Green Bonds: A Year in Review

This post is part of an EDF+Business ongoing series on sustainable finance, highlighting market mechanisms and strategies that drive environmental performance by engaging private capital. EDF is actively engaging leaders with the capital and expertise needed to catalyze sector-wide changes—from accelerating investment in energy efficiency and clean energy, to protecting tropical forests, restoring depleted fisheries and saving habitats of endangered species.


Green bonds were a glimmer in the eye for investors when we first reported on them two years ago, but since then these sustainability-oriented debt financing instruments have exploded onto the investment scene. In fact green bonds were held up as a key instrument to keeping warming below the global high-end target of 2°C at COP21.

career-544952_640-300x211In the past year, the market to buy these bonds — which, by design, are linked to an environmental benefit — has significantly grown and matured. Over the course of 2015, the green bond market expanded from $37 billion to $42.4 billion, with much of this growth due to diversification — both in who is issuing them and for what wider types of projects.

While expansion of this market is encouraging, its growth is much slower than most experts had originally anticipated. Early predictions for 2015 had the green bond market booming to $80 billion, or even $100 billion. Instead, numbers seem to have stagnated. What does the future hold for this market, especially in the wake of COP21? Read more

KKR Expands Its Green Portfolio by Shepherding Green Solutions

This post is part of an EDF+Business ongoing series on sustainable finance, highlighting market mechanisms and strategies that drive environmental performance by engaging private capital. EDF is actively engaging leaders with the capital and expertise needed to catalyze sector-wide changes—from accelerating investment in energy efficiency and clean energy, to protecting tropical forests, restoring depleted fisheries and saving habitats of endangered species.


We’re proud to see the Green Portfolio Program, an initiative we helped kickstart in 2008 with private equity firm Kravis Kohlberg & Roberts (KKR), evolve to identify and implement more efficient practices in its portfolio companies that drive business value and reduce environmental impacts. Last week, KKR relaunched this initiative as the Green Solutions Platform (GSP), expanding its mission to include companies outside of its private equity portfolio, as well as a wider range of business and environmental benefits.

kkr_logo_13932KKR announced a shift in its investment strategy in its latest ESG report, and the relaunch of the GSP gives us a first glimpse into what that means in practice. The GSP’s scope has expanded beyond finding energy, water and waste reductions – what KKR refers to as “eco-efficiency projects” – to include portfolio company projects that can drive both top-line and environmental gains (“eco-innovation”) and companies whose core business drives a positive environmental impact (“eco-solutions”).

Much like GE with its Ecomagination product line or social enterprises focused on delivering renewable energy or clean water, the GSP’s new direction has the potential to support business activity that, by its nature, curbs climate impacts and creates value for communities and companies alike.

In just eight short years, 27 KKR portfolio companies reported that they achieved nearly $1.2 billion in avoided costs and added revenue, and avoided more than 2.3 million metric tons of greenhouse gas emissions, 27 million cubic meters of water use, and 6.3 million tons of waste through eco-efficiency efforts. We’re heartened to see an already-forward looking firm push its boundaries further in the pursuit of greater environmental gains, and look forward to seeing what innovations emerge from the Green Solutions Platform.

Innovations in Sustainable Finance: The View From SOCAP15

This post is part of an EDF+Business ongoing series on sustainable finance, highlighting market mechanisms and strategies that drive environmental performance by engaging private capital. EDF is actively engaging leaders with the capital and expertise needed to catalyze sector-wide changes—from accelerating investment in energy efficiency and clean energy, to protecting tropical forests, restoring depleted fisheries and saving habitats of endangered species.


SOCAP logoI recently returned from SOCAP15, an annual conference “at the intersection of money + meaning”… in other words, a good place to be if you’re interested in how to harness markets to deliver financial, as well as social and environmental, returns. A record 2,600 attendees turned up this year, evidence of the growing interest in sustainable finance.

