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ESG Economist - An introduction to nature-related risks
- Sustainability
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Economies are deeply reliant on ecosystem services like food, water, and climate regulation, yet alarming trends reveal the rapid degradation of critical natural ecosystems.
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 – ESG issuance expected to considerably lag in 2025
- Macro economy
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There was a noticeable surge in negative news related to ESG in the first half of the year, which has impacted the issuance of ESG-labelled bonds. Initially, we expected ESG issuance to total EUR 266bn in 2025, but we have adjusted our forecast down to EUR 247bn. In the financials space, that downward revision stems from less ESG-labelled senior non-preferred bonds in Q2. With regards to corporates, the issuance of ESG-labelled bonds by utilities’ companies has also fallen short of our forecast, and we now expect it to total EUR ~50bn by year-end. And, finally, concerning sovereigns, we are also downward revising our forecast for NextGenerationEU issuance in EUR 3bn, in line with the trend registered in the first half of the year.
ESG Economist - Understanding European Social Housing Through a Comparative Lens
- Macro economy
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According to the Universal Declaration of Human Rights, everyone has the right to housing, regardless of their employment status, health, or other conditions. In this note we dive deeper into the structures of social housing in four European countries: the Netherlands, United Kingdom, Germany and France.
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 Strategist - Large biodiversity investment gap
- Sustainability
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The United Nations Environment Programme (UNEP) characterizes nature-based solutions (NbS) as “initiatives designed to protect, conserve, restore, and sustainably manage ecosystems”. Examples of these solutions include ecosystem restoration, urban green spaces, and sustainable land management. In the EU, the integration of nature-based solutions across diverse landscapes is deemed crucial for fulfilling the ecosystem restoration objectives outlined in the EU Biodiversity Strategy for 2030. Additionally, NbS are considered vital for achieving climate change mitigation goals. Since the establishment of the Global Biodiversity Framework in Montreal in December 2022, there has been a slight increase in financial inflows towards nature preservation and restoration. Nevertheless, these remain substantially below the trajectory required to meet the targets set in Montreal. For the first time, the report identifies that there are USD 7 trillion of financial flows (public and private) that finance activities that have a negative impact on nature. These activities include price incentives and fiscal transfers to the agriculture sector, consumption subsidies for fossil fuels, and support for fishing capacity that exceeds the maximum sustainable yield of fish stocks. These figures could potentially be underestimated as they account only for direct impacts. Despite the substantial investment potential of NbS, the most effective measure to halt and reverse nature loss is the redirection of nature-negative financial flows. While increased public finance for NbS is crucial, more efforts would also be need to repurpose harmful subsidies if biodiversity goals are to be met. Simultaneously, governments would need to establish regulations and economic incentives to redirect private financial flows away from activities that are harmful to nature and towards nature-based solutions. In this note, we aim to explore the state of NbS, examine their financing trends over recent years, and discuss strategies to enhance investment in nature.
ESG Economist - Increasing our security could come at an environmental cost
- Macro economy
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As geopolitical fears mount, EU countries are discussing options to ramp up defence spending. Currently, there are three options: finance it with debt, raise taxes and/or cut spending elsewhere, or use EU programmes.
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 Strategist – Sustainability-linked bond market at a crossroads
- Sustainability
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Back in September 2019, the Italian utility company Enel issued what would be the first ever sustainability-linked bond (SLB). In total, since 2019, EUR 257 billion was issued by 400 issuers through 823 SLBs. The SLB market reached a peak in 2021, fuelled by the entry of prominent issuers, and has been steadily declining since 2022, due to unfavourable economic conditions, rising interest rates, and heightened concerns around the credibility of the SLB market have hampered volumes since. Last year, SLBs accounted for 5% of all ESG bonds listed worldwide (i.e., green, social, sustainability, and sustainability-linked bonds).
