Any move to restrict issuers from issuing labeled bonds or more broadly consider ESG factors would be “ill-advised,” said Barry Fick, executive director of the Minnesota Higher Education Facilities Authority, which has issued labeled bonds with more deals coming this year. He has said the green label drove demand for a 2022 deal priced by the authority.
“It’s not something that’s suddenly new and thought up by individuals who are saying we have a liberal agenda,” Fick said. “If you look at the majority of the items and the factors that are included in the ESG analysis, most of them are items that are normally looked at it in credit rating analysis and by investors anyway,” he said. “The restrictions would mean less information than we have always provided for a multiple number of years, so [now] investors are going to say, ‘I’m going to have less information than I had before ESG and now my risk increases, so I’m going to have to accommodate that risk by either charging a higher interest rate or asking for more difficult covenants.'”