Bloomberg Launches Proprietary ESG Scores

Scores will provide transparent, data driven insights into company performance

Bloomberg recently announced the launch of proprietary ESG scores. This initial offering includes Environmental and Social (ES) scores for 252 companies in the Oil & Gas sector, and Board Composition scores for more than 4,300 companies across multiple industries.

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Berlin fires the starting shot for federal green bonds

Debut with ten-year maturity in September – 2020 volume up to 11 billion euros

Green Bunds will soon see the light of day. The debut issue is to take place as a twin bond with a minimum volume of 4 billion euros and a term of ten years as early as September, Finance State Secretary Jörg Kukies announced to the press in Berlin. According to reports, this may even be a very short term issue. The bond will be launched on the market via a bank syndicate. The fourth quarter should see another green Bund come on the market. A five-year maturity is planned. According to Kukies, the federal government will thus be able to issue up to 11 billion euros this year via green Bunds.

“From now on, the federal government will issue green federal securities every year,” announced Kukies. “This will give strong support to strengthening the sustainable finance market.”

According to the State Secretary, actual green expenditures from the 2019 federal budget of up to 12.7 billion euros can be allocated for the planned emission. Kukies mentioned the areas of transport, environment, international cooperation, research, energy and industry as well as forestry, natural landscape and biodiversity. This would provide security for investors, Kukies emphasised, “There’s green in this, too.”

According to the Finance Agency, the German government’s new green securities will always have the identical characteristics of an existing conventional government security (i.e. same maturity and coupon). With the concept of these twin bonds, the German government aims to issue green twins for standard maturities of the conventional curve and to create added value for the sustainable finance market in Europe. In the future, the Federal Government will be able to offer investors different maturities and create additional added value for the sustainable finance market with a green euro interest rate benchmark.

“The twin concept offers the opportunity to take green bonds out of their niche by allowing a broad range of investors to get involved in the green bond market,” said Tammo Diemer Co-Managing Director of the German Finance Agency.


Source: Börsen-Zeitung, 25 August 2020, Kai Johannsen, Angela Wefers, © All rights reserved.

Image: Gerd Altmann/Pixabay

Deutsche Bank Research: Global headwinds make continental value chains more attractive

The German export sector has had to cope with numerous challenges over the last few years. Not only the automotive sector, but also the shift of US trade policy and the increasingly important issue of climate change implied massive changes. That is why the long-term trend in many manufacturing sectors appeared unclear even ahead of the coronavirus pandemic. Now, COVID-19 has compounded already existing uncertainties. However, a number of developments support the thesis of Deutsche Bank Research that continental value chains are likely to gain importance.

ESG considerations raise questions about whether global supply chains really make sense.

Attention is shifting towards humanitarian, social and ecological issues. There is a broad social consensus that climate protection should play a major role in the recent stimulus packages. Even though we are currently experiencing the deepest recession since the Second World War, consumers are increasingly rethinking their consumption patterns. The fact that the German government is currently discussing a new “supply chain law” underlines that this is a relevant topic for society as a whole.

Geopolitical tensions make global supply chains less attractive.

Geopolitical trends and the growing importance of ESG issues already suggested before the COVID-19 outbreak that major changes in the supply chains might be necessary in the long run. The virus-related supply shortages have led to a considerable increase in the desire for security. There are, therefore, significant incentives to scale back the global supply chains, which were established for maximum efficiency, and return to more regional supply patterns.

The full comment can be found at: Deutsche Bank Research – Global headwinds make continental value chains more attractive

© Copyright 2020. Deutsche Bank AG, Deutsche Bank Research, 60262 Frankfurt am Main, Germany. All rights reserved.

Photo: PIRO4D/Pixabay

Clean Energy League Tables 2020: Taylor Wessing ranks twice in the top ten

The past year was a highly successful one for the international energy team of Taylor Wessing. The team’s improved ranking in this year’s Clean Energy League Tables is proof of this: the team took sixth place in the Project Finance by number of transactions category, and eighth place in the M&A Deals category (and eleventh place in terms of M&A deal value).

