Labels and Standards

The Sustainability Bond Guidelines (SBG), which were published in June 2018 by the International Capital Market Association (ICMA), confirm the relevance of the Principles in this context and facilitate the application of their guidance on transparency and disclosure to the Sustainability Bond market. The common four core components of the Principles and their recommendations on the use of external reviews and impact reporting therefore also apply to Sustainability Bonds.

Developed by AccountAbility, a UK-based global organisation, AA1000 are a series of standards designed to help organisations become more accountable and sustainable. They address priorities, performance and targets in governance, sustainability assurance and inclusive stakeholder engagement, among others, and complement standards such as ISO9001 and ISO14001.

In March 2017, China Securities Regulatory Commission (CSRC), the regulator overseeing the issuance of bonds from listed corporates and corporate asset-backed securities, released new guidelines for Chinese listed companies. The CSRC guidelines have adopted the green definitions used by People's Bank of China (PBOC), with a restrictive provision excluding high-polluting and high-energy consumption companies that conflict with the national industrial planning policy. They also require the relevant company to deliver a commitment letter to CSRC regarding the green characteristics of the issuance. The guidelines include a prohibition in principle on the issuances of Green Bonds by non-green issuers.

A working group has been established under the TEG (Technical Experts Group) with the objective of setting up standards for the EU Green Bond market, especially in terms of reviewing standards.

Green Loan Principles are set of principles, published in March 2018 by the Loan Market Association (LMA), together with Asia Pacific Loan Market Association (APLMA), with the aim to create a high-level framework of market standards and guidelines as well as to provide for a consistent methodology for use in the whole-sale Green Loan market.

The Green Bond Principles (GBP), updated in June 2018, are voluntary process guidelines issued by the International Capital Market Association (ICMA) that recommend transparency and disclosure and promote integrity in the development of the Green Bond market by clarifying the issuance approach. The GBP are intended for broad use by the market and provide issuers guidance on the key components involved in launching a credible Green Bond; they aid investors by ensuring availability of information necessary to evaluate the environmental impact of their green bond investments, and they assist underwriters by moving the market towards standard disclosures, which will facilitate transactions.

The Social Bond Principles (SBP), issued by the International Capital Market Association (ICMA) and updated in June 2018, promote integrity in the Social Bond market through guidelines that recommend transparency, disclosure and reporting. They are intended for use by market participants and are designed to drive the provision of information needed to increase capital allocation to social projects.

The Climate Bonds Standard and Certification Scheme is a Fairtrade-like labelling scheme for bonds.
Scientific criteria ensure that it is consistent with the 2 degrees Celsius warming limit in the Paris Agreement. The Scheme is used globally by bond issuers, governments, investors and the financial markets to prioritise investments which genuinely contribute to addressing climate change.

The Sustainability-Linked Bond Principles (SLBP), issued by the International Capital Markets Association (ICMA) in 2020, are voluntary process guidelines that outline best practices for financial instruments that incorporate forward-looking sustainability/ESG objectives. The SLBP also aim to build integrity as the Sustainability-Linked Bond market continues to development by clarifying the approach for issuance of SLBs. These Principles are intended for broad use by the market and provide issuers with guidance on the key components involved in launching a credible and ambitious SLB. They help to facilitate investor trust by promoting accountability of issuers in terms of their sustainability strategy and availability of information necessary to evaluate SLB investments, and they assist underwriters by moving the market towards expected approaches to structuring and disclosures that will facilitate credible transactions.

Sustainability Linked Loan Principles are set of principles, published in March 2019 by the Loan Market Association (LMA), together with Loan Syndications & Trading Association (LSTA) and Asia Pacific Loan Market Association (APLMA), with the aim of promoting the development and integrity of sustainability linked loan products by providing guidelines which capture the fundamental characteristics of these loans.

ISO26000 is an international guidance standard on social responsibility for organisations of all sizes in the public and private sector, and includes specific guidance on communication surrounding social responsibility. The standard was issued in November 2010 after five years of work that included contributions from some 450 experts from 99 countries, as well as 200 observers and 42 regional or global liaison organisations such as the Consumers International, the International Labour Organisation, UNCTAD, the UN Global Compact and the World Health Organisation.

In December 2015, the National Development and Reform Commission (NDRC), China’s national policy management agency, published its guidelines for green domestic corporate bonds. The guidelines, intended for non-listed companies, clarify what projects are eligible as green. NDRC’s guidelines are limited to a list of qualifying green projects that should be supported by green corporate bonds and proposals for policy incentives for green bonds.

These OECD Guidelines are far-reaching recommendations addressed by governments to multinational enterprises operating in, or are from, adhering countries.
They provide voluntary principles and standards for responsible business conduct in areas such as employment and industrial relations, human rights, environment, information disclosure, combating bribery, consumer interests, science and technology, competition and taxation. Chapter III covers disclosure and calls on enterprises to be transparent in their operations and responsive to the public’s increasingly sophisticated demands for information.

In December 2015, the PBOC (People's Bank of China) published the Green Projects Catalogue for green financial bonds. The catalogue, aimed at financial entities, defines eligible green projects and provides guidelines for project classification and eligibility criteria within the following six environmental sectors:

• Energy saving
• Pollution prevention and control
• Resource conservation and recycling
• Clean transportation
• Clean energy
• Ecological protection and climate change adaptation

Principles for Responsible Investments (PRI) are a voluntary and aspirational set of investment principles (six principles) that offer a menu of possible actions for incorporating ESG issues into investment practice.