WEBVTT 00:00:00.170 --> 00:00:03.049 Welcome to Drumbeats, the must -listen -to podcast 00:00:03.049 --> 00:00:05.710 which explains why Indigenous partnerships are 00:00:05.710 --> 00:00:08.710 the key to securing successful outcomes in natural 00:00:08.710 --> 00:00:11.070 resource and infrastructure investment in Canada. 00:00:12.849 --> 00:00:15.390 I'm Mark McNacca and my co -host Rob Brant and 00:00:15.390 --> 00:00:18.410 I are joined today by Aude Radjinson. In this 00:00:18.410 --> 00:00:20.789 two -part series, we explore UK and European 00:00:20.789 --> 00:00:23.890 sustainable finance with Aude, head of fixed 00:00:23.890 --> 00:00:26.629 income origination at London Stock Exchange Group. 00:00:26.850 --> 00:00:30.489 And Aude is also based in New York. The LSEG 00:00:30.489 --> 00:00:33.630 oversees more than 1 ,200 debt issuers, representing 00:00:33.630 --> 00:00:36.509 more than $6 trillion in securities from over 00:00:36.509 --> 00:00:39.609 90 countries, and OAT provides essential intelligence 00:00:39.609 --> 00:00:42.289 on how international capital markets serve communities 00:00:42.289 --> 00:00:45.909 seeking sustainable development financing. This 00:00:45.909 --> 00:00:48.649 will be a two -part series. In our first podcast, 00:00:48.969 --> 00:00:52.299 you'll discover why the UK and Europe hosts 90 00:00:52.299 --> 00:00:56.439 % of global sustainable bond fund assets, understand 00:00:56.439 --> 00:01:00.880 how LSEG's £400 billion sustainable bond market 00:01:00.880 --> 00:01:04.519 has evolved over 10 years, and we also ask the 00:01:04.519 --> 00:01:08.879 practical questions you want answered about creditworthiness, 00:01:09.079 --> 00:01:11.760 deal sizes, currency flexibility, and rating 00:01:11.760 --> 00:01:15.760 requirements. In part two, Next week's podcast, 00:01:15.939 --> 00:01:17.859 we'll dive deeper into the innovation spectrum 00:01:17.859 --> 00:01:21.000 and have some step -by -step guidance for accessing 00:01:21.000 --> 00:01:25.060 these markets. But first, let's understand what 00:01:25.060 --> 00:01:27.579 makes UK and Europe's sustainable bond market 00:01:27.579 --> 00:01:30.219 an essential consideration for the Indigenous 00:01:30.219 --> 00:01:34.840 peoples of Canada. Welcome. We have Odra Johnson 00:01:34.840 --> 00:01:37.159 from the London Stock Exchange Group with us 00:01:37.159 --> 00:01:39.560 today. She's the Director, Head of Fixed Income 00:01:39.560 --> 00:01:44.079 Origination at LSEG, based in New York. and a 00:01:44.079 --> 00:01:46.879 French national, and a Sciences Po graduate. 00:01:47.819 --> 00:01:51.000 Welcome. Thank you so much. Thank you, Mark. 00:01:52.019 --> 00:01:54.280 Nice to see you. Rob, nice to see you as well. 00:01:54.640 --> 00:01:57.959 Delighted to be on. Hi, Od. Nice to see you again, 00:01:58.019 --> 00:02:00.340 and thanks for joining us. I've done a lot of 00:02:00.340 --> 00:02:02.239 work with the London Stock Exchange over the 00:02:02.239 --> 00:02:05.900 years. A lot of capital has been raised by Canadian 00:02:05.900 --> 00:02:09.639 companies in the equity and debt markets. So 00:02:09.639 --> 00:02:11.919 it's great to have you with us. Do you want to 00:02:11.919 --> 00:02:13.960 start by talking a little bit about your own 00:02:13.960 --> 00:02:16.960 professional background and how you ended up 00:02:16.960 --> 00:02:20.620 at the London Stock Exchange? Yeah, absolutely. 00:02:20.919 --> 00:02:24.500 So as Mark rightly said, I am head of the fixed 00:02:24.500 --> 00:02:27.219 income origination for the London Stock Exchange. 