In 2018, Taylor Wessing had already moved up into the top 20 in these categories. The again significantly improved rankings document the successful cooperation in the recent past with top-class clients across jurisdictions. Clean Energy projects, for example, were not only advised across borders within core Europe, but also in Australia, the US and Africa.

“The energy market, and in particular the issue of clean energy, can only be thought of and dealt with internationally. With our international energy team, we have therefore established an international team with experts from Germany, England and France at its core from the very beginning and positioned ourselves as a committed partner for the clean energy industry. This was the right course to take, as shown by our steadily improving rankings in the Clean Energy League Tables from year to year,” says Carsten Bartholl, Head of the international Energy Industry Group at Taylor Wessing.

Read the full press release: Taylor Wessing: Clean Energy League Tables 2020

Find out more about Taylor Wessings: Area of Focus in the Energy Sector


Text: © Taylor Wessing

Photo by Jason Black Eye on Unsplash

ESG ratings are better standardised than one might think (DVFA Guest contribution in Börsen-Zeitung)

Authors: Henrik Pontzen and Gunnar Friede, both Heads of the DVFA Commission Sustainable Investing


Imagine one analyst rates a security as a buy, while another deems it a sell. Scandalous? Not at all. Isn’t it quite normal that two equally well-trained and recognized experts could reach opposite conclusions after a thorough fundamental analysis of the same company? Then, why do we hear repeated complaints about ESG (environment, social and governance) ratings, deriding them because they too can have differing conclusions?

The demand that rating agencies come to a unanimous judgement when assessing ESG standards arises from false expectations. In terms of complexity, a company’s ESG rating can hardly be seriously compared with a credit rating. The latter evaluates only one facet: what is the probability of default on the coupon and repayment of a bond?

In assessing ESG, both the observation horizon and the number of criteria taken into account are disproportionately greater, and not only quantitative but also qualitative weighting is required. In this respect, a higher spread of results is to be expected per se.

However, the variance is not only due to the complexity of the subject. It also lies in the nature of the subject. For example, the answer to the question of whether electromobility is sustainable may vary depending on the rating agency’s assessment. On the one hand, e-mobility is compatible with the goal of climate neutrality; on the other hand, rare earths are used in the production of batteries, the extraction of which is sometimes questionable from a social and environmental point of view.

The answer to whether a car manufacturer, for example, is a company that operates sustainably can, therefore, be quite different, with good reasons. Which business activities are sustainable and which are not will only be decided in the future. The divergent ratings reflect this openness of decision and give room for different assessments.

Therefore, differing results are not an argument against ESG ratings or against the goal of investing sustainably. Even the fundamental analysis of a company’s stock does not always provide clear results about its actual performance. The fact that different analysts, in good faith and with the best of intentions, arrive at different results – one advises to buy, another to sell – is generally not seen as a sufficient reason to altogether do away with these analyses. ESG ratings should be handled in a similarly relaxed manner, but with a constant desire to conduct better analysis.

Furthermore, the assertion that ESG ratings do not agree to any extent on how to measure a company’s sustainability risk must be questioned. While the argument for a low correlation between individual stocks may be justified, it is not true for the average of companies and ESG rating agencies. This is demonstrated, among others, by a recently conducted study by MIT Sloan. The study’s authors Florian Berg, Julian Koelbel and Roberto Rigobon examine the ESG ratings by leading ratings agencies Asset4, RobecoSam, Sustainalytics and Vigeo Eiris for a universe of more than 800 of the world’s largest companies and found an average paired correlation of 0.7.

