Post-issuance reporting in the green bond market 2021

 
Post-issuance
reporting in the
green bond market
2021

Prepared by Climate Bonds Initiative.                      Sponsored by IDB, UniCredit and Lyxor ETF.
Post-issuance reporting in the green bond market 2021 Climate Bonds Initiative                          1
1. Introduction
This is Climate Bonds Initiative’s third study        The impact reporting section explores                  Contents
of post-issuance reporting in the green bond          several topics specific to the impact space. We
                                                                                                             1. Introduction 2
market. By shedding more light on reporting           significantly deepened our impacts research
practices, we aim to understand the availability      this year, and thus cover a broader range of           Report structure 2
and attributes of disclosure on the use of proceeds   issues than our last report with the explicit aim      Methodology 4
(UoP) and environmental impacts of projects/          of supporting further market development and
                                                                                                             2. Report summary 4
assets/activities financed by green bonds, as well    best practice.
as identify avenues for improvement.                                                                         High-level findings & conclusion 4
                                                      Along with impact reporting, many readers may
                                                                                                             Quantitative findings: more detail 5
Post-issuance UoP reporting is a core component       be most interested by what the future holds.
of the Green Bond Principles (GBP) and the            This section includes extensive critical reflections   3. Use-of-proceeds reporting 7
Green Loan Principles (GLP), and it is also           on past and future market trends, both within
                                                                                                             Quarterly analysis 7
recommended that issuers report on the                and beyond UoP instruments. We hope it can
                                                                                                             Deal size 8
environmental impacts achieved. Post-issuance         be used as a platform for further progress and
                                                                                                             Issuer type 8
disclosure provides transparency, ensures             harmonisation of sustainability reporting.
                                                                                                             External reviews 9
accountability and underpins the credibility
                                                      The conclusion summarises the key findings,            Geographies 10
of green bonds and loans. As the market has
                                                      provides various best practice recommendations,        At issuance vs. post-issuance 13
grown, so has investor interest in UoP and impact
                                                      and gives an overview of where reporting might
reporting to inform decision-making processes,                                                               4. Quality scoring 14
                                                      be headed.
analysis and investor reporting.
                                                                                                             Process overview & key variables 14
                                                      It is a long report. Our overarching aim was to
                                                                                                             Case studies 14
Report structure                                      be as comprehensive as possible in order to
                                                                                                             Quantitative analysis 16
                                                      facilitate the continued evolution of sustainable
This report follows a broadly similar structure to                                                           Best reporters 17
                                                      finance. We have therefore addressed many
our 2019 study, but with greater depth.
                                                      topics, some of which are quite complex                5. Impact reporting 18
The report summary gives an overview of the key       (especially related to impact reporting).
                                                                                                             Overview 18
messages, findings and conclusions, as well as a
                                                                                                             Impact reporting practices 18
summary of the key quantitative findings covering     Methodology                                            Impact case studies 20
different aspects of post-issuance reporting.
                                                      Report coverage:                                       Metrics: analysis approach 21
The subsequent section covers the availability                                                               Metrics: analysis results 24
                                                      • Green bonds issued from Nov 2017 - March
of use-of-proceeds (UoP) reporting analysed                                                                  Other relevant findings 33
                                                        2019 included in the Climate Bonds Green
through different perspectives, followed by an                                                               Impact reporting methodologies 34
                                                        Bond Database
assessment of the quality of reporting using
                                                                                                             6. What the future holds 38
a scoring system almost identical to the one we       • Loans and securitized instruments excluded
introduced in 2019. Here we also identify top                                                                State of play, and looking ahead 38
                                                      • The full universe is made up of 694 bonds from
performers and provide best practice examples.                                                               Looking further ahead 41
                                                        408 issuers = USD212bn
                                                                                                             Getting there: the paradigm shift 45
                                                      The research underpinning this report looked           Final remarks & food for thought 47
  Climate Bonds Initiative                            at all publicly available information after the
                                                                                                             7. Conclusion 48
                                                      bond has closed. Information sources include
  The Climate Bonds Initiative is an
                                                      bespoke green bond reports, annual reports,            Findings overview 48
  international investor-focused not-for-profit
                                                      CSR/ sustainability reports, etc.                      Evolution of impact reporting 48
  organisation working to mobilise
                                                                                                             Best practice recommendations 49
  the USD100tn bond market for climate                The analysis is based on what was available
  change solutions.                                   at the time of the research, the bulk of which         Appendices 51
                                                      happened in Q2 and Q3 2020 to allow just over a
  We promote investment in projects                                                                          1. Research methodology 51
                                                      year for the last included deals to provide post-
  and assets needed for a rapid transition                                                                   2. Climate Bonds Taxonomy 52
                                                      issuance reporting. This gives most, but not the
  to a low carbon and climate resilient                                                                      3. External review types 53
                                                      latest, deals a two-year time frame to report, the
  economy. Our mission is to help drive                                                                      4. Country ranking (by quality) 54
                                                      maximum recommended by the GBP.
  down the cost of capital for large-scale                                                                   5. List of impact metrics 55
  climate and infrastructure projects                 To read more detail about the methodology,
                                                                                                             Endnotes 58
  and to support governments seeking                  please see Appendix 1.
  increased access to capital markets to
  meet climate and greenhouse gas (GHG)
  emission reduction goals, as well as other
  sustainability objectives.