00:02:27.319 --> 00:02:31.740 So essentially, my team, we are in charge of 00:02:31.740 --> 00:02:36.250 over 1 ,200 issuers at least. their debt securities 00:02:36.250 --> 00:02:40.449 on our markets globally, whether it be from Australia 00:02:40.449 --> 00:02:44.189 to Canada to Europe to Africa. And as part of 00:02:44.189 --> 00:02:47.310 my role, I speak, I have ongoing conversations 00:02:47.310 --> 00:02:51.550 with heads of funding, treasurers, ministries 00:02:51.550 --> 00:02:54.590 of finance, when they seek to access the international 00:02:54.590 --> 00:02:58.909 market and will list their securities on our 00:02:58.909 --> 00:03:02.080 markets. as an owner exchange, as a way to access 00:03:02.080 --> 00:03:06.199 international investors. I have been at the London 00:03:06.199 --> 00:03:09.879 Stock Exchange for about five years now. Prior 00:03:09.879 --> 00:03:13.180 to that, my background is actually in debt capital 00:03:13.180 --> 00:03:18.699 markets. I used to work as a DCM banker at Standard 00:03:18.699 --> 00:03:21.379 Bank. I was covering a lot of emerging markets, 00:03:21.620 --> 00:03:25.259 debt origination. Great. Well, we're very pleased 00:03:25.259 --> 00:03:29.000 to have you with us today. And why don't we just 00:03:29.000 --> 00:03:31.680 start talking about the international financing 00:03:31.680 --> 00:03:35.180 opportunity. The LSE obviously operates in global 00:03:35.180 --> 00:03:38.560 capital markets. Great reputation. How do you 00:03:38.560 --> 00:03:40.699 see the benefits of Indigenous capital markets 00:03:40.699 --> 00:03:43.860 for the Indigenous people of Canada and around 00:03:43.860 --> 00:03:47.259 the world? Yes, thanks, Mark. It's a very, very 00:03:47.259 --> 00:03:49.780 good question. So maybe if I can sort of take 00:03:49.780 --> 00:03:53.150 a step back. The loan and stock exchange essentially 00:03:53.150 --> 00:03:56.669 is an infrastructure that sits at the heart of 00:03:56.669 --> 00:04:01.629 global markets. And our role as an exchange rate 00:04:01.629 --> 00:04:04.770 is to facilitate the flow of capital between 00:04:04.770 --> 00:04:07.789 those who have it, meaning investors looking 00:04:07.789 --> 00:04:11.110 for return and yield, and those who need it, 00:04:11.129 --> 00:04:14.169 such as companies, governments, agencies, multilateral 00:04:14.169 --> 00:04:18.560 development banks, financial institutions. We 00:04:18.560 --> 00:04:20.860 as an exchange, as I mentioned in my introduction, 00:04:21.060 --> 00:04:25.920 we serve over 102 ,000 issuers at least of security 00:04:25.920 --> 00:04:30.300 on our exchanges. So that's over $6 trillion 00:04:30.300 --> 00:04:34.660 worth of debt from issuers from over 90 countries 00:04:34.660 --> 00:04:39.139 across 50 currencies. So it's a very sort of 00:04:39.139 --> 00:04:42.879 international communities that we have. So when 00:04:42.879 --> 00:04:45.639 you think about the scale of that global market 00:04:45.639 --> 00:04:49.519 versus domestic markets, the advantage that we 00:04:49.519 --> 00:04:52.899 see from our assured base coming to the LSC really 00:04:52.899 --> 00:04:56.560 is in terms of funding options. The international 00:04:56.560 --> 00:04:59.920 capital markets offer access to broader, to more 00:04:59.920 --> 00:05:02.779 diversified pool of investors that will include 00:05:02.779 --> 00:05:07.579 wealth funds, global asset managers, development 00:05:07.579 --> 00:05:11.949 finance institutions, we call DFIs. And that 00:05:11.949 --> 00:05:16.709 enables issuers to raise a larger amount of debt 00:05:16.709 --> 00:05:18.990 than was sometimes awarded in the domestic market. 00:05:19.689 --> 00:05:22.990 Sometimes also achieving a lower cost of funding 00:05:22.990 --> 00:05:26.230 by virtue of having more investors coming into 00:05:26.230 --> 00:05:28.310 transactions and creating some price tension. 