E- and S-ratings consistent

The consistency of the ratings is particularly high in the E-areas and for the most part in the S-areas. However, there are larger deviations in the G-areas and when the ratings from KLD/MSCI are added. By way of comparison, the leading bond ratings show a paired correlation of about 0.9 for the MSCI AC World between Moody’s, S&P and Fitch. In other words, the dispersion of the correlation between the providers of ESG ratings is quite acceptable on average, which is all the more surprising as the providers use different rating philosophies and take into account between 38 and 238 indicators in their measurements, i.e. they differ greatly in their methodology in quantitative terms alone. The major providers of bond ratings indeed achieve higher levels of agreement in their ratings. But the correlation in ESG ratings is surprisingly high when considering their complexity.

Assessments of companies according to ESG criteria are already better standardised than their reputation. However, the informed, critical use of multiple ESG ratings and the qualitative, conclusive overall assessment by the analyst remains indispensable for sustainable investing and highlight the strength of the asset manager. Ambiguities and sometimes poor data quality do not fundamentally call into question the concept of sustainable investing. The DVFA Commission on Sustainable Investing sees these findings rather as a mandate to investors to support diversity in rating agencies and at the same time to demand better measurement methods and, in dialogue with the companies, data that is sufficiently reliable and up-to-date.


DVFA Commission Sustainable Investing:

DVFA study on Sustainable Development Goals: A Brief Overview of Providers, Methodologies, Data and Output

Alignment with the United Nations Sustainable Development Goals (SDGs) is not as easy as it seems and is still very inconsistent. A current study by the DVFA Commission Sustainable Investing on the SDG impact measurement offers a market overview of the currently available measurements, analysis tools and providers as well as some evaluations and recommendations.

The authors of the study, Christoph Klein and Dr. Rupini Rajagopalan, consider the 17 sustainability goals of 2015, although introduced to assess states, as an important milestone on the way to effective sustainable investments in companies. In their view, the SDGs have the potential to shift the focus of market participants and science to the purpose and positive effects of investments. So far, however, implementing ESG considerations has been viewed as prudent risk management.

Klein and Rajagopalan examine the following questions: How can the SDG-related effects of financial instruments and funds be measured? What is actually measured? What is the defined methodology? What types of data are needed? What is the analytical output?

The study provides an overview of the market, but is not a recommendation for a particular provider. The DVFA paper focuses on the twelve providers who, from the authors’ perspective, offer their tools to a broader customer base.


DVFA study on Sustainable Development Goals:

DVFA Commission Sustainable Investing:

Paris Europlace International Financial Forum: New Frontiers in Finance

Panel discussions, expert talks, and networking: The chances and challenges facing the global financial industry – including digitalisation and sustainable finance – were discussed at the International Financial Forum, which took place in mid-July 2019 in Paris. In a workshop moderated by Arnaud de Bresson, Chief Executive Officer of Paris Europlace and Chairman of the World Alliance of International Financial Centres, Frankfurt Main Finance (FMF) Managing Director Hubertus Väth discussed the cooperation between International Financial Centres (IFCs) and global economic growth alongside representatives from the IFCs Toronto, Astana, Tokyo and Abu Dhabi.

Digitalisation and Sustainable Finance in the Financial Industry

From July 9th to July 10th, financial industry experts, CFOs, CIOs, senior executives, investors and representatives of financial services providers, regulators, and politicians met at the annual International Financial Forum near the famous Champs-Élysées in Paris to discuss:

  • Sustainable Finance
  • European perspectives in a globally changing world
  • Digital trends in Finance
  • Growing capital markets

Two of those topics – digitalisation and green finance – were emphasized in the closing address presented by Francois Villeroy de Galhau, Governor of the Banque de France: The theme of this Forum – ‘New Frontiers in Finance’ – prompts us to look towards new territories that we have to explore and conquer. Regarding finance, I will focus on two of them: digitalisation and green finance. (…) Digitalisation is shaking up the way we live and consume, opening up a world of possibilities for corporates and customers alike. Worldwide, it clearly represents both an opportunity and a challenge for banks, as well as for supervisors. (…) We are currently witnessing a growing awareness from central banks, supervisors and financial institutions about climate-related risks. Clearly, green finance and climate risks management have gone from the ‘nice to have’ to the ‘must have’, from emotion to reason.

