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New Waves: The ESG Megatrend Meets Green Bonds

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Rise of Responsible ESG Investing

outperformance of esg investing

New Waves: The ESG Megatrend Meets Green Bonds

It’s clear that sustainable investing has been thrown into the limelight.

Increasingly, investors are seeing both the financial and social imperative for sustainable investing. In particular, the rapid growth of green bonds—a fixed income investment that is designed to raise funds for the climate or environment—is booming.

The above infographic from Raconteur navigates the growing green bond market against the backdrop of the broader ESG (environmental, social, and governance) investing shift.

Gathering Steam

By the end of 2020, $45 trillion in assets will adhere to sustainable practices, including ESG principles.

Despite the loss of confidence from COVID-19, investors flocked to sustainable-focused funds.In fact, global fund flows hit record levels for Q2 of 2020—surpassing $71 billion.

The fund flows are not without financial warrant. Between April 2015 and April 2019, average returns of socially responsible investments (SRI) outperformed their non-SRI peers. At the same time, 94% of sustainable indices realized stronger returns than their benchmarks between January and March 2020.

The accelerating demand for sustainable investments may seem like old news, but green bonds offer a new avenue.

What Are Green Bonds?

Green bonds raise money for climate and environmental projects, and are issued by governments, corporations, and financial institutions.

Multilateral development banks, which include the European Investment Bank and the World Bank, initially brought them to market in 2007, though they had a slow start. However, in 2019, new issues of green bonds topped $258 billion worldwide—jumping 51% in one year.

Across the green bond market there is a broad spectrum of different debt instruments. These include private placements, covered bonds, and green loans.

Green private placements occur when the sale of bonds are made to private investors, rather than through public offerings. Green covered bonds, on the other hand, are bonds that are backed by a group of assets that are sustainably-focused. Green loans are forms of loans that are meant to finance green projects.

Overall, green bonds can be diversified across a number of different sectors.

The Top Purposes for Green Bonds

What are the top sectors for green bond issuance?

Category20152019
Alternative energy$30.4B$143.8B
Green building$10.7B$63.5B
Sustainable transport$3.7B$58.7B
Energy efficiency$9.5B$47.6B
Sustainable water$3.1B$23.8B
Pollution prevention$1.4B$18.1B
Climate adaptation$1.8B$15.0B
Sustainable forestry/agriculture$1.1B$11.3B

Source: MSCI

Alternative energy, accounting for over $143 billion in green bonds, outpaces all other sectors by a wide margin. Within four years, renewable energy bond issuance has more than quadrupled.

Meanwhile, green building bonds are garnering attention. These instruments finance the construction of energy efficient buildings. Within the industry, a notable green building certification system is the LEED standard, also internationally recognized. Often, real estate investment trusts (REITs) are involved in issuing green building bonds.

Interestingly, Big Tech is also becoming more active within the green bond landscape. Google’s parent company, Alphabet, has issued a record $5.8 billion in corporate sustainability bonds to fund everything from energy efficiency projects to affordable housing.

The Top 10 Countries for Green Bonds

On a country-by-country level, green bonds are most common in the U.S., China, and France.

RankCountryGreen Bond Issuance2018-2019 Change (Amount)
1🇺🇸U.S.$50.6B44%
2🇨🇳China$30.1B1%
3🇫🇷France$29.5B113%
4🇩🇪Germany$18.7B144%
5🇳🇱Netherlands$15.1B105%
6🇸🇪Sweden$10.3B66%
7🇯🇵Japan$7.2B73%
8🇨🇦Canada$7B63%
9🇮🇹Italy$6.8B128%
10🇪🇸Spain$6.5B3%
Top 10 Total$181.8B49%

Source: Climate Bonds Initiative

Germany issued its first multi-billion dollar government green bonds in just 2019. One catalyst behind this was the European Central Bank’s announcement that the environment would become a “mission critical” priority going forward.

This may contribute to the fact that both Germany and France saw the biggest change between 2018 and 2019.

