ICMA releases new resources on green enabling projects and sustainability-linked loan bonds
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The International Capital Market Association (ICMA) released new materials to support green enabling projects and guidelines for sustainability-linked loan financing bonds.
The principles set the global standard for the $5 trillion sustainable bond market, the largest source of market finance dedicated to sustainability and climate transition.
Guidance for green enabling projects
This publication focuses on projects that are not explicitly green themselves but facilitate the implementation or development of green projects.
It includes guidance on induced and avoided emissions and managing environmental and social risks.
It says that to qualify as a green enabling project, a project must meet specific criteria, such as being an essential part of the enabled project’s value chain and not contributing to carbon lock-in.
It must also comply with transparency requirements regarding end-use to demonstrate its environmental benefits. The guidance notes that issuers of green bonds incorporating green enabling projects shall align with the green bond principles.
Guidelines for sustainability-linked loans financing bonds (SLLBs)
ICMA collaborated with the Loan Market Association (LMA) to create these guidelines.
These guidelines’ core recommendation is to use the existing sustainability-linked loan principles (SLLP) as the foundation for constructing any portfolio communicated to the market via a bond instrument.
SLLBs involve financing a portfolio of sustainability-linked loans aligned with its principles, adopting the use of proceeds project financing structure typical of green, social, and sustainability (GSS) bonds.
The guidelines are designed for broad market use for issuers, investors, and underwriters.
ICMA is expected to release further publications to support the market in the coming months, including aligning the Social Bonds Impact Reporting Handbook with the equivalent Green Bond framework and additional materials to support the SLB market.
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