Carbon Care Asia (CCA) and index provider Solactive have partnered to launch an Asia sustainability bond index which will be the first to measure the growth of green, social and sustainability bonds in the region.
Bonds that are issued to contribute to environmental sustainability and to address social challenges leading to a positive impact in Asia are eligible for inclusion in the Solactive CarbonCare Asia Sustainability Bond index.
Eligible bonds are required to pass a two-layered screening process by consultancy firm CCA before they are included, which is intended “to examine the transparency standards of the bond issuers and that the proceeds from the bond issuance are designated for projects that have significant positive outcomes”.
Albert Lai, chief executive of CCA, said: “This index is a long-awaited initiative to address the trust gap and to enable investors to track the performance of Asia Pacific bonds that can demonstrate high integrity and transparency in environmental and social contributions.”
The index, which is quoted in US dollars and calculated as a total return index, had more than 80 bonds with a weighted average yield to maturity of 2% and duration of four years, as of 5 December 2019.
Steffen Scheuble, chief executive of Solactive, added: “We hope that this index will be a valuable tool for asset owners in managing their ESG mandates and that it will serve as a reference for the wider investment community.”
According to CCA and Solactive, the global annual issuance of green bonds increased sixteen-fold in the past five years to reach $170bn in 2018, with the growth trajectory in Asia outstripping other regions.
The total amount outstanding of Asia Pacific green, social, and sustainability bond issuance hit more than $35bn in the first three quarters of 2019.