Key takeaways from the 2020 Annual General Meeting of the ICMA Green and Social Bond Principles

The launch of the Sustainability-Linked Bond Principles was the biggest news of the day at the 2020 Annual General Meeting of the Green and Social Bond Principles on June 9. We summarize the key developments from the meeting and their significance for the sustainable finance market.

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The International Capital Market Association (ICMA) on June 9 hosted the Annual General Meeting (AGM) of the Green and Social Bond Principles for the sixth consecutive year. Due to the COVID-19 situation, the event took place digitally on the London Stock Exchange’s online platform. A number of announcements were made public in connection with the AGM. We have summarised them below and include our initial reflections.

For background on sustainable finance developments within the fixed income market, read this article.

And don’t miss the recorded webinar from June 17, “AGM recap and the sustainable finance market outlook.”

Disclaimer: Nordea is a member of the ICMA Green and Social Bond Principles and an active participant in several of the working groups. Only information available from forms the basis for this article.

Sustainability-Linked Bond Principles announced (new document)

Sustainability Linked Bond Principles Cover

Context and Nordea’s reflection

The biggest announcement of the day was undoubtedly the launch of a new set of Sustainability-Linked Bond Principles. These principles come on the back of the announcement earlier this year that a working group on this topic had been established.

The interest in this new format picked up last year after Enel, the Italian utility company, launched their inaugural SDG-Linked Bond, with the coupon linked to various sustainability targets, such as share of renewable energy capacity. That transaction further built on the strong momentum seen in the loan space where sustainability-linked loans have really taken off after the launch of a similar set of Sustainability-Linked Loan Principles (first launched last year but updated back in May).

Although one should be careful with extrapolating success from one deal and a new set of principles, it is fair to say that interest in the new format is very high. As previously outlined in an opinion piece for Environmental Finance, sustainability-linked bonds should be welcome as they largely complement the existing “use of proceeds” structure we know from green and social bonds by giving issuers and investors a new financing tool to engage with sustainability on. Time will tell how well this market will fare, but it is fair to say that expectations are high.

Summary details

  • Sustainability-Linked Bonds (“SLBs”) are any type of bond instrument for which the financial and/or structural characteristics can vary depending on whether the issuer achieves predefined sustainability/ESG objectives.
  • The proceeds of SLBs are intended to be used for general purposes, hence the use of proceeds is not a determinant in its categorisation. Regardless, in select cases, issuers may choose to combine the GBP/SBP approach with the SLBP. Thus, please note that SLBs are not to be confused with Sustainability Bonds (i.e. use-of-proceeds bonds currently defined by the Sustainability Bond Guidelines).
  • The SLBP have five core components: 1. Selection of key performance indicators (KPIs); 2. Calibration of sustainability performance targets (SPTs); 3. Bond characteristics; 4. Reporting; and 5. Verification.
  • Appendix II provides a detailed table outline of information that can or must be included and how/where to write this.
  • See the Sustainability-Linked Bond Principles.

Social Bonds Principles 2020 (updated from 2018)

Social Bond Principles cover page

Context and Nordea’s reflection

The Social Bond Principles 2018 were updated with an expansion of social project categories as well as target populations. The recent release of COVID-19 bond guidance from ICMA was also included in the updated Social Bond Principles. In addition to the updated principles, case studies on social and sustainability bonds were published for further guidance.

The update is a timely reaction to the proliferation of COVID-19 bonds, observed since the outbreak of the pandemic, that seek to fund initiatives that mitigate the effects of the socioeconomic crisis created by the COVID-19 pandemic.  The new version also provides much-needed examples and clarification on definitions of target population and eligible social projects, which will encourage entities interested in issuing social bonds.

Summary details

  • Social Bonds are use-of-proceeds bonds that raise funds for new and existing projects that address or mitigate a specific social issue and/or seek to achieve positive social outcomes for a target population.
  • Similar to the Green Bond Principles, the Social Bond Principles have four core components: 1. Use of proceeds; 2. Process for project evaluation and selection; 3. Management of proceeds; and 4. Reporting.
  • The updated Social Bond Principles provide further clarification on social projects as well as an expansion of example project categories and target populations.
  • In addition to the updated Social Bond Principles, a deck of example case studies has been published to illustrate how issuers have applied the Social Bond Principles and Sustainability Bond Guidelines in practice.
  • The Social Bond Working Group has in addition developed a Q&A related to COVID-19 bonds as a related illustrative case study.
  • See the 2020 Social Bond Principles.

