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Institutional investors are increasingly aware of environmental, social and governance (ESG) factors. But quantifying the benefits remains a challenge.
'Sustainable investing' has come a long way. Many asset managers now include material sustainability criteria in their investment decisions. Recent figures show that sustainable investments are the 'new normal' with more than one quarter of assets under management globally now being invested sustainably.
ESG investing is no longer just a way to meet corporate social responsibility aims (often by making a trade-off between impact and profits). Integrating ESG principles can deliver value by identifying hidden risks and opportunities through the analysis of ESG information and trends.
We see the delivery of the UN’s Sustainable Development Goals (SDGs) as a particular area of opportunity: it is estimated that $90tn worth of investment is needed by 2030 to achieve these and the goals of the Paris climate agreement. The vast majority of these will require project finance capabilities to deliver the energy, transport and IT infrastructure needed to provide a sustainable future.
Freshfields has created and implemented complex, highly structured solutions for organisations across the public and private sector, working with the world’s leading national and multinational corporations, financial institutions, export credit agencies and governments on business-critical mandates, as shown below.
Advising on the green bond financing of over €510m for CPPIB’s investment in Germany’s largest offshore wind project
Advising on the largest ever green bond issuance by a UK company
Supporting the set-up of impact investing solutions, including advice on corporate, finance, tax and distribution, as well as registration requirements
Advising a leading German industrial company on all aspects of the issue of a sustainability promissory note loan, the first ever sustainability-oriented financing for a promissory note loan
Advising the lenders on a €60m sustainability-linked revolving credit facility agreement for an international industrial group
Advising the Inter-American Development Bank on the innovative use of credit default swap technology with other multilateral finance institutions, including the World Bank and African Development Bank
Contributing to the EU’s High-Level Expert Group on Sustainable Finance, which advised on the Commission’s action plan on sustainable finance
Assisting the UN Principles for Responsible Investment (UN PRI), UN Environment Programme Finance Initiative (UNEP FI) and the Generation Foundation with their 'A Legal Framework for Impact' research
A Legal Framework for Impact explores whether and how legal frameworks allow for – and incentivise – investors to consider sustainability impact across major markets.
This work builds upon our 2005 publication (PDF) for the UNEP FI on the first legal framework for integration of environmental, social and governance issues into institutional investment.
Supporting the UN PRI's outreach to the EU institutions
We helped guide the legislation emanating from the EU Commission's sustainable finance action plan through the EU legislative procedure (in particular the EU disclosure regulation and the taxonomy proposal).
Our efforts included helping the UN PRI’s dialogue with members of the European Parliament, the Council of Ministers and other stakeholders, and ongoing political analysis and advice on amendments to the Commission’s proposals by Brussels lawmakers and how to effectively influence these.
We also helped the UN PRI organise a high-level conference at our Brussels office, with participation of the Commission itself, to discuss the expectations for and benefits of the action plan.
Creating an 'ESG gold standard' for measuring social impact return
This standard will help social impact investors understand the quantitative (not qualitative) social impact return valuation methodologies used by asset managers and academia. We are collaborating with academic institutions, as well as talking directly to asset managers at social impact investment funds about the methodologies they use.