I. Listed below are some of the initiatives led internationally to further green and sustainable finance:
In January 2019 – one year after the Paris Green Bond Pledge, published to mark 2017 Climate Finance Day, sixteen European companies (EDF, EDP, ENEL, ENGIE, Ferrovie Dello Stato Italiane, Iberdrola, Icade, Ørsted, RATP, SNCF Réseau, Société du Grand Paris, SSE, Tennet, Terna, Tideway, Vasakronan) have joined to set up the Corporate Forum on Sustainable Finance (“the Forum”). The Forum, designed as a permanent network for exchanging views and ideas, brings together dynamic “Green Issuers” committed to upholding and developing sustainable finance as a critical tool to fight climate change and to foster a more sustainable and responsible society.
The GGFC was created in 2017 with the objective to bring together key global and regional associations and other stakeholders involved in the green financing. The industry joined forces to coordinate efforts to promote green finance, facilitate cross-fertilization between related markets and asset classes, and with the ambition to act as a representative counterparty to the official sector on green finance policy matters. GGFC has published a directory is to provide policymakers and global and regional market participants a simple, easy-to-use reference guide as to which international and regional governments and industry bodies have implemented or are implementing major initiatives on green, sustainability and climate change.
In March 2018 the LMA, together with the APLMA, launched the Green Loan Principles (GLP) with the support of the International Capital Market Association (ICMA). The GLP aim to create a high-level framework of market standards and guidelines, providing a consistent methodology for use across the wholesale green loan market.
In March 2019 the LMA, together with the APLMA and LSTA, launched the Sustainability Linked Loan Principles (SLLP) with the support of the International Capital Market Association (ICMA). The sustainability linked loan product is a dynamic and innovative product that enables lenders to incentivize improvements in the borrower’s sustainability profile by aligning loan terms (for example, margins) to the borrower’s performance against ambitious, pre-determined sustainability performance targets.
The Green Bond Pledge is a joint initiative developed and designed by international climate finance and environmental groups including the Climate Bonds Initiative, Mission 2020, CDP, Ceres, Citizens Climate Lobby, California Governor’s Office, California Treasurer’s Office, Global Optimism, NRDC & The Climate Group. The Green Bond Pledge is a simple declaration with broad and far-reaching impact. All bonds that finance long-term infrastructure and capital projects need to address environmental impact and climate risk.
At the Paris “One Planet Summit” in December 2017, eight central banks and supervisors established a Network of Central Banks and Supervisors for Greening the Financial System (NGFS). The Network’s purpose is to help strengthening the global response required to meet the goals of the Paris agreement and to enhance the role of the financial system to manage risks and to mobilize capital for green and low-carbon investments in the broader context of environmentally sustainable development.
In December 2016, the Task Force published its report setting out some recommendations for helping businesses disclose climate-related financial risks and opportunities within the context of their existing disclosure requirements.
The objective of the G20 Green Finance Study Group (GFSG) is to “identify institutional and market barriers to green finance, and based on country experiences, develop options on how to enhance the ability of the financial system to mobilize private capital for green investment”.
The latest green finance synthesise report was published in July 2017.
The Sustainable Banking Network (SBN) is a community of financial sector regulatory agencies and banking associations from emerging markets committed to advancing sustainable finance in line with international good practice. The Network facilitates the collective learning of members and supports them in policy development and related initiatives to create drivers for sustainable finance in their home countries. The idea for the SBN arose during the first International Green Credit Forum, hosted by IFC and the China Banking Regulatory Commission, in Beijing in May 2012, where banking regulators and associations from 10 countries requested that IFC facilitate a global knowledge network on sustainable banking. The Network was formally launched in September 2012.
The SSE initiative is a UN Partnership Programme organised by UNCTAD, the UN Global Compact, UNEP FI and the PRI. Launched in 2009 by the UN Secretary General, the SSE’s mission is to provide a global platform for exploring how exchanges, in collaboration with investors, companies (issuers), regulators, policymakers and relevant international organizations, can enhance performance on ESG (environmental, social and corporate governance) issues and encourage sustainable investment, including the financing of the UN Sustainable Development Goals. The SSE seeks to achieve this mission through an integrated programme of conducting evidence-based policy analysis, facilitating a network and forum for multi-stakeholder consensus-building, and providing technical assistance and advisory services.
