Green and social - CICERO rates its first sustainability bond framework
Both social and green aspects have been reviewed by CICERO and the International Institute for Sustainable Development (IISD) for The Agricultural Development Bank of China’s first green and sustainability bond framework.
“By combining our shades of green methodology with transparency on social issues related to the investment, CICERO together with IISD aims to raise the bar for sustainability bonds,” said Harald Francke Lund, who leads CICERO’s work on Second Opinions.
The Agricultural Development Bank of China (ADBC) is a policy bank, which supports the performance of China’s goal through policy-oriented financing, focuses on eliminating poverty at regional level by 2020, rural revitalization strategy, the development Yangtze River Economic Belt and so on.
“When reviewing the green and sustainability bond framework of ADBC, we have looked at the green aspects of social projects and the social aspects of green projects,” said Christa Clapp, Research Director at CICERO.
First joint review
The review is a result of cooperation between CICERO and the International Institute for Sustainable Development (IISD), where IISD provided additional expertise on social issues. The review of the ADBC green and sustainability bond framework is the first sustainability bond framework the two research institutions have reviewed together.
“Financing sustainable infrastructure is crucial to achieving the Sustainable Development Goals (SDGs),” said Oshani Perera, Director, Public Procurement and Infrastructure Finance, IISD. “We are very pleased to collaborate with CICERO to further human development and environmental sustainability to champion solutions to 21st century challenges,” Perera said.
The ADBC's green bond framework is rated dark green and the sustainability bond framework is rated medium green. The sustainability bond framework includes a broad range of project categories that generally support sustainable development. Both green and sustainability bonds may be issued under the framework.
The green bonds can fund sustainable water and wastewater management, renewable energy and environmentally sustainable management of living natural resources and land-use. The sustainability bonds can fund the above green projects categories, and affordable housing, affordable basic infrastructure such as water networks and basic medical facilities as well as essential services such as medical and educational services.
"We are excited to provide transparency to international investors in the emerging Chinese sustainability bond market,” said Kristina Alnes, Senior Advisor at CICERO.
China has shown leadership in climate finance. The Chinese green bond market is one of the largest in the world and the country has a rigorous process for green bond issuances. CICERO partner CECEP assisted ADBC with the certification against Chinese regulations.
CICERO’s Shades of Green methodology gives transparent information on how well a green or sustainability bond framework aligns with a low-carbon resilient future. In our reviews green and sustainability bond frameworks are graded light green, medium green and dark green.
CICERO is an award-winning independent reviewer of green bonds that counts the reviews of many green bond market ‘firsts’: the first green sukuk issued by Tadau Energy in Malaysia; the first green city bond issued by Gothenburg, Sweden; the first green corporate bond issued by Vasakronan; and the first green bond issued by the World Bank, as well as the world's largest bank - ICBC of China. CICERO works with international organizations such as the German GIZ to build capacity on green bonds across the world.