Post-issuance reporting in the green bond market 2021 Climate Bonds Initiative                                                                      2
Glossary                                                                     Impact metricsi: The KPIs that issuers use to                                     Key acronyms /
Green bond: Labelled use-of-proceeds debt
                                                                             measure/estimate and report impacts (e.g. GHG                                     abbreviations
                                                                             emissions saved, energy generated). There is a
instrument financing environmental projects/                                                                                                                   UoP: use of proceeds
                                                                             wide range, which we grouped together to form
assets and included in the Climate Bonds
                                                                             a consolidated list – throughout most of this                                     DM / EM: developed and emerging markets
Green Bond Database (as per our Database
                                                                             report, ‘metrics’ refers to the consolidated list.                                (according to MSCI classificationiii)
Methodology).
                                                                             General vs. Specific metrics: General metrics                                     SDGs: Sustainable Development Goals
Post-issuance reporting: Includes all the
                                                                             can be used across several or all project
publicly available information on a green bond’s                                                                                                               GHG: greenhouse gases
                                                                             categories (e.g. GHG emissions saved, energy
UoP and impacts after the bond has closed (often
                                                                             saved, number of units built). Specific metrics are                               CO2: carbon dioxide
referred to simply as ‘reporting’). Providing this is
                                                                             specific to each project category (e.g. building
a core component of the GBP.                                                                                                                                   GBP: Green Bond Principles
                                                                             certifications, number of journeys made).
Availability / Quality of reporting: For the                                                                                                                   ICMA: International Capital Market
                                                                             Absolute vs. Relative metrics:ii Absolute
purposes of this report, availability of reporting                                                                                                             Association
                                                                             metrics reflect absolute measures of performance
refers to whether post-issuance UoP reporting
                                                                             (e.g. GHG emissions, energy generated, capacity                                   ICMA Harmonized Framework: Handbook
is available (except in the ‘Impact reporting’
                                                                             installed, number of journeys made). Relative                                     – Harmonized Framework for Impact
section); quality of reporting refers to how ‘good’
                                                                             metrics reflect a comparison against some sort of                                 Reporting (2020)
the issuer’s overall reporting is.
                                                                             baseline, such as the performance in a previous
                                                                                                                                                               NPSI Position Paper: Nordic Public Sector
Use of proceeds (UoP): The projects/assets/                                  period (e.g. energy reduced, water reduced)
                                                                                                                                                               Issuers Position Paper on Green Bonds
activities financed by the bond proceeds. In                                 or in the project’s absence / against a relevant
                                                                                                                                                               Impact Reporting (2020)
use-of-proceeds instruments, the proceeds are                                benchmark (e.g. GHG emissions avoided, energy
allocated to specific uses.                                                  avoided, building certifications, number of                                       NFRD: EU Non-Financial Reporting Directive
                                                                             journeys shifted).
Impacts: The environmental impacts achieved                                                                                                                    CSRD: EU Corporate Sustainability Reporting
through the projects/assets financed with green                              Absolute vs. Relative units: Absolute units                                       Directive (replaces NFRD)
bond proceeds. However, in most of the ‘What                                 express a ‘direct measurement’ (e.g. kWh/MWh,
                                                                                                                                                               SFDR: EU Sustainable Finance Disclosure
the future holds’ section, takes on a broader                                tonnes, ha) while relative units express a relative
                                                                                                                                                               Regulation
definition of the full social and environmental                              amount (almost always in %, but can be an
impacts of activities/entities (clarified there).                            intensity, e.g. kWh per $ or per m2).                                             TCFD: Task Force on Climate-related
                                                                                                                                                               Financial Disclosures
Measured vs. Estimated impacts: Depends                                      Impact methodologies: Defined as any type
on how the impact is calculated. Measured                                    of framework that helps issuers decide which                                      TNFD: Task Force on Nature-related
impacts are derived directly from measurement                                metrics to report and/or how to monitor,                                          Financial Disclosures
(e.g. often the case for installed power capacity,                           measure/calculate and/or report them.
energy generated and area conserved/restored).
Estimated impacts require some form of
estimation and tend to refer to metrics that
are hard, if not impossible, to measure directly
(e.g. GHG emissions, GHG emissions avoided,
transport mode shifted).