II. Listed below are some of the regional and national initiatives to further green and sustainable finance:
On November 2017, the ASEAN Capital Markets Forum (ACMF) issued Green Bond Standards.
The Standards, revised in October 2018, were developed based on the Green Bond Principles (GBP) tailored to meet the needs and commitment of ASEAN. The Standards label is to be used only for issuers and projects in the region and specifically excludes fossil fuel related projects.
The ACMF has produced in December 2018 a document Aligning sustainable finance with the Sustainable Development Goals (SDGs).
Malaysia has implemented the ASEAN Standards and SRI Sukuk Framework via incorporating the requirements into the Guidelines On Unlisted Capital Market Products Under The Lodge And Launch Framework (see especially Part 3, Chapters 7 and 8) and the Guidelines On Issuance Of Corporate Bonds And Sukuk To Retail Investors (see especially Part E, Chapter 20 and Part F, Chapter 21).
The Philippines Securities and Exchange Commission has approved on 16 August 2018, the “Guidelines on the Issuance of Green Bonds Under the ASEAN Green Bonds Standards.” These Guidelines set out to adopt the ASEAN Green Bond Standards and provide for the rules and procedures for the issuance of ASEAN Green Bonds in the Philippines.
The newly established Asia Securities Forum Working Group for Promotion of SDGs conducted a survey on SDGs with special focus on the status of ESG and sustainable finance in the ASF member jurisdictions. The survey, aiming to collect information on ESG investment in the region in a manner that can be compared across borders, was compiled and published in August 2019.
The ‘Guidelines for Issuing Green Bond in Brazil 2016’ aim at providing recommendations to participants in the Brazilian fixed income securities market on the process of issuing Green Bonds. It also intends to contribute to the development of this market in the country.
Official Rules: ICMA offers English versions of the Green financial bond rules of the People’s Bank of China (PBOC). The documents include the PBOC Announcement and the Preparation Instructions on Green Bond Endorsed Project Catalogue (2015 Edition). These translations have been coordinated and made available by ICMA for information only. In case of any discrepancy between these translations and the original Chinese version, please refer to the Chinese version as the official document.
NAFMII (National Association of Financial Market Institutional Investors) and ICMA Report: A comprehensive report on how the Green Bond market in China has developed over the past few years has been published in March 2017, detailing the critical factors which have allowed Green Bond issuance in China to expand so rapidly, with reference to developments in the international green bond market. It aims to provide issuers, investors and other market participants with information about the development of the Chinese and international green bond markets, including operational practices, standards and reporting, to encourage more participation in this market and expand financing channels for sustainable development.
Access ‘The practice and prospects for green bond market development at home and abroad’ (Chinese)*
Access ‘The practice and prospects for green bond market development at home and abroad’ (English)*
*These documents are locked to ICMA members only. Members of NAFMII and members and observers of the Principles may access the documents by requesting them via the International Capital Market Association.
The European Commission set up a Technical Expert Group on Sustainable Finance (TEG) to assist it in developing, in line with the Commission’s legislative proposals of May 2018:
For more information regarding the work of the TEG and the legislative proposals that frame their work, see also the frequently asked questions.
The Ministry of the Environment, Japan, established the “Green Bond Guidelines, 2017” on 28 March 2017 with the purpose of spurring issuances of Green Bonds and investments in them in Japan.
On 20 February 2019, Kenya launched its green bonds regulatory framework: The launch of the green bonds market has been embedded in the legal framework through the publication of a Policy Guidance Note (PGN) on Issuance of Green Bonds and the approval of amendments to the NSE Listing Rules by CMA.
III. Other useful links:
The Equator Principles (dated June 2013) is a risk management framework, adopted by financial institutions, for determining, assessing and managing environmental and social risk in projects. It is primarily intended to provide a minimum standard for due diligence to support responsible risk decision-making.
Currently 89 Equator Principles Financial Institutions (EPFIs) in 37 countries have officially adopted the EP, covering over 70 percent of international Project Finance debt in emerging markets.
In September 2015, countries adopted a set of goals to end poverty, protect the planet and ensure prosperity for all as part of a new sustainable development agenda. Each goal has specific targets to be achieved over the next 15 years.