people attend the Montreal Climate Strike" height="4024" width="6048" msid="90853614" hostid="261"></div><ul class="summary-list"><li><keyword id="6356687" type="UNKNOWN" weightage="60" keywordseo="canada" source="Orion">Canada</keyword> just issued its first-ever <keyword id="13621615" type="UNKNOWN" weightage="60" keywordseo="green-bond" source="Orion">green bond</keyword> on March 23, 2022. </li><li>The proceeds from the issuance will fund sustainabilty projects, infrastructure, and jobs in the sector. </li></ul>Canada's 7.5-year inaugural green bond was issued on March 23, 2022, drawing attention from investors from around the world.For Canada, the $5 billion transaction fulfills the country's commitment to issue a bond of this amount within the fiscal year and is earmarked for financing the country's sustainable infrastructure projects, all while creating new jobs as part of Canada's newly published <a href="https://www.canada.ca/en/department-finance/programs/financial-sector-policy/securities/debt-program/canadas-green-bond-framework.html">Green Bond Framework.</a>Green bonds have become more common for companies, but countries like Canada, which have also seen regular climate crisis protests and demands for meaningful progress, are also looking to leverage these financial instruments to drive progress. Canadian finance department spokesperson, Anna Arneson, said, "the government is focused on developing the green bond program to develop the sustainable finance market in Canada, which will help to mobilize capital that will aid Canada in achieving its 2030 emissions reduction target and net-zero emissions by 2050." To measure the success of the bond, Canada will publish both an allocation report and an impact report, detailing the projects that the bond's proceeds are funding. "The government of Canada will provide very transparent information on both of these aspects," said Valerie Lemieux, HSBC's sustainable finance lead for global banking and markets, who acted as joint structuring advisors, along with TD Securities, on the deal.It's the first issue of what is hoped will be many financial instruments set to catalyze Canada's liquid green bond program. As Trevor Bateman, head of credit research at CIBC Asset Management, explains, "Canada has studied the framework underlying green bonds and how they can be applied to its finances and economy, deciding now is the time to issue." "The government looked at their renewed climate change targets, and their need to generate capital as soon as possible, and decided now is the right time," said Jonathan Laski, director of corporate solutions at Sustainalytics, the independent environmental, social, and governance (ESG) research group who provided an assessment of Canada's framework.This timing is not incidental, and with European financial heavyweights historically leading the charge on bonds such as these, the issuance has long been expected. <h2>A long time in the making </h2>Reaching beyond initial expectations, however, was the deal's final order book which reached $11 billion, securing a price advantage for investors of two basis points and a subsequent yield cut for investors. The basis point reduction relative to Canada's non-green curve represents a savings known as a ''greenium" and reflects the broad interest in the issuance from both ESG/SRI and non-ESG buyers.Insiders say this marks it as in-line with what other domestic government issuers, as well as other sovereign borrowers, have issued relative to their respective non-green curves. Canada's Deputy Prime Minister and Minister of Finance has celebrated this success, saying, "The strong demand for this inaugural green bond issuance — the first of many issuances to come — is a sign of Canada's future as a sustainable finance leader." The transaction, which ultimately attracted 98 investors, has been a long time in the making, pulling together top financial minds from the likes of TD Securities and HSBC, who acted as co-structuring advisors on the project over the previous year. Advisors helped the government develop alongside market best practices and the <a href="https://www.icmagroup.org/sustainable-finance/the-principles-guidelines-and-handbooks/green-bond-principles-gbp/">International Capital Market Association's</a> Green Bond Principles, advising on aspects as varied as marketing to investors to the development of the green bond framework itself. "As a joint lead book runner on the transaction, we, along with the other joint leads, provided the government with advice on investor preference relating to bond characteristics such as maturity and pricing, and how to obtain the best execution on a $5 billion transaction," says Trevor Thom, managing director and head, government finance at TD Securities.Canada was advised to exclude activities from the bond's proceeds such as transportation, fossil fuels, and nuclear energy to meet market expectations and the criteria of major green bond indices. "After the framework was finalized, it was published. Then we did investor marketing globally, across America, Europe, and Asia. And finally launched the integral green bond in March," Lemieux said. The final list of investors is one that, according to Lemieux, includes some interesting names. While unable to say exactly who, she tells us that "there were some very strong ESG-focused investors that participated in that transaction," who spanned multiple continents in categories from central banks, reserve managers, pension funds, insurance companies, and asset managers.Some 72% of buyers were environmentally and socially responsible investors, and 45% of the investor base came from outside of Canada. "Post transaction, we have seen a very positive reaction from the markets," she added. While there are continued criticisms of Canada's huge fossil-fuel industry, and concerns over green bond's exclusion of nuclear — something seen as crucial on the path to net-zero — more generally, the significance of this deal should not be underestimated.As Arneson explained, "With investors increasingly seeking green investment opportunities backed by triple-A credit ratings — as evident by the final order book of over $11 billion —Canada's successful $5 billion inaugural green bond issuance will help meet that global demand."

