Fixed Income Investor Survey on the use of Second Party Opinions

This summer, we conducted a quick survey on the use of Second Party Opinions (SPOs) by Fixed Income investors for the needs of our Green Hub Origination team, and ultimately for our issuer clients.

Although the results of this survey are not revolutionary and may be less informative for you as an investor, they nonetheless highlight some interesting aspects that we are pleased to bring to your attention:

• SPOs are mandatory for fewer than half of the respondents when investing in Green, Social, or Sustainable Bonds (7 out of 15 respondents) or in Sustainability-linked Bonds (6 out of 15 respondents).

•  Investors thoroughly review SPOs when evaluating the alignment of sustainable debt instruments with ICMA principles, which is mandatory for many portfolios. These reports serve as a crucial tool for informing them about the strengths and weaknesses of a green finance framework or a specific instrument.

• For GSS Bonds, investors primarily focus on SPOs to understand the environmental and/or social characteristics of the projects intended for the Use of Proceeds (eligibility/exclusion criteria).

• In contrast, for SLBs, they seek an evaluation of the credibility of the strategy presented to meet KPIs/SPTs, considering benchmarks, baselines, and scenario analyses.

• Regardless, investors expect SPO providers to include a section on the issuer to verify that the issued instrument aligns with the overall sustainability strategy.

• Last, investors view the analysis of EU Taxonomy alignment criteria—namely 'Substantial Contribution,' 'Do Not Significant Harm,' and 'Minimum Social Safeguards'—as a valuable addition to be included in an SPO.

Full results are available upon request (Béatrice Verger, beatrice.verger@natixis.com)