Daily Update: January 13, 2021

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Environmental, social, and governance risks and opportunities took on new shapes during the tumult of 2020, and the momentum propelling impact investing is expected by market participants to accelerate this year.

Green and social bonds saw higher issuance last year as investors addressed climate issues, and health and diversity divisons heightened by the pandemic—trends that are forecast to continue. Sustainable debt issuance swelled to $732 billion last year, up nearly 30% from 2019, according to BloombergNEF. Green bonds accounted for $329 billion, according to the Climate Bond Initiative, and the market this year may see a flood of green bonds totaling between $350 billion, as forecast by the Climate Bond Initiative, to $500 billion, anticpated by the Swedish bank SEB. The European Union’s plans to fund its coronavirus stimulus plan with sustainable debt will drive this forward. Comparatively, Impact Investing Institute CEO Sarah Gordon told S&P Global Market Intelligence that social bond have been the fastest growing sector of the labelled bonds market in the past year.

The pace of global engagement with ESG investing will be set by U.S. President-elect Joe Biden, who is likely to bring "a change of tone when it comes to the significance of the threat around climate change," Carlo Funk, EMEA head of ESG Investment Strategy at State Street Global Advisors, told S&P Global Market Intelligence’s ESG Insider podcast. "That's also going to lead to much more desperately needed cross-border collaboration around climate efforts” that the incoming administration will advocate.

"We know that the current administration about to leave office on Jan. 20 really has been trying to do everything they can to try to slow that momentum," Matt Patsky, CEO of the sustainable investment firm Trillium Asset Management, said in the episode, adding that in 2021 “it looks like we will be getting, hopefully, support from the Biden administration on reversing some of those roadblocks and seeing some exponential growth in the adoption of ESG strategies."

Nonetheless, corporate executives have a new role to play in advancing the ESG agenda. After George Floyd was killed while being detained by police over the summer and protests against racial injustice spread across the country and world, the CEOs of nearly every major business expressed support for people of color and committed to accelerating their diversity and inclusion efforts. Now, after a violent mob stormed the U.S. Capitol last week, CEOs issued statements against U.S. President Donald Trump’s efforts to derail the peaceful transition of power.

"More and more, employees, investors, and consumers are expecting public companies to respond to social and other ESG issues," Gary LaBranche, president and CEO of the trade group National Investor Relations Institute, told S&P Global Market Intelligence. "This is especially the case for larger consumer-facing companies, which are expected to condemn violence and to be on the right side of history."

As ESG investing continues its rapid expansion, stakeholders’ desires for more comprehensive data will grow. Companies’ commitments to sustainability and diversity will require tangible data on how they are delivering real-world impacts. As the EU implements new sustainability finance regulations by 2022, "the No. 1 challenge that investors report is that they are not sure if they are going to have sufficient data on their underlying holding," Nathan Fabian, chief responsible investment officer at the U.N.-backed Principles for Responsible Investment and chairperson at the European Platform on Sustainable Finance, told S&P Global Market Intelligence in an interview. And although State Street Advisors will now require companies they invest in to disclose their diversity data—joining Nasdaq, which has proposed enforcing its listed companies to have at least one director on its board who is a woman, person of color, or of another under-represented group—data on the genders, races, and sexual orientations of board members is hard to come by.

"We need more data, and we need better data," Ateli Iyalla, managing director of CDP North America, a group that surveys companies about their ESG data disclosures, told S&P Global Market Intelligence in an interview. "We need broader participation across underreported sectors, and we also need companies to continue to report at a higher quality.”

Today is Wednesday, January 13, 2021, and here is today’s essential intelligence.

The Future of Credit

Global Sukuk Issuance Is Set To Increase In 2021

Market conditions should remain buoyant throughout 2021, with record-low interest rates and abundant liquidity. S&P Global Ratings forecasts total sukuk issuance of about $140 billion–$155 billion this year, thanks to a recovery in issuance in Malaysia, Indonesia, and the Gulf Cooperation Council countries.