00:05:28.970 --> 00:05:33.509 So not only do issuers have access to your wider 00:05:33.509 --> 00:05:36.889 investments, but they also have access to different 00:05:36.889 --> 00:05:40.540 types of investors, including... sustainability 00:05:40.540 --> 00:05:44.120 investors or investors that have a specific mandate 00:05:44.120 --> 00:05:48.600 to only invest in perceived sustainable finance 00:05:48.600 --> 00:05:52.139 securities, for example. Another advantage that 00:05:52.139 --> 00:05:56.480 we see from global markets is that issuers do 00:05:56.480 --> 00:05:59.839 have the option to diversify their currency away 00:05:59.839 --> 00:06:03.819 from their local currency. and access longer 00:06:03.819 --> 00:06:06.379 -term financing that may not always be available 00:06:06.379 --> 00:06:08.699 in the domestic market and that can help finance 00:06:08.699 --> 00:06:12.240 some of the projects. If you think about, you 00:06:12.240 --> 00:06:15.379 know, many infrastructure energy development 00:06:15.379 --> 00:06:20.100 projects, they often require fundings over a 00:06:20.100 --> 00:06:23.800 long period of time, like sometimes 10, 20, 30 00:06:23.800 --> 00:06:26.680 years, right, to match their investment horizon. 00:06:27.420 --> 00:06:30.540 That diversity, in fact, when you look at... 00:06:31.290 --> 00:06:33.069 And closer to home, when you look at the Canadian 00:06:33.069 --> 00:06:37.449 institutions that regularly access the international 00:06:37.449 --> 00:06:40.629 markets through our exchange, whether it be the 00:06:40.629 --> 00:06:43.009 province of Saskatchewan, the province of Alberta, 00:06:43.310 --> 00:06:46.589 or all the major Canadian banks that list our 00:06:46.589 --> 00:06:49.910 program on our exchange, they have been erasing 00:06:49.910 --> 00:06:53.029 various types of fixed income instruments through 00:06:53.029 --> 00:06:56.470 multiple currencies, and not just the Canadian 00:06:56.470 --> 00:07:01.660 dollar. So we have about $200 billion. worth 00:07:01.660 --> 00:07:05.839 of debt raised by Canadian insurers across nine 00:07:05.839 --> 00:07:10.660 different currencies on the markets. You mentioned 00:07:10.660 --> 00:07:15.079 the sustainability segment of the bond market 00:07:15.079 --> 00:07:18.639 and it's from North America at least nice to 00:07:18.639 --> 00:07:23.639 hear that that's not a dirty word and that there 00:07:23.639 --> 00:07:27.620 still is an active investor community in that 00:07:27.620 --> 00:07:29.839 segment. Can you tell us a bit more about the 00:07:29.839 --> 00:07:32.699 sustainable? bond market in particular on the 00:07:32.699 --> 00:07:37.519 LSE? Yeah, absolutely. So it's pretty timely 00:07:37.519 --> 00:07:40.579 actually, because earlier this year, we celebrated 00:07:40.579 --> 00:07:44.079 the 10 -year anniversary of the sustainable bond 00:07:44.079 --> 00:07:48.500 market of the London Stock Exchange. So we built 00:07:48.500 --> 00:07:52.100 this market back in 2015 in consultation with 00:07:52.100 --> 00:07:56.860 this market. And at the time, we became the first 00:07:56.860 --> 00:08:01.120 major exchange to have a dedicated green segment. 00:08:01.420 --> 00:08:04.540 So initially, it was just a green segment. And 00:08:04.540 --> 00:08:08.399 that's really because about 11 years ago, the 00:08:08.399 --> 00:08:11.379 market introduced the ICMA green bond principles 00:08:11.379 --> 00:08:14.879 that then followed by the social bond principles 00:08:14.879 --> 00:08:19.160 and sustainability bond guideline. So from then, 00:08:19.279 --> 00:08:21.740 from that green bond segment, we then expanded 00:08:21.740 --> 00:08:25.680 to social, sustainable, and then later on, sustainability 00:08:25.680 --> 00:08:29.939 linked bond, LB. as well as transition segment, 00:08:30.220 --> 00:08:33.940 all under sort of the umbrella of the sustainable 00:08:33.940 --> 00:08:37.559 bond market that aligns to the ICMA principles. 00:08:39.100 --> 00:08:43.480 And over the past decade, the sustainable bond 00:08:43.480 --> 00:08:46.379 market has become really like a high -profile 00:08:46.379 --> 00:08:49.519 platform, connecting investors with an impact 00:08:49.519 --> 00:08:53.700 mandate and issuer. And really, the mission for 00:08:53.700 --> 00:08:58.340 us, the mission of this market for us, is to 00:08:58.340 --> 00:09:00.720 facilitate the flow of capital I was talking 00:09:00.720 --> 00:09:04.639 about earlier between investors and those in 00:09:04.639 --> 00:09:09.320 need of capital with a sustainable purpose. So 00:09:09.320 --> 00:09:12.120 with our sustainable bond market, you know, we 00:09:12.120 --> 00:09:14.820 work closely with markets participant championing 00:09:14.820 --> 00:09:18.299 issuances from sovereigns, supranational agencies, 00:09:18.899 --> 00:09:21.559 financial institutions and corporates alike. 