Since the world's first green bond issuance in 2009, the global green finance market has been dominated by fixed-income products.In 2020, the world's first "green stock" was unveiled in Sweden, becoming another innovative product in the field of green finance.In 2021, Nasdaq launched the "Green Share Labeling" program on its Nordic Exchange, and so far, eight listed companies have been awarded the Nasdaq Green Share Label.In November last year, a renewable energy-focused real estate investment trust (REIT) in the Philippines was also certified as a green stock and listed on the Philippine Stock Exchange in February this year, becoming the first green stock IPO in Asia.
As a new type of sustainable financial product, green equity offers global investors a new asset class.Compared with ESG investment, which covers a wide range of topics, is difficult to rate, and has many value judgments, green stocks focus on energy conservation, emission reduction and low-carbon transformation. The evaluation method is objective and transparent, which can satisfy equity investors who focus on climate change risks and opportunities. special needs.Under the global trend of "carbon neutrality",green stocks are expected to become one of the core green financial assets alongside green bonds.
China has taken an international leading position in the field of green finance.In the context of "double carbon", China's low-carbon transformation investment demand in the next three decades will reach one trillion yuan.Needless to say, there are lower-risk projects suitable for debt financing such as green loans and green bonds, and higher-risk projects that are more suitable for equity financing.Therefore, theintroduction and promotion of the evaluation criteria and financing forms of green stockscan not only provide Chinese enterprises committed to low-carbon transition with a lower cost, longer term, and more flexible financing tools, but also provide Chinese companies with a lower cost, longer term and higher flexibility. ESG investors with climate risk governance provide a green financial asset with higher returns and greater credibility.
The developmentof green stocks The concept of "green stocks" was first developed in collaboration with Swedbank (International Climate Research).
In May 2020, Swedish real estate company K2A released a green equity framework, with Swedbank serving as its "structuring advisor" and CICERO providing a third-party independent assessment, becoming the first company in the world to receive a "green equity" assessment. company .Swedbank has since provided this advisory service to several companies, helping them to design green equity frameworks and market the concept of “green equity”.
In June 2021, Nasdaq launched the "green stock" label in Europe.In the same month, NX Filtration, a filtration technology supplier awarded CICERO's "Green Rating", was listed on Euronext Amsterdam.In February this year, Rebelle, a German e-commerce company, was listed on the Nasdaq Nordic Exchange, becoming the first green stock IPO on Nasdaq.A total of four companies received the Nasdaq green label in the first quarter of this year.
In November 2021, Citicore Energy REIT Corp., a real estate investment trust company focusing on renewable energy in the Philippines, obtained CICERO's green share certification and listed on the Philippine Stock Exchange in February this year, becoming the first green share IPO in Asia.
Nasdaq's "Green Equity Designation" ProgramOn June 8, 2021, Nasdaq launched the "Green Equity Designation" program for issuers in the Nordic market, with the aim of improving the green development of listed companies. Visibility and transparency in all aspects, making it easier for ESG investors to identify green labels.Nasdaq said that if the "labeling" of green stocks is successful in the Nordic market, it will also be replicated and promoted in the U.S. market.After a year of development, 8 listed companies have been awarded the Nasdaq green stock label.
"Green Share Labeling" is a voluntary scheme.Applications are available to listed companies and potential listed issuers on the Nasdaq Nordic Main Market and the Nasdaq First North Growth Market
Nasdaq's "green label" is divided into two categories: Green Equity Designation and Green Equity Transition Designation. The former aims to identify income and investments that are more than 50% derived from green activities. The latter aims to identify companies that are committed to the green transition and invest 50% of their investments in green areas.
Nasdaq designated CICERO and Moody's ESG Solutions (Moody's ESG Solutions, hereinafter referred to as "Moody's ESG") as the evaluation service providers for the "green stock labeling".Companies need to obtain an independent opinion issued by an evaluation agency and meet the exchange's definition criteria before they can obtain the green stock label..
Currently, Nasdaq is the first and only exchange to launch a green stock label in Europe.While other European exchanges do not have a green label, they welcome and endorse IPOs with a "green" label.In 2021, filtration technology supplier NX Filtration has been assessed by CICERO that 100% of its revenue and investments are green.The company was subsequently listed on Euronext Amsterdam under the guise of a "green IPO".Euronext Amsterdam also actively promoted the green IPO.
CICERO's Green Equity Assessment Approach
Nasdaq designated CICERO and Moody's ESG as independent third-party assessment agencies for the green stock label.
Among them, CICERO is a professional climate research institution in Norway and the world's leading provider of Green Bond Second Party Opinion (SPO, Second party opinion).The issuance of green bonds needs to be reviewed by a third-party professional institution, and the specific methods include second opinion, certification, and rating. Among them, the second opinion refers to the issuer hired a third-party institution to issue a professional opinion letter on the evaluation of green bonds. its green properties.
As one of the world's leading institutions in the field of green certification, CICERO participated in the issuance of the world's first standardized green bond in 2008.According to the Climate Bonds Initiative (CBI) statistics, from 2008 to 19, the market share of green bonds assessed by CICERO was 37% in terms of cumulative issuance amount and 77% in terms of transaction volume.CICERO has assessed more than US$310 billion in green bonds, and is professional and authoritative in the field of green assessment/certification.Since 2018, in order to meet the development needs of the global green bond market, CICERO has established a subsidiary, CICERO Shades of Green, which focuses on providing second opinion services in the field of green and sustainable finance.
CICEROis the first third-party service organization to conduct green evaluations on company equity.As of April 2022, it has completed green evaluations for 16 companies, involving real estate, transportation, energy, manufacturing, optional consumption and other industries. hands-on experience and a complete methodology for evaluating companies.
Its assessment method not only identifies the green attributes and degree of greenness of a company's business activities, but also clearly defines the green percentage of a company's income and investments.When conducting a green assessment of a company, CICERO mainly assesses two main parts: “Revenue and Investment” and “Governance Structure”.
In terms of income and investment, the evaluation content mainly includes: 1) the part of the company's total income from green activities (and its green degree), which is recognized as green income; 2) the part of the company's investment invested in green activities (and its green degree) , identified as a green investment, to understand the company's future revenue composition and green transformation strategy.
In terms of sustainable development governance structure, the assessment contents mainly include: 1) The company's environmental governance, such as whether the company has formulated a carbon reduction or zero carbon goal, whether it has conducted a climate risk stress test, and whether it has complied with the working group on climate-related financial information disclosure (TCFD). ) Framework for climate information disclosure, etc.; 2) Evaluate the sustainability of the company’s business in accordance with the EU Sustainable Finance Classification Scheme.
In the final second opinion report, CICERO will list the proportion of the company's green income and green investment, and evaluate the sustainable development governance structure, which is divided into three levels: fair, good and excellent.The evaluation data comes from the company's self-disclosed information, materials submitted by the company and other public information.
In the above evaluation framework,the core part is the green evaluation of the company's income and investment.With reference to the evaluation method of green bonds, CICERO has designed a set of evaluation methods for the company's "Shades of Green".Consistent with the long-term vision of low-carbon transition and climate resilience, CICERO classifies the company's business activities into five levels: "Dark Green", "Medium Green", "Light Green", "Yellow" and "Red" (Figure 4). And quantify the proportion of green income in a company's total revenue and the proportion of green investment in total investment.Taking the Swedish real estate company K2A as an example, its green income in 2020 accounted for 75% and green investment accounted for 74%.
