S&P Global has acquired the Shades of Green business from the Center for International Climate Research to boost its assessments of green and sustainability-based financing.
Shades of Green provides independent, research-based second-party opinions (SPO) on a variety of climate and sustainability financing including green, sustainability, and sustainability-linked frameworks, which are increasingly important as ESG debt grows. The business also provides climate risk assessments and impact reporting reviews based on science.
SPOs are independent assessments of a company’s financing or framework’s alignment with market standards and are typically provided before any borrowing has occurred. Shades of Green provided the SPO for the first green bond framework issued by the World Bank in 2008, and S&P Global says the business is a leading provider of the service.
S&P Global says the Shades of Green deal will help it expand and strengthen its ability to help businesses and organizations seeking access to sustainable debt markets. It will also help improve the transparency on climate risk and resulting credit rantings.
ESG debt has grown to $4.5 trillion in the third quarter of 2022 up from $1.5 trillion in the third quarter of 2020, according to the International Institute of Finance. Last year was a record year for sustainable debt, topping $1.6 trillion, according to data from BloombergNEF.
Sustainable financing has slowed in 2022, with sustainable bonds for example down 23% over the first half of the year from 2021, but financing green and climate-related activities are still seen as a significant piece of net-zero goals. Internationally issuance of green, social, sustainability, and sustainability-linked bonds in emerging markets was up 22% in the first quarter of 2022 from the fourth quarter of last year.
Shades of Green has been a subsidiary of Norway’s Center for International Climate Research since 2018. S&P Global Ratings provides credit ratings, benchmarks, and analytics, and began using SPOs in 2017.
S&P Global Ratings will retain an office in Oslo, Norway, where Shades of Green is based. The Center for International Climate Research will also continue to provide Shades of Green and S&P Global with sustainability insights, S&P Global says.
The deal closed on Dec. 1, 2022, and terms were not disclosed.