00:09:22.440 --> 00:09:25.580 Our sustainable bond market of the London Stock 00:09:25.580 --> 00:09:31.460 Exchange has almost $400 billion worth of sustainable 00:09:31.460 --> 00:09:37.039 debt across 16 different currencies. And we have 00:09:37.039 --> 00:09:40.379 a very sort of diverse base of issuers, including 00:09:40.379 --> 00:09:43.720 issuers from Canada. So it's a very growing and 00:09:43.720 --> 00:09:48.789 vibrant community that we have. As part of this 00:09:48.789 --> 00:09:51.370 sustainability bond market as well, what we've 00:09:51.370 --> 00:09:55.330 done is we launched a few years ago, we set up 00:09:55.330 --> 00:09:58.230 this initiative where we launched the Sustainable 00:09:58.230 --> 00:10:01.889 Bond Market Advisory Group. And this is how we 00:10:01.889 --> 00:10:05.789 keep the conversation going with multiple market 00:10:05.789 --> 00:10:09.990 participants, issuers, investors, advisors, to 00:10:09.990 --> 00:10:13.070 make sure that our sustainable bond market evolves 00:10:13.070 --> 00:10:17.919 with what the market needs. And this is how our 00:10:17.919 --> 00:10:20.720 transition segment and our Selby segment that 00:10:20.720 --> 00:10:24.340 I was talking about earlier came to life. Well, 00:10:24.419 --> 00:10:26.159 you've certainly led the development of that 00:10:26.159 --> 00:10:29.179 and the 10 -year celebration was something. And, 00:10:29.179 --> 00:10:31.639 you know, from a market that started at zero, 00:10:31.799 --> 00:10:35.779 yourself and your colleagues, supported by... 00:10:35.950 --> 00:10:38.889 The City of London has done a great job of really 00:10:38.889 --> 00:10:41.610 making this the home of sustainable finance. 00:10:41.870 --> 00:10:44.590 What are the key differences between social bonds 00:10:44.590 --> 00:10:47.549 and other sustainable financial instruments like 00:10:47.549 --> 00:10:50.129 green or sustainability -linked bonds, especially 00:10:50.129 --> 00:10:53.370 for Indigenous issuance? What's in it for investors 00:10:53.370 --> 00:10:56.570 to invest in these types of bonds? Yes, absolutely. 00:10:56.909 --> 00:10:59.830 There are some clear distinctions between all 00:10:59.830 --> 00:11:02.789 of these types of instruments. Typically, when 00:11:02.789 --> 00:11:07.460 we talk about green bonds, A green bond is when 00:11:07.460 --> 00:11:11.120 the proceeds of the bonds are used to finance 00:11:11.120 --> 00:11:14.100 projects that have clear environmental benefits, 00:11:14.279 --> 00:11:18.639 such as climate change protection, biodiversity 00:11:18.639 --> 00:11:21.759 and ecosystem protection of forests and so on. 00:11:21.960 --> 00:11:24.600 An example of that is the country of Hungary 00:11:24.600 --> 00:11:28.120 regularly issues green bonds that are used to 00:11:28.120 --> 00:11:31.720 fund the rehabilitation and restoration of forests 00:11:31.720 --> 00:11:37.000 and conservation efforts. These are the type 00:11:37.000 --> 00:11:40.659 of green bonds that we've seen. They are by far 00:11:40.659 --> 00:11:43.620 the largest portion of the broader sustainable 00:11:43.620 --> 00:11:47.259 bonds issued every year. They're about 60 % of 00:11:47.259 --> 00:11:51.620 the total sustainable bonds that gets issued 00:11:51.620 --> 00:11:56.240 on a global level. When you think about social 00:11:56.240 --> 00:12:00.740 bonds, social bonds tend to have a focus on the 00:12:00.740 --> 00:12:04.799 people and on society. So the proceeds are used 00:12:04.799 --> 00:12:07.559 to finance projects that have clear social benefits. 