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5 key takeaways from the Toxic Bonds launch webinar

Bonds are a critical source of finance for coal, oil and gas companies

Since the Paris climate talks in 2015, $2 trillion oil and gas bonds have been issued. That’s half of the total in circulation. More than $600 billion is set to mature after 2030, according to Greenwatch. Coal companies with the biggest expansion plans raise 2.5x more capital through bond issuance than through bank loans, and bonds have become the single largest source of financial support for coal in China and India, according to The Sunrise Project’s analysis of the Global Coal Exit List and data from company financial statements.

Altogether, the “ Dirty 30” – a list – of 30 of the world’s top expansionary fossil fuel companies who are using the bond market to finance new coal, oil and gas projects and includes some of the most well-known fossil fuel companies worldwide such as Exxon, TotalEnergies, Shell, BP, Chevron, Saudi Aramco, and Adani – compiled currently by the Toxic Bonds initiative, have more than $491 billion (nearly half a trillion) in total EU/USD bonds that are outstanding. This number does not include bond issuances in local currency, which would make the amount much larger.

“As bank lending for coal has tightened, the bond market remains a safe haven for fossil fuel companies to fund expansion. Dirty energy companies are using the corporate bond market as the back door to secure large amounts of cash for expansion projects. This has so far received too little scrutiny.”
– Nick Haines, SumofUs and member of the Toxic Bonds Network

Sustainability markets are on the rise – but so is greenwashing

There is a growing demand from the market for Green Bonds and Sustainability Linked Bonds (SLBs) – and bond issuers are recognising this opportunity to secure cheaper debt. The difference as highlighted by Christina Ng from IEEFA is that green bond issuers are meant to be allocating proceeds from green bonds only to green projects, thus making them project specific bonds; whereas SLBs do not have that project specific use of proceeds, and instead don’t require requires issuers have a credible targets in place. As a result, SLBs can be used to finance just about anything the company would like to.

With that, one of the trends that we are seeing globally is an increase in greenwashing. And if this remains unchecked risks undermining the credibility of these emerging sustainable debt markets. The other trend that is that investor activism is growing, which is definitely a positive trend and needs to be intensified.

Unfortunately though despite this uptick in engagement, big asset managers are still investing billions into fossil fuel companies. And indeed a number of asset managers are actively pushing back against adopting exclusion criteria for their portfolios, arguing that engagement is more useful to support the transition of companies towards a net zero world. Yet, almost none of these asset managers have adopted the public policies to make engagement meaningful. You can read more on this in the Asset Manager scorecard here.

Challenges in engaging with the bonds market for civil society

There are a couple of challenges with three being specifically highlighted which were:

  • Timing: Short window of time for engagement as there is a very small gap between the announcement of a new bond and its investment.
  • Market capacity: Information gap as the bonds market is quite opaque.
  • Coordination: The need for civil society to work together to coordinate their activities.

“The challenges of tackling bonds for fossil fuel expansion is the lack of visibility we have on the bond market.”
– Pablo Brait, Market Forces

The Toxic Bonds initiative aims to help fill some of this gap by sharing information and bringing together advocates to help draw attention to the role the bond market plays in fuelling the climate crisis.

Campaigning Opportunities

There are so many potential targets and so many areas of impact. The exciting areas that could be covered are:

  • Refinancing of bonds on the horizon especially for well-known companies like Adani and KEPCO. Campaigners could use maturity dates that are on the horizon for those companies ( compiled in the Toxic Bonds website), to engage bondholders and commit to deny debt to expansionary fossil fuel companies.
  • Bank arrangers are key pressure points. Notably, underwriting activities may be considered by banks an off-balance sheet activity, so a bank may have a climate policy which covers lending but that same policy doesn’t apply necessarily to underwriting activities.
  • The index providers are another target and crucial for the influence over the passively managed funds of the major asset managers. Previously, work has been done on MSCI and S&P, specifically on sustainability indexes and climate indexes.One achievement was when Adani Ports was kicked off the Dow Jones Sustainability Index.
  • Very often asset managers don’t apply exclusion criteria to passive bond investments. Asset managers need to do much more to engage index providers to remove companies from indices.
  • Credit rating agencies and providers of second party opinions are another key player in the market.Credit rating agencies need to include substantial risk of coal assets they evaluate.
  • We need Governments to ban new fossil fuel projects and implement transition at a nation-wide level.
  • We need to engage with central banks and regulators to ensure better policies settings are in place to regulate the bonds market.

“Governments take pride in having little intervention in the market, but there are many ways for governments to tighten and give clarity on bonds e.g. with green taxonomies.”
– Christina Ng, IEEFA 

Partner with us

Bond markets are a really important corner of the economy that continues to channel funds to fossil fuel expansionist companies, despite the climate change warnings. It is critical that civil society comes together to engage with different players and ensure all financial institutions deny debt to Toxic Bonds!

If you would like to be a part of this network of organizations and are interested in working on the bond markets, please get in touch with us at, and follow us on Twitter or on LinkedIn