The torrent of cash for anything related to cutting carbon emissions mean green bonds will remain a cheaper source of financing. The greenium will hover around 4 to 5 basis points for the rest of the year. Barclays also found no evidence of green-bond outperformance in the recent debt selloff. ESG bond indexes have underperformed broader gauges.

The proposed green bond rules were designed to help facilitate the financing of sustainable investments through the creation of a ‘gold standard’ for how companies and public authorities can use green bonds to raise funds on capital markets, while meeting rigorous sustainability requirements and protecting investors from greenwashing.

A benchmark for government and corporate debt total returns, has fallen 11% from a high in January 2021. Rising inflationary pressure around the world is fueling concerns. For investors, it means the allure of holding debt is diminishing given how sensitive valuations are to interest rates. Corporate bonds are particularly vulnerable to mounting stagflation.

This investment follows the Euroclear-led CBDC experiment to settle French government bonds on DLT. Market participants have demonstrated a wider acceptance of DLT and its potential for transforming global capital markets. Regulators are starting to create the conditions to allow for its use in securities markets, such as the EU DLT pilot regime.

As of December 2021, ESG funds had $2.7 trillion assets under management ; 81% were in European funds. ESG funds perform poorly in financial terms and they don’t deliver better ESG performance either, as reported by the researchers of Columbia University, London School of Economics and the European Corporate Governance Institute.

University of Zurich compared SLBs to their non-labelled equivalents. 55 of the bond pairs saw a sustainabilty premium larger than penalty attached for not meeting KPIs. 36 of the pairs saw no or a negative premium. Premium was higher for callable bonds, where the issuer may repay the debt before maturity and often before the KPI measurement date.

Polish energy providers detail the cost of carbon-emission permits in invoices to households. These costs are high, as Poland relies on coal for more than 70% of power generation. It will cost $415 billion, or about two-thirds of gross domestic product, for Poland to reach the EU’s net-zero emissions goal by 2050, according to government estimates.

The Luxembourg Stock Exchange marked the admission of the first financial instruments registered on a public distributed ledger technology (DLT). The three series of security tokens admitted on LuxSE SOL are digital covered bonds (housing finance bonds) and structured products. They are financial instruments and debt securities under French law.

Nicolai Tangen, CEO of Norway’s $1.3tn sovereign wealth fund said inflation could be stronger than expected: “It hits bonds and shares at the same time. For the next few years, it will hit both.” AQR Capital Management estimated that a classic portfolio of 60% stocks and 40% bonds would return just 2% annually after inflation over the next 5-10 years.

The EU will need to invest €500 billion in new generation nuclear power stations, said Thierry Breton, the EU internal market commissioner. To label energy from nuclear power and natural gas as "green" was a vital step towards attracting investors. Currently, the bloc gets 26% of its energy from nuclear power, by 2050, this would be reduced to 15%.

ESMA has published a paper seeking feedback on possible changes to regulatory standards and reporting requirements when deploying distributed ledger technology (DLT) for securities trading and settlement. The consultation comes in the wake of plans for a pilot regime for trading and settling digital securities issued, traded and recorded on DLT.

In 2021 banks pocketed US$3.4 billion from green-labelled debt deals, compared with US$3.3B from their work with oil, gas and coal companies. In 2020, the split was US$1.9B for green and US$3.7B for fossil fuels. Analysts expect that US$2.5 trillion of debt advertised as green or ESG-oriented will be issued this year, up from US$1.5T in 2021.