Difference between revisions of "Green Loan Principles"

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== Principles ==
 
== Principles ==
  
=== Use of Proceeds ===
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=== 1. Use of Proceeds ===
 
The fundamental determinant of a green loan is the utilisation of the loan proceeds for [[Green Loan | Green Projects]] (including other related and supporting expenditures, including R&D), which should be appropriately described in the finance documents and, if applicable, marketing materials. All designated Green Projects should provide clear environmental benefits, which will be assessed, and where feasible, quantified, measured and reported by the borrower.
 
The fundamental determinant of a green loan is the utilisation of the loan proceeds for [[Green Loan | Green Projects]] (including other related and supporting expenditures, including R&D), which should be appropriately described in the finance documents and, if applicable, marketing materials. All designated Green Projects should provide clear environmental benefits, which will be assessed, and where feasible, quantified, measured and reported by the borrower.
  
 
Where funds are to be used, in whole or part, for refinancing, it is recommended that borrowers provide an estimate of the share of financing versus refinancing. Where appropriate, they should also clarify which investments or project portfolios may be refinanced, and, to the extent relevant, the expected look-back period for refinanced Green Projects.
 
Where funds are to be used, in whole or part, for refinancing, it is recommended that borrowers provide an estimate of the share of financing versus refinancing. Where appropriate, they should also clarify which investments or project portfolios may be refinanced, and, to the extent relevant, the expected look-back period for refinanced Green Projects.
  
A green loan may take the form of one or more tranches of a loan facility. In such cases, the green tranche(s) must be clearly designated, with proceeds of the green tranche(s) credited to a separate account or tracked by the borrower in an appropriate manner.
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A green loan may take the form of one or more [[Credit Facility Tranche | tranches of a loan facility]]. In such cases, the green tranche(s) must be clearly designated, with proceeds of the green tranche(s) credited to a separate account or tracked by the borrower in an appropriate manner.
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The GLP explicitly recognise several broad categories of eligibility for Green Projects with the objective of addressing key areas of environmental concern such as climate change, natural resources depletion, loss of biodiversity, and air, water and soil pollution. This non-exhaustive list is intended to capture the most usual types of projects supported, and expected to be supported, by the green loan market. However, it is recognised that definitions of green and green projects may vary depending on sector and geography.
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=== 2. Process of Project Evaluation and Selection ===
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The borrower of a green loan should clearly communicate to its lenders:
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* its environmental sustainability objectives;
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* the process by which the borrower determines how its projects fit within the eligible Green Loan categories  and
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* the related eligibility criteria, including, if applicable, exclusion criteria or any other process applied to identify and manage potentially material environmental risks associated with the proposed projects.
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Borrowers are encouraged to position this information within the context of their overarching objectives, strategy, policy and/or processes relating to environmental sustainability. Borrowers are also encouraged to disclose any green standards or certifications to which they are seeking to conform.
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=== 3. Management of Proceeds ===
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The proceeds of a green loan should be credited to a dedicated account or otherwise tracked by the borrower in an appropriate manner, so as to maintain transparency and promote the integrity of the product.
 +
 
 +
Where a green loan takes the form of one or more tranches of a loan facility, each green tranche(s) must be clearly designated, with proceeds of the green tranche(s) credited to a separate account or tracked by the borrower in an appropriate manner.
 +
 
 +
Borrowers are encouraged to establish an [[Internal Governance]] process through which they can track the allocation of funds towards Green Projects.
  
The GLP explicitly recognise several broad categories of eligibility for Green Projects with the objective of addressing key areas of environmental concern such as climate change, natural resources depletion, loss of biodiversity, and air, water and soil pollution. This non-exhaustive list, set out in Appendix 1, is intended to capture the most usual types of projects supported, and expected to be supported, by the green loan market. However, it is recognised that definitions of green and green projects may vary depending on sector and geography.
 
  
 
== References ==
 
== References ==

Revision as of 17:41, 15 January 2020

Definition

The Green Loan Principles (GLP) have been developed by representatives from financial institutions active in the Syndicated Loan market, with a view to promoting the development and integrity of the Green Loan product[1]

Principles

1. Use of Proceeds

The fundamental determinant of a green loan is the utilisation of the loan proceeds for Green Projects (including other related and supporting expenditures, including R&D), which should be appropriately described in the finance documents and, if applicable, marketing materials. All designated Green Projects should provide clear environmental benefits, which will be assessed, and where feasible, quantified, measured and reported by the borrower.

Where funds are to be used, in whole or part, for refinancing, it is recommended that borrowers provide an estimate of the share of financing versus refinancing. Where appropriate, they should also clarify which investments or project portfolios may be refinanced, and, to the extent relevant, the expected look-back period for refinanced Green Projects.

A green loan may take the form of one or more tranches of a loan facility. In such cases, the green tranche(s) must be clearly designated, with proceeds of the green tranche(s) credited to a separate account or tracked by the borrower in an appropriate manner.

The GLP explicitly recognise several broad categories of eligibility for Green Projects with the objective of addressing key areas of environmental concern such as climate change, natural resources depletion, loss of biodiversity, and air, water and soil pollution. This non-exhaustive list is intended to capture the most usual types of projects supported, and expected to be supported, by the green loan market. However, it is recognised that definitions of green and green projects may vary depending on sector and geography.

2. Process of Project Evaluation and Selection

The borrower of a green loan should clearly communicate to its lenders:

  • its environmental sustainability objectives;
  • the process by which the borrower determines how its projects fit within the eligible Green Loan categories and
  • the related eligibility criteria, including, if applicable, exclusion criteria or any other process applied to identify and manage potentially material environmental risks associated with the proposed projects.


Borrowers are encouraged to position this information within the context of their overarching objectives, strategy, policy and/or processes relating to environmental sustainability. Borrowers are also encouraged to disclose any green standards or certifications to which they are seeking to conform.

3. Management of Proceeds

The proceeds of a green loan should be credited to a dedicated account or otherwise tracked by the borrower in an appropriate manner, so as to maintain transparency and promote the integrity of the product.

Where a green loan takes the form of one or more tranches of a loan facility, each green tranche(s) must be clearly designated, with proceeds of the green tranche(s) credited to a separate account or tracked by the borrower in an appropriate manner.

Borrowers are encouraged to establish an Internal Governance process through which they can track the allocation of funds towards Green Projects.


References

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