The Principles announce updated guidance for transition finance and climate-themed bonds, and the integration of sovereign issuer considerations in the recommendations and tools for sustainability-linked bonds
22 June 2023 The Green, Social, Sustainability and Sustainability-Linked Bond Principles (the “Principles”) announce the 2023 editions of the Climate Transition Finance Handbook (CTFH) and the Sustainability-Linked Bond Principles (SLBP) as well as of the accompanying Key Performance Indicator (KPI) registry. The Principles are the global standard for the $3.2 trillion sustainable bond market that represents the largest source of market finance dedicated to sustainability and climate transition available internationally to corporates and financial institutions as well as supranationals, agencies and sovereigns.
Key publications and resources released today are:
- The 2023 edition of the CTFH, its first update since the original publication in 2020, integrates the progress made by the market and the official sector on climate transition guidance and disclosures. The document includes dedicated recommendations for climate-themed green, sustainability and sustainability-linked bonds and acknowledges the development of “climate transition” bonds in certain jurisdictions. It includes new annexes with illustrative disclosures, infographics and a list of wider market and official sector guidance for climate-themed bonds.
- A 2023 update of the SLBP and related tools featuring notably adapted language for sovereign issuers, as well as new metrics for sovereigns and social issues in the KPI registry.
The Principles have also released today further guidance, specifically:
- Additional Q&As for green, social and sustainability bond securitisation;
- Revised language for the Social Bond Principles (SBP) confirming notably the need to identify target populations, and separately, specific guidance for impact reporting for Social Bonds;
- Updates to the core recommendations for impact reporting for Green Bonds, and impact reporting metrics for energy efficiency & renewable energy;
- A revised mapping to the SDGs; and
- Updated issuer information templates and external review forms.
The Principles also announced the renewal of half of the 24 members of its Executive Committee following an annual vote in line with its governance. 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 2023, the Principles were referenced by an estimated 97% of sustainable bonds issued internationally and have been translated into 26 languages.
The 2023 Annual Conference of Principles will be held in hybrid format in Singapore on Wednesday, 28 June, with the Monetary Authority of Singapore as the supporting partner. The conference agenda features a discussion on the key updates of the 2023 guidance from the Principles and incorporates the Asia Pacific perspective. It also covers the critical topics currently being debated in sustainable finance including regulation, market integrity and climate transition finance.
Isabelle Laurent, Chair of the Principles, Deputy Treasurer, EBRD said: “The furtherance of the voluntary process guidance for issuing bonds aligned to the Principles, and the heightened transparency and disclosure that they represent, should underpin the market’s credibility, integrity and investor trust, and allow it to fulfil its primary purpose of mobilising private sector finance for sustainable investments.”
Nicholas Pfaff, Deputy Chief Executive and Head of Sustainable Finance, ICMA said: “The Principles are providing important additional guidance on climate transition finance, aiming to increase its availability at scale to fund transition, especially in the hard-to-abate industries. We have also adapted the recommendations for sustainability-linked bonds for the benefit of sovereign issuers which have started to use these target-based sustainable finance instruments.”
Agnes Gourc, Head of Sustainable Capital Markets, DCM Structuring & Solutions, BNP Paribas and Vice-Chair of the Principles, said: “As the GSS market has a critical role to play in the financing of energy transition, environmental protection and social development, this has come with an ever greater responsibility for all stakeholders involved, and the ExCom of the Principles and the technical working groups have worked hard this year again to keep improving and promoting a better frame for greater transparency across green, social, sustainability and sustainability-linked bonds through the updated and enhanced guidance documents published today.”
Ashley Schulten, Head of ESG Investment, Global Fixed Income, BlackRock and Vice-Chair of the Principles, said: “A tremendous thank you to both ICMA and all the various participants in the Green and Social Bond Principles ecosystem. The body of work we’ve been able to create over the past 9 years has been crafted through countless hours of detailed debate and discussion, coordination between investors, issuers and underwriters, and outreach to other interested parties in sustainable finance. This year’s updates should further add to the credibility of the funding avenues being created by this historic joint effort.”