The increased focus on this space has triggered a wave of innovations aimed at addressing some of the sector’s key challenges, such as building and supporting a pipeline of investible entrepreneurs, securing sufficient demand from investors, and linking those players so that capital can flow efficiently to provide the greatest impact. It’s a challenging road ahead, but the conference offered important proof points that help show the way forward.

Growing support for entrepreneurs

Now is a very good time to be a social or environmental entrepreneur. We are witnessing a growing array of resources, services, and incubator and accelerator programs aimed at kick-starting ventures and preparing them for investment. One exciting example: Agora Partnerships hosted 20+ “deal rooms” at this year’s conference, offering Latin American-based entrepreneurs who had completed Agora’s intensive six-month accelerator program the chance to pitch to interested investors. Last year, these deal rooms resulted in eight investments, ranging from $50,000 to $500,000. EDF is in the early stages of engaging with Agora as we look to scale our sustainable fisheries finance work in Latin America.

Increasing demand from investors

Investor demand is rising to meet the growing supply of social and environmental ventures. A recent survey by US SIF – The Forum for Sustainable and Responsible Investment shows that U.S.-based sustainable, responsible and impact investing assets grew 76% from 2012 to 2014. Another driver of demand is the growing trend of big banks, such as Citi, Goldman Sachs, and Bank of America, committing to increased investment in environmental innovation.

The demand extends beyond banks and institutional investors – to individuals, foundations, and companies, all of which have roles to play. During a panel discussion, Sasha Dichter, Chief Innovation Officer of Acumen Fund, an international nonprofit venture fund, noted a recent shift in how companies invest in their supply chains to build more sustainable businesses: moving from funding initiatives to becoming more deeply engaged, strategic partners. He cited the example of Acumen’s partnership with Unilever and Clinton Giustra Enterprise Partnership, which will improve the livelihoods of up to 300,000 smallholder farmers globally by investing in enterprises to support farmers and incorporate them into Unilever’s global supply chains. Read more

Faith-Based Investors Call on Exxon, Valero and Others to Support Methane Regulations

Since the president announced in January a national goal of reducing methane emissions from the oil and gas industry nearly in half by 2025, an outpouring of voices has supported the move. Now, EPA has proposed rules to help meet that target, and we’ve seen another wave of support – everyone from editorial boards in the heart of oil and gas country to massive investors like California’s pension funds has recognized that the rules are a manageable, commonsense means for reducing methane pollution.

ICCR-logoThe one voice that’s been silent? The companies with the opportunity to adopt the proven, cost-effective technologies and services to not only reduce pollution but also prevent the waste of the very energy resource they’re producing. Now another voice has emerged to make the case directly to these companies that it’s worth constructively engaging in the rulemaking process: the Interfaith Center on Corporate Responsibility (ICCR), a group of shareholders dedicated to promoting environmentally and socially responsible corporate practices.

Several shareholders from ICCR’s coalition sent letters today to dozens of energy companies in which they invest, voicing their concern about the impact of methane emissions on the climate and public health. As You Sow, BCAM, Mercy Investments, Miller Howard, the Sisters of St. Francis of Philadelphia, Trillium Asset Management, and others made their case to companies whose shares they own, including some of the biggest names in the business, like Chesapeake Energy, ConocoPhillips, Exxon, Kinder Morgan, and Valero.

Specifically, the investors asked the companies to file public comments on EPA’s proposed methane rules, sharing the companies’ data and experience with methane monitoring and management and providing perspective on how the methane rules can be designed to reduce emissions cost effectively. They also urged the companies to guide their powerful trade associations –which have been some of the most vocal opponents of the rules – to engage honestly and transparently in the rulemaking process. Read more

Inside the Climate Bonds Initiative with Sean Kidney

This post is part of an EDF+Business ongoing series on sustainable finance, highlighting market mechanisms and strategies that drive environmental performance by engaging private capital. EDF is actively engaging leaders with the capital and expertise needed to catalyze sector-wide changes—from accelerating investment in energy efficiency and clean energy, to protecting tropical forests, restoring depleted fisheries and saving habitats of endangered species.

