Hello and welcome to the Strawman, the daily newsletter that’s like your friend who always leaves a comment on your instagram posts - we got your back.

Today we’re talking about the complex world of climate transition funding and the path Verizon has chosen to take. Let’s get in to it.

From government tax breaks to ESG funds, there’s always a way to fund the energy transition. This week, Verizon, one of the largest telecommunication players in the world, announced the fifth issuance of their ‘green bonds’ to help fund their sustainability efforts. The billion dollar issuance brings their total raised from this type of instrument to $5 billion.

Sorry, What’s Green?

A bond is a financial instrument where investors lend money to an organisation such as a government or corporate for a fixed return on their investment over a given period. In this case, Verizon is raising money specifically to fund their green energy transition.

The new fundraise comes after a rare announcement that they’ll be bringing their targets forward with an aim to source or generate 100% of their energy from renewable sources by 2030. That’s like the opposite of asking your professor for an extension on your essay.

1-2 Combo

Verizon isn’t only providing investors with an opportunity to make green investments - they’re going above and beyond.

Ticks ESG box #1

They’ve also promised to work with minority and women led firms for their underwriting process. In other words, instead of a bunch of old white guys doing the banking stuff, they’ve got some diversity in the room.

Ticks ESG box #2

Investors loved the previous products for exactly these reasons. Their last fund was 8 times oversubscribed!

• The bonds fulfilled a number of ESG criteria

• They provided decent returns in the low interest rate environment (3-4% annually)

• They were relatively stable given Verizon’s position as a global telecoms leader

It’s yet to be announced what returns investors can expect from this new product but what was a compelling pitch in a low interest rate environment might be less attractive today. It will be interesting to see how competitive the product can become - and whether investors are still in to it.

Until next time,

The Strawman