Sustainaweekly - Why physical risks are key for the here and now
In this edition of the SustainaWeekly, we start by arguing that physical risks from climate change are not just a long-term issue, but should be a consideration for the hear and now. The increased frequency of extreme events can have a profound impact on the behaviour of consumers, companies and financial institutions. We go on to argue that Dutch residential real estate are in pole position – relative to German peers - to reduce emissions. Meanwhile, we asses recent issuance, where we see corporates taking advantage of the ESG label to issue bonds in volatile markets. Finally, we look at trends in useful usage of industrial waste in the various subsectors.
Economics Theme:
The World Meteorological Organization estimated a 50-50 chance that global temperature rise would exceed 1.5°C in at least one of the next five years. This should bring physical risks into sharper focus. Well-known macroeconomic projections of the physical risks are very likely to be underestimates.
Strategy Theme:
Residential real estate bond issuers have been reporting on their portfolio emissions for a few years already. We compare the German issuer emission intensities against Dutch issuer Vesteda. Not only does Vesteda have lower emission intensity, it does so from a position of luxury given the low issuer debt levels.
ESG Bonds:
ASML came to the market last week with a debut green bond. We do not see a reason why there shouldn’t be a greenium in ASML’s new green bond. Orange issued its second sustainability bond, which was more than 6x oversubscribed. NN Bank issued the first green covered bond from a Dutch financial institution.
Company & Sector news:
A circular economy is positive for further sustainable development and economic growth. Dutch material productivity is the highest of all EU countries. The Dutch government's goal of a 100% circular economy by 2050 is ambitious, but has the potential to yield great benefits for society and the economy.