Green & Social Bond Principles 2021 edition issued
10 June 2021 The Green and Social Bond Principles are the global standard for a $1.6 trillion market representing the largest source of market finance dedicated to sustainability and climate transition available internationally to corporates, banks and sovereigns. In 2020, these standards were referenced by an estimated 97% of sustainable bonds issued globally.
This is the first update to the GBP since 2018. Over the last three years this crucial document, translated into 24 languages, has been at the centre of developments in the market as it has gone mainstream. The 2021 editions of the Social Bond Principles and Sustainability Bond Guidelines have been similarly revised.
The Green Bond Principles 2021 edition features:
- Two key recommendations on the Bond Framework and External Reviews designed to increase transparency alongside the four core components (Use of Proceeds, Process for Project Evaluation and Selection, Management of Proceeds, and Reporting);
- A recommendation of heightened transparency for issuer-level sustainability strategies and commitments;
- Encouragement to supply information, if relevant, on the degree of alignment of projects with official or market-based taxonomies;
- Promotion of transparency on issuer processes to identify and manage perceived and known social and/or environmental risks;
- Links and references to the complementary guidance of the Climate Transition Finance Handbook, the Harmonised Framework for Impact Reporting, the Guidelines for External Reviews, which are supplemented by the Guidance Handbook.
- Illustrative examples for the selection of Key Performance Indicators (KPIs) for Sustainability-Linked Bond issuers, underwriters and investors;
- A Pre-issuance Checklist for Social Bonds/Social Bond Programmes;
- Guidelines for Green, Social, Sustainability and Sustainability-Linked Bonds’ Impact Reporting Databases;
- Impact reporting metrics for circular economy and/or eco-efficient projects;
- Update of the Green Project Mapping to GBP Environmental Objectives and other Green Classifications;
- Update to the comprehensive GBP Guidance Handbook.
Martin Scheck, Chief Executive, ICMA said: "The Principles are the foundation for the global sustainable bond market. The 2021 edition will continue to support its growth and innovation as we tackle the pressing issues of sustainability and climate transition, while also giving the issuers who are committed to financing change, further guidance on transparency and reporting as the market evolves."
Johanna Köb, Head of Responsible Investment, Zurich Insurance and Vice-Chair of the Executive Committee of the GBP SBP, said: "Many investors view the sustainable bond markets through an impact lens, and will certainly welcome this year’s updates: Impact reporting is now strongly recommended for all use-of-proceeds bonds. The impact reporting handbook has been expanded with guidance on the circular economy and eco-efficient products category, and there is new guidance for database providers seeking to support market participants with the collection and aggregation of impact data."
Tanguy Claquin, Global Head of Sustainable Banking, Crédit Agricole CIB and Vice-Chair of the Executive Committee of GBP SBP, said: "The Green Bond Principles have been a reference text for all bond market stakeholders for more than 8 years, but this is still a young market and climate and social challenges are always more urgent. There was therefore a need to further strengthen this text to reflect the evolution of best practices. Recommending a framework, an external review and more information at issuer-level will help increase the transparency of the market. Encouraging issuers to supply more information on projects’ alignment with official or market-based taxonomies will enhance the credibility and standardisation of this market. These are very important steps forward."
Illustrative overview of the Principles