Corporate ESG Investor Q&A – Q4 2021 trends

04 January 2022

Dr Arthur KrebbersHead of Corporate Climate and ESG Capital Markets

View bio

Dan BresslerVice President, Sustainable Finance Corporates

View bio

Jyoti ShekarAnalyst, Sustainable Finance Corporates

View bio

Niceasia Mc PerryCorporate Financing & Risk Solutions

View bio

Saakshi AroraDebt Capital Markets Team, India

View bio

Other insights

View more insights

“Where do we start?” and “What do we prioritise?” are typically the first two questions the management team of any business about to embark on its sustainability journey, or about to prepare for its first sustainable debt issuance, will ask. Knowing how investors think and their expectations can help to answer those questions. So, we’ve compiled the most frequently asked questions heard from investors during NatWest Markets-led roadshows and deals in Q4, for issuances in the Housing Association, Industrials, Utilities, Consumer, Chemicals, and REIT1 sectors. We will be releasing updates on investor questions each quarter, so please do look out for these.

The questions indicate what’s important for investors to know when looking to invest in ESG transactions and offer issuers valuable insights into what they need to deliver in order to satisfy investors. Equally, the overview of “Example Questions” is a helpful guide for any corporate to consider and to answer for their own business while formulating and/or refining their sustainability strategy.

Source: NatWest, ESG-related investor feedback for corporates in Q4 2021 [4]

Example Questions

  • Are you already discussing your hydrogen strategy with the government?
  • Do you have a clear view on how your hydrogen investment will be remunerated in the future?
  • Will there be a change in the standpoint for the use of natural gas, and on which suppliers (i.e. countries) you are dependent?
  • Does the project produce carbon dioxide or other greenhouse gases and will there be a report on emissions (or carbon savings)?
  • Are customers actively transitioning towards lower carbon footprints?
  • Are there ESG-specific requirements in procurement processes to drive sustainable procurement?
  • Have you considered the risk of pollution from discharges to waterways (including groundwater)?
  • What is the timeline to EPC5 rating C on 100% of the assets?
  • With new regulatory developments, will there be an increased need to demolish more buildings that don’t meet the EPC criteria and how do you view this need, given the negative environmental impact of demolition versus redevelopment?
  • Are the targets SBTi-aligned6? How ambitious are these?
  • Please confirm that you intend to follow best-in-class green bond standards, such as those formulated by the ICMA Green Bond Principles and EU green bond standards.
  • How are the KPIs of the SLB7 framework linked to the strategy?
  • Can you elaborate on the historical performance of the KPIs?
  • Is it correct that your sustainability targets are not linked to senior management pay?
  • There’s no language around changing the KPIs/SPTs8 over time, do you anticipate a change of the Framework?
  • Does the project report on gender and diversity?
  • Does the project report on biodiversity and habitat? (e.g. wildlife fatalities, habitat removed or maintained, enhanced/restored or protected).
  • Does the project consume a large amount of energy from non-renewable sources, and will there be a report on energy performance?
  • Do you intend to issue green bonds in the future? If so, which projects will be eligible for the use of proceeds?
  • What are the key pillars of your ESG story and net-zero strategy?
  • What are the specific actions that you have taken towards improving circularity (circular products)?
  • Can you provide an overview of your sustainability programme?
  • Can you talk about how the Green Finance Framework works in relation to this transaction?
  • How was the framework created? Which steps were considered during the process?
  • What was the reason to choose the SPO9 provider? Please comment on recent discussions with ESG agencies and concerns raised.

We’ll provide regular updates on frequently asked questions posed by investors, to keep you up-to-speed with their most current views. So, please check our Insights Hub regularly for updates.

Glossary

1

Real estate investment trust

2

Includes both Sustainability-Linked Bond structure & company Key Performance Indicators

3

Includes equal proportion of questions related to energy sources & ESG-related training

4

Includes feedback obtained during deal and non-deal related roadshows

5

Energy Performance Certificate

6

Science Based Targets Initiative

7

Sustainability-Linked Bonds

8

Sustainable Performance Targets

9

Second Party Opinion

ESG
ESG/Sustainability


This article has been prepared for information purposes only, does not constitute an analysis of all potentially material issues and is subject to change at any time without prior notice. NatWest Markets does not undertake to update you of such changes.  It is indicative only and is not binding. Other than as indicated, this article has been prepared on the basis of publicly available information believed to be reliable but no representation, warranty, undertaking or assurance of any kind, express or implied, is made as to the adequacy, accuracy, completeness or reasonableness of the information contained in this article, nor does NatWest Markets accept any obligation to any recipient to update or correct any information contained herein. Views expressed herein are not intended to be and should not be viewed as advice or as a personal recommendation. The views expressed herein may not be objective or independent of the interests of the authors or other NatWest Markets trading desks, who may be active participants in the markets, investments or strategies referred to in this article. NatWest Markets will not act and has not acted as your legal, tax, regulatory, accounting or investment adviser; nor does NatWest Markets owe any fiduciary duties to you in connection with this, and/or any related transaction and no reliance may be placed on NatWest Markets for investment advice or recommendations of any sort. You should make your own independent evaluation of the relevance and adequacy of the information contained in this article and any issues that are of concern to you.

This article does not constitute an offer to buy or sell, or a solicitation of an offer to buy or sell any investment, nor does it constitute an offer to provide any products or services that are capable of acceptance to form a contract. NatWest Markets and each of its respective affiliates accepts no liability whatsoever for any direct, indirect or consequential losses (in contract, tort or otherwise) arising from the use of this material or reliance on the information contained herein. However this shall not restrict, exclude or limit any duty or liability to any person under any applicable laws or regulations of any jurisdiction which may not be lawfully disclaimed.

NatWest Markets Plc. Incorporated and registered in Scotland No. 90312 with limited liability. Registered Office: 36 St Andrew Square, Edinburgh EH2 2YB. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and Prudential Regulation Authority. NatWest Markets N.V. is incorporated with limited liability in the Netherlands, authorised and regulated by De Nederlandsche Bank and the Autoriteit Financiële Markten. It has its seat at Amsterdam, the Netherlands, and is registered in the Commercial Register under number 33002587. Registered Office: Claude Debussylaan 94, Amsterdam, the Netherlands. Branch Reg No. in England BR001029. NatWest Markets Plc is, in certain jurisdictions, an authorised agent of NatWest Markets N.V. and NatWest Markets N.V. is, in certain jurisdictions, an authorised agent of NatWest Markets Plc. NatWest Markets Securities Japan Limited [Kanto Financial Bureau (Kin-sho) No. 202] is authorised and regulated by the Japan Financial Services Agency. Securities business in the United States is conducted through NatWest Markets Securities Inc., a FINRA registered broker-dealer (http://www.finra.org), a SIPC member (www.sipc.org) and a wholly owned indirect subsidiary of NatWest Markets Plc.

Copyright 2022 © NatWest Markets Plc. All rights reserved.