Retail bond and Conference of the Parties - historical milestones: Difference between pages

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''Bonds - retail.''
''Environmental risk management.''


"Retail bond" is a colloquial abbreviation for a bond designed to attract retail investors, that a bond issuer is allowed to offer for sale to non-professional investors.
'''Author: [https://www.linkedin.com/in/chadofficial/ Charitarth Sindhu], Environmental Sustainability & ESG Consultant'''




They are generally issued in smaller denominations to facilitate retail-sized investments for trading, and unsecured.
The Conference of Parties (COP) serves as a primary decision-making entity under the United Nations Framework Convention on Climate Change (UNFCCC) inaugurated in 1992.  


Denomination sizes designed for retail investment in GBP markets might typically be around £2,000 or less.
Convened by participating nations annually in recent years, the COP examines key facets of climate action, encompassing mitigation, adaptation, finance, technology, and transparency.




In the UK, since the 2005 Prospectus Directive, smaller-denomination bonds must be backed by a prospectus making certain additional disclosures.
Selected historical milestones from past COPs are set out below.


These disclosure requirements apply to bond denominations of below £100,000.


==Kyoto 1997 to Glasgow 2020==


Few UK investment grade corporate treasuries have been tapping the retail bond market since 2005, due to these disclosure requirements, which are viewed as onerous. 


In the UK, this may be about to change, as the Financial Conduct Authority (FCA) has responded to increasing investor dis-satisfaction (expressed through bodies such as the Investor Access to Regulated Bonds Working Group) and following positive responses to a consultation process in 2023, are preparing detailed policy changes proposed to be implemented in early 2025, which will remove the requirement for separate disclosure requirements depending on denomination size and also introduce incentives to reduce denomination size. 
'''COP3 (1997):''' Adoption of the Kyoto Protocols legally bound developed countries with climate targets called Quantifiable Emission Limitation and Reduction objectives (QELR). In order to safeguard participating developed countries’ domestic industries, two mechanisms exist:


The term "retail bond" may then fall away.  Relevant bonds will simply be bonds, with both wholesale and retail investors holding them.
* Joint Implementation project.  Developed countries are allowed to meet their targets by investing in emission reduction programmes in another developed country.
* Clean Development Mechanism.  Developed countries are allowed to meet their targets by investing in emission reduction programmes in a developing country.


''(Source - James Leather FCT - January 2024.)''


'''COP7 (2001):''' The Marrakesh Accords, set the stage for Kyoto Protocols' ratification by adopting detailed rules of implementation.


:<span style="color:#4B0082">'''''Improving access to retail bonds - Financial Conduct Authority'''''</span>


:"The Government is in the process of finalising a new legislative framework that will replace the UK Prospectus Regulation...
'''COP8 (2002):''' The Delhi Declaration, outlined development needs for the poorest countries and emphasized the need of technology transfer for climate change mitigation.


:We asked for views [about whether] stakeholders would welcome the removal of the dual disclosure standards in [bond] prospectuses.


:The removal of the dual disclosure standards in prospectuses for retail and wholesale non-equity securities was almost unanimously supported [by respondents]. There was strong support to use the wholesale disclosure standard as a starting point...
'''COP13 (2007):''' The Bali action plan, with pillars of shared vision, mitigation, adaptation, technology, and financing,  charted a two-year plan to finalize a binding agreement for the UNFCCC during COP15.




:Facilitating broader access to listed bonds:  A scheme which would encourage the issuance by seasoned UK-listed corporates of simple standardised unsubordinated unsecured corporate bonds aimed at a wide range of investors, retail and wholesale, was largely welcomed...
'''COP14 (2008):''' Launch of an adaptation fund under the Kyoto Protocol, investing in concrete adaptation projects in developing countries vulnerable to climate change effects.  


:However, there were nuanced and sometimes differing views on what types of issuers and securities should be within the scope of the scheme, with the majority of respondents asking that the scope be extended to encompass additional issuers and/or security features."
Following up on the Delhi Declaration, the Poznan strategic program was launched to fund climate technology development and transfer activities.




:''Engagement feedback on the new public offers and admissions to trading regime - Financial Conduct Authority - December 2023.''
'''COP15 (2009):''' End of the Bali action plan marked the Copenhagen Accord.  


The accord declared climate change to be the greatest modern challenge and should be limited to 2°C.


The accord was not legally binding.


:<span style="color:#4B0082">'''''Incentivising issuers: What if disclosure is easier when retail is included?'''''</span>


:"We agree with the FCA that the removal of the dual standard of disclosure is one way to address the exclusion of retail investors and wealth managers from the listed bond markets.
'''COP16 (2011):''' Mexico.  Establishment of the Green Climate Fund to distribute US$ 100 billion per year to assist developing nations in addressing climate change.


