Green, Social and Sustainable Bonds

In 2015, on the occasion of the COP 21 (Conference of Parties, the United Nations Framework Convention on Climate Change, UNFCCC), held in Paris from 30 November to 12 December 2015, some important agreements and key sustainable development references were signed by the governments around the world.

The Sustainable Development Agenda 2030 was the first UN project to take shape, a global partnership action plan for people, the planet and prosperity adopted in September 2015 by the 193 Member States of the United Nations. .

The Agenda includes  17 Sustainable Development Goals – Sustainable Development Goals, SDGs – in a larger action plan of 169 “targets". The launch of the 17 Sustainable Development Goals began at the beginning of 2016, with a timeframe of 15 years:  the countries have in fact committed in achieving these objectives by the end of 2030.

 

 

Over the years, alongside the environmental issues, all communities best practice policies (not only the financial ones) in relation to corporate governance are gaining increasing relevance and attention.

Being aware of the challenges and the behaviours that can impact the development of ESG topics, Borsa Italiana immediately considered essential to increase the awareness of all investors operating in the capital markets regarding the importance of divulging and implementing sustainable processes.

Borsa Italiana, as a leading international markets infrastructure provider and a facilitator of the dialogue between issuers, sell side and investors, is ideally placed to help promote good practices across the industry.

If on the one hand, on the business side, the number of entities choosing finance models that integrate ESG criteria within their internal processes is growing, on the other hand, on the investors side, the idea of investing in and promoting these ESG models are a necessary choice for an effective and successful medium-long term strategy.

All this brings to the opportunity to issue and invest in financial instruments whose proceeds are intended to finance green and/or economically sustainable projects, so-called Green, Social and Sustainable Bonds (hereafter Green&Social Bonds).

FIXED INCOME INSTRUMENTS FOR SUSTAINABLE FINANCE:

Green&Social Bonds are very similar to the traditional bonds; however, concerning the use of proceeds, the issuers must comply with shared guidelines and international principles.

The range of projects to be financed is based on a specific procedure in accordance with a predefined list of categories. In addition, the issuer must guarantee the transparency in communicating and reporting to investors regarding the progress of their sustainable investments.

Moreover, for all listed products classified as Green&Social bonds, a number of tools are available in order to better identify and analyse the instruments features in terms of international principles, allocation of proceeds and relevant reporting.

In this perspective, the Green and Social Bond market segment of Borsa Italiana, which is cross to MOT, ExtraMOT and EuroTLX markets, offers institutional and retail investors the opportunity to clearly identify the instruments whose proceeds are destined to finance projects with environmental ("Green Bonds") and/or social ("Social Bonds") impacts. 

These sustainable bonds will be certified by an independent third-party entity and the information regarding the use of proceeds should be readily available and renewed at least once a year.

GREEN&SOCIAL BOND SEGMENT OF BORSA ITALIANA:

Green&Social segment strenghts

 

Lastly, as part of its mission, Borsa Italiana has joined the Sustainable Stock Exchanges Initiative, backed by the United Nations, with the aim of supporting the transition to a low environmental impact economy. Moreover it adheres to the Climate Bonds Initiative and is a member of ICMA, the International Capital Markets Association, promoter of the Green Bond Principles, the Social Bond Principles and the Sustainability Bond Guidelines.