The recent ICMA Sustainable Bonds Annual Conference was held in Singapore at the end of June 2023.
A number of market reference documents were updated (See below).
These changes show and highlight key changes and direction of the market.
The 5 Key Take Aways we want to cover are:
1. Climate Transition Finance Handbook (“CTFH”):
CTFH (2023 edition), integrates progress made on climate transition guidance and disclosures. Good new annex and info-graphics have been included, such as guidance for climate themed bonds (both use of proceeds and linked).
References also included for various aspects of transition taxonomies.
2. Sustainability Linked Bond Principles (“SLBP”):
SLBP (2023 update) includes language for sovereign issuers, as well as new metrics for sovereigns/social issues in the KPI registry. A separate tab for sovereigns is now included plus tips on how to consider sovereigns on material issues and reporting.
3. Social Bond Principles (“SBP”):
2023 edition of the SBP include very subtle yet extremely important references to “Just Transition”, plus clarifications are made around target populations who should benefit from social use of proceeds (reiterating that it can be general public).
4. Q and A Sustainable Bonds:
Important clarifications provided on use of proceeds investing in green bonds, and should duration of assets match maturity of bond (generally yes!)
5. Harmonized Framework for Impact Reporting:
The Green Bond Principles include 10 categories of use of proceeds. In this update, the core quant indicators remain unchanged for Energy Efficiency and Renewable Energy (common use of proceeds).
However, there is a comprehensive list of other sustainability indicators now included;
- Renewables: Transmission, distribution, appliances and products); and
- Energy Efficiency: New and refurbished buildings, energy storage, district heating, smart grids, appliances etc.
This shows the ongoing importance of deeper and more focused impact reporting as the market continues to mature.
If you look closely there are a few impact measures connected to just transition.