:However, issuers won’t be compelled to use low denominations – and so there’s no guarantee that a single disclosure standard will change much at all.


:So we are a pleased to see that the FCA has proposed an incentivisation scheme.  
'''COP18 (2012):''' Doha Agreements launched a new commitment period of the Kyoto Protocols, aiming to reduce greenhouse gas emissions by 18% compared to 1990 levels.


:This scheme proposes to reduce disclosure for seasoned UK-listed corporates or similarly seasoned companies who issue bonds with retail-inclusive low denominations.


'''COP19 (2013):''' Created a mechanism for Intended Nationally determined Contributions (INDC) to be submitted by parties during the vital COP21.


:We think that this scheme will be attractive for issuers who will be able to tap into retail demand in the primary and/or secondary markets without the present disclosure-related complications.
The Warsaw Framework for REDD+ was also designed to reduce human reliance on forests.


:In our view, we think that the FCA’s draft requirements for inclusion in the scheme are targeted at the types of issuers whose bonds retail and wealth managers will want: investment grade bonds from well-known listed and unlisted companies."


'''COP21 (2015):''' The Paris Agreement fully replaced the voluntary Kyoto Protocol with a legally binding treaty.


:''Enabling broader access to the UK bond markets - Winterflood Securities - October 2023.''
Countries are expected to commit to their Nationally determined contributions (NDCs).  


The Paris agreement committees to keeping global temperature rise below 2°C pre-industrial levels, accompanied by a yearly US$100 billion funding pledge by developed countries.


:<span style="color:#4B0082">'''''Facilitating broader access to listed bonds'''''</span>


:"We are aware of calls among some UK market participants for measures to address what is seen as the exclusion of smaller scale investors from listed bond markets.  
'''COP26 (2020):''' Was promoted as ‘the last chance to save the planet’.


:The removal of the dual standard of disclosure proposed above is one measure which we believe will assist here.  
The Glasgow summit targeted global warming to not exceed 1.5°C and got 140 countries to announce net zero target dates.


:There remains, however, a question as to whether more might be done.


==Egypt - COP 27 - 2022==


:We think there may be an opportunity for a scheme which encourages the issuance by seasoned UK-listed corporates of simple standardised unsubordinated unsecured corporate bonds aimed at a wide range of investors, retail and wholesale.  
* '''Loss and Damage fund:''' A financial assistance initiative for nations most impacted by climate change.


:... a product in which sophisticated institutional investors are keen to invest is likely to offer better terms for all investors, including retail investors, than a product aimed solely at retail investors, due to the additional scrutiny and pricing pressure institutional investors exert.


:Such a scheme may be to the benefit of all participants, issuers and investors alike, giving issuers a new additional source of demand for their bonds and by giving investors better access to corporate credit."
* '''Global shield financing facility:''' Established by G7 countries to channel grants through global institutions for aiding climate-vulnerable developing countries.


:''Financial Conduct Authority - May 2023.''


* '''African Carbon Markets initiative:''' Established to enhance African nations' participation in voluntary carbon markets, with a goal to generate 300 million carbon credits annually by 2030 and 1.5 billion carbon credits annually by 2050. The funds raised will address the ongoing climate finance needs of participating nations.


== See also ==
* [[Bond]]
* [[Corporate treasury]]
* [[Credit]]
* [[Disclosure]]
* [[Equity]]
* [[Financial Conduct Authority]]  (FCA)
* [[Green bond]]
* [[Institutional investor]]
* [[Investment grade]]
* [[Issuance]]
* [[Issuer]]
* [[Listed company]]
* [[Order book for Retail Bonds]]  (ORB)
* [[Primary market]]
* [[Prospectus Directive]]
* [[Retail]]
* [[Seasoned issuer]]
* [[Secondary market]]
* [[Secured debt]]
* [[Security]]
* [[Subordinated debt]]
* [[Subordination]]
* [[Unsecured]]
* [[Wholesale markets]]