Expected (ex-ante) vs. Actual (ex-post)
impacts: Depends on when the assessment is
conducted. Ex-ante impacts are forward-looking
(i.e. assessment before impact materialises) and
therefore necessarily estimated. Ex-post impacts
are assessed after the impact actually occurs, and
can be either measured or estimated.

i. Full list of (consolidated) metrics in Appendix 5, along with classification as general/specific and absolute/relative metrics.
ii. Relative metrics can be expressed in both absolute and relative units (e.g. energy saving in kWh and %); absolute metrics are almost always expressed in absolute units, but can be in relative units if an intensity, or in
some cases as a % (when reporting a share, e.g. share of building space covered by LED lighting or smart meters, and recycling/recovery rates).
iii. Frontier markets included within emerging.

Post-issuance reporting in the green bond market 2021 Climate Bonds Initiative                                                                                                                                                     3
2. Report summary
High-level findings &
                                                            UoP reporting more common than impacts
conclusions
                                                                                                                           Reporting Scope
   Availability of post-issuance reporting is
                                                                                                                           Use of                 Impact             Both              At least
widespread, but UoP is still more commonly
                                                                                                                           proceeds                                                    one
reported than impacts.
                                                            Number of issuers Reporting %                                              77%               59%               57%                 79%
77% of issuers representing 88% of the amount
issued provided use-of-proceeds (UoP)                       Number of bonds Reporting %                                                77%               63%               62%                 78%
reporting, while 59% of issuers and 74% of the
                                                            Amount issued (USDbn) Reporting %                                          88%               74%               73%                 88%
amount issued reported on impacts.
                                                            NB: A few repeat issuers had reporting and non-reporting deals (latter often more recent). ‘Number of bonds’ figures are not comparable
57% of issuers and 73% of the amount issued                 to the summary table in our 2019 report, since that one included securitized deals, which skewed the figures due to Fannie Mae.
reported on both UoP and impacts, demonstrating
best practice.
                                                          The real evolution is therefore yet to come, in the                        The key is to create a common language
The amount issued share is generally higher as
                                                          form of a common reporting framework and                                to assess impacts/sustainability/ESG
larger issuers are more likely to report.
                                                          platform that drives greater transparency                               performance.
The reporting share has increased versus the              through added availability, quality and (crucially)
                                                                                                                                  Integration of efforts is crucial: there is
early market (especially on impacts). However,            consistency of disclosure.
                                                                                                                                  currently a wide range of approaches, ideas,
several issuers are still not reporting within one
                                                          • There are several promising efforts to                                initiatives, tools and resources- creating a
year of issuance.
                                                            harmonise and centralise reporting                                    common language and framework/platform is of
                                                            globally, including existing platforms                                the utmost importance.
   Greenwashing is rare: from our estimates,
                                                            (e.g. Green Assets Wallet and Green Bond
almost all non-reporting issuers at the time of                                                                                   Now that the USA is back in climate talks, the
                                                            Transparency Platform), frameworks (e.g. ICMA
research have now reported at least UoP.                                                                                          time is ripe for a new global initiative that delivers
                                                            Harmonized Framework and NPSI Position
                                                                                                                                  consistent sustainability reporting and rules
Nevertheless, there are improvements to                     Paper), and ICMA Impact Reporting Working
                                                                                                                                  designed for a rapid, robust, resilient transition.
be made: some issuer types and regions are                  Group.
weaker, and impact reporting in particular is                                                                                     Comprehensive sustainability reporting
                                                          • The EU Green Bond Standard may also have the