Green, Social and Sustainability Bonds: A High-Level Mapping to the Sustainable Development Goals (updated from 2019)

Mapping To SDGs cover page

Context and Nordea’s reflection

This High-Level Mapping to the Sustainable Development Goals aims to provide a broad frame of reference by which issuers, investors and bond market participants can evaluate the financing objectives of a given green, social or sustainability bond programme against the Sustainable Development Goals (SDGs).

Developments in international policy over the last few years have created momentum within the global capital markets to establish a link between investments and achieving the SDGs. In response to this growing momentum, the High-Level Mapping to the Sustainable Development Goals has been created for public and private sector issuers and investors to review their green, social and sustainability bond issuances and investments against the SDGs.

The 2020 edition has been slightly updated to include guidance that, where possible, issuers reference their methodology for alignment with the SDGs and, where applicable, incorporate this in their external review process as well as text to encourage reporting on SDG-related indicators and any potential contradictory negative.  An Annex has been included and references relevant SDGs for alleviation of COVID-19.

Summary details

  • The 2020 version has an updated structure and now includes sustainability bonds in addition to green and social bonds.
  • The Mapping table has been updated with clarified and amended example indicators. The example indicator’s reference to sub-SDG’s has been removed.
  • An annex has been added with SDGs particularly relevant for issuers who want to map their coronavirus-related social or sustainability bonds to SDGs. Those are SDG 3, 4, 6, 8 and 10.
  • See the High-Level Mapping to the Sustainable Development Goals.

Sustainability Standards and Labels overview (new document)

Sustainability Standards And Labels cover page

Context and Nordea’s reflection

Another new document published this year is the overview of Standards and Labels. The use of sustainability standards and/or labels as a reference for assessing the greenness of an investment has been a practice in the green bond market for years. It is not uncommon for issuers to include these standards in their frameworks to qualify environmental use of proceeds. The document provides an overview for green bond market participants to consider when they are assessing the relevance, strengths and weaknesses of various sustainability standards or labels as a suitable reference for assessing green eligibility.

Summary details

  • Sustainability standards and labels, with focus on environmental aspects, also known as environmental labelling and information schemes, are developed with the aim of conveying information on the environmental quality and performance of a product, process or service to an external audience.
  • The International Standards Organisation (ISO) outlines three types of different categories: 1. Ecolabels (ISO 14024); 2. Self-declared environmental claims (ISO 14021); and 3. Environmental declarations (ISO 14025).
  • The document provides further guidance on how Green bond market participants should use such standards and labels.
  • To foster transparency on some of the key issues related to such standards and labels, a Sustainability Standards Form has been made available for these bodies to respond to.
  • See the Sustainability Standards and Labels overview.

Handbook: Harmonized Framework for Impact Reporting (updated in April)

Handbook Harmonized Framework For Impact Reporting front page

Context and Nordea’s reflection

Reporting is one of the core pillars of the Green and Social Bond Principles and has been a core focus for the market for years as it represents one of the most tangible ways that issuers and investors can engage on the impact of green and social bonds. The “Harmonized Framework” approach was originally proposed by a set of international finance institutions back in 2015. Originally this document was focused only on climate change mitigation and adaptation, but has been expanded to include other categories (see more below in the section “Handbook: Harmonized Framework for Impact Reporting”).

The Handbook on reporting for green bonds has been updated continuously over the past few months and years. As such, it represents a living document that is continuously expanded upon. The latest update to the Handbook came in the form of the chapter on biodiversity back in April.

Summary details

  • The Handbook provides an overall introduction to impact reporting, the history of the development of impact reporting, the core principles and recommendations for reporting, and finally detailed sector-specific guidance and reporting metrics.
  • The list of categories covered by the Handbook now cover: 1. Renewable Energy; 2. Energy Efficiency; 3. Sustainable Water and Wastewater Management; 4. Waste Management and Resource Efficiency; 5. Clean Transportation; 6. Green Buildings; and 7. Biodiversity.
  • See the Handbook on Green bond reporting.