==Dubai - COP28 - 2023==
* '''Global Stocktake:''' A periodic review mechanism established under the Paris Agreement at COP21 (2015), proposing eight steps to keep the global temperature rise below 1.5°C compared with pre-industrial levels.  The COP28 Global Stocktake identified the imperative to cut global greenhouse gas emissions, especially methane emissions, by 43% (compared to 2019 levels) by 2023 to meet the Paris Agreement Goals.
* Adoption of a target to achieve net-zero fossil fuel consumption by the year 2050, coupled with accelerated actions to facilitate this transition.
* '''Global goal on adaptation (GGA):'''
::- Established under COP21 (2015), encouraging nations to conduct climate risk assessments, inform policy development with these findings, and establish early warning systems by 2027.
::- COP28 called for doubling adaptation finance and outlined plans for assessments and monitoring needs, specifying explicit 2030 targets in water security, health, and ecosystem restoration.
* '''Climate Finance:'''
::- '''New Collective Quantified Goal (NCQG)''' for climate finance estimated that wealthy nations owe developing nations US$ 500 billion in 2025, including US$ 250bn for mitigation, US$ 100bn for adaptation, and US$ 150bn for loss and damage.
::- Operationalization of the '''Loss and Damage Fund (L&D)''' during COP28, overseen by the World Bank, with financial commitments to support the fund.
* '''Global Cooling Pledge:'''
::- A commitment to reduce cooling-related emissions by at least 68% globally relative to 2022 levels by 2050. This involves investments in passive cooling mechanisms such as shades, ventilation, insulation, green roofs, reflective surfaces, and reintroduction of nature in urban settings. This reduces the need for mechanical cooling mechanisms which cause greenhouse gas emissions.
::- Phase-down of refrigerants, especially Hydrofluorocarbons (HFCs), which are potent greenhouse gases classified as ‘super pollutants’. And switching to alternative cooling substances like hydrocarbons, ammonia and carbon dioxide.


==Other resources==


*[https://www.fca.org.uk/publication/feedback/engagement-feedback-new-public-offers-admissions-trading-regime.pdf Engagement feedback on the new public offers and admissions to trading regime - Financial Conduct Authority (FCA) - December 2023]
* A declaration to triple nuclear energy capacity by 2050.


*[https://www.winterflood.com/sites/default/files/Enabling%20broader%20access%20to%20the%20UK%20bond%20markets%20-%20Winterflood%20White%20Paper.pdf Enabling broader access to the UK bond markets - Winterflood Securities - October 2023]


*[https://www.treasurers.org/hub/treasurer-magazine/opening-up-bond-market-will-give-corporates-more-flexibility Opening up bond market will give corporates more flexibility - The Treasurer - September 2023]
== See also ==
* [[Biodiversity]]
* [[Carbon credits]]
* [[Carbon dioxide]]
* [[CBD COP 15]]
* [[Climate change]]
* [[Climate change: testing the resilience of corporates’ creditworthiness to natural catastrophes]]
* [[Climate change adaptation]]
* [[Climate change mitigation]]
* [[Climate finance]]
* [[Climate risk]]
* [[Conference of the Parties]]
* [[Convention on Biological Diversity]]
* [[COP27]]
* [[COP28]]
* [[Developing country]]
* [[Ecosystem services]]
* [[Emissions]]
* [[Fossil fuel]]
* [[Fund]]
* [[Green Climate Fund]]
* [[Greenhouse gas]]
* [[G7]]
* [[Hydrocarbons]]
* [[Kyoto Protocol]]
* [[Loss and damage]] 
* [[Methane]]
* [[Nationally determined contribution]]  (NDC)
* [[Net zero]]
* [[Paris Agreement]]
* [[Ratification]]
* [[REDD+]]
* [[Risk management]]
* [[Transition]]
* [[Transparency]]
* [[Treaty]]
* [[United Nations Framework Convention on Climate Change]]  (UNFCCC)
* [[Voluntary carbon markets]]  (VCM)
* [[V20]] 
* [[World Bank]]


*[https://www.treasurers.org/hub/treasurer-magazine/return-retail-bonds-market-on-cards Return of retail to bond markets on the cards]


*[https://www.fca.org.uk/publication/call-for-input/non-equity-securities-engagement-paper-4.pdf Engagement paper - non-equity securities - FCA - May 2023]
==External links==
*[https://unfccc.int/ UNFCCC home page]
*[https://www.cbd.int/cop/ Convention on Biological Diversity - Conference of the Parties webpage]


[[Category:Accounting,_tax_and_regulation]]
[[Category:Accounting,_tax_and_regulation]]
[[Category:Long_term_funding]]
[[Category:Risk_frameworks]]
[[Category:The_business_context]]

Revision as of 23:43, 23 January 2024

Environmental risk management.

Author: Charitarth Sindhu, Environmental Sustainability & ESG Consultant


The Conference of Parties (COP) serves as a primary decision-making entity under the United Nations Framework Convention on Climate Change (UNFCCC) inaugurated in 1992.

Convened by participating nations annually in recent years, the COP examines key facets of climate action, encompassing mitigation, adaptation, finance, technology, and transparency.


Selected historical milestones from past COPs are set out below.