—Read the full report from S&P Global Ratings

Outlook For U.S. Not-For-Profit Acute Health Care: Navigating The Bumps While Getting Back On Track

Many of S&P Global Ratings’ rated credits weathered the COVID-19 storm reasonably well in 2020 and S&P Global Ratings expects many to continue to do so in 2021 given underlying credit fundamentals and proactive management teams as well as funding support from the Coronavirus Aid, Relief, and Economic Security (CARES) Act. Demand for health care services helps support some resiliency of the sector and is reflected by the number of ratings that were maintained in 2020.

—Read the full report from S&P Global Ratings

Technology & Innovation

Amid Chaos In Washington, Analysts Hazy On Social Media's Long-Term Future

Impacts from the U.S. Capitol siege have reverberated across social media, and analysts are weighing how the backlash regarding certain online speech about the event may impact platform usage — and revenues — going forward.

—Read the full article from S&P Global Market Intelligence

Amazon Is Likely To Boost Its Own Healthcare Ambitions After Exiting Haven JV

Amazon.com Inc., JPMorgan Chase & Co. and Berkshire Hathaway Inc. are calling it quits on their healthcare joint venture, but the e-commerce company is forging ahead with solo ambitions in the healthcare space and will likely apply the knowledge it obtained from working with its soon-to-be former partners, according to health industry experts and analysts.

—Read the full article from S&P Global Market Intelligence

ESG in the Time of COVID-19

In ESG Era, 'Hunker Down, Hope It Will Pass' No Longer A Viable CEO Strategy

CEOs from across corporate America spoke out in response to President Donald Trump's refusal to commit to a peaceful transition of power and the subsequent violence on Jan. 6 in Washington, D.C. Last week's events make it clear that expectations of business leaders in times of social unrest are rapidly changing and inaction is less of an option as the environmental, social and governance movement gains traction in the U.S.

—Read the full article from S&P Global Market Intelligence

New Congress Could Seek Compromise Between Mining, Renewable Energy Interests

To ensure that the critical minerals needed to further develop renewable energy technologies are available, lawmakers should be willing to accommodate both renewable and mining interests, according to the leading Republican on the U.S. House Natural Resources Committee.

—Read the full article from S&P Global Market Intelligence

The Future of Energy & Commodities

Watch: Market Movers Americas, Jan 11-15: Polar Vortex Could Drive Up US Power, Gas Prices

In this week's Market Movers Americas, presented by Adriana Carvalho: US braces for possible polar vortex, China looking into US, Canada met coal, container box rate increases likely amid operational capacity crunch, US steel market sentiment bullish for January, and Latin America steels see nonstop price rally.

—Watch and share this Market Movers video from S&P Global Platts

Biden To Move Carefully On Tariffs On Energy Trade, Supplies – Attorneys

The Biden administration will take a measured approach to the U.S.-China trade relationship and will avoid yanking down tariffs that have hurt the LNG business between the two nations and affected the supply chain for the U.S. pipeline and solar industries, a panel of Washington trade lawyers and experts said Jan. 11.

—Read the full article from S&P Global Market Intelligence

Biden Tariff Decisions Seen Subordinate To Overarching Policy Goals

The Biden administration's direction on trade, including tariffs affecting the energy sector, is likely to be driven by the administration's broader domestic or foreign policy objectives, a panel of Washington trade lawyers and experts said Jan. 11.

—Read the full article from S&P Global Platts

Cobalt Hydroxide Shipments From South Africa Ongoing; Concerns Lift Price Sentiment: sources

Border restrictions in South Africa to curb the spread of the new strain of COVID-19 have not yet been extended to the movement of goods, and shipments are continuing unfettered, according to market sources, despite concerns about cobalt shipments from Africa to China.

—Read the full article from S&P Global Platts

Written and compiled by Molly Mintz.