Latest news with #ESG-linked
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Business Standard
2 days ago
- Business
- Business Standard
L&T raises Rs 500 crore via first listed ESG bond under Sebi framework
Larsen & Toubro (L&T), engineering and construction major, has raised Rs 500 crore through an ESG-linked bond issuance, the first listed deal under the Securities and Exchange Board of India's (Sebi) new framework for sustainability-linked securities, the company said in a press statement on Friday. The transaction, solely arranged by British bank HSBC, comes a day after Sebi announced the regulatory framework designed to promote transparency, accountability and alignment with international ESG standards. The framework sets out stricter disclosure norms for ESG and sustainability-linked bonds, including mandatory external assessments and measurable environmental or social targets. As part of the deal, the engineering and construction conglomerate has tied the issuance to specific environmental goals, such as reducing the intensity of its freshwater usage and greenhouse gas emissions, the company said. L&T has longer-term targets of water neutrality by 2035 and carbon neutrality by 2040. While ESG fundraising in India has so far been limited to green bonds by financial institutions and a handful of large corporates, Sebi's new guidelines are expected to expand the market by standardising disclosures and setting accountability mechanisms. 'We take pride in leading the transition to sustainable finance under Sebi's new ESG framework,' said a senior spokesperson from L&T. 'This bond issuance reinforces our steadfast commitment to sustainable development and responsible business practices while aligning our finances with environmental targets.' 'We are pleased to partner with L&T on the first INR Sustainability Linked Bond under Sebi's guidelines, reinforcing our commitment to supporting the Clean Energy Transition in India,' said HSBC India.
Business Times
25-05-2025
- Business
- Business Times
ESG-aligned indices in Asean outperform conventional benchmarks: CGS International
[SINGAPORE] Stock market indices that include South-east Asian companies screened for their environmental, social and governance (ESG) practices tend to outperform their conventional benchmarks, said a recent report by financial services provider CGS International. This indicates that the premium Asean companies can get from strong ESG performance – whether through higher valuations, lower costs of capital or better investor sentiment – has matured into a structural signal rather than a transient recovery, the report noted. The report found that between May 2022 and May 2025, the ESG-aligned index FTSE4Good Asean 5 generated an annualised return of 5.1 per cent, and achieved a 3.6 per cent alpha against the FTSE Asean All-Share Index. Similarly, the FTSE4Good Bursa Malaysia had an annualised return of 3.5 per cent over the same period, and outperformed the FTSE Bursa Malaysia EMAS index by 0.4 per cent. 'This hints that ESG momentum is no longer a lagging catch-up. It is now a repeatable source of risk-adjusted alpha, especially when integrated into capital allocation decisions,' said the report. ESG performers and laggards Regulatory momentum in Asean – such as the growing number of mandatory sustainability reporting requirements – as well as better transparency in ESG scoring systems, are leading investors to price ESG performers structurally, and penalise laggards as part of their Asean strategy. A NEWSLETTER FOR YOU Friday, 12.30 pm ESG Insights An exclusive weekly report on the latest environmental, social and governance issues. Sign Up Sign Up Research shows that Asean stocks with low ESG risk delivered positive returns in several markets over a three-year horizon. In Malaysia and Thailand, for example, companies with clear ESG transition pathways and consistent disclosure momentum outpaced their country indices. Institutional investors in these markets have also expressed a growing preference for sustainability-aligned portfolios for downside protection and structural exposure to regulatory and thematic tailwinds. Similarly, poor ESG performance now carries visible commercial and financial consequences. The reported noted that companies in Malaysia, Vietnam and Indonesia have faced import bans and exclusion from global supply chains due to labour or environmental violations. Beyond reputational risks, companies with ESG controversies also face capital market penalties as they contend with higher risk premiums in bond pricing and less access to ESG-linked lending. With local regulators such as those in Indonesia trying to mandate ESG integration into credit risk evaluation and Philippines banks having to report on ESG-linked capital allocation from this year, the financing costs for ESG laggards will inevitably go up. 'The cost of non-alignment is enforced through both market mechanisms and institutional standards. Sustainability blind spots, once overlooked, are now being priced into both trade and capital costs,' said the report. 'This shift marks a reassertion of the ESG premium through improved data quality, risk-adjusted performance and investor alignment. Where ESG was once overlooked due to insufficient signal fidelity, credible transitions and regulation-backed disclosures are now enabling that premium to be priced in,' it added. Asean companies are also not just adopting ESG strategies to meet basic disclosure compliance, but are leveraging ESG to differentiate their business models, and deepen investor engagement. For example, Indonesia's Bank Central Asia aligned its credit allocation with ESG principles, excluded borrowers involved in unsustainable sectors and increased its green loan portfolio to 23 per cent of total lending in mid-2024. 'ESG is now guiding capital allocation decisions, reshaping business portfolios and offering visibility to long-term investors seeking resilience and transition alignment. This transition from reporting to repositioning strengthens the ESG alpha thesis, particularly in sectors with high regulatory exposure and stakeholder sensitivity,' said the report. Integrating ESG into equity allocation Beside supportive regulation, this gradual repositioning of ESG investing is a result of it being initially seen as a specialist approach into a structural allocation theme over the last three years, with institutional asset owners increasingly embedding ESG into mandates, and rebalancing equity allocation based on ESG transitions. Malaysia's retirement savings fund Employees Provident Fund, Singapore's state investor Temasek, as well as Thailand's Government Pension Fund have actively tilted their portfolios towards ESG improvers. Allocation decisions are increasingly based on ESG trajectory signals, particularly those tied to climate reporting upgrades, governance remediation and sector-specific policy responsiveness. These trends underscore a shift in practice that ESG momentum is no longer aspirational, but already embedded in active capital allocation decisions. 'This convergence in investor behaviour and regulatory architecture ensures that ESG remains an embedded, credible theme in global capital markets. These trends create a structural tailwind for ESG-integrated portfolios, particularly in under-covered or inefficient markets where mispriced ESG momentum can generate alpha,' said the report. Investors in Asean should therefore approach ESG integration as a structured signal used to enhance selectivity and allocate into companies exhibiting both transition visibility and valuation headroom. Despite the growing ESG momentum in South-east Asia, the report also highlighted several risks to watch out for. These are inconsistent disclosures and regulatory divergence across the region; superficial compliance; execution gaps when implementing ESG strategies; as well as ESG scoring instability due to changes in methodologies.