International Financial Centers: Cooperation for Economic Growth

In a workshop moderated by Arnaud de Bresson, Chief Executive Officer of Paris Europlace, FMF’s Managing Director Hubertus Vaeth, discussed Cooperation between International Financial Centres and economic growth alongside Keiichi Aritomo, Executive Director of FinCity Tokyo, Kairat Kelimbetov, Governor of the Astana International Financial Centre, Jennifer Reynolds, President & CEO of Toronto Financial International, and Philippe Richard, Director of the Financial Services Regulatory Authority, Abu Dhabi Global Market.

While Arnaud de Bresson highlighted the significance of financial technology, globalisation as well as green and sustainable finance for Financial Centres he also pointed out, that it is vital to further convey the relevance of International Finance hubs to the general public. Kairat Kelimbetov agreed and added that International Financial Centres should not only concentrate on the banking sector but rather focus on promoting the economy. Philippe Richard informed the workshop participants about current solar energy and Green City projects conducted in the United Arab Emirates and Abu Dhabi. Moreover, Hubertus Väth emphasized the role of young, innovative and agile start-up companies – which bridge the gap between agile technology and the financial sector – as a central competitive factor for all financial institutions.

Please find a photo gallery of the event on the Homepage of Paris Europlace.

CFS survey on Green Finance

In light of the growing debate over climate change and its consequences, sustainability considerations are also taking on greater importance in the financial sector. Under the headings “Sustainable Finance” or “Green Finance”, numerous initiatives have been launched to address the financial sector’s contribution to attaining climate goals. A recent survey by the Center for Financial Studies showed that the majority of the German financial industry (64%) believes that the financial sector could play a supporting role in achieving climate goals. Indeed, 17% of respondents would even attribute a major role to the financial sector. By contrast, 18% of those surveyed do not regard the financial sector as relevant to the climate goals.

“I see great opportunities for the Financial Centre Frankfurt to profit from the growing trend towards sustainable financial products as well as from trading in emission rights,” Professor Volker Brühl, Managing Director of the Center for Financial Studies, interprets the survey results.

Demand for sustainable investment products (e.g. green bonds) is on the rise. The majority of the financial industry (70%) believes that sustainability will be an important factor in how investors decide to allocate capital in the future. By contrast, 26% of respondents believe that sustainability considerations will not influence investment decisions.

On the issue of how much government influence should be exerted, the German financial industry is fairly unanimous (70%) that no government incentives such as tax relief should be offered for green bonds, nor should regulatory advantages such as lower capital requirements be granted to banks that do little or no business with companies harming the environment.

“Banking regulation should not be overloaded with climate policy goals. Firstly, the financial sector is already subject to a dense network of regulations. Secondly, looser capital requirements for environmentally friendly financing could lead to false incentives that jeopardize financial stability,” Professor Brühl adds.

Regarding the question of whether a company’s environmental impacts should be factored into banks’ corporate lending decisions (e.g. through ratings), opinions in the financial industry are rather divided. While 52% of respondents support this approach, 45% are opposed to it.

Hubertus Väth, Managing Director of Frankfurt Main Finance e.V., emphasizes: “The results clearly show that the time is ripe and sustainable products are in demand. In addition, they show that further government incentives are not necessary. This is an encouraging sign that today, sustainable products are already competitive.”

