Sustainable Finance
What is Sustainable Finance?
Sustainable finance represents a paradigm shift in the financial sector, prioritizing long-term environmental health and social well-being alongside traditional financial returns. It's a key driver in the global transition towards a more sustainable and equitable future.
This form of finance is integral to achieving key climate and environmental objectives, such as those outlined in the European Green Deal and the UN's Sustainable Development Goals, and is fundamental in fostering a climate-neutral, resource-efficient, and fair economy.
This includes a wide array of activities, from investing in green energy projects to supporting Countries and companies with strong social values and governance practices. It's not just about environmental aspects but also incorporates social and governance elements, ensuring a holistic approach to sustainability.
Sustainable Finance Elements
1. Green bonds: Are debt securities issued to finance projects that have positive environmental impacts? They are a crucial tool for raising capital for sustainable development.
2. Green Loans: Are similar to green bonds but in a loan format. They are used to finance or re-finance green projects.
3. EU Taxonomy for Sustainable Activities: The EU Taxonomy is a classification system, established by the European Commission, defining which economic activities can be considered environmentally sustainable. It is a key piece of legislation in the EU's Green Deal and Sustainable Finance Strategy.
4. Sustainability Linked loans and bonds:
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Sustainability-Linked Loans (SLLs): These are loan instruments and performance-based financing arrangements designed to incentivize borrowers to achieve ambitious, predetermined sustainability performance objectives.
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Sustainability-Linked Bonds (SLBs): Similar to SLLs, SLBs are bond instruments where the financial and/or structural characteristics can vary depending on whether the issuer achieves predefined sustainability objectives.
5. Climate bond initiative: The Climate Standard and Certification Scheme is a rigorous labeling system for bonds, assets, and entities to ensure that investments in climate mitigation are consistent with limiting global warming to 1.5C, as outlined in the Paris Agreement. This global scheme is utilized by bond issuers, governments, investors, and financial markets to identify and prioritize investments that make a genuine contribution to addressing climate change.
How we can help
Feasibility and Impact Analysis
Project Identification
Identifying potential projects or investments that align with the client’s sustainability goals.
Marketing & Capital Raising
Provide Advice on the road map of obtaining substantial finance.
Investor Outreach: Presenting the green bond or loan to potential investors, emphasizing the sustainability aspects and expected environmental or social impacts.
Feasibility Study
Conducting a feasibility study to assess the viability, risks, and potential environmental impact of the proposed projects.
Green Bonds
defining the use of proceeds, establishing a framework aligned with Green Bond Principles
Green Loan
Aligning the loan structure with the Green Loan Principles, defining the use of proceeds, and setting up any necessary performance indicators.
Due Diligence
Conducting thorough due diligence to ensure compliance with relevant sustainability standards and regulations.
For green bonds, obtaining certification from recognized bodies like the Climate Bonds Initiative can be an important step to enhance credibility and investor confidence.
Implementation & Monitoring
Implementation of the Green financing into the Project
Regular monitoring and reporting on the project's performance and its impact on sustainability goals, such as emission reductions or energy efficiency improvements.
Reporting & Compliance
Provide regular updates to investors and stakeholders on the use of proceeds and the environmental impact of the financed projects.
Ensuring ongoing compliance with the terms of the green bond or loan.
Continuous Improvement & Scaling
Conduct Performance and impact assessments, and adapt strategies to maximize sustainability impacts.