2014 has seen exciting growth in the maturing green bonds market, with clear investor demand and issuance tripling compared to 2013. However, for the market to grow to scale, this sector needs the kinds of systems and accepted standards in place that sustain the $80 trillion global debt capital markets.

Climate Bonds InitiativeI recently caught up with a key figure in the green bond movement – Sean Kidney, chief executive and co-founder of the Climate Bonds Initiative (CBI) – to discuss the current state of green debt and what it will take to scale up investments. Kidney launched CBI as a project of the Network for Sustainable Financial Markets, after a career in social marketing and strategy consulting, including working at some of the largest Australian pension funds. Here are some highlights from our conversation:

I understand that policy will play a key role in scaling the green bond marketplace. What role is CBI playing in the policy arena?

A price on carbon is critical to creating a scale, but that has proved challenging to secure in the near-term. Instead, we are largely focusing on what we call financial system policy.

First and foremost, we are advancing international standards, working to establish clear, green and robust definitions. We have a huge number of organizations involved in this, representing $34 trillion of investors, and sizeable grants from Bloomberg and the Swiss government. The type of certification system we are working to establish is critical to building and maintaining reasonable confidence in green bond “credentials”.

Our second focus is what we call policy formulation, helping governments see that ‘There’s a pot of gold over there,’ and showing them how to harvest it. Examples of this effort include a couple of papers we published in the spring. One is about what China can do to grow its green bond market and the macroeconomic reasons to do it. We also published a report for the European Commission on Financing the Future, where we articulated the role of green bonds in designing stable financial markets.

Our third effort is what we call market education; here our focus is to increase issuance. We’ve established there is investor demand, and now we need to feed it with bonds, so we travel the world working with the issuer community. We brief banks and cities on this new market, hoping to motivate them to enter it and thereby build supply.

There’s a lot of issuance coming through the system. I think we’ll see double the market this year than we saw last year without too much difficulty, but I want it to triple again because triple gets us to a magical $100 billion issuance, which has political resonance. Read more

In Its 5th Citizenship Report, KKR Reaches Beyond ESG

This post is part of an EDF+Business ongoing series on sustainable finance, highlighting market mechanisms and strategies that drive environmental performance by engaging private capital. EDF is actively engaging leaders with the capital and expertise needed to catalyze sector-wide changes—from accelerating investment in energy efficiency and clean energy, to protecting tropical forests, restoring depleted fisheries and saving habitats of endangered species.

Sustainability pioneer and inspiration to many of us at EDF, Ray Anderson frequently talked about his company’s efforts to scale the seven faces of Mount Sustainability and develop a more responsible company along the way. Summiting a mountain is a good analogy for a company’s journey to improve its environmental performance. To succeed you need a plan, commitment, resources, and the ability to change direction if there are obstacles in your path.

In the case of a private equity firm like KKR & Co. L.P. – with over 56 portfolio companies participating in value creation programs linked to its environment, social and governance (ESG) strategy since 2009– the journey is more akin to traversing an entire mountain range, whose contours keep evolving as companies enter and exit their portfolio.

That changing landscape is what’s driven KKR to continue to adapt how it manages ESG challenges and opportunities. KKR’s recently-released 5th annual ESG & Citizenship Report details how these programs have continued to evolve since our initial partnership in 2008.

Our work together helped drive KKR’s Green Portfolio Program which, six years later, has added a cumulative $1.2 billion to its portfolio companies’ bottom lines while avoiding more than 2.3 million metric tons of greenhouse gases and reducing waste by 6.3 million metric tons and water use by 27 million cubic meters, according to results announced last fall.

kkr_logo_13932KKR’s latest report documents the firm’s progress in advancing ongoing efforts, including measuring and improving ESG performance at key portfolio companies, rolling out a publicly available ESG policy across its global private equity staff, contributing its expertise to the Sustainable Accounting Standards Boards’ development of ESG disclosure guidelines, bringing together sustainability professionals and other experts at its first Sustainability Summit last year, and hiring a full-time energy expert and two EDF Climate Corps fellows to help its portfolio companies more systematically adopt solutions for better energy management.