Opening the Floodgates

As sustainable investing becomes front and center on the global agenda, questions about its impact on returns have arisen.

During times of both extreme exuberance and market crisis, companies with higher sustainability ratings have outperformed their respective benchmark. However, there is still a long way to go. Even with the record issuance of green bonds in 2019, they make up just 3% of all global bonds issued.

As demand for sustainable investments quickly grows, could it spell a watershed decade ahead for green bonds?

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Which Countries are Mapping the Ocean Floor?

We know more about the surface of Mars than we do on the ocean floor. Which countries are mapping the ocean floor, and what’s still unknown?

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mapping the ocean floor

Which Countries are Mapping the Ocean Floor?

Our vast and complex planet is becoming less mysterious with each passing day.

Consider the following:

  • Thousands of satellites are now observing every facet of our planet
  • Around three-quarters of Earth’s land surface is now influenced by human activity
  • Aircraft-based LIDAR mapping is creating new models of the physical world in staggering detail

But, despite all of these impressive advances, our collective knowledge of the ocean floor still has some surprising blind spots.

Today’s unique map from cartographer Andrew Douglas-Clifford (aka The Map Kiwi) focuses on ocean territory instead of land, highlighting the vast areas of the ocean floor that remain unmapped. Which countries are exploring their offshore territory, and how much of the ocean floor still remains a mystery to us? Let’s dive in.

What Do We Know Right Now?

Today, we have a surprisingly incomplete picture of what lies beneath the waves. In fact, if you were to fly from Los Angeles to Sydney, the bulk of your journey would take place over territory that is mapped in only the broadest sense.

Most of what we know about the ocean floor’s topography was pieced together from gravity data gathered by satellites. While useful as a starting point, the resulting spatial resolution is about two square miles (5km). By comparison, topographic maps of Mars and Venus have a resolution that’s 50x more detailed.

As the map above clearly illustrates, only a few large pieces of the ocean have been mapped—and not surprisingly, many of these higher resolution portions lie along the world’s shipping lanes.

Another way to see this clear difference in resolution is through Google Maps:

As you can see above, these shipping lanes running through the Pacific Ocean have been mapped at a higher resolution that the surrounding ocean floor.

The Countries Mapping the Ocean Floor

The closer an area is to a population center, the higher the likelihood it has been mapped. That said, many countries still have a long way to go before they have a clear picture of their land beneath the waves.

Here is a snapshot of how far along countries are in their subsea mapping efforts:

Countries/territoriesSize of Exclusive Economic Zone* (EEZ)Percentage of EEZ mapped
Japan1,729,501 mi² (4,479,388 km²)97.7%
United Kingdom2,627,651 mi² (6,805,586 km²)90.6%
Norway920,922 mi² (2,385,178 km²)81.9%
New Zealand1,576,742 mi² (4,083,744 km²)74.0%
United States4,382,645 mi² (11,351,000 km²)69.9%
Australia3,283,933 mi² (8,505,348 km²)64.9%
Iceland291,121 mi² (754,000 km²)49.9%
South Africa592,874 mi² (1,535,538 km²)39.5%
Canada2,161,815 mi² (5,599,077 km²)38.8%
Samoa49,401 mi² (127,950 km²)34.6%
South Korea183,579 mi² (475,469 km²)28.3%
Taiwan32,135 mi² (83,231 km²)26.3%
Argentina447,516 mi² (1,159,063 km²)22.6%
Cook Islands756,770 mi² (1,960,027 km²)29.0%
Phillippines614,203 mi² (1,590,780 km²)16.7%
China338,618 mi² (877,019 km²)11.4%
Madagascar473,075 mi² (1,225,259 km²)5.5%
Bangladesh45,873 mi² (118,813 km²)3.3%
Thailand115,597 mi² (299,397 km²)1.5%

*An exclusive economic zone (EEZ) is the sea zone stretching 200 nautical miles (nmi) from the coast of a state.

