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ESG Strategist – EuGBs outperform regular green bonds
- Sustainability
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Bonds issued under the EU Green Bond Standard (EuGBs) outperform regular green bonds both in primary and secondary markets, with higher investor demand and stronger pricing performance. On average, EuGBs attract larger orderbooks at issuance and price at lower new issue premia than regular green bonds and other investment-grade bonds issued during the same timeframe, however, this trend is most prominently visible within corporate bond issuers. After issuance, EuGBs experience more significant spread tightening than regular green bonds, especially in SSA and corporate bonds, with EuGBs from banks actually underperforming in secondary market. EuGBs exhibit lower volatility in secondary markets compared to regular green bonds, as measured by the standard deviation of z-spreads. Our findings are constrained by the small sample size of EuGBs issued year-to-date, limited comparability across ratings and sub-sectors, and the inability to conduct more robust statistical analyses.
ESG Strategist – Investigating commonly-cited factors of the greenium
- Sustainability
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Earlier this year, we wrote about how euro investment grade (IG) green bonds exhibit lower volatility and, in most cases, also offer slightly higher liquidity, the latter based on Bloomberg LQA scores, bid-ask spread relationships and relative trading volumes [1]. Our analysis helps to explain the presence of a greenium over time: that is, why investors might be willing to accept a higher price (lower spread) for green bonds in comparison to non-green bonds. In this note, we delve further into the dynamics of the greenium. More specifically, we are interested in understanding the potential drivers of the greenium and if existing research on the topic is still valid when considering more recent data.
ABN AMRO ESG Investor Survey – 2H 2025
- Macro economy
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ABN AMRO is pleased to share the outcome of its annual investor survey. The survey is aimed at better understanding investors' behaviour, preferences and screening criteria for fixed income ESG investing. The outcome of the survey will also be presented during a webinar held on Monday, the 20th of October, at 14h CET.
ESG Strategist – EU ETS costs will not eat into company’s profits
- Sustainability
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In this note, we analyze the impact of increasing ETS prices on companies’ results from the sectors under EU ETS and EU ETS2. According to our results, the impact on the electricity sector is quite benign, especially if we consider that the cost pass through is limited to 42%.
ESG Strategist – Limited impact expected from changes to the ECB collateral framework
- Sustainability
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The ECB has recently announced a change to its collateral framework. From the second half of 2026, haircuts to non-financial institutions’ bonds will be adjusted by a climate factor. The latter will serve as a buffer, mitigating the potential financial impact of climate-related uncertainties on collateral value and is calculated based on a sector-specific stressor, an issuer-specific exposure and an asset-specific vulnerability.
ESG Strategist - Do defence investments and ESG mix?
- Sustainability
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Investments in the defence sector are projected to rise in the coming years due to growing geopolitical concerns. Given that public investment alone is insufficient to meet the sector's needs, private investors are expected to ramp up their defence-related investments. However, this prompts several questions regarding which funds could participate, especially considering the social implications of this issue. Therefore, in this note, we explore which funds are currently investing in defence, assess whether legislation permits both ESG and non-ESG funds to invest in defence-related companies, and provide a comprehensive evaluation of the involvement of ESG funds, particularly Article 9 funds, in defence-related investments.
ESG Economist - NZBA loosens climate ambitions
- Sustainability
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The Net Zero Banking Alliance (NZBA) provides guidance to banks on setting climate goals. Initially, the NZBA had a key principle that banks should aim to limit global warming to 1.5°C above pre-industrial levels by 2100 and work towards transitioning to a net-zero economy by 2050. Banks committed to structure their portfolios according to these guidelines. On April 15, the NZBA released version 3 of its key principles[1]. These principles still align with the Paris Agreement, but the requirement to specifically target 1.5°C has been removed. This change gives banks more flexibility in choosing their paths to reducing emissions. In this note, we consider the potential impact of this change on emission reduction efforts.
ESG Economist – Is there a business case for sustainability?
- Macro economy
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Sustainability and climate change seem to have lost relevance in a world marked by tariffs, wars, and inflation. This note aims to establish a business case for sustainability, despite a loosening of regulatory standards and less participation of greens in the European Parliament.
ESG - Green bonds exhibit lower volatility and higher liquidity than non-green bonds
- Sustainability
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Following the first green bond issued in 2007 by the European Investment Bank, the green bond market has evolved to become what is now a USD 5 trillion issuance market. Green bonds offer several benefits for both issuers and investors, leading discussions amongst academics whether these advantages translate into green bonds trading at tighter spread levels (higher prices) compared to non-green bond. This spread difference is called the greenium and is positive if the green bonds trades at tighter spread levels. In this note, we aim to evaluate this topic and explore potential advantages of green bonds for market participants, such as volatility and liquidity. This note is the first of a series of notes about the greenium.
ESG Strategist - Investors pricing rating downgrades for TotalEnergies
- Sustainability
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Last week, the oil and gas company TotalEnergies issued a EUR 1.3bn 20-year unsecured bond, which attracted over EUR 3bn in orders. Considering the global energy transition, it is important to examine how oil and gas companies are positioning themselves and how investors anticipate their future trajectories. An analysis of the bond curves for oil and gas companies reveals that these bonds, particularly those with longer maturities, are trading at levels comparable to those of lower-rated companies. These results may suggest that investors expect these companies to be downgraded by two to three notches in the future.