00:12:07.980 --> 00:12:11.240 So an example of that is social housing, access 00:12:11.240 --> 00:12:14.580 to education, access to health care, social care, 00:12:14.759 --> 00:12:18.620 access to basic infrastructure, where really 00:12:18.620 --> 00:12:21.460 the goal is to help the population that lives 00:12:21.460 --> 00:12:25.659 below the poverty line and low -income population, 00:12:25.940 --> 00:12:29.879 the uneducated, the unemployed, the vulnerable. 00:12:30.570 --> 00:12:36.470 So it's about improving the standards of living. 00:12:37.970 --> 00:12:41.070 The category of social bonds really expanded 00:12:41.070 --> 00:12:44.730 during COVID, actually, where basic infrastructure 00:12:44.730 --> 00:12:48.649 healthcare became a core part of our needs. And 00:12:48.649 --> 00:12:53.509 the African Development Bank issued a $3 billion, 00:12:53.970 --> 00:12:58.039 what they called... the fight COVID -19 social 00:12:58.039 --> 00:13:02.320 bonds back in 2020, where essentially the proceeds 00:13:02.320 --> 00:13:05.799 of this bond were used towards enhancing access 00:13:05.799 --> 00:13:09.460 to essential services, supporting healthcare, 00:13:09.799 --> 00:13:12.720 employment, water and sanitation to really mitigate 00:13:12.720 --> 00:13:17.779 the impact of the pandemic. We've seen other 00:13:17.779 --> 00:13:20.940 social bonds, the likes of the UK publisher Pearson. 00:13:21.820 --> 00:13:25.899 who issued a 350 million sterling social bonds, 00:13:26.080 --> 00:13:28.620 where the proceeds of that bonds were directed 00:13:28.620 --> 00:13:32.399 to education product that target the sort of 00:13:32.399 --> 00:13:35.080 underserved learner and communities, such as 00:13:35.080 --> 00:13:39.460 people living below the poverty line with disability 00:13:39.460 --> 00:13:43.679 or the unemployed population. Sustainable bonds 00:13:43.679 --> 00:13:46.240 are quite simple in a sense that they're just 00:13:46.240 --> 00:13:50.440 a mix of both green and social project. And then 00:13:50.440 --> 00:13:54.000 you have sort of like a couple of sort of innovative 00:13:54.000 --> 00:13:58.340 structures that came to life over the last few 00:13:58.340 --> 00:14:01.460 years. You have what we call the SLB, the Sustainability 00:14:01.460 --> 00:14:06.240 Link Bond. And those are forward -looking performance 00:14:06.240 --> 00:14:09.840 -based instruments where the issuer is committing 00:14:09.840 --> 00:14:13.340 to future improvement in sustainability outcomes 00:14:13.340 --> 00:14:17.500 within a predefined timeline. So a good example 00:14:17.500 --> 00:14:21.379 of that is the government of Uruguay who issued 00:14:21.379 --> 00:14:26.279 its first SLB with a step -down coupon mechanism 00:14:26.279 --> 00:14:30.039 that gets activated if the government reaches 00:14:30.039 --> 00:14:34.740 certain environmental targets over time in line 00:14:34.740 --> 00:14:39.700 with the Paris Agreement. And then you have another 00:14:39.700 --> 00:14:43.179 category of transition bonds. It's actually... 00:14:43.559 --> 00:14:48.120 a step that we took forward back in 2021 with 00:14:48.120 --> 00:14:50.799 the introductions of that transition bond segment 00:14:50.799 --> 00:14:55.179 on our market which is designed for issuer financing 00:14:55.179 --> 00:14:58.620 sort of clearly defined climate transition activities 00:14:58.620 --> 00:15:03.080 for example to help carbon intensive industries 00:15:03.080 --> 00:15:06.259 finance their shift towards more sustainable 00:15:06.259 --> 00:15:10.580 operations so an example of that is the uk company 00:15:11.340 --> 00:15:16.259 Gate and Gas raised transition bonds in sterling 00:15:16.259 --> 00:15:19.980 to support the decarbonization of their gas distribution 00:15:19.980 --> 00:15:22.639 infrastructure. So it's often targeted for what 00:15:22.639 --> 00:15:25.679 we call the sort of brown industry that is looking 00:15:25.679 --> 00:15:29.639 to transition towards more sustainable operations. 