Japan and the UK, which have the 5th and 8th largest EEZs respectively, are the clear leaders in mapping their ocean territory.

Piecing Together the Puzzle

Sometimes tragedy can have a silver lining. By the time the search for Malaysia Airlines Flight 370 concluded in 2014, scientists had gained access to more than 100,000 square miles of newly mapped sections of the Indian Ocean.

Of course, it will take a more systematic approach and sustained effort to truly map the world’s ocean floors. Thankfully, a project called Seabed 2030 has the ambitious goal of mapping the entire ocean floor by 2030. The organization is collaborating with existing mapping initiatives in various regions to compile bathymetric information (undersea map data).

It’s been said without hyperbole that we know more about the surface of Mars than we do about our own planet’s seabed, but thanks to the efforts of Seabed 2030 and other initiatives around the world, puzzle pieces are finally falling into place.

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Visualizing the Biggest Threats to Earth’s Biodiversity

Earth’s biodiversity has seen a massive decrease over the years. What’s driving this loss, and which regions have been impacted the most?

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The Biggest Threats to Earth’s Biodiversity

Biodiversity benefits humanity in many ways.

It helps make the global economy more resilient, it functions as an integral part of our culture and identity, and research has shown it’s even linked to our physical health.

However, despite its importance, Earth’s biodiversity has decreased significantly over the last few decades. In fact, between 1970 and 2016, the population of vertebrate species fell by 68% on average worldwide. What’s causing this global decline?

Today’s graphic uses data from WWF’s Living Planet Report 2020 to illustrate the biggest threats to Earth’s biodiversity, and the impact each threat has had globally.

Measuring the Loss of Biodiversity

Before looking at biodiversity’s biggest threats, first thing’s first—how exactly has biodiversity changed over the years?

WWF uses the Living Planet Index (LPI) to measure biodiversity worldwide. Using data from over 4,000 different species, LPI tracks the abundance of mammals, birds, fish, reptiles, and amphibians across the globe.

Here’s a look at each region’s average decline between 1970 and 2016:

RankRegionAverage decline (between 1970 and 2016)
1Latin America & Caribbean94%
2Africa65%
3Asia Pacific45%
4North America33%
5Europe and Central Asia24%

Latin America & Caribbean has seen the biggest drop in biodiversity at 94%. This region’s drastic decline has been mainly driven by declining reptile, amphibian, and fish populations.

Despite varying rates of loss between regions, it’s clear that overall, biodiversity is on the decline. What main factors are driving this loss, and how do these threats differ from region to region?

Biggest Threats to Biodiversity, Overall

While it’s challenging to create an exhaustive list, WWF has identified five major threats and shown each threats proportional impact, averaged across all regions:

ThreatProportion of threat (average across all regions)
Changes in land and sea use50%
Species overexploitation24%
Invasive species and disease13%
Pollution7%
Climate Change6%

Across the board, changes in land and sea use account for the largest portion of loss, making up 50% of recorded threats to biodiversity on average. This makes sense, considering that approximately one acre of the Earth’s rainforests is disappearing every two seconds.

Species overexploitation is the second biggest threat at 24% on average, while invasive species takes the third spot at 13%.

Biggest Threats to Biodiversity, By Region

When looking at the regional breakdown, the order of threats in terms of biodiversity impact is relatively consistent across all regions—however, there are a few discrepancies:

In Latin America and Caribbean, climate change has been a bigger biodiversity threat than in other regions, and this is possibly linked to an increase in natural disasters. Between 2000 and 2013, the region experienced 613 extreme climate and hydro-meteorological events, from typhoons and hurricanes to flash floods and droughts.

Another notable variation from the mean is species over-exploitation in Africa, which makes up 35% of the region’s threats. This is higher than in other regions, which sit around 18-27%.

While the regional breakdowns differ slightly from place to place, one thing remains constant across the board—all species, no matter how small, play an important role in the maintenance of Earth’s ecosystems.

Will we continue to see a steady decline in Earth’s biodiversity, or will things level out in the near future?

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