Kyoto 1997 to Glasgow 2020

COP3 (1997): Adoption of the Kyoto Protocols legally bound developed countries with climate targets called Quantifiable Emission Limitation and Reduction objectives (QELR). In order to safeguard participating developed countries’ domestic industries, two mechanisms exist:

  • Joint Implementation project. Developed countries are allowed to meet their targets by investing in emission reduction programmes in another developed country.
  • Clean Development Mechanism. Developed countries are allowed to meet their targets by investing in emission reduction programmes in a developing country.


COP7 (2001): The Marrakesh Accords, set the stage for Kyoto Protocols' ratification by adopting detailed rules of implementation.


COP8 (2002): The Delhi Declaration, outlined development needs for the poorest countries and emphasized the need of technology transfer for climate change mitigation.


COP13 (2007): The Bali action plan, with pillars of shared vision, mitigation, adaptation, technology, and financing, charted a two-year plan to finalize a binding agreement for the UNFCCC during COP15.


COP14 (2008): Launch of an adaptation fund under the Kyoto Protocol, investing in concrete adaptation projects in developing countries vulnerable to climate change effects.

Following up on the Delhi Declaration, the Poznan strategic program was launched to fund climate technology development and transfer activities.


COP15 (2009): End of the Bali action plan marked the Copenhagen Accord.

The accord declared climate change to be the greatest modern challenge and should be limited to 2°C.

The accord was not legally binding.


COP16 (2011): Mexico. Establishment of the Green Climate Fund to distribute US$ 100 billion per year to assist developing nations in addressing climate change.


COP18 (2012): Doha Agreements launched a new commitment period of the Kyoto Protocols, aiming to reduce greenhouse gas emissions by 18% compared to 1990 levels.


COP19 (2013): Created a mechanism for Intended Nationally determined Contributions (INDC) to be submitted by parties during the vital COP21.

The Warsaw Framework for REDD+ was also designed to reduce human reliance on forests.


COP21 (2015): The Paris Agreement fully replaced the voluntary Kyoto Protocol with a legally binding treaty.

Countries are expected to commit to their Nationally determined contributions (NDCs).

The Paris agreement committees to keeping global temperature rise below 2°C pre-industrial levels, accompanied by a yearly US$100 billion funding pledge by developed countries.


COP26 (2020): Was promoted as ‘the last chance to save the planet’.

The Glasgow summit targeted global warming to not exceed 1.5°C and got 140 countries to announce net zero target dates.


Egypt - COP 27 - 2022

  • Loss and Damage fund: A financial assistance initiative for nations most impacted by climate change.


  • Global shield financing facility: Established by G7 countries to channel grants through global institutions for aiding climate-vulnerable developing countries.


  • African Carbon Markets initiative: Established to enhance African nations' participation in voluntary carbon markets, with a goal to generate 300 million carbon credits annually by 2030 and 1.5 billion carbon credits annually by 2050. The funds raised will address the ongoing climate finance needs of participating nations.


Dubai - COP28 - 2023

  • Global Stocktake: A periodic review mechanism established under the Paris Agreement at COP21 (2015), proposing eight steps to keep the global temperature rise below 1.5°C compared with pre-industrial levels. The COP28 Global Stocktake identified the imperative to cut global greenhouse gas emissions, especially methane emissions, by 43% (compared to 2019 levels) by 2023 to meet the Paris Agreement Goals.


  • Adoption of a target to achieve net-zero fossil fuel consumption by the year 2050, coupled with accelerated actions to facilitate this transition.


  • Global goal on adaptation (GGA):
- Established under COP21 (2015), encouraging nations to conduct climate risk assessments, inform policy development with these findings, and establish early warning systems by 2027.
- COP28 called for doubling adaptation finance and outlined plans for assessments and monitoring needs, specifying explicit 2030 targets in water security, health, and ecosystem restoration.


  • Climate Finance:
- New Collective Quantified Goal (NCQG) for climate finance estimated that wealthy nations owe developing nations US$ 500 billion in 2025, including US$ 250bn for mitigation, US$ 100bn for adaptation, and US$ 150bn for loss and damage.
- Operationalization of the Loss and Damage Fund (L&D) during COP28, overseen by the World Bank, with financial commitments to support the fund.


  • Global Cooling Pledge:
- A commitment to reduce cooling-related emissions by at least 68% globally relative to 2022 levels by 2050. This involves investments in passive cooling mechanisms such as shades, ventilation, insulation, green roofs, reflective surfaces, and reintroduction of nature in urban settings. This reduces the need for mechanical cooling mechanisms which cause greenhouse gas emissions.
- Phase-down of refrigerants, especially Hydrofluorocarbons (HFCs), which are potent greenhouse gases classified as ‘super pollutants’. And switching to alternative cooling substances like hydrocarbons, ammonia and carbon dioxide.


  • A declaration to triple nuclear energy capacity by 2050.


See also


External links

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