Green and Sustainable Finance Cluster_ Grüneburgpark Frankfurt

Green and Sustainable Finance Cluster Germany

Strengthening efforts for a sustainable future in the Financial Centre Frankfurt

A strong and responsibly acting financial sector is of utmost importance to a sustainable future – just filling the forecast gap in the level of emissions avoidance necessary for Germany to meet international obligations by 2050 requires €530 bn in investments alone, as a report published by the Green and Sustainable Finance Cluster Germany (GSFCG) points out. Read more

Green and Sustainable Finance Cluster

Green and Sustainable Finance Cluster Germany releases baseline report

Mobilising the finance sector for climate protection and sustainable investment

On Friday, in Frankfurt, the Green and Sustainable Finance Cluster Germany issued its baseline report presenting an inventory of sustainability activities at the financial centre of Frankfurt/Main. The report is the first publication from this cluster, created in spring 2018 in a merger between the Green Finance Cluster Frankfurt of the Hessian Ministry of Economics and the Accelerating Sustainable Finance Initiative of Deutsche Börse. The cluster’s objective is to further mobilise the finance sector for climate protection and sustainable investment.

One encouraging result is that sustainability is now a hot topic in the boards of financial institutions, resulting in more and more innovative products and services, notes Hessian Minister for Economics Tarek Al-Wazir. “Now it’s about coordinating these activities to make Frankfurt a leader in this area that can articulate the German voice in international discussions.”

The report analyses the current state of sustainable activities in Frankfurt and other European financial centres. The baseline report draws from extensive field research. The results show that 86 per cent of respondents discuss sustainability topics at management board level. 100 per cent of participating companies report on their sustainability activities. The increasing importance of this topic is also evident in current figures from a survey by the Forum Nachhaltige Geldanlagen (Sustainable Investment Forum), which found that sustainable investment in Germany was already at €1.4 trillion in 2017. Since 2005, annual growth has hovered at 27 per cent.

Al-Wazir made reference to European Commission estimates that €180 billion per year in additional investments are needed to meet Europe’s 2030 climate targets.

“The required sustainability investments are far too great for the public sector to bear alone. This means we must mobilise large volumes of private capital. For investors, this is about creating high demand. Practically every financial centre in the world now recognises the importance of green and sustainable finance. Frankfurt must play a leading role in this, concludes Karsten Löffler, Co-Head of the Frankfurt School/UNEP Collaborating Centre for Climate & Sustainable Energy Finance, and one of the two cluster directors.

Analysis of the baseline report finds that sustainable finance should become a much more prominent topic in the finance sector, not only for reputation, but also for its strategic business potential. It is becoming increasingly vital to identify risks to investments and financing arising from factors such as climate change. On the other hand, this also offers a variety of new business opportunities, stemming directly from the financing of sustainable infrastructure needs. In light of the high financing volume required for the transformation to a more sustainable economic system, financial institutions are increasingly compelled to take a forward-looking tack and develop corresponding strategies.

Aside from many encouraging trends, the baseline report still finds insufficient data on sustainable investments, due to factors such as a lack of standards and definitions, explains Kristina Jeromin, Head of Group Sustainability at Deutsche Börse and second cluster director.

“This is a key issue,” agrees Al-Wazir. “Uncertainty is poison to investment. Investors must have confidence that they are not getting scammed.”

The cluster wants to take on this and other challenges in four defined areas of activity:

  • Inventory and innovation: e.g. taking stock of activities thus far, identifying potential for development
  • Metrics and standards: e.g. developing definitions and measurement methods for sustainable investment
  • Data and digitalisation: e.g. expansion of the traditional key business figures to include environmental and social indicators
  • Dialogue and knowledge building: e.g. employee training, creation of permanent platforms for dialogue

The cluster is an association. The current sponsors are BNP Paribas Germany, Commerzbank AG, DekaBank Deutsche Girozentrale, Deutsche Bank AG, Deutsche Börse AG, DZ BANK AG, Deutsche Zentral-Genossenschaftsbank, Helaba, KfW Bankengruppe and Metzler Asset Management GmbH. The cluster is headquartered at the Frankfurt School of Finance & Management. The signatories to the Frankfurt Declaration also support the cluster.

For the full baseline report and further details on the Green and Sustainable Finance Cluster Germany, please visit the new website at