S&P releases evaluation tool for green bonds

S&P wants to create a system to rate the environmental impact of projects that bonds will finance.

As the Middle East looks forward to its first green bond hitting the market this year, S&P Global Ratings is aiming to tap the rapidly expanding market worth billions by issuing an evaluation tool.

The credit rating agency has launched a plan to analyse and estimate the environmental impacts of projects or initiatives that will be financed by these bonds.

The S&P offering will include a transparency, governance and a mitigation or adaptation score to evaluate the projects or initiatives financed by the bond’s proceeds.

Green bonds have grown over the past three years to more than US$65 billion from $11bn, according to the Climate Bonds Initiative. Regional banks such as NBAD have been looking into issuing a green bond, which would be the first in the region, falling in line with principles set by the International Capital Market Association.

“As market interest for information relating to the green credentials of capital market instruments continues to grow, S&P Global Ratings believes that development of a Green Bond Evaluation product may further serve to meet informational needs of market participants,” said Michael Wilkins, S&P Global Ratings head of environmental and climate risk research.

S&P is looking at reaching out to the market, including investors, issuers, governments, multilaterals and intermediaries for feedback on its proposed green bond evaluation.

lgraves@thenational.ae

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Published: September 13, 2016 04:00 AM

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