The Principles announce key publications and resources in support of market transparency and development
28 June 2022 The Green Bond Principles (GBP), Social Bond Principles (SBP), Sustainability Bond Guidelines (SBG) and Sustainability-Linked Bond Principles (SLBP) (the “Principles”) - the global standard for a $2.4 trillion market, representing the largest source of market finance dedicated to sustainability and climate transition available internationally to corporates, banks and sovereigns - announce new and updated publications including new definitions for green securitisation, updated key performance indicators for Sustainability-Linked Bonds and new resources for climate transition finance.
Specific publications and resources released today are:
- New definitions for green securitisation (Secured Green Collateral Bond, Secured Green Standard Bond) clarifying terminology and market practice, notably for collateral. A related Q&A is also being released (including sustainability criteria relating to collateral, no double counting principles, reporting requirements, etc.). Similar guidance is also available for social bond securitisation.
- An updated registry of approximately 300 key performance indicators (KPIs) for Sustainability-Linked Bonds, the fastest-growing segment of the sustainable bond market. The KPIs are classified by sector and between core and secondary indicators following the input of over 90 leading market participants and stakeholders. An accompanying Q&A also addresses, among other issues, the materiality assessment of KPIs, which has been a topic of debate among market participants and stakeholders.
- A new Climate Transition Finance (CTF) Methodologies registry has been created with a list of tools to specifically help issuers, investors, or financial intermediaries validate their emission reduction trajectories/pathways as "science-based". Similarly, the Guidelines for External Reviews have been updated to facilitate the assessment of alignment with the existing Climate Transition Finance Handbook (CTFH).
The Principles have also released today additional guidance, updates and templates, specifically:
- New metrics for impact reporting (1) for Green Projects relating to environmentally sustainable management of living natural resources and land use, and (2) for Social Projects (including an enriched list of social indicators and impact confirmation on target population).
- Updated high-level mapping to the United Nations’ Sustainable Development Goals (SDGs).
- A recommendations paper and proposed information template for providers of Green, Social and Sustainability Bond index services.
- Pre-issuance Checklist for Green Bonds/Green Bond Programmes and an updated Sustainable Bond/Bond Programme Information Template (including disclosure of the issuer’s sustainability strategy).
The standards and guidance from the Principles are developed with the input of over 400 market participants and stakeholders, as well as the participation of many other organisations through technical working groups. In 2021, the Principles were referenced by an estimated 98% of sustainable bonds issued globally and have been translated into 25 languages.
The new and updated publications and resources in support of market transparency and development are being announced at the 2022 Annual Conference of the Principles on the 28 June in London. The conference will also feature discussions on workstreams concerning the application of the Principles in a wider context, including commercial paper and repo, as well as high yield and emerging markets.
Denise Odaro, Chair of the Principles, Head of Investor Relations, International Finance Corporation (IFC), said: ”The Principles serve as a model for incorporating sustainability into capital markets, and the updates this year ensure that they remain current with market developments while also recognising emerging related products. Additionally, the updated KPI registry and climate transition methodologies stand to aid issuers to fundamentally and rapidly advance the transition to a low-carbon economy via the bond market and beyond.”
Nicholas Pfaff, Deputy Chief Executive and Head of Sustainable Finance, ICMA, said: “The 2022 announcements of the Principles represent critical support for market integrity and development. Sustainability now permeates all areas of the capital markets. The Principles provide market participants and stakeholders with an essential reference for product standards, agreed terminology and technical consistency, as well as a resource to benchmark ambition.”
Ashley Schulten, Head of Responsible Investing for Global Fixed Income, BlackRock, and Vice-Chair of the Principles, said: “What the Principles have accomplished over the years has been truly impressive. This has been possible thanks to the very active participation across various market players, the incredible support of ICMA, and the input through our member and advisory network covering the sustainability ecosystem. These updated guidelines reflect hundreds of hours of research, feedback and consensus-building across this community.”
Tanguy Claquin, Global Head of Sustainable Banking, Crédit Agricole CIB and Vice-Chair of the Principles, said: “As every year, the Principles community publishes new best practices and guidelines for the sustainable bond market. It is a great toolbox for market participants, but also a great reference for stakeholders and regulators that can be used to ensure market transparency and credibility. I want to deeply thank all the people who have dedicated their time to the development of these new texts.”
New/updated documents released:
Green Bond Principles - June 2021 (with June 2022 Appendix 1)
Pre-issuance Checklist for Green Bonds / Green Bond Programmes - June 2022
Social Bond Principles - June 2021 (with June 2022 Appendix 1)
Sustainable Securitisation Related questions - June 2022
Sustainability-Linked Bond Principles Related Questions - June 2022
Sustainability-Linked Bonds Illustrative KPIs Registry - June 2022
Climate Transition Finance Methodologies Registry - June 2022
Green, Social and Sustainability Bonds: A High-Level Mapping to the Sustainable Development Goals - June 2022
Handbook - Harmonised Framework for Impact Reporting (Green Bonds) - June 2022
Harmonised Framework for Impact Reporting for Social Bonds - June 2022
Guidelines for Green, Social, Sustainability and Sustainability-Linked Bonds External Reviews June 2022 - June 2022
Green, Social and Sustainability Bond Index Service Mapping Supporting Paper - June 2022
Index Providers Mapping Template - June 2022