ICMA releases new resources on Green, Social, Sustainability and Sustainability-Linked Bond Principles

On 22 June 2023, ICMA held its ninth Annual General Meeting on its Green, Social, Sustainability and Sustainability-Linked Bond Principles (the Principles) and its collection of voluntary frameworks which were referenced in 2022 by an estimated 97% of sustainable bonds issued internationally as well as translated into 26 languages.

Latest publications and resources

As we have come to expect from the annual meeting, new materials and resources were  released to support the Principles, including:

• The 2023 edition of the Climate Transition Finance Handbook (CTFH). This is the first update since its original publication in 2020. Notably, the CTFH now includes dedicated recommendations for climate-themed green, sustainability and sustainability-linked bonds and acknowledges the development of “climate transition” bonds in specific jurisdictions. New annexes have also been added providing illustrative disclosures and a list of market and official sector guidance for climate transition themed bonds.
• A 2023 update of the Sustainability-Linked Bond Principles (SLBP) and related tools which, most notably, features adapted language to accommodate all types of issuers, including sovereign and sub-sovereign issuers as well new metrics for sovereigns and social issues in the KPI registry. The update expands the key performance indicator registry by 33%, and also integrates “just transition” across the Principles.

Further guidance

The Principles also released further guidance on specific areas, including:

• additional Q&As for green, social and sustainability bond securitisation;
• revised language for the Social Bond Principles confirming, among other things, the need to identify target populations, and separately, specific guidance for impact reporting for Social Bonds;
• updates to the core recommendations for impact reporting for Green Bonds, and impact reporting metrics for energy efficiency & renewable energy;
• a revised mapping to the Sustainable Development Goals; and
• updated issuer information templates and external review forms.

The most significant update is to the CTFH which now places a greater emphasis on alignment with an issuer’s greenhouse gas emission (GHG) reduction strategy and the goals of the Paris Agreement. There is also an increased focus on disclosures and transparency. The CTFH is intended to provide complementary guidance to issuers utilising sustainable use of proceeds bonds or sustainability-linked bonds in connection with the reduction of GHG emissions.

The updates to the SLBP reflect the use of this issuance format by Uruguay and Chile and better align the available resources to issuances by sovereign issuers.

The 2023 Annual Conference of the Principles will be held in Singapore on 28 June 2023 and will feature discussions on the aforementioned updates and will incorporate the Asia Pacific perspective. The conference will also cover the key topics currently being debated in sustainable finance, including regulation, market integrity and climate transition finance.

The Principles are expected to release further publications to support the market in the coming months. Updates anticipated include additional Q&As related to Sustainability-Linked Bonds reflecting market developments, as well as guidance in relation to sustainable short-term instruments such as euro commercial paper.