00:15:30.679 --> 00:15:35.179 So given all of this structure, Mark, to your 00:15:35.179 --> 00:15:37.850 point, I think The great thing is that there 00:15:37.850 --> 00:15:40.909 are so many options available for the Indigenous 00:15:40.909 --> 00:15:44.909 community. And just to give a few examples, I 00:15:44.909 --> 00:15:48.110 mean, you know, they could look to issue a green 00:15:48.110 --> 00:15:51.529 bond for land conservations or a blue bond for 00:15:51.529 --> 00:15:54.970 lakes or protections of lakes and rivers, or 00:15:54.970 --> 00:15:57.409 even a social bonds for community development 00:15:57.409 --> 00:16:01.389 towards reducing poverty, knowing that all of 00:16:01.389 --> 00:16:04.730 these structures have been tested in the market. 00:16:05.850 --> 00:16:11.909 And when you think about the universe of investors 00:16:11.909 --> 00:16:16.190 that look at these instruments, it's the universe 00:16:16.190 --> 00:16:19.029 of investors that have a dedicated mandate in 00:16:19.029 --> 00:16:22.610 impact investing. And those investors will be 00:16:22.610 --> 00:16:26.049 looking for new investment opportunities to diversify 00:16:26.049 --> 00:16:29.789 their portfolio away from vanilla bonds. They 00:16:29.789 --> 00:16:31.809 will want to seek returns for their portfolio 00:16:31.809 --> 00:16:35.429 and also be in alignment with regulatory framework. 00:16:35.889 --> 00:16:39.090 So really, a sustainable instrument represents 00:16:39.090 --> 00:16:42.789 an opportunity for them to invest, especially 00:16:42.789 --> 00:16:48.169 as the context of sustainability debt is currently 00:16:48.169 --> 00:16:51.610 lagging behind demand, which makes those sustainable 00:16:51.610 --> 00:16:54.490 bonds often very attractive and oversubscribed. 00:16:54.970 --> 00:16:57.950 If you think about the universe of sustainable 00:16:57.950 --> 00:17:02.870 bonds. They represent about a volume of a trillion 00:17:02.870 --> 00:17:08.390 dollar insurance back in last year in 2024, which 00:17:08.390 --> 00:17:11.329 actually was a new annual record last year. But 00:17:11.329 --> 00:17:14.970 it's really only about 10 % of the global bond 00:17:14.970 --> 00:17:18.069 insurance that we see for the year. So it's a 00:17:18.069 --> 00:17:24.599 very small part of the market. Our role as an 00:17:24.599 --> 00:17:27.599 exchange is to continue to foster that sustainable 00:17:27.599 --> 00:17:31.980 development and investment. And one way that 00:17:31.980 --> 00:17:35.940 we do that through our exchanges is through ensuring 00:17:35.940 --> 00:17:38.339 that there is a high degree of transparency in 00:17:38.339 --> 00:17:42.200 the market so that it gives investors the confidence 00:17:42.200 --> 00:17:45.559 to invest. And that's a responsibility that we 00:17:45.559 --> 00:17:48.700 take seriously, especially in the context of 00:17:48.700 --> 00:17:54.200 wanting to avoid... the green, what we call greenwashing. 00:17:54.420 --> 00:17:58.960 So we have defined a series of terms and conditions 00:17:58.960 --> 00:18:02.380 for bonds for them to be deemed eligible for 00:18:02.380 --> 00:18:05.359 our sustainable bond market. And those align 00:18:05.359 --> 00:18:08.460 with investment criterias of the investment community. 00:18:08.859 --> 00:18:12.740 So for use of proceeds bond, for example, these 00:18:12.740 --> 00:18:16.059 criterias will typically include the requirement 00:18:16.059 --> 00:18:18.119 for issuers to set up a sustainable framework. 00:18:19.099 --> 00:18:22.299 seeking a second -party opinion on this framework, 00:18:22.619 --> 00:18:26.160 as well as the publication on an annual reporting 00:18:26.160 --> 00:18:30.880 on the allocation of the proceeds raised, such 00:18:30.880 --> 00:18:34.680 as what we call an impact report. Wow. That's 00:18:34.680 --> 00:18:38.599 really interesting. Yeah. And some big numbers 00:18:38.599 --> 00:18:41.319 there, a trillion, was it dollars, globally? 