Mint
03-05-2025
- Business
- Mint
Sebi eases ESG rating rules. But experts warn of short-term risk
MUMBAI : The market regulator has eased norms for ESG rating providers (ERPs), aligning the framework with that for credit ratings. The changes, effective immediately, aim to improve rating transparency, reduce conflicts of interest, and enhance market confidence, according to a circular issued by the Securities and Exchange Board of India (Sebi) on 29 April. Now, ERPs operating under the subscriber-pays model can withdraw ratings if there are no active subscribers or if a company fails to file its Business Responsibility and Sustainability Reporting (BRSR) report, according to the circular. For issuer-pays models, ratings can be withdrawn only after a minimum period and with bondholder consent in the case of debt securities. While subscribers like banks, insurance companies, or even the rated company itself pay to access the ratings under the subscriber-pay model, the company being rated pays under the issuer-pays model. 'Conditional withdrawal could create short-term volatility in ESG risk perception, especially when driven by administrative lapses such as missing BRSR filings," said Shailesh Tyagi, partner, sustainability and climate change, Deloitte India. However, he said, clear and transparent documentation of withdrawal rationale could help mitigate long-term reputational risk. Moin Ladha, partner at Khaitan & Co., said ratings retracted or revised unexpectedly could lead to 'fluctuating investor confidence, particularly if the conditions for withdrawal are not clearly defined or consistently applied". The Sebi circular also revamped disclosure rules for ERPs. Subscriber-pays ERPs are no longer required to publish detailed rating rationales publicly, easing their compliance burden. However, they must disclose assigned ESG ratings in a standardised, year-wise format, including details of the rated entity, sector, and the date of rating. Additionally, stock exchanges must now host ESG ratings on dedicated sections of company and debt security pages to ensure better investor visibility. Ladha said the increased compliance burden from simultaneous disclosures and reliance on public data may raise operational costs. 'ERPs may need to explore hybrid or issuer-pays models to maintain profitability and competitiveness. These changes aim at improving rating credibility, but they could challenge the subscriber-pays model's viability unless ERPs adapt effectively," he said. However, according to Ketan Mukhija, senior partner at Burgeon Law, mandatory disclosures on stock exchanges could enhance market transparency and aid more efficient price discovery for ESG-linked instruments. Experts also expect the circular to reshape ERP business models, pushing firms to reevaluate revenue strategies and compliance structures. Ladha said stricter transparency and conflict-of-interest norms could undermine the viability of the subscriber-pays model unless ERPs adapt. According to Tyagi, while these changes reduce public-facing obligations for subscriber-based ERPs, they may increase internal coordination and systemisation costs. Issuer-pays ERPs, meanwhile, must continue with full public disclosures and prepare for enhanced governance and audit requirements. Sebi granted Category II ERPs—a classification typically covering newer or smaller firms—a two-year extension before compliance with mandatory internal audits and governance committee formations kicks in. The relaxation of governance norms for Category-II ERPs 'may offer some relief, but smaller players may still struggle with capacity and compliance burdens", Mukhija said. The regulator has also expanded the pool of eligible auditors to include cost accountants and professionals with information systems security credentials. Despite initial challenges, experts are hopeful that the regulatory changes will enhance ESG rating credibility and support capital allocation into ESG-linked instruments. 'Improved visibility and transparency of ESG scores on stock exchanges will aid efficient price discovery and bolster investor confidence," said Jyoti Prakash Gadia, managing director at financial advisory firm Resurgent India. 'The changes are pragmatic, not disruptive, and will contribute to the long-term credibility of the ecosystem." The long-term impact will likely foster broader market acceptance and increased use of ESG ratings in investment decisions, experts said. Tyagi believes the reforms will bring India's ESG framework closer to global benchmarks, facilitating greater institutional interest. 'For corporates, the clarity in rating assignment, withdrawal, and disclosure norms means better planning and predictability in ESG engagement."