Canada's first green bond focuses investment on sustainable solutions, infrastructure, and jobs

<a href="https://www.businessinsider.com/financing-a-sustainable-future-2022"></a><div type="image" title="Engineer walking on a wind farm at sunset" height="3733" width="5600" msid="90236826" hostid="261"></div><ul class="summary-list"><li>ESG is not just a moral obligation, but a financial commitment to hold companies accountable for sustainable progress.</li><li>Sustainable finance executives will discuss "Planet," the second of the four pillars of ESG reporting defined by the World Economic Forum.</li><li>On April 12, 2022, Insider is hosting "<keyword id="13301621" type="UNKNOWN" weightage="100" keywordseo="financing-a-sustainable-future" source="Orion">Financing a Sustainable Future</keyword>: Accelerate the Net-Zero Transition," a free virtual event at noon ET, featuring speakers from Bank of America, Walmart, Cognizant, and more.</li></ul>As part of the "Financing a Sustainable Future" series, Insider's virtual event "Financing a Sustainable Future: Accelerate the Net-Zero Transition," in partnership with Bank of America, takes place Tuesday, April 12, 2022, at noon ET, and includes live conversations with Insider editors, sustainable finance experts, business leaders, and ESG professionals. Panelists will discuss toolbox items such as <keyword id="13391959" type="UNKNOWN" weightage="60" keywordseo="green-bonds" source="Orion">green bonds</keyword>, <keyword id="11896309" type="UNKNOWN" weightage="60" keywordseo="sustainability" source="Orion">sustainability</keyword> bonds, public-private collaborations, metrics that track companies' dependencies and impacts on the natural environment. At a time when sustainable investments have been growing at a rapid pace, this virtual conversation will dive into the financial obligations behind the transition to a net-zero world. The event will take a closer look at the second of the four pillars of ESG reporting, as defined by the World Economy Forum: Planet. <h2>Speakers include:</h2><ul><li>Karen Fang, Managing Director, Global Head of Sustainable Finance, Bank of America</li><li>Kathleen McLaughlin, Executive Vice President and Chief Sustainability Officer, Walmart</li><li>Sophia Mendelsohn, Chief Sustainability Officer and Global Head of ESG, Cognizant</li><li>Moderator: Aaron Weinman, Finance Correspondent, Insider</li></ul><h2>A look at the series events:</h2><ul><li>Financing a Sustainable Future: Investing in People Transforms Economies on March 8, 2022</li><li>Financing a Sustainable Future: Creating Broad-based Economic Prosperity on May 10, 2022 </li><li>Financing a Sustainable Future: Advancing Effective Corporate Governance on June 14, 2022 </li></ul>We hope to see you there!

