The principles are a set of industry guidelines that promote transparency and integrity when companies issue ‘green bonds’. Such bonds allow issuers to raise money for investment in projects with environmental and social benefits.
The Green Bond Principles give companies guidance on disclosure and reporting to investors about what happens to the capital that is raised. This gives investors greater transparency and the information they need to evaluate the environmental impact of the bond. The principles are also useful for underwriters, by moving the market towards standard disclosures which make transactions easier and more efficient.
Sébastien Rozès, Country Executive and Head of Corporate Coverage France, Belgium and Luxembourg, said: “This shows how RBS stays at the forefront of the developments from a markets and client perspective.”
The principles were developed with guidance from issuers, investors, and environmental groups and are overseen by the International Capital Market Association (ICMA).
RBS was involved recently in two green bonds. One, a EUR750 million green bond for real estate firm Unibail-Rodamco, was the first such bond for a company in that sector in the euro market. The proceeds are expected to be used to finance brownfield sites or existing assets that meet specific social, environmental and sustainable criteria.
Renewable and efficient energy
That was followed by a GBP500 million Climate Awareness Bond for the European Investment Bank (EIB) to raise money for lending to borrowers in the renewable energy and energy efficiency space. RBS was a lead manager on what was the first such GBP deal for the EIB in this category.
Lionel Palomba, Director of Bond Origination, is expecting the green bond market to grow. “As the world focuses more on sustainability, there is likely to be an increase in green bond issuance. Companies can improve the perception of their environmental track record by investing the proceeds of a bond in a sustainable project. Meanwhile in a context of abundant liquidity, investors are very happy to have a new asset class to consider.”
Eliminating deforestation
RBS also recently became one of the first banks to adopt the Soft Commodities Compact, a scheme aiming to eliminate deforestation through changing supply chains. The initiative focuses on commodities that are grown rather than mined, like palm oil, timber, paper and soya, known as ‘soft’ commodities.
The Compact was created by the Consumer Goods Forum and the Banking Environment Initiative. The initiative is trying to find new ways for banks to collectively work towards low carbon growth, by helping capital to flow towards projects and companies that promote sustainability. The overall aim is to help clients achieve zero net deforestation by 2020.
To find out more about how RBS manages its direct and indirect impacts on the environment, read the 2013 Sustainability Review.