highly unstandardised.                                                                                                            under a common framework has the power
                                                            potential to contribute towards a globally adopted
                                                                                                                                  to create a purpose-driven economy with
Almost no segment of the market has more                    reporting framework for thematic debt instruments.
                                                                                                                                  impact at its core, as long as improvements in
non-reporting than reporting issuers, but
                                                          • Climate Bonds planning to work more in                                performance are properly integrated and valued,
there are still variations in availability of reporting
                                                            this space.                                                           enabled via adequate institutional set-ups, and
depending on deal size, external reviews, issuer
                                                                                                                                  supported by coherent policies.
type and geography.
                                                             Beyond UoP instruments: urgent need for
Developed markets (DM) tend to have higher                comprehensive sustainability reporting to create
share (and quality) of reporting, but the                 a purpose-driven economy with impact at its core
relationship is not perfect and there are several
                                                          A framework/platform targeting UoP instruments
exceptions.
                                                          would be beneficial in the interim, but the
Quality and consistency of reporting vary more            current approach to impact reporting among
significantly, particularly regarding impacts,            UoP instruments does not provide a real and
i.e. which metrics to report along with how to            full picture of impacts.
measure/calculate and report them.
                                                          There is a need to assess holistic impacts,
    An expanding market, together with                    use absolute – not relative – metrics, and
increasing guidance and developments                      look beyond UoP instruments for entity-level
in reporting practices, have contributed to               assessments.
a rich and varied reporting landscape – now,
                                                          There are growing calls for globally consistent,
harmonisation of disclosure must be the priority,
                                                          comparable and reliable sustainability
but without losing granularity.
                                                          disclosure standards through a shared,
There is still a long way to go until reporting is        versatile framework.
available market-wide in a consistent fashion,
                                                          • The EU is leading the drive towards
which poses problems especially in impact
                                                            comprehensive sustainability reporting
comparability and aggregation. This is hardly
                                                            from regulatory perspective through NFRD
surprising given the fragmented nature of
                                                            and more recently CSRD, supported by EU
reporting up to now – in the absence of a
                                                            Taxonomy for Sustainable Activities, SFDR
common framework to report within, issuers
                                                            and TCFD; some other geographies are also
must independently plan, create and publish
                                                            working with similar goals.
green bond reports.

Post-issuance reporting in the green bond market 2021 Climate Bonds Initiative                                                                                                                        4
Financials top, non-financials bottom
   Quantitative findings:
   more detail                                                             Reporting         Non-reporting      Figures: Amount issued (USDbn)

      Availability of UoP reporting is widespread                    100%
   but variations exist, especially depending on                                 1.5                              6.0              2.0                                 2.8
                                                                                                 1.5                                                12.8
   external reviews and deal size, and to a lesser
                                                                     80%
   extent issuer type and region.

   • Reporting share stable throughout sample
     period, except for most recent quarter                          60%         19.6           65.1             26.7              14.7             37.1               22.5
     (Q1 2019) due to shorter window to report
     (research conducted during 2020)
                                                                     40%
   • Larger issuers are more likely to report:
     amount issued share larger than issuer count
     share across virtually all market segments                      20%

   • Reporting availability is positively
     correlated with deal size                                       0%

   • Private sector issuers most polarised in                               Development      Financial       Government-    Local   Non-Financial                   Sovereign
                                                                               Bank          Corporate         Backed    Government  Corporate
     terms of reporting availability, with financial
     corporates ranking first and non-financials last                                                           Entity