In addition, something new caught our eye. KKR plans to refocus its investment efforts through one of three lenses – responsible investing, solutions investing and impact investing.

  • Responsible investing incorporates ESG metrics and analysis into investment decisions.
  • Solutions investing refers to investments made in companies that have an intentional focus on solving a societal challenge and deliver traditional returns to investors, such as providers of reusable bulk shipping containers, developers of environmentally-responsible office buildings in Korea and microfinance groups increasing access to capital for business owners in rural and semirural India.
  • Impact investing goes beyond the other two, focusing on investments in companies that put environmental and social impacts on par or even ahead of financial impacts. KKR began advising two impact businesses in 2013 by providing technical assistance, helping the companies scale their businesses and secure additional funding. Moving forward, KKR will consider investing in such businesses.

At EDF, we believe that private capital can and must be part of the solution to our biggest environmental challenges. We’re encouraged to see major investors like KKR expand their investment strategy as the next step in this journey and eager to see the environmental and financial results it delivers.

EDF Climate Corps Proves its ROI for Private Equity Firms

As summer officially gets underway, the 2015 EDF Climate Corps fellows are already off to the races seeking out energy and cost-saving opportunities for some of the world’s largest companies and organizations. Among those participating, we are pleased to place 13 fellows with private equity firms and their portfolio companies, the largest such cohort in a single summer, besting last year’s record of 12 fellows. This brings the grand total up to 57 EDF Climate Corps fellows who have worked in the private equity sector (including with portfolio companies) to date.

EDF Climate Corps fellows Yien Huang (left) and Jiamu Lu (right) collaborating at the fellow training

EDF Climate Corps fellows Yien Huang (left) and Jiamu Lu (right) collaborating at the fellow training

Since 2008, EDF has worked with the private equity sector to drive environmental results, beginning with a partnership with KKR & Co. L.P., and later with The Carlyle Group and Oak Hill Capital Partners. Resulting from this work was a suite of free tools designed to help firms identify and manage environment, social and governance (ESG) issues. EDF Climate Corps offers private equity firms a powerful resource that continues to deliver environmental benefits alongside real financial returns.

This year, as in past years, we continue to see a diverse range of participating companies and projects:

  • In 2015, we welcome new hosts Guitar Center, NBTY (vitamin/food supplement supplier), Ortho Clinical Diagnostics (medical equipment manufacturer), Pharmaceutical Product Development, and Gelson's Markets (a grocery chain in southern California).
  • Among returning companies, we’re excited to welcome back Floor & Décor, Philadelphia Energy Solutions, Avaya, and Caesars Entertainment, the last of which was featured in episode 7 of the Showtime series Years of Living Dangerously (now available on Netflix, Hulu and Amazon Prime), which profiled the efforts of EDF Climate Corps.
  • HCA Healthcare will also be returning, marking the company’s sixth straight year of participation.
  • KKR & Co. L.P., Carlyle Group, and Hellman & Friedman will have fellows working at the firm level this year.

The work that these fellows will engage in this summer ranges from energy benchmarking and efficiency upgrades to demand response assessments and green revolving loan fund design. We’ve written previously about the myriad ways that fellows can add value both at private equity firms and portfolio companies and we’re excited to see new stories unfold this summer. Watch this space as well as our Climate Corps-specific blog, where fellows across a variety of sectors will share their experiences and accomplishments.

Investor Ranks Top $1.5 Trillion in Support of National Methane Standards

California public school teachers. Religious charities. New York police officers and firefighters.

investorsWhat do all of these groups have in common? Investors representing them — who manage $1.5 trillion in retirees, current employees’, and others assets – are standing together and calling for strong rules limiting harmful methane emissions from the oil and gas sector. This level of outpouring – from diversified investors with holdings in the oil and gas industry – represents five times the support investors expressed for methane rules last year. A trend is emerging.