SIGN UP NOW: How companies can fund the energy transition to net-zero

<a href="https://www.businessinsider.com/financing-a-sustainable-future-2022"></a><div type="image" title="Ana Carolina Oliveira, head of sustainable finance at ING" height="1800" width="2400" msid="90804570" hostid="261"></div><ul class="summary-list"><li>Companies and countries are turning to green bonds to finance projects and lower carbon emissions. </li><li>The increasingly popular debt product is poised to grow as the SEC demands greater transparency.</li></ul>The sale of green bonds — a form of debt that funds renewable-energy projects like wind or solar farms, for example — entered another stratosphere in 2021.Globally, green bonds raised a record $479 billion in proceeds last year, well ahead of the $245 billion sold in 2020, according to Refinitiv data. And bankers expect the asset class to continue smashing records as companies seek to lower their emissions."They are here to stay," said Anne van Riel, BNP Paribas' head of <keyword id="13301622" type="UNKNOWN" weightage="60" keywordseo="sustainable-finance" source="Orion">sustainable finance</keyword> capital markets for the Americas. "In the last two years we've seen a lot of interest in the S in <a href="https://www.businessinsider.com/how-companies-consider-governance-setting-esg-goals-2022-3">ESG</a>, but now the E is the focus of discussion."Countries such as India and Qatar are weighing their first-ever green bonds, while big companies like Apple have made them a part of annual capital-raising plans.Investors, too, are demanding more green, as they want exposure to companies charting a path toward a zero-carbon economy.These fund managers got some extra support from the Securities and Exchange Commission last month. The markets regulator drafted <a href="https://www.sec.gov/news/statement/gensler-climate-disclosure-20220321">a proposal</a> to ask public companies to divulge more information about their climate risks. It would force companies to provide more information, and greater transparency, to investors weighing a multitude of green financing.<h2>Preparing for green bonds</h2>But getting a company ready for a green bond takes time. It must have projects that are considered green — like renewable-power plants — and often companies must appoint third-party observers to certify their projects as green.Banks, too, must help companies establish a green-bond framework that outlines which projects are eligible for green proceeds and comply with principles outlined by entities like the International Capital Market Association or the Climate Bonds Initiative.It seems cumbersome, but it can put a company in a good position as big investors from BlackRock to Vanguard look to park their money with companies putting their best foot forward to mitigate climate risk.For example, the Portuguese utility Energias de Portugal raised a 1.25 billion-euro green bond in March to finance projects owned by its renewable-energy unit EDP Renováveis. Ana Carolina Oliveira, the head of sustainable finance at ING, told Insider that the demand for the bond was so great that at one point EDP obtained more than 4 billion euros in orders from investors.In circumstances like this, borrowers can leverage that investor demand to extract a cheaper interest rate on their green bond, which can make all the extra work worthwhile.<div type="image" title="Headshot of Anne van Riel, BNP Paribas' head of sustainable finance capital markets for the Americas" height="1800" width="2400" msid="90804571" hostid="261"></div>EDP was also prepared. It appointed Sustainalytics, which rates companies' ESG performance, to conduct an outside-party opinion on its renewables projects, and it picked ING to help compile EDP's green-bond framework."Companies that want to issue green bonds need to be ready, because there will be plenty of opportunities," Oliveira said. "You just need to have your framework and third-party opinions ready."More and more companies are getting ready. Refinitiv data indicates green-bond sales grew to $479 billion last year from $37 billion in 2015. And bankers say borrowers are saving 0.05% to 0.1% in interest payments if they go green."The demand for green bonds still outstrips the supply available, but hopefully not for much longer," Oliveira said. We're starting to see a more diverse group of sectors issuing these bonds and investors want to invest in companies that are fundamentally committed to change."

More companies are turning to green bonds to finance their projects. Here's how they work.

