The World Bank on Monday published a guide to help public debt managers improve their engagement with investors on Environmental, Social and Governance (ESG) topics.
According to a statement issued by the World Bank in Washington D. C., the guide is titled: “Engaging with Investors on Environmental, Social and Governance (ESG) Issues – A World Bank Guide for Sovereign Debt Managers”.
The guide is expected to help bridge the communication gap on ESG issues between sovereign issuers and investors.
It also outlines how sovereign debt investors use ESG information in their investment strategies, how debt managers engage with them and how engagement could be improved.
The bank said that sovereign issuers, who represent 50 per cent of the fixed income market by volume were facing increasing interest on ESG issues from investors.
It bank said that rating agencies and investors had long considered governance-related information, while assessing sovereign risk, the macro-fiscal outlook and debt-default risk.
It added that increasingly, environmental and social sustainability was becoming an explicit part of their assessment as they looked for long-term economic growth and macroeconomic stability in a more equal, inclusive and sustained way.
“The World Bank’s guide provides examples, best practices, and action plans that can help debt managers enhance their capacity to engage with investors on national sustainability initiatives and performance.”
The organisation said its treasury had conducted surveys and roundtable discussions to gather insights and knowledge on investor expectations and issuer challenges regarding ESG topics.
It said that the guide builds on exchanges and other research and shows how issuers should proactively and systematically communicate ESG information.
It added that this would address investor expectations for more disclosure and issue thematic bonds – green, blue, social, sustainable – to attract new investors as well as communicate their sustainability commitments.
“This guide complements the recently published World Bank report – “Riding the Wave: Navigating the ESG Landscape for Sovereign Debt Managers”, which defines a framework that debt managers can use to design an appropriate strategy for undertaking ESG activities.
“This new guide leverages World Bank Treasury’s expertise to outline the practical steps sovereign issuers can take to engage with investors.”
It said that the World Bank played a leadership role in promoting and financing sustainable development.
It said that its triple-A rated innovative bond issuance programme had catalysed sustainable capital markets across the world.
According to it, it issued the first green bond in 2008 and has executed more than 160 transactions in over 20 currencies for a total of approximately $15 billion.
The World Bank also issues Sustainable Development bonds to support its activities across a variety of sectors and engages with investors through impact reporting that highlights how projects support the Sustainable Development Goals (SDGs).
Anshula Kant, Managing Director and World Bank Group Chief Financial Officer said the organisation was pleased to present the guide for investors and public debt managers.
She said it was part of its work to promote dialogue on ESG topics between investors and sovereign bond issuers.
“Stronger engagement helps investors make better investment decisions in line with their institutional objectives and allows issuers to diversify their funding sources, improve access to new investors and lower the cost of borrowing for sustainable development.”
César Arias Director of Public Credit and National Treasury at the Ministry of Finance, Colombia said the focus of markets on environmental, social and governance issues represents an opportunity for sovereign debt managers in developed and emerging markets.
He said that sustainability enhances the quality of fiscal policy, diversifies funding sources and increases transparency in the dialogue with domestic and foreign investors.
