Session timeout

Sorry, your session timed out after a long time of inactivity. Please click OK and Sign In again.


Green Schuldschein market: ready to grow

This article was written as a contribution for Euromoney Seminars’ International Schuldschein Forum 2017. The authors work as Policy Analyst and Director Investor Outreach & Partners Programme, respectively, at the Climate Bonds Initiative.

Manuel will be speaking at the upcoming International Schuldschein Forum 2017, taking place 29th & 30th March 2017 in Frankfurt.  For full information about the conference you can visit our website, or to secure your place please follow this link.


By Beate Sonerud and Manuel Adamini


2016 was the year of the first green Schuldschein. There is exciting further growth potential for this asset class in 2017 and beyond. The green Schuldschein taps into trends from two debt markets that are seeing record levels of issuance: the green bond market and the Schuldschein market.

Green Schuldschein: green assets, not entities

A green Schuldschein is defined as a Schuldschein with proceeds going into green assets or projects. Any Schuldschein-issuing entity with a portfolio of eligible green projects can therefore issue a green Schuldschein, regardless of whether or not the issuer as such would qualify as green. Focusing on green assets rather than entities enables a wider range of issuers to come to market with green deals. The use of proceeds model has proven successful in growing the green bond market, where annual issuance has exploded from USD3bn in 2012 to USD81bn in 2016.1

The use of proceeds structure also means green Schuldschein ha yields comparable to non-green Schuldschein. The risk of the Schuldschein is determined by the issuer’s overall credit quality and full balance sheet rather than just the green assets funded by the deal. Green Schuldschein can be used for refinancing, as well as financing new projects and assets.

First crop of green Schuldschein issued in 2016 and 2017

By February 2017, five green Schuldschein issuances have come to market (see table). German wind company Nordex was first out, in March 2016. The issuers of green Schuldschein to date have all been corporates, while in the green bond market, local governments and financial institutions account for a significant share of issuance, too. We have also recently seen the first sovereign plain-vanilla green bonds issued by Poland and France* with more countries waiting in the wings.

The deals we have seen so far show that green Schuldschein are suitable to finance a wide range of green assets, and that the models of external review and reporting used in the green bond market to assure investors of sound environmental credentials are being transferred to the green Schuldschein market.

Investor diversification key benefit of issuing green

Investor diversification is the main benefit of issuing a green Schuldschein. The green label makes it simple for investors, in particular institutional investors, who increasingly have made climate change commitments, to identify green investments. Labelled green Schuldschein can make the investment stand out to international Schuldschein investors, as well as domestic, expanding the potential base of buyers. For example, Nordex’ green Schuldschein, which was Climate Bonds certified, saw investors with environmental, social and governance (ESG) mandates account for 25% of the investor pool, a larger share than they had expected, according to GlobalCapital. For FrieslandCampina, 60% of investors in their green Schuldschein had a sustainability interest; also for them, this was higher than expected (see separate Euromoney Seminars interview for more details on FrieslandCampina’s green deal).

“The Schuldschein investor base lends itself to green issuance because a number of the German cooperatives and savings banks have ESG-focused investments.”
UniCredit’s head of global syndicate & capital markets, Christian Reusch*


Green can bring new issuers to the Schuldschein market

Green Schuldschein growth can also come from issuers that have not traditionally issued Schuldschein, but now see it as an alternative to issuing a green bond or another green debt product. The emergence of green Schuldschein sits alongside the rise of other green debt products, such as the certified green loan from German Strasser Capital in January 2017.2

In particular, issuers that are looking into issuing private placement green bonds could consider issuing Schuldschein instead.  Green Schuldschein can be particularly attractive for financing smaller-scale green investments, as the light documentation in the Schuldschein market lowers costs to make smaller issuance sizes (€25-50 million) viable.  However, the increased range of transaction sizes in the Schuldschein market, with more deals reaching €500m-1bn, also facilitates green bond issuers looking to raise larger amounts to consider green Schuldschein.

How to issue green Schuldschein: the importance of standards

The green label is a discovery tool that reduces friction in the investment due diligence process for environmental impacts.  However, addressing investor concerns about the credibility of green labelling is crucial for market growth. Standards, certification and reporting are essential to ensure investor confidence in the environmental credentials of green Schuldschein. But there is no need to reinvent the wheel - existing green bond standards and guidelines can be readily applied.

The extra documentation required for green can be a concern for potential green Schuldschein issuers, since lean documentation is a characteristic of the Schuldschein market. The Climate Bonds Standard addresses this concern by offering a green certification model with low transaction costs, standardising what assets qualify as green, as well as the issuance process. The Standard - suitable for a wide range of debt instruments, including Schuldschein - fully integrates the Green Bond Principles, a set of widely used guidelines on the green bond issuance process also referred to by green Schuldschein issuers seen to date.

Conclusion: Green Schuldschein boost for Schuldschein market and green debt markets

Green Schuldschein issuance offers a new avenue for growth for the Schuldschein market by bringing new issuers to the market. Vice versa, green Schuldschein can further support the growth and diversification in green debt issuance. Expanding the labelled green market to cover more instruments from more issuers is an important aspect of growing and maturing the overall green debt market.

About the Authors

Manuel is an expert in institutional responsible investing, with a deep understanding of climate-related investment risks and opportunities, including green/ climate bonds. He is a frequent speaker at international conferences and has contributed to numerous publications in retail and institutional media, both mainstream and specialised. At Climate Bonds Initiative, Manuel works as a Director, responsible for our Partnership programme, investor network, and advisory services. Until early 2015, Manuel had served as Head of Responsible Investing at Dutch EUR 55 bln asset manager ACTIAM for seven years. Earlier in his career, Manuel had worked with Fortis, at the time a major international bank-assurance company. During his time there he initiated and implemented a climate strategy for carbon neutrality on a global scope, including business opportunities like carbon and green banking.

Beate is responsible for undertaking public policy related research projects, as well as contributing to the CBI blog. She has previously worked in Climate Change Research at HSBC, and at the low-carbon consultancy Xyntéo.
Beate has completed an MSc in Environmental Technology at Imperial College London, and holds a first-class BSc in Economics and International Development from the University of Bath. She is a fellow of the Schmidt-MacArthur fellowship on the circular economy, and writes a blog about sustainable business and finance.

1 Note that the USD81bn figure for 2016 does not include bonds that do not meet international definitions of green (e.g. reduced-emissions coal, large hydro and grid connection projects not linked to renewable energy). Including these bonds brings total 2016 issuance to USD92bn.

2 The green loan is certified under the Climate Bonds Standard and is secured against a “highly granular” pool of residential solar leases held by Strasser’s largest subsidiary MEP Werke.
*Disclosure: We are proud to mention that Unicredito / HypoVereinsBank, MEP Werke as well as the French Ministry of Ecology, Sustainable Development and Energy are Climate Bonds Partners.
This content is provided by Euromoney Seminars for informational purposes only, and it reflects the market and industry conditions and presenter’s opinions and affiliations available at the time of the presentation.