00:18:41.960 --> 00:18:46.690 Yes. Sustainable markets. What innovations or 00:18:46.690 --> 00:18:49.170 trends in sustainable finance could support and 00:18:49.170 --> 00:18:51.930 empower Indigenous communities that you've seen 00:18:51.930 --> 00:18:56.230 in your experience? So the very interesting part 00:18:56.230 --> 00:19:01.490 of sustainability is the innovation that keeps 00:19:01.490 --> 00:19:05.309 coming out of the asset class. And innovation 00:19:05.309 --> 00:19:09.329 in this space is driven by issuer needs, community 00:19:09.329 --> 00:19:13.809 needs, investor appetite, and regulatory frameworks. 00:19:14.720 --> 00:19:18.200 Those incentivize the market to constantly come 00:19:18.200 --> 00:19:21.099 up with instruments that are more diverse, readable, 00:19:21.380 --> 00:19:24.460 and impactful. And this is really the reason 00:19:24.460 --> 00:19:28.000 why over the last few years we have seen interesting 00:19:28.000 --> 00:19:32.380 structures coming out more broadly on the market. 00:19:33.079 --> 00:19:38.619 The market has seen blue bonds for the conservation 00:19:38.619 --> 00:19:42.460 of ocean in support of the fishing industry. 00:19:44.240 --> 00:19:46.559 The Seychelles, for example, issued a blue bond 00:19:46.559 --> 00:19:50.099 with the support of the World Bank. We've seen 00:19:50.099 --> 00:19:52.140 the Nordic Investment Bank issue a blue bond 00:19:52.140 --> 00:19:54.839 for the protection of the Baltic Sea. So you 00:19:54.839 --> 00:19:57.720 can see how blue bonds are an innovative tool, 00:19:57.880 --> 00:20:00.680 could be an innovative tool for financing lake 00:20:00.680 --> 00:20:03.039 constellations in Canada, given that Canada is 00:20:03.039 --> 00:20:06.740 home to over two million lakes. And three oceans. 00:20:07.160 --> 00:20:13.599 And three oceans. Ian Market has also seen some 00:20:13.599 --> 00:20:16.720 rhino bonds, what we call rhino bonds, right? 00:20:16.799 --> 00:20:20.819 So the World Bank back in March 2022 issued a 00:20:20.819 --> 00:20:23.660 rhino bond in dollars to fund protection of black 00:20:23.660 --> 00:20:27.359 rhinos, which is a critically endangered species 00:20:27.359 --> 00:20:31.940 in South Africa. We've also seen debt for nature 00:20:31.940 --> 00:20:34.779 swaps, where essentially there's a commitment 00:20:34.779 --> 00:20:39.039 from countries to cancel a portion of their country's 00:20:39.039 --> 00:20:42.069 external debt. in exchange for their commitment 00:20:42.069 --> 00:20:44.690 to fund an environmental conservation project. 00:20:45.170 --> 00:20:48.730 And it's a structure that is largely issued by 00:20:48.730 --> 00:20:52.210 emerging markets because they're the ones facing 00:20:52.210 --> 00:20:57.369 high debt and facing climate vulnerability. So 00:20:57.369 --> 00:20:59.549 you've seen a lot of the structures issued by 00:20:59.549 --> 00:21:01.549 Latin American countries, actually, the likes 00:21:01.549 --> 00:21:06.660 of Ecuador, Barbados, Bahamas, Belize. You may 00:21:06.660 --> 00:21:10.380 have seen also structures like forestry and biodiversity 00:21:10.380 --> 00:21:15.819 bonds. And actually, one of the various relevant 00:21:15.819 --> 00:21:19.440 structures that we've seen earlier this year 00:21:19.440 --> 00:21:22.119 was launched by the U .S. organization Everland, 00:21:22.240 --> 00:21:27.059 where they issued what we call an outcome bond, 00:21:27.160 --> 00:21:30.640 a $50 million outcome bond. The proceeds were 00:21:30.640 --> 00:21:32.859 to protect the Amazon forest and its indigenous 00:21:32.859 --> 00:21:36.299 and traditional population under the equitable 00:21:36.299 --> 00:21:41.880 earth standards. And we're very proud at the 00:21:41.880 --> 00:21:45.660 LSE to have always been at the forefront of innovation 00:21:45.660 --> 00:21:48.259 and we're constantly pushing for innovation and 00:21:48.259 --> 00:21:51.119 new structures. And because of the international 00:21:51.119 --> 00:21:56.599 nature of our issue -based, but also of our group 00:21:56.599 --> 00:21:59.460 footprint as part of... the London Stock Exchange 00:21:59.460 --> 00:22:03.880 Group, where we have presence in about 65 countries. 