Bloomberg
28-03-2025
- Business
- Bloomberg
Amundi to Push to Embed ESG in Upcoming Lebanon Debt Rework
Europe's biggest asset manager, Amundi, plans to step up efforts to embed sustainability criteria in future restructurings of emerging-market bonds, notably in Lebanon's upcoming $30 billion debt overhaul. The $2.4 trillion firm will push for environmental, social and governance goals (ESG) to be part of any restructuring deal in Lebanon, Yerlan Syzdykov, Amundi's head of emerging markets, said in an interview. The fund is part of a committee that's gearing up to negotiate with the government, and is hoping a debt agreement reached last year in Sri Lanka can be a blueprint for ESG-linked deals in Lebanon and elsewhere.
Gulf Today
25-02-2025
- Business
- Gulf Today
Emirates NBD approves substantial ordinary dividend of 100 fils per share
Emirates NBD held its 18th General Assembly Meeting on Tuesday, Feb.24, 2025. At the General Assembly Meeting, a review of the Group's performance during 2024 was presented. Commenting on the Group's performance, Emirates NBD Chairman, Sheikh Ahmed Bin Saeed Al Maktoum, said: 'The story of Dubai and the UAE in 2024 is one of relentless ambition and boundless opportunity. Dubai and the UAE had another exceptional year, cementing their position among the leading global hubs for innovation, talent, and investment. Dubai's GDP grew by 3.2 per cent in 2024 to reach Dhs443 billion, driven by the expansion of key sectors, including transport, hospitality, logistics, and financial services.' Sheikh Ahmed Bin Saeed added: 'A key catalyst in this remarkable growth story is Emirates NBD, which continues to perform and transform, as Dubai's largest bank and the most profitable financial institution in the region. The Dubai Economic Agenda, D33 aims to double the size of Dubai's economy by 2033 and position the city among the top three global cities.' 'Emirates NBD is actively driving progress through strategic initiatives that prioritise innovation, financial inclusion, and sustainable growth, solidifying its standing as a critical enabler in Dubai's vision.' 'Our landmark financial performance has been achieved in harmony with Emirates NBD's longstanding commitment to responsibility and sustainability. In 2024, Emirates NBD expanded its sustainable finance offerings with innovative solutions, such as Sustainable Fixed Deposits and ESG-linked working-capital facilities for customers across the region. It also introduced the region's first globally recognised Sustainability- Linked Loan Bond Framework, fully aligned with the latest International Capital Market Association guidelines,'' he noted. 'Our ESG Forward Journey outlines a comprehensive roadmap to enhance sustainable finance governance, achieve net zero emissions for key sectors, and reduce Scope 1 & 2 Greenhouse Gas emissions by 30% from the 2023 baseline by 2030. We have also committed to provide $30 billion in sustainable finance and achieve 25 per cent female representation in senior leadership by 2027.' Emirates NBD's profit before tax is 15 per cent higher on significant loan growth, a low-cost funding base and strong transaction volumes and substantial recoveries. Emirates NBD's profit after tax is at Dhs23 billion up 7 per cent. Bank's total income up to Dhs44.1 billion on strong loan growth coupled with an excellent stable and low-cost funding mix. The General Assembly Meeting passed a number of resolutions including the approval of the Board's proposal to distribute cash dividends for the year ended 31 December 2024 of Dhs1 per ordinary share (100 per cent), being Dhs6,316,598,253 in total, to shareholders on the register of the Bank's shareholders at the close of the trading on 6 March 2025. It also approved the report of the board of directors (the Board) on the Bank's activities and the financial statements for the year ended 31 December 2024. Meanwhile Emirates NBD (ENBD), a leading banking group in the Middle East, North Africa and Turkiye (Menat) region, has released the global investment outlook for 2025. Themed 'Winds of Change', the 2025 outlook was revealed by Maurice Gravier, Group Chief Investment Officer at Emirates NBD at a media roundtable. Speaking to the media, Gravier and his team presented their investment strategy for the year ahead, which starts with improved visibility and strong financial returns from 2024, 'The Year of Answers'. Opening the discussion, Gravier said: 'By contrast to 2024, attention should switch from the present to the future, due to material emerging changes. New leaders will implement new policies, while the geopolitical picture will evolve, commercially and militarily. National and regional priorities should prevail and create divergences.' He added: 'We believe that macro-economic uncertainty, driven by political changes, could prove much higher than the consensus suggests. This is not adverse for long-term investors: markets overreact on surprises, providing opportunities for those who keep the medium-term picture in mind. Volatility and divergences are a pool of alpha for active allocation and selection. To that extent, Emirates NBD's Group Chief Investment Office has added two new functions in 2024: quantitative tactical analysis to identify short-term signals, starting with FX and commodities, and onshore bespoke discretionary portfolio management, to constantly and swiftly adjust positioning on behalf of Private Banking clients, under their very own guidelines.' On the economic outlook, Gravier said: 'Our Emirates NBD Research Team expects a stable but moderate global growth in 2025, similar to 2024 on aggregate but with regional differences.
