Primary analysis

UPDATE — Altice International — ESG QuickTake (9fin) (28/09/2023)

Cable and telecommunications company Altice International’s (AI) subsidiary Altice Portugal is involved in a criminal investigation by the Portuguese Public Prosecutor for alleged corruption, which has resulted in five arrests. AI lacks group-wide emissions targets, and some of its emissions reporting is partial with unexplained restatements. However, it has low emissions intensity compared to peers. AI’s Israeli subsidiary has operations within Israeli settlements in the West Bank. The group also has numerous legal proceedings pertaining to competition and tax violations which have resulted in significant fines.

We Soda — ESG QuickTake (9fin) (28/09/2023)

We Soda, a soda ash producer, uses a solution-extraction “natural” production method. This is less water-, CO2- and energy-intensive than the “synthetic” production method (and We Soda claims to be less environmentally impactful than other “natural” methods), but it still carries a high environmental impact. We Soda’s Turkish facilities pose a risk to biodiversity and are located close to areas that are at risk of earthquakes. The US administration has imposed sanctions on Turkey in the past. Further sanctions could impact We Soda (both of its production sites are in Turkey).

Galileo Global Education — ESG QuickTake — UPDATE (9fin) (26/09/2023)

Galileo Global Education Group (GGE) reports its combined scope 1 and 2 emissions and emission intensity metrics. However, the Paris-headquartered post-secondary education group does not report any reduction/net zero targets and it provides limited historical data. Despite cyber attacks presenting a material risk to GGE, its publicly-reported approach lacks detail. In 2022, GGE faced seven GDPR incidents (personal data breaches) that all involved personally identifiable data. 

Piaggio — ESG QuickTake (9fin) (2023/09/25)

Piaggio, an Italian based scooter manufacturer, discloses limited forward looking climate information in comparison to its competitors. It does not have any publicly available emission reduction targets despite operating in a carbon intensive industry. Piaggio is dependent on suppliers that are considered high risk for sustainability violations, however it reports limited actions taken to ensure a responsible supply chain. Piaggio’s board of directors includes members of the Colaninno family, which own Piaggio’s controlling company. The company has taken action in line with good practice to ensure that it maintains an independent board.

Virgin Media O2 — ESG QuickTake (9fin) (2023/09/25)

Virgin Media O2, a cable and telecommunications company, has reported forward-looking climate transition information, with a few potential shortfalls. The group has reported progress for all the impact key performance indicators (KPIs) linked to the green bond it issued in July 2021. In July 2023, Ofcom launched an investigation into Virgin Media (part of the Virgin Media O2 business) after complaints alleging it makes it difficult for customers to leave. O2 is involved in an investigation by the UK’s Serious Fraud Office for potentially breaking anti-bribery laws.

9fin Featured Content

Rosen Group debt talks reignite at $1.2bn after ESG stalls (9fin) (2023/09/27)

Talks are “active” again regarding the sale of oil and gas inspector Rosen Group, according to multiple sources, after ESG concerns stalled discussions over the summer. While no particular ESG controversy shrouds Rosen Group, sources previously told 9fin that any links to oil and gas investments can be undesirable during fundraising periods. 

IMTT raises second sustainability-linked facility in two months (9fin) (2023/09/29)

The Riverstone-backed company is raising its second sustainability-linked debt facility in two months — a rarity in the US leveraged finance market where this kind of debt has been slow to catch on. According the the company, the $750m sustainability-linked loan is tied to the company’s effort to reduce its exposure to petroleum products and reinvest in greener and cleaner products. ESG margin ratchets are still a fairly new development in the US leveraged finance market, IMTT’s is just the third SLL to launch syndication in the leveraged finance primary market this year, and not all buysiders see value in the mechanism yet.

HY company news

Judge: Chemours and DuPont liable for PFAS damage last century

A court in Rotterdam ruled that chemical company Chemours (and previously DuPont) is responsible for damage caused by the emissions of poly- and perfluoroalkyl substances (PFAS) between 1984 and 1998. Specifically, the court ruled that DuPont was still acting according to the permit it had before 1984.

Water companies given £114m performance fine — with Thames Water among the worst of the lot (26/09/2023)

Industry regulator Ofwat has confirmed that water companies will need to return £114m to customers after failing to meet performance targets. Thames Water has been the worst affected, receiving a penalty of over £100m, while Anglian Water has received a penalty of £22.4m. The regulator also said that Thames Water has made insufficient efforts to resolve pollution incidents, plug leakages and improve customer service

Victoria Shares, Bonds Fall as Auditor Flags Fraud or Error Risk (25/09/2023)

After the company’s auditor, Grant Thornton, identified a risk of fraud or error relating to Victoria Plc subsidiary Hanover, the shares of the UK-based flooring company dropped as much as 25%, while maturing notes fell as much as 4.8 cents to 76.9 cents, according to data compiled by Bloomberg. Specifically, the auditors raised concernsrelated to a high volume of cash sales and a lack of compliance with money laundering regulations

News stories

John Kerry: Energy transition is the ‘new industrial revolution’ (29/09/2023)

With COP28 looming, countries have been keen to make preliminary agreements and US climate envoy John Kerry has highlighted outcomes he expects to see at COP28. The Financial Times interviewed Kerry, who outlined three automatic outcomes he expects for COP: an adaptation report outlining steps to meet adaptation needs, the completion of the loss and damage fund and a stocktake of global efforts to limit warming, which is intended to assess the global response to climate change. In contrast to Kerry’s optimism, Sasja Beslik, writer of ‘ESG on a Sunday’, made a critical assessment of Kerry’s veiws. Specifically, Beslik criticised the US’s $12bn climate adaption plan and questioned Kerry’s focus on the loss and damage fund as well as his claim of positive US emissions progress.

‘Sustainable’ debt pioneer ditches controversial ‘blue bond’ label (22/09/2023)

NGO The Nature Conservancy (TNC) has stated that it will abandon the “blue bonds” label, which has been criticisedby FT sources for misrepresenting its true environmental impact. TNC initiated a "blue bonds programme" which raised funds for marine conservation through debt deals with Belize, Barbados, the Seychelles, and Gabon. However, recent criticism arose when funds raised for Gabon were not exclusively allocated to conservation. TNC will now use the term "nature bonds" to emphasise broader ecosystem preservation. 

Asset managers turn to ‘green hushing’ on sustainable funds (26/09/2023)

During the first half of 2022, 44 funds removed their “sustainable” labels from their brand name following an increase in regulatory and reputational concerns. Industry participants have highlighted an absence of a specific methodology under the Sustainable Finance Disclosure Regulation for calculating sustainable investments, as well as ESMA’s launch of a consultation regarding guidelines for sustainable fund names

SLB guidance leaves step-up size unresolved (30/09/2023)

The International Capital Market Association (ICMA) has updated its guidance on sustainability-linked bonds (SLBs). The update consists of a revised series of questions and answers on SLBs. Specifically, the update tackles issues such as restating targets and pre-measurement calls. But it didn’t address other issues, such as the appropriate size of a coupon step-up.