   • Broadly more consistency in reporting
                                                                        Quality of reporting is improving, but still      A relatively high simple average reporting
     availability across public sector issuers
                                                                     varies considerably; larger issuers and more         score of 19.2 (out of 25) - weighted average of
     – development banks second overall (like
                                                                     mature green bond markets more consistent.           20.0 reflects higher relative scores of larger issuers.
     financial corporates, they tend to be large
     repeat issuers), local governments improving                    Key aspects of quality reporting include             The deal size analysis does not point to necessarily
                                                                     providing clear, easily accessible and               higher quality among issuers of large deals –
   • There is clear positive correlation between
                                                                     granular information, as well as reporting in        and instead the average, median and maximum
     reporting and external reviews – bonds with
                                                                     line with commitments at issuance and obtaining      scores relatively constant for all size brackets.
     no review are much less likely to have post-
                                                                     external reviews
     issuance reporting                                                                                                   This means that while larger issuers tend to
                                                                     Most issuers report at project level, and the        report more often than smaller ones, the average
   • Higher reporting share in regions with
                                                                     proportion seems to be rising. In addition,          quality is not necessarily higher.
     larger, more mature green bond markets,
                                                                     most repeat issuers - especially financial
     driven by large issuers that are more likely to                                                                      However, there is a clear increase in minimum
                                                                     institutions - report at programme level.
     report as well as more robust & consolidated                                                                         scores, which suggests larger issuers are less
     issuing practices, including around reporting                   The average quality remained stable versus           likely to have poor-quality reporting.
                                                                     our 2019 study, but still some improvement,
   • Most countries achieved at least 90%                                                                                 European entities are the most consistent
                                                                     including fewer low-quality reporters.
     reporting (by amount), including most large                                                                          in reporting quality, with 110 issuers ranging
     developed markets                                               More issuers (majority) now have dedicated           between 10–25 points; Asia-Pacific has a 6–25
                                                                     webpages that make documents more easily             range, and North America’s range is also wider than
   • Most issuers delivered on reporting
                                                                     accessible, more produce separate green bond         Europe’s even though its issuer count is about half
     commitments made at issuance: smaller
                                                                     reports or standalone sections within annual,
     issuers more likely to over-promise than larger                                                                      • Apart from having high scorers, more mature
                                                                     sustainability or CSR reports, and more report at
     ones, while latter more likely to report in line                                                                       green bond markets have consistently
                                                                     project level.
     with commitments at issuance                                                                                           good-scoring issuers

   Countries with all deals reporting are mainly markets with under 5 deals and/or USD2bn issued
                                     Amount issued (LHS)       Number of deals (RHS)
                        10                                                                                                                                               15

                        8                                                                                                                                                12
Amount issued (USDbn)

                        6                                                                                                                                                 9
                                                                                                                                                                               Number of deals

                        4                                                                                                                                                 6

                        2                                                                                                                                                 3

                        0                                                                                                                                                 0
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   Post-issuance reporting in the green bond market 2021 Climate Bonds Initiative                                                                                                   5
Reporting issuers scored between 6-25 points, with most at the top end
                        50                                                                                                                                                     50

                        40            Amount issued                 Number of issuers                                                                                          40
Amount issued (USDbn)

                        30                                                                                                                                                     30

                                                                                                                                                                                       Number of issuers
                        20                                                                                                                                                     20

                        10                                                                                                                                                     10

                        0                                                                                                                                                       0
                                 6      7      8       9      10       11    12    13       14     15    16    17      18      19   20    21     22     23    24     25
                                 Quality score

   • Spain is the country with most high scorers                                 Impact reporting is increasingly common,           Impact reporting in the USA is considerably
     (previously France), with four issuers scoring at                       but more complex than UoP reporting and highly         weaker than UoP reporting – although
     least 24 points; Hong Kong follows, with three                          unstandardised; harmonising impact disclosure          this is driven by small US Muni issuers, this is
                                                                             is vital (although will only truly come with           still an area for improvement in the country’s
   Corporates dominate among top scorers
                                                                             comprehensive reporting beyond UoP instruments)        sustainable finance market.
   – seven of the Top 10 issuers are corporates
   (mostly non-financials), although partly due to                           Availability                                           Impact reporting practices
   the larger sample of corporate issuers.
                                                                             59% of issuers and 74% of the amount issued            Less than half of the issuers, but almost
   • Reasonable diversity among top scorers,                                 report impacts post-issuance                           two-thirds of the volume, report impacts at
     but more would be welcome; sovereigns, for                                                                                     programme level (assessed at the level of most
                                                                             Almost all issuers reporting impacts also
     example, tend to be high-quality reporters and                                                                                 granularity, as a few issuers report at both bond
                                                                             report allocations (97%) but 74% of issuers
     some will likely make it into the Top 10 as more                                                                               and programme level)
                                                                             that report UoP also provide impacts.
     come to market
                                                                                                                                    Larger issuers tend to report with less project
                                                                                                                                    granularity, as they often finance many projects
   European issuers most consistent, Africa with highest average                                                                    and include many financial institutions.