<ul class="summary-list"><li>Jobs data came in super hot, sending US stocks lower and bond yields higher.</li><li>The US economy added 353,000 jobs in January, way past expectations of 185,000.</li></ul>US stocks traded mixed on Friday after a fresh jobs report blew past expectations, forcing investors to rethink their bets on a Fed rate cut.The economy added 353,000 jobs in January, way past estimates of 185,000. That increase is well above <a href="https://markets.businessinsider.com/news/stocks/stock-market-news-today-jobs-data-fed-policy-rate-cut-2024-1">December's revised numbers</a> of 333,000 jobs added, which rose from an initial estimate of 216,000 jobs. Meanwhile, unemployment remained unchanged, clocking in at 3.7%. The data is a sign that the labor market is still running too hot, which could push out the timing of the Federal Reserve's first interest rate cut. Treasury yields spiked in response to the report, with yields on the 10-year note up 13 basis points, punching past 4%."Job creation heated up in January, perhaps causing some Federal Reserve officials to break out in a sweat," Mark Hamrick, an analyst from Bankrate, said. "This is as they look to gain greater confidence that inflation is coming down at a sustained pace."And the news arrived right after a Fed meeting where Jerome Powell said central bank officials need to see a continuation of "good" data before pivoting their policy, and that an interest rate cut is unlikely in March."Now, even May is in question," Hamrick said.Here's where US indexes stood as the opening bell at 9:30 a.m. on Friday: <ul><li><a href="https://markets.businessinsider.com/index/s&amp;p_500?utm_source=markets&amp;utm_medium=ingest%3Futm_source%3Dmarkets&amp;utm_medium=ingest&amp;utm_medium=ingest&amp;utm_source=markets&amp;utm_medium=ingest&amp;utm_source=markets&amp;utm_medium=ingest&amp;utm_source=markets">S&amp;P 500</a>: 4,914.45, up 0.17%</li><li><a href="https://markets.businessinsider.com/index/dow_jones?utm_source=markets&amp;utm_medium=ingest%3Futm_source%3Dmarkets&amp;utm_medium=ingest&amp;utm_medium=ingest&amp;utm_source=markets&amp;utm_medium=ingest&amp;utm_source=markets&amp;utm_medium=ingest&amp;utm_source=markets">Dow Jones Industrial Average</a>: 38,445.44, down 0.19% (-74.40 points)</li><li><a href="https://markets.businessinsider.com/index/nasdaq_composite?utm_source=markets&amp;utm_medium=ingest%3Futm_source%3Dmarkets&amp;utm_medium=ingest&amp;utm_medium=ingest&amp;utm_source=markets&amp;utm_medium=ingest&amp;utm_source=markets&amp;utm_medium=ingest&amp;utm_source=markets">Nasdaq Composite</a>: 15,403.17, down 0.27%</li></ul>Here's what else is going on:<ul><li>Meta and Amazon are <a href="https://markets.businessinsider.com/news/stocks/meta-amazon-apple-stock-price-big-tech-rally-magnificent-seven-2024-2">set to add $280 billion in combined market cap</a> — more than Netflix is worth.</li></ul>In commodities, bonds, and crypto: <ul><li>Oil prices dipped, with<a href="https://markets.businessinsider.com/commodities/oil-price?type=wti&amp;utm_medium=ingest&amp;utm_source=markets&amp;utm_medium=ingest&amp;utm_source=markets"> West Texas Intermediate</a> down 0.95% to $73.12 a barrel. <a href="https://markets.businessinsider.com/commodities/oil-price?utm_medium=ingest&amp;utm_source=markets&amp;utm_medium=ingest&amp;utm_source=markets&amp;utm_medium=ingest&amp;utm_source=markets">Brent crude</a>, the international benchmark, edged lower by 0.65% to $78.19 a barrel.</li><li><a href="https://markets.businessinsider.com/commodities/gold-price?utm_source=markets&amp;utm_medium=ingest%3Futm_source%3Dmarkets&amp;utm_medium=ingest&amp;utm_medium=ingest&amp;utm_source=markets&amp;utm_medium=ingest&amp;utm_source=markets&amp;utm_medium=ingest&amp;utm_source=markets">Gold</a> fell 0.86% to $2,053.30 per ounce.</li><li>The<a href="https://markets.businessinsider.com/rates/u-s--rates-10-years?utm_medium=ingest&amp;utm_source=markets&amp;utm_medium=ingest&amp;utm_source=markets&amp;utm_medium=ingest&amp;utm_source=markets"> 10-year Treasury yield</a> jumped 13 basis points to 3.993%.</li><li><a href="https://markets.businessinsider.com/currencies/btc-usd?utm_medium=ingest&amp;utm_source=markets&amp;utm_medium=ingest&amp;utm_source=markets&amp;utm_medium=ingest&amp;utm_source=markets">Bitcoin</a> dropped 1.04% to $42,550.75.</li></ul>

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