Onbrane on Sustainable finance
The Covid-19 crisis has highlighted the urgent need to build sustainable business models and to integrate sustainable indicators into our financial decisions.
We are committed to deliver powerful solutions to the financial industry. To this end, Onbrane has assembled a group of sustainability experts and a dedicated team.
Since the beginning of the crisis, all indicators are green for the Onbrane Sustainable offering. We make the issuance of Sustainable Commercial Paper simple on our platform.
A glance at Sustainable finance
Financial stability is under threat and will be affected by climate change, as stated by Mark Carney, former governor of the Bank of England in 2015.
This is where Sustainable finance has a tremendous opportunity to pave the way towards a low-carbon economy; By providing better information and understanding of the potential risks faced by all financial actors.
Green bonds have been one of the main drivers of Sustainable finance. They were first issued in 2008 by the EIB, followed by the World bank in 2009. Along the way, new debt instruments have been developed such as social labelled debts and sustainability-linked debt instruments. These meet the growing need for sustainable development.
The pain points of today's sustainable market
A market based on voluntary guidelines
The ICMA’s principles for sustainable debt products recommend financial and impact reporting with no strict disclosure obligations. There is yet to be a reporting harmonization.
A market with time-wasting manual processes
When establishing a qualified sustainable framework, many of the required processes are time-consuming, because no standard documentation is available
Sustainable impacts are difficult to assess and monitor
There is a strong and growing trend among financial actors – to take into account sustainable indicators in their financial decisions. This is done to assess their environmental, social and governance (ESG) impacts.
Unfortunately, the availability, reliability and comparability of company ESG data needs to be significantly improved.
A market with an asymmetry in knowledge and a gap in information
The NGO Climate Bond Initiative (CBI) highlights in its 2020 European Investor survey, a lack of knowledge and education as a barrier to entry into these sustainable markets. Since reporting is not mandatory and standards are evolving, it can be difficult to seize these opportunities and comply with eligibility criteria.
A market lacking flexibility
Today, almost all sustainable debt products are focused on medium to long-term capital markets. However, some projects are more short-term in nature and players tend to diversify the maturity of their financing with short-term securities.
This is why Sustainable Commercial Papers can be considered as a complementary financing to sustainable bonds.
We can help this growing market
For 2 years, Onbrane has been working on solving these debt market challenges, using better communication processes and digitalization.
Green Commercial Papers
Our sustainable value proposition
Working with our user community, Onbrane has developed a multi-currency, multi-product OTC platform. It digitalizes the negotiation and issuance processes for Commercial Papers and medium-term notes.
The green label can be applied to all types of financial instruments. The issuing entity can use ICMA’s Green Bond Principles (GBP) as the basis for Green CPs and Green bonds. The issuer must have identified the green assets or projects for which the Green CP is earmarked.
All these processes are simplified on our platform allowing users to issue their Green Commercial Papers for all available securities.
NEU CP ECP US CP NEU MTN … and much more to come !
There are many advantages in issuing Green CP
- Greater debt product diversification
- Highly liquid short-term instruments
- Better pricing flexibility to issue papers in different currencies
- Attract new investors and improve your reputation
Some prominent examples
Vasakronan AB : They issued the world’s first green corporate bond in 2013 and the world’s first green Commercial Paper in 2018.
Rabobank : As a founding member of the GBP, they have issued ESG-labelled Commercial Paper, ranked in the top 5% of their industry peers.
ENEL Group : In 2020, their ECP program has been updated to become a sustainability-linked ECP to achieve a total share of at least 60% of installed renewable energy capacity by 2022.
Short-Term Objectives
Our team has designed powerful features, making it possible to create frameworks and reports on sustainable projects.
We provide a powerful Framework & Project builder
Issuers will simplify the issuance process and therefore Increase the financing of projects accessible to an unlimited number of buyers.
Intermediaries will be assured of negotiating projects that meet sustainable standards and principles.
Investors will be able to make sustainable investments and manage their portfolios responsibly, according to their preferences.
We design a simple and innovative collaboration tool
Issuers will facilitate communication with internal teams and market players.
Intermediaries will have an effective tool to advise investors on sustainable investments.
Investors will be able to define investment preferences in line with their sustainable strategy.
We create effective reports to highlight your impacts
Issuers will strengthen the way they communicate and report on their impacts.
Intermediaries will discuss projects and approve impact reports to give even more confidence to the market.
Investors will easily understand the use of funds and will be able to assess the impacts of their sustainable investments.
Long-term ambitions
The only way to strengthen market rules and integrity is to link financial performance with sustainable indicators.
Project analysis
How to select and evaluate a sustainable project ?
- By providing immediate and detailed project KPIs thanks to AI
- By Implementing a comprehensive risk management tool integrating climate risks
KPI indexation
How do you link an investment characteristic to a project KPI ?
- The use of oracle technology will automatically populate reports
- The characteristics of the debt (interest rates, etc.) will adapt on the basis of monitoring sustainable KPIs
Data storage
How to keep and manage reports for a +100 year project?
- Blockchain will replace documents with smart contracts
- This technology will enable immutable, less expensive and secure transactions
Several evidences highlighting this vision
In June 2020, the ICMA working group (JPMorgan, CACIB, Natixis, etc) published the Sustainability-linked bonds principles. The debt financing cost may vary on sustainable metrics. In October 2019, ENEL made the 1st issue of this type by replacing the use of proceeds by sustainable KPI(s) tracking.
The market is opening up to many players who want to move towards sustainability. Green bond demand remains strong, as the annual growth in the volume issued in 2019 was 50% compared to the previous year (Climate Bond Initiative).
Issuers are asking for more flexibility. They want to make arbitrary financing decisions based on the type of debt security and the desired maturity when financing their sustainable projects.