00:22:04.299 --> 00:22:07.900 Our ethos is to serve and work closely with local 00:22:07.900 --> 00:22:11.980 economies throughout the world. So we have been 00:22:11.980 --> 00:22:15.740 the place of many what we call first and innovative 00:22:15.740 --> 00:22:18.720 structures. We worked with pioneer transactions 00:22:18.720 --> 00:22:23.799 in sustainability. Also, earlier this year, we 00:22:23.799 --> 00:22:27.660 worked with the climate investment funds. for 00:22:27.660 --> 00:22:30.140 the establishment of their Capital Markets Mechanism 00:22:30.140 --> 00:22:35.599 Program, which is an innovative financing backed 00:22:35.599 --> 00:22:39.259 by the World Bank and a pool of MDBs to fund 00:22:39.259 --> 00:22:43.779 climate projects in the sector of renewable energy, 00:22:44.079 --> 00:22:48.480 energy efficiency, sustainable transport, and 00:22:48.480 --> 00:22:55.299 green industry. We also were the first to see 00:22:55.299 --> 00:23:00.440 the first M. SLB with a step -down coupon mechanism 00:23:00.440 --> 00:23:03.440 that I mentioned earlier that were issued by 00:23:03.440 --> 00:23:05.599 a sovereign. And that sovereign was the governor 00:23:05.599 --> 00:23:11.299 of Uruguay. And we've also seen the likes of 00:23:11.299 --> 00:23:14.660 the metropolitans of Tokyo in a different part 00:23:14.660 --> 00:23:17.359 of the world that listed their sterling resilience 00:23:17.359 --> 00:23:20.839 bond on our main market. And this transaction 00:23:20.839 --> 00:23:24.589 marks... the first in the world to carry the 00:23:24.589 --> 00:23:27.690 resilience certification under the Climate Bond 00:23:27.690 --> 00:23:30.269 Initiative's Climate Bond Resilience Taxonomy. 00:23:30.569 --> 00:23:34.490 And the proceeds of that are used to fund flood 00:23:34.490 --> 00:23:38.309 defenses, coastal protection, and other sort 00:23:38.309 --> 00:23:41.269 of disaster risk infrastructure for the city. 00:23:42.190 --> 00:23:45.950 So we have been able to support local communities 00:23:45.950 --> 00:23:49.549 and issuers and really emphasize the global reach 00:23:49.549 --> 00:23:51.809 of their innovation so that the transaction gets 00:23:51.809 --> 00:23:55.309 to be seen by the international community, but 00:23:55.309 --> 00:23:59.009 also by other similar communities that live in 00:23:59.009 --> 00:24:02.569 other parts of the world. And really by listing 00:24:02.569 --> 00:24:05.769 their securities on our markets, not only does 00:24:05.769 --> 00:24:08.549 the issuer position itself as a pioneer, but 00:24:08.549 --> 00:24:13.420 they also get to set a trend. in a way, that 00:24:13.420 --> 00:24:17.000 sends a signal to other communities or issuers 00:24:17.000 --> 00:24:20.599 in other parts of the world about what's possible. 00:24:20.799 --> 00:24:23.440 And our role as our exchange is to emphasize 00:24:23.440 --> 00:24:28.480 that message. I think we've seen that. We had 00:24:28.480 --> 00:24:30.799 a gentleman on our podcast a week or two ago 00:24:30.799 --> 00:24:34.940 who was in Latin America and talking about the 00:24:34.940 --> 00:24:37.640 leadership that... Canadian Indigenous nations 00:24:37.640 --> 00:24:40.000 have been providing for other Indigenous nations. 00:24:40.240 --> 00:24:45.279 So I think that's a very timely comment. Thank 00:24:45.279 --> 00:24:48.000 you to Owen Rogerson for sharing your insights 00:24:48.000 --> 00:24:50.940 with us. And thank you for viewing and listening. 00:24:51.779 --> 00:24:54.859 Mark your calendars for the upcoming 2026 Summit 00:24:54.859 --> 00:24:57.980 taking place on the 8th of April. Be sure to 00:24:57.980 --> 00:25:00.180 share, subscribe, and leave a review on your 00:25:00.180 --> 00:25:02.839 favorite podcast channel. Thanks for listening 00:25:02.839 --> 00:25:04.720 to Drumbeats. Until next time.