LONDON (December 6): S&P Global Inc has bought an ESG debt verifier, as it tries to expand its influence in the US$1.8 trillion annual market for such products.
S&P acquired Shades of Green from the Oslo-based Center for International Climate Research, it said in a statement Tuesday, without disclosing the terms of the deal. CICERO will receive around $20 million in cash to be spent on “independent, high-quality climate research”, the Norwegian research group said separately.
Global data and risk assessment providers are under pressure from customers to provide increasingly granular environmental, social and governance analysis. In the booming ESG debt market, investors often demand external verification, so they know that what they are investing in is truly sustainable. Shades of Green provides these so-called second-party opinions.
“As we strive to provide credit quality transparency with our credit ratings, we have developed the capabilities and expertise to support the development of the sustainable debt market,” Martina said. Cheung, president of S&P Global Ratings. The acquisition “will further broaden and strengthen our ability to assist our clients seeking access to sustainable debt markets.”
ESG debt issuance is expected to decline from nearly $2 trillion sold last year, according to Bloomberg Intelligence, as volatility persists in most capital markets. Green bonds, the proceeds of which are channeled into environmental projects, are still the largest market for ESG debt, although there is now a wide range of labels, including social debt and sustainability-related debt.
CICERO claims to have published the world’s first second-party advice on green bonds for the World Bank in 2008. Since then, a global industry has emerged to assess sustainable ESG debt benchmarks. S&P has its own SPO business, which it intends to combine with Shades of Green, while Moody’s Corp bought ESG assessment firm Vigeo Eiris in 2019.
“We pushed the Shades of Green methodology as far as we could,” said Kristin Halvorsen, director of CICERO and former finance minister of Norway. “This agreement greatly increases the impact of our work.”