The investors, including the largest retirement funds in California and New York, issued a powerful statement in support of the president’s methane proposal aimed at cutting emissions nearly in half in a decade. A centerpiece is regulation of methane, the primary ingredient in natural gas, which has over 80 times the warming power of carbon dioxide in the first 20 years after it’s released and is responsible for 25 percent of the warming we are feeling today.

From their vantage point as long-term stakeholders, the “serious threat” methane poses to climate stability compels them, as fiduciaries, to support action to cut emissions and avoid near term threats to “infrastructure and economic harm that will weaken not only the companies we invest in, but the nation as a whole.” Market pressure like that is difficult to ignore. Read more

Bank of America Votes for Renewables with Its Very Large Wallet

bank-of-america-logoA company’s public statements matter– they can influence consumer choice, sway public policy decisions and demonstrate leadership on important issues. But in terms of actual change, it’s where a company puts its money that really matters. This week, Bank of America spoke with both its voice and wallet: At its shareholder meeting last week, the bank announced a new coal policy that continues the company's commitment to reducing its exposure to coal extraction companies and accelerating the transition from a high-carbon to a low-carbon economy.

According to BoA, its portfolio has grown to favor renewable energy over coal by a ratio of more than three-to-one. That’s an important step forward toward a clean, low-carbon energy future. And, it’s one that builds on moves by other institutions, like the recent news from Goldman Sachs about how the company is looking to divest some of its mining interests and Citi’s recent 10-year, $100-billion commitment towards investments in areas like energy efficiency, renewable energy, green affordable housing and climate change resiliency projects.

Tom Murray, VP Corporate Partnerships, EDFInvestors are seeing the terrain change beneath them – from upcoming regulations like the EPA’s Clean Power Plan and federal regulations on methane emissions from the oil and gas sector, to consistently lower natural gas prices, which undercut coal’s prior price advantage over other power sources – and beginning to bet on a future that’s powered by lower-carbon options.

More of this type of corporate leadership, including metrics and timelines, is what's needed to help make the leap from today’s polluting energy system to tomorrow’s thriving, clean energy future.

Further reading:

Carlyle Sheds Light on How Sustainability Creates Value in 2015

This post is part of an EDF+Business ongoing series on sustainable finance, highlighting market mechanisms and strategies that drive environmental performance by engaging private capital. EDF is actively engaging leaders with the capital and expertise needed to catalyze sector-wide changes—from accelerating investment in energy efficiency and clean energy, to protecting tropical forests, restoring depleted fisheries and saving habitats of endangered species.


On the eve of The Carlyle Group releasing its 2015 Corporate Citizenship Report, I had the chance to catch up with Jackie Roberts, Chief Sustainability Officer at Carlyle and former EDF colleague who was one of the founders of EDF’s Corporate Partnership Program. Here are highlights from our conversation:

Jackie RobertsWhat attracted you to your current role at Carlyle?

Rather than being in an arm’s-length advisory role, I now get into more of the details of implementation. I work directly to support sustainability leads in a broad range of companies, helping them prioritize among business goals, crystallize sustainability strategies and, most importantly, execute on a lot of different ideas. Also, as Carlyle is an owner of companies in many countries and industries, I have the opportunity to understand how aspects of sustainability play out differently across the globe. In short, it is a tremendous platform for influencing corporate sustainability.

What are you and Carlyle particularly proud of in this year’s report?

This is the first year that we have designed the report to align with the types of value creation we typically see, such as customer satisfaction, brand equity, operational efficiency and workplace strength. This year’s report moves beyond operational efficiencies into these other key drivers for companies.

What does Carlyle see as the value of ESG management for its business? How do you quantify that value? What form is that taking, both for Carlyle and its portfolio companies?

We have examples across these four ways that ESG management connects to value creation (customer satisfaction, brand equity, operational efficiency and workplace strength). A great example related to both customer satisfaction and brand equity comes from a portfolio company that quantified its sales increase for greener products. Their primary customers, mainly hotels, were requesting green products, so the company invested in this area, which paid off in increased sales – a clear win-win. Read more