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Boom in ‘sustainable’ debt fuels scrutiny of green labels

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By illuminem briefings

· 2 min read

illuminem summarizes for you the essential news of the day. Read the full piece on Financial Times or enjoy below

🗞️ Driving the news: Major investment banks have set multi-trillion-dollar goals for green financing, leading to a surge in "sustainable" debt deals
• However, there's growing scrutiny as many of these deals fund high-emission companies or aren't directly related to environmental projects

🔭 The context: While banks are grappling with measuring the carbon footprint of their financial activities, especially with companies in polluting sectors, regulations may soon force them to disclose these emissions
• As of now, their primary focus is on sustainable bond and loan issuance, which is sparking regulatory concerns

🌎 Why does it matter for the planet: In the push for sustainable finance, deals backing fossil fuels and shipping industries gain traction
• Bank of America's recent $500mn "blue bonds" for Gabon raised eyebrows over its genuine sustainability and market standard alignment

⏭️ What's next: The UK's Financial Conduct Authority warns of "greenwashing" risks
• While banks like Goldman Sachs progress toward green finance goals, some deals, like Chevron's buyout of Renewable Energy Group, raise questions about genuine environmental benefits

💬 One quote: "If I was an investment manager I would be concerned I couldn’t put this in a green bond portfolio without being sued for false advertising." (Daniel Hardy, researcher at Vienna Institute for International Economic Studies)

📈 One stat: Loans to the oil, gas, and shipping sectors in the past year that were tied to sustainability goals amounted to $17.5bn, nearly the same as the year before

Click for more news covering the latest on environmental sustainability

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