                                     Max       Min         Median       Mean                                                        Three-quarters of issuers report actual
                        25                                                                                                          (ex-post) impacts, sometimes alongside. In
                                                                                                                                    addition, almost half report a combination of
                        20                                                                                                          measured and estimated impacts.

                                                                                                                                    Impact metrics
                        15
                                                                                                                                    A wide breadth of metrics is used, even within
                        10                                                                                                          similar project types – these vary between
                                                                                                                                    general and specific metrics.

                        5                                                                                                           The lack of uniformity in impact data makes
                                                                                                                                    it very hard – if not impossible – to compare
Score

                        0                                                                                                           and aggregate, an issue many investors are
                                                                                                                                    acutely aware of
                               Europe        Asia-Pacific        North             Latin             Africa    Supranational
                                (110)           (119)           America           America             (3)           (9)             There are many reasons for this, but a key one is
                                                                  (60)              (9)                                             the frequent use of relative metrics (especially
                               Region (Number of issuers)                                                                           GHG emissions saved), which inherently depend
                                                                                                                                    on the baseline used
   Most issuers report both UoP and impacts                                                                                         The widespread adoption of relative metrics
                        100%                                                                                                        (especially GHG savings) raises questions,
                                                                                                                                    and should be viewed with caution as they
                        80%                                                                                                         do not inform absolute performance and
                                                                                                                                    trajectory towards climate and other targets.
                        60%

                        40%
Share of total

                        20%

                        0
                               No reporting          UoP           Impacts        No reporting          UoP          Impacts
                                            Amount issued                                        Number of issuers

   Post-issuance reporting in the green bond market 2021 Climate Bonds Initiative                                                                                                            6
3. Use-of-proceeds reporting
This section delves into how the                       Substantial drop in Q1 2019 deals explained by reporting lag...
availability of reporting varies
according to different market                                       Reporting          Non-reporting   Figures: Amount issued (USDbn)
attributes. Throughout it,                             100%
‘reporting’ is classified as post-                                25.6           3.7          2.7          2.1           2.7        13.4
issuance UoP disclosure.                               80%

Reporting share stable except                          60%
for most recent quarter
                                                                  25.6          24.7         31.2          25.1         46.7        32.5
The first item we look at is issue date, in order      40%
to uncover changes over time. In our previous
report, we conducted a yearly assessment of            20%
issue dates since the analysis period was longer,
spanning 2007-2017. This provides more time for
                                                       0
market trends to emerge and we noted the clear
upward trend in reporting availability between                     Q4            Q1           Q2           Q3            Q4             Q1
2014-17, following the release of the GBP in 2013.                2017                              2018                            2019

The quarterly analysis in this study yields less
striking conclusions. The reporting share remained
                                                       … and less visible by issuer count
relatively constant for the first five quarters – at                Reporting          Non-reporting   Figures: Number of issuers
around 90% – but dropped significantly to 71%          100%
among bonds issued in Q1 2019.
                                                                   18            14           22           21            32             38
Despite the GBP recommending a maximum                 80%
two-year timeframe to report, market best
practice is generally to do so within one year of      60%
issuing a green bond, which is why we define
the issue date cut-off as just over a year (about                  60            49           72           60            93             83
                                                       40%
400 days) before we conduct the research. Some
issuers are therefore not reporting within 12
                                                       20%
months of issuance.

However, several issuers – especially those            0
reporting at programme level – do so in cycles,
                                                                   Q4            Q1           Q2           Q3            Q4             Q1
allowing them to aggregate reporting for multiple
bonds at a convenient time; usually the start or                  2017                              2018                            2019
end of the calendar, or sometimes fiscal, year.
In such cases, the post-issuance report tends to
cover deals issued up to the preceding year. For
example, a report released in 2020 covering all
bonds outstanding as of the end of 2019 (project
allocations and/or impacts would generally also
refer to 2019).

