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The new document aims to provide guidance for financing Green Enabling Projects that are essential to the value chain of Green Projects
The Green, Social, Sustainability, and Sustainability-Linked Bond Principles (the Principles), the global standard for the $5 trillion sustainable bond market, announced on Tuesday the launch of its new Guidance for Green Enabling Projects.
Green Enabling Projects, essential components in the value chain of Green Projects, are not explicitly considered green but remain critical to eligible Green Projects, the International Capital Market Association (ICMA) stated in a press release. The ICMA serves as the Secretariat to the Principles.
The new document aims to provide guidance for financing Green Enabling Projects, addressing both induced and avoided emissions dimensions, along with the management of related environmental and social risks.
The ICMA explained that the document highlights the role of green enabling projects in catalysing and scaling the transition to a low-carbon economy in alignment with the Paris Agreements goals. It acknowledges the complexities of value chains and the challenges posed by multiple end-uses.
Criteria for eligibility
The document outlines specific criteria for the eligibility of Green Enabling Projects:
The project must be essential for the value chain of an enabled Green Project.
It should not result in the lock-in of high greenhouse gas emitting activities.
The project must provide a clear, quantifiable, and attributable environmental benefit.
It should demonstrate appropriate management of identified environmental and social impacts and risks, with transparent disclosure of material impacts.
Additionally, eligibility is based on the transparency of end-use. Regardless of the traceability level to a specific end-user in an enabled Green Project, environmental benefits should be demonstrated based on current use or potential for ramping up enabled Green Projects over time with clear timelines.
Both the specific criteria and transparency of end-use are required to qualify a Green Enabling Project. Furthermore, issuers of green bonds incorporating Green Enabling Projects must align with the Green Bond Principles (GBP).
Sector inclusion
An indicative list of sectors for Green Enabling Projects includes mining and metals, building and construction supplies and equipment, chemicals and specialty chemicals, ICT and telecommunication networks, and manufacturing of industrial parts and components.
The issuance of the Guidance is expected to help more issuers further up the value chain access the green bond market, facilitating broader participation in sustainable financing.
The Green Bond Principles (GBP), together with the Social Bond Principles (SBP), the Sustainability Bond Guidelines (SBG) and the Sustainability-Linked Bond Principles (SLBP) are published under the governance of the Principles. |