Working Towards a Harmonized Framework for Impact Reporting for Social Bonds (updated from 2019)

Harmonized Framework For Impact Reporting For Social Bonds cover page

Context and Nordea’s reflection

Building on the work of the Harmonized Framework document, a similar set of “harmonized” guidelines for social bonds was released in 2019. This document has been updated to include more robust definitions of output, outcome and impact. Also, with the launch of a new set of Social Bond Principles, the wording has been aligned in this latest version on topics such as “target population.” Similarly, the working list of sample indicators has been updated and restructured.

By updating the guidelines for social bond impact reporting, and aligning these with the 2020 version of the corresponding principles, many uncertainties in the social bond market should be clarified. We expect that the increased focus on harmonization of reporting, together with the other outputs from the social bond working group, should help further drive the development of that part of the market. The relevance of social bonds have been further highlighted by the response to the COVID-19 crisis.

Summary details

  • The document contains a detailed list of core principles (1-6) for reporting on social bonds as well as a set of recommendations (A-H).
  • It outlines a framework for reporting on projects to which social bond proceeds have been allocated, including core principles and recommendations for issuers as they develop their own reporting.
  • The document also provides a reporting template covering quantitative and qualitative information that issuers can adapt to their own circumstances.
  • See the Social Bond Impact Reporting Harmonized Framework.

Guidelines for Green, Social and Sustainability Bonds External Reviews (updated from 2019)

External Review Guidelines cover page

Context and Nordea’s reflection

The Guidelines for External Review, first published in 2018, is a complement to the Sustainable Bond Principles and provides voluntary guidance relating to professional and ethical standards for external reviewers, as well as to the organisation, content and disclosure for their reports.

The 2020 version of the Guidelines provides additional guidance, especially for second party opinions. It is important to note that it has not been updated to date for guidance related to the new Sustainability-Linked Bond Principles. It would not be unrealistic to expect that we could see future versions of this guideline also address the role of external reviewers in the Sustainability-Linked Bond space, but that is still too early to tell.

Summary details

  • The GBP, SBP and SBG recommend that, in connection with the issuance of a green, social or sustainability bond or programme, issuers appoint external review provider(s) to confirm the alignment of their bond or bond programme with the four core components of the principles.
  • The Guidelines for External Reviews provides voluntary guidance relating to professional and ethical standards for external reviewers, as well as to the organisation, content and disclosure for their reports.
  • They have been developed as a common undertaking between the Executive Committee of the Principles in consultation with a group of leading external reviewers, with the support of the ICMA Secretariat, with the common objective to promote best practice in the provision of external review services for green, social and sustainability bonds.
  • The guidelines complement the Green and Social Bond Principles, the Sustainability Bond Guidelines and reference other existing relevant guidance.
  • See the Guidelines for Green, Social and Sustainability Bonds External Reviews.

Guidance Handbook (updated from 2019)

Guidance Handbook cover page

Context and Nordea’s reflection

The Guidance Handbook, first published in 2019, is a collection of Q&As thematically organised to provide further insight into the practical application of the Green Bond Principles, the Social Bond Principles and the Sustainability Bond Guidelines, as well as clarification and other guidance.

The new version of the Guidance Handbook includes an updated Q&A, some of which relates to questions raised following the COVID-19 crisis and the related social and/or thematic COVID-19 bonds.

The six sections included in the Guidance Handbook are Fundamentals, Governance & Membership, Core Components of the GBP/SBP, Market and Technical Issues, Other Market and Official Sector Initiatives, and Social Bonds related to COVID-19.

Summary details

  • The Guidance Handbook is a Q&A related to the Green Bond Principles, the Social Bond Principles and the Sustainability Bond Guidelines.
  • The new version contains updated Q&As, many of which are related to the socioeconomic crisis created by the COVID-19 pandemic.
  • See the Guidance Handbook.

About the authors:

Ebba Ramel, an analyst in Nordea's Sustainable Bonds team


Ebba Ramel is an analyst in Nordea’s Sustainable Bonds team.



Jacob Michaelsen, Head of Nordea Sustainable Finance Advisory


Jacob Michaelsen is Head of Sustainable Finance Advisory at Nordea.

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