ICMA 'Principles' Meeting Introduces New Sustainable Finance Guidance

The International Capital Market Association (ICMA) hosted its eighth annual general meeting for the "Principles" on June 28, 2022. The meeting introduced updated guidance to support market transparency and development, particularly concerning Green Bond Principles (GBP), Social Bond Principles (SBP), Sustainability Bond Guidelines (SBG), and Sustainability-Linked Bond Principles (SLBP).

Nicholas Pfaff, Deputy Chief Executive and Head of Sustainable Finance at ICMA, stated that the 2022 announcements represent critical support for market integrity and development. He emphasized that the Principles provide market participants and stakeholders with an essential reference for product standards, agreed terminology, and technical consistency, as well as a resource for benchmarking ambition.

Key announcements from the meeting include new definitions for green securitisation, clarifying terminology and market practices, especially regarding collateral. These definitions and an accompanying Q&A have been published for secured green and social bond structures.

Furthermore, a registry of approximately 300 key performance indicators (KPIs) for sustainability-linked bonds was updated, based on input from over 90 leading market participants. The registry includes sector classifications and details on core and secondary indicators. A registry of Climate Transition Finance (CTF) methodologies was also introduced to help issuers, investors, and financial intermediaries validate emission reduction pathways as science-based.