What is a green bond?
Green bonds are used to finance projects or assets that promote environmental sustainability. This includes for instance green buildings, renewable energy or sustainable transport solutions that help to prevent and limit pollution.
What is required?
Mutually agreed industry-wide standards stipulate stricter requirements on transparency, accounting and reporting. These take the form of a green bond framework, coupled with an annual follow-up of the environmental impact of the project.
The market for green bonds also stipulates requirements on independent assessments from a third party that evaluates the projects and assets. These requirements are established in the Green Bond Principles (GBP), an industry-wide standard administered by the International Capital Markets Association (ICMA). The GBPs are updated annually. Here, Handelsbanken, along with other stakeholders, can use its vote to move development forwards.
As of June 2017, there are also principles for social bonds that are designed to finance projects and assets with socially positive effects through the Social Bond Principles (SBP). In addition to these principles, there are also guidelines for combining green and social bonds, Sustainability Bond Guidelines (SBG). These two documents are also administered by the ICMA. The purpose of the principles is to increase transparency and integrity in the market for green bonds.
Criteria
ICMA: Green bond principles – GBP
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ICMA: Social bond principles – SBP
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ICMA: Sustainability bond guidelines – SBG
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Characteristics of green bonds
- Transparency
- Accounting
- Reporting
