Environmental Finance's Bond Awards 2023

External assessment provider of the year: S&P Global Ratings/Cicero Shades of Green

S&P Global Ratings and Cicero Shades of Green sealed the External assessment provider of the year award after judges praised their broad coverage and "strong reputation" in the second party opinion (SPO) market.

Lynn MaxwellThe win represents the second consecutive year that Cicero Shades of Green – which was acquired by S&P Global in December 2022 – has secured the award. Following the acquisition, S&P Global is now the second largest SPO provider in the world – with around a 25% market share.

The combination of the two businesses comes amid the increasing complexity of the sustainable finance market posing a challenge for SPO providers. For example, S&P Global Ratings EMEA commercial and global marketing head Lynn Maxwell highlighted to Environmental Finance that sustainable finance was moving towards new applications – such as adaptation – and they are "increasingly seeing more complex structures, such as securitisations or project financing vehicles" coming to market.

In addition, Cicero Shades of Green sustainable finance managing director Christa Clapp said that recent innovations are also increasing the need for "careful assessment" by external reviewers. For example, she said there are "increasing demands with respect to sustainability-linked bond SPOs to assess robustness, and with respect to EU Taxonomy to assess alignment".

Christa ClappAmong the SPOs in 2022 that the team were most proud to have worked on were those from EDF and India. The EDF framework not only incorporated EU Taxonomy-alignment, but also tackled the topic of nuclear power.

The Indian sovereign green bond framework also provides an "interesting" example of sovereign adaptation financing, which has been identified as a key sustainable financing gap.

They said it provides an example of financial assistance to state and local governments, such as forest fire prevention, water storage, public awareness measures and early warning systems. As a result, S&P Global said the framework supplied a “mix of information, preparedness and built infrastructure” directed at climate adaptation.