Green, Social, and Sustainability linked Bonds

A new era for sustainable bonds

With the adaptation of the new EU Green Bond Standard (EU GBS), Europe is at the forefront of promoting sustainable finance. Sustainable bonds, including green, social, sustainability, and sustainability-linked bonds, play a crucial role in financing projects that have positive environmental and social impacts.

The EU GBS sets a new standard by making external reviews mandatory for issuers of sustainable bonds, ensuring transparency and credibility in the market.

Explore how PwC is supporting sustainable bonds incl. EU Green bonds and drives sustainable finance in Europe.

Green Bonds are defined by international standards such as the International Capital Market Associations (ICMAs) Guiding principles or the Climate Bonds Initiative. The common aspect embedded into these is the use of proceeds, how the bond proceeds are allocated towards projects that bring environmental and climate benefits.

The European Commission has defined EU Green Bonds (“EU GBS”) as any type of listed or unlisted bond or capital market debt instrument whose proceeds shall be used to finance green projects meeting environmental objectives as defined in the EU Taxonomy.

Social bonds are any type of bond instrument where the proceeds will be used to finance eligible social projects, which are aligned with the four core components of the Social Bond Principles as defined by the International Capital Markets Association.

Sustainability bonds are bonds where the proceeds will be used to finance a combination of both green and social projects.

Sustainability-linked bonds are any type of bond instrument for which the financial and/or structural characteristics (typically their interest coupon) can vary depending on whether the issuer achieves its Sustainability/ESG objectives.

Compared to the green, social and sustainability bonds, sustainability-linked bonds are not focused on how the proceeds of the bond are being used. Instead, they focus on whether or not the issuer meets its Sustainability/ESG targets.

How can we help?

Prepare

Prepare the Issuer's’ ability to issue public or private debt with a sustainability focus, including analysing the Issuer's capital structure and sustainability strategy.
Determining the most suitable bond type and appropriate market for the issuance.
Developing internal project selection criteria and process to identify eligible projects, incl. setting up for example a taxonomy-alignment assessment process.
Conducting an environmental and social due diligence.
Determine financial and non-financial information needed to fulfil the relevant prospectus requirements and marketing purposes.
Optimising the issuer’s financial and non-financial ESG reporting process to ensure continuous compliance with all existing and future reporting requirements.
Establishing data models for financial data and non-financial ESG data to support meeting due diligence requirements from banks and other transaction parties.
Developing measurement and reporting framework and key performance indicators to demonstrate sustainable impact.

Arrange

Assisting the issuer in creating investor marketing materials.
Co-drafting with legal counsel of the information memorandum or prospectus and loan agreement containing the information required by investors and other stakeholders.
Conducting a credit and ESG rating readiness assessment and execute follow up recommendations. Based on the results of the assessment, we will provide management with "no regrets” recommendations for improvement in key areas such as corporate governance, financial transparency, and financial profile. These enhancements are aimed to help in achieving a favourable credit rating.