In brief: Three signs of a maturing ESG credit market

This week has already featured numerous signs that the ESG-linked credit market is on the rise.

NY Green Bank, a finance agency sponsored by New York state, announced on Monday a $314 million transaction with Bank of America, representing its first private capital raise. Although financial details were not disclosed, NY Green Bank said the deal “demonstrates lender confidence” in sustainable infrastructure assets. The lender said it will use the capital from Bank of America to continue providing finance for clean energy projects, instead of relying on public funds.

Apollo Global Management highlighted how it is building ESG factors into its lending process in its annual ESG report, published on Tuesday. The firm said it has deployed a credit-specific scoring system across its lending platform to help “put borrowers in an ESG mindset” and increase transparency for the firm’s investors: “ESG awareness and increasing data open up new possibilities in credit, shifting the stance from one that’s reactive and punitive – ie., not investing in risky companies with poor ESG performance – to one that’s proactive and can reward companies for ESG improvement.”

Moody’s launched its Global Compact Screening tool on Tuesday. The credit ratings agency said the tool will help investors integrate global ESG standards into their portfolio management. The tool currently provides 0-100 scores on how aligned around 5,000 listed companies are with UN Global Compact principles covering human rights, labour rights, environmental issues and measures to tackle corruption.