The Green, Social, Sustainability, and Sustainability-Linked Bond Principles (the “Principles”) have announced new guidance for green enabling projects and guidelines for Sustainability-Linked Loan financing Bonds (SLLB), along with other significant updates. The Principles are the global standard for the $5 trillion sustainable bond market representing the largest source of market finance dedicated to sustainability and climate transition, available internationally to corporates and financial institutions, supranationals, agencies and sovereigns.
Key publications and resources released by the Principles include:
- Guidance for green enabling projects: many green enabling projects are not explicitly considered green but remain critical to other eligible green projects. This document seeks to guide such green enabling projects, encompassing both the induced and avoided emissions dimensions, as well as the management of related environmental and social risks.
- Guidelines for SLLBs: these guidelines, developed jointly with the Loan Market Association (LMA), define a dedicated bond instrument designed for issuers wishing to finance or re-finance a portfolio of eligible sustainability-linked loans (SLLs) aligned with the LMA’s Sustainability-Linked Loan Principles (SLLP).
- An update of the Sustainability-Linked Bond Principles with clarifications to support KPI selection and a new SLB disclosure data checklist.
- An expansion of the SLB KPIs Registry related to environmental themes (biodiversity, circular economy/raw materials and water) as well as additional KPIs for sovereign issuers.
- A new annex of the Impact Reporting Handbook covering potential environmental and/or social risks associated with eligible project categories for green bonds.
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 330 market participants and stakeholders, as well as the participation of many other organisations through technical working groups. The Principles are the de facto global standard referenced by 98% of sustainable bond issuance.
Nicholas Pfaff, Deputy Chief Executive and Head of Sustainable Finance at International Capital Market Association (ICMA) said, “The Principles are releasing ground-breaking guidance for financing green enabling projects while considering the underlying sustainability challenges of their supply chains. With the publication of the new Sustainability-Linked Loan financing Bonds, we are otherwise creating both a new financing opportunity in the debt capital markets while also aiming to support the integrity of sustainability-linked loans.”
