Monday, April 14, 2014

Green Bond Principles Governance Framework Announced

The governance framework of the recently-created Green Bond Principles was released today, with the support of 25 international financial institutions.

The voluntary guidelines will allow for diverse stakeholder input into the Principles, provide effective oversight, and support their further development, the International Capital Markets Association, which will provide administrative duties for the project, said in a release.
“The Green Bond Principles were developed with guidance from issuers, investors, and environmental groups, and serve as voluntary guidelines on recommended process for the development and issuance of Green Bonds,” ICMA said. “The Principles suggest process for designating, disclosing, managing, and reporting on the proceeds of a Green Bond. They are designed to provide issuers with guidance on the key components involved in launching a Green Bond, to aid investors by ensuring the availability of information necessary to evaluate the environmental impact of their Green Bond investments, and to assist underwriters by moving the market toward standard disclosures that facilitate transactions. “

The framework sets out the membership eligibility, which requires organizations to have issued, underwritten, or invested in Green Bonds, and admits others in the field of green finance as observers.
The 25 banks include four founders, Bank of America Merrill Lynch, Citi, Crédit Agricole CIB, and JPMorgan Chase & Co., as well as supporters BMO Financial Group and RBC Capital Markets.

“Endorsing the Green Bond Principles is RBC’s latest commitment to embedding sustainability into our core business activities,” said Sandra Odendahl, director of Corporate Sustainability at RBC, in a statement. “We have been incorporating environmental considerations into financing since we added environmental credit risk management to our lending policies in 1991. Since then, we’ve broadened and deepened our environmental programs, and have been recognized as a corporate leader in environmental sustainability. As the market for green bonds grows, RBC will continue to explore how financial products can be used to drive positive social and environmental impact.”
RBC highlighted the rapid growth of the global green bond market since the first green bond was issued in 2007. “Between 2007-2013, total green bond issuance sits at $24.2 billion, with 2013 issuance alone comprising $11.8 billion and Q1 2014 yielding record issuance of $9 billion.”

RBC also noted that the Ontario government has announced its intention to launch its first green bond in 2014 as a strategy to finance environmentally-friendly infrastructure projects. In March, TD Bank launched a $500 million green bond, the first commercial bank in Canada to offer a product dedicated to funding green initiatives.

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