This means that bonds issued in Q1 are more
likely to experience a greater reporting lag,
as this may only come in the next calendar year
(2020 in the case of 2019 deals). A high-level
assessment has confirmed many more reporting
deals if the research were repeated now,
particularly for those issued in Q1 2019.

In line with our last study, we also note that the
reporting share was lower by issuer count
compared to amount issued in every period,
i.e. larger issuers are more likely to report. This
is a near constant finding throughout our study.

Furthermore, the drop in Q1 2019 is far less evident
by issuer count – this is due to the lag explained
above often applying to repeat issuers reporting at
programme level, which tend to be larger.

Post-issuance reporting in the green bond market 2021 Climate Bonds Initiative                                                               7
Large bonds more likely to have reporting; sharpest increase at benchmark size (issuer count)
                     Reporting              Non-reporting
100%
                   4.2                8.8               7.1                 6.4                73                35                 7
80%                                                                                                                                                    2

60%

40%
                   9.9               41.5               61.3                72.9             134                124                 76                33

20%

0
              Up to 100m          100-500m            500m-1bn        1bn or more        Up to 100m           100-500m         500m-1bn          1bn or more
                                  Amount issued (USDbn)                                                            Number of issuers

Reporting share increases with                          Significant variation across                            investment community contributes positively to
deal size                                               issuer types                                            reporting among financial institutions. The lower
                                                                                                                reporting share among non-financial corporates
Slicing the deal universe by issue size paints a        There are also differences by issuer type. Several
                                                                                                                is partly due to a wider base of smaller issuers,
similar picture as our 2019 report: that larger         reasons for this may exist, both directly and
                                                                                                                many of which have only issued one bond.
deals are more likely to have post-issuance             indirectly related to issuer type. For example,
reporting. This is visible by comparing the             financial institutions are often larger and repeat      There is more consistency in reporting levels
shares of different size brackets, both in terms of     issuers with more advanced tracking and reporting       across public sector issuers. Development
amount issued and number of issuers.                    systems, sovereigns are more likely to be in the        banks rank second overall, since, similarly
                                                        public eye and face scrutiny if non-reporting, and      to financial corporates, they tend to be large
To some extent, the positive correlation between
                                                        local governments may have increased budgetary          repeat issuers with a more structured approach
bond size and reporting is also noticeable by
                                                        restrictions that make it harder to provide timely      to applying the GBP guidelines on proceeds
comparing the amount issued and issuer count
                                                        and good-quality reporting.                             management and reporting.
shares for each size bracket, since deal and issuer
sizes are closely linked. The share of reporting by     Corporates polarised, public sector issuers             Sovereigns and local governments are the next
issuer count tends to be lower than by amount           more consistent                                         highest, with 89% and 88% respectively. That
issued, i.e. within a given bracket the non-                                                                    not all sovereigns have reported is somewhat
                                                        Overall, private sector issuers are the most
reporting issuers tend to be relatively small.                                                                  surprising given they tend to be high profile issuers
                                                        polarised in terms of reporting availability,
                                                                                                                facing added public – and potentially investor
However, this does not hold among benchmark             with financial corporates ranking first and
                                                                                                                – scrutiny. In addition, our previous study had
size deals (USD500m+). In the top two brackets,         non-financials last. Apart from often being large
                                                                                                                found 100% reporting among this group.
the few non-reporting issuers are relatively large,     and repeat issuers, perhaps being close to the
so the amount issued share is slightly higher than
the issuer count share.
                                                        Financials top, non-financials bottom
In our last study we had noted the particularly
sharp increase in reporting share for benchmark                Reporting           Non-reporting       Figures: Amount issued (USDbn)
deals. The results this year point to a more            100%
gradual increase, although the largest jump is
                                                                     1.5                                6.0              2.0                               2.8
indeed between the 100-500m and 500m-1bn                                              1.5                                                12.8
brackets, by number of issuers (78% to 92%).            80%
Large deals tend to be from more experienced
and repeat issuers, such as financial institutions,
and likely benefit from more comprehensive              60%          19.6             65.1             26.7             14.7             37.1              22.5
corporate-level monitoring and reporting
systems, combined with greater experience in
                                                        40%
issuing green.

                                                        20%

                                                        0%
                                                                Development        Financial        Government-    Local   Non-Financial                Sovereign
                                                                   Bank            Corporate          Backed    Government  Corporate
                                                                                                       Entity

Post-issuance reporting in the green bond market 2021 Climate Bonds Initiative                                                                                     8
However, there are valid reasons for this.            Lower reporting shares and different ranking by issuer count
Firstly, this year’s research featured several more
sovereign issuers (nine versus two last time) as             Reporting           Non-reporting        Figures: Number of issuers
governments from more countries green their           100%
expenditures and jump on the ‘thematic debt
                                                                    4               12                 16                 24              46               3
bandwagon’ to finance these. Secondly, all
three non-reporting sovereigns – Indonesia, Fiji      80%
and Nigeria – have reported as of the time of
writing, although we do note that Nigeria could
make substantial improvements to the ease of          60%
accessibility and granularity of its reporting (its
most recent bond already has more detail, so this
                                                      40%
was likely related to the 2017 deal included in our                 15               90                52                 55              39               6
research having been its first).
                                                      20%
Local governments improving

Reporting among local governments
increased since our last study (previously            0%
78%). A large share of local government                       Development        Financial       Government-    Local   Non-Financial                Sovereign
issuers consists of US Munis, for which                          Bank            Corporate         Backed    Government  Corporate
reporting is often lacking despite frequent                                                         Entity
commitments to provide post-issuance
information (usually in the bond prospectus),         Issuer count analysis slightly more uniform              We found that bonds for which there is no
at least for allocations. Indeed, this group                                                                   review are much less likely to have post-
                                                      Finally, we note the smaller reporting shares by
accounted for 92% of the unreported amount                                                                     issuance reporting; only 34% by amount issued
                                                      number of issuers, which lead to a slightly more
within local governments; excluding them                                                                       and 35% by issuer count. These figures jump to
                                                      uniform picture and different ranking between
results in a boost to 98% reporting.                                                                           69% and 58% for deals that received an external
                                                      issuer types. Non-financial corporates and
                                                                                                               review at issuance only.
Nevertheless, this is improving. A greater share      government-backed entities exhibit the smallest
of US Munis was found to provide post-issuance        difference versus their amount issued shares.            However, the highest proportion of reporting
UoP reporting this year, although it is often                                                                  clearly occurs when a post-issuance review
unclear where this is made available (e.g.                                                                     is available. 100% of deals with only a post-
sometimes on EMMA, sometimes on city or
                                                      Clear positive correlation                               issuance review had reporting, while for deals
state government websites, and occasionally
                                                      between external reviews                                 with external reviews both at and post-issuance
even elsewhere) and robust impact reporting
                                                      and reporting                                            this dropped slightly to 99% of the amount
is still chronically lacking within this issuer       Two categories of external reviews were defined in       issued and 95% of issuers. The difference is likely
type. The lower availability and quality of           order to assess how external reviews and reporting       due to the many more deals with reviews at
reporting among US Munis may be due to                correlate. For details on each type see Appendix 3.      both stages versus only post-issuance (i.e. larger
budget constraints, incorporation in broader                                                                   sample), since there is no reason to expect the
                                                      • External reviews at issuance include second-
city or state budget reporting, and/or to the                                                                  latter to have more reporting.
                                                        party opinions (SPOs), green bond ratings, and
fact that they allocate a relatively high share for
                                                        Certification (under the Climate Bonds Standard).      This analysis points to a similar conclusion as
refinancing, for which post-issuance reporting
                                                                                                               in our last study: the likelihood of reporting
may be less relevant. Another key reason may          • External reviews post-issuance include
                                                                                                               increases significantly with either type of
be the investor base (e.g. retail), which is less       audits/assurance, verification for Certified
                                                                                                               external review, but the relationship is much
likely to demand reporting, especially for small        Climate Bonds, and reviews by SPO providers
                                                                                                               stronger for post-issuance external reviews.
bonds like US Munis.                                    or rating agencies.

Post-issuance reviews excellent predictor of reporting
                     Reporting           Non-reporting
100%

80%                5.3              20.3                                  0.9               39.0               77.0                                 8.0

60%

40%

20%
                   2.8              46.0              11.0               126.0              21.0              107.0                28.0            163.0

0
               No review         At issuance     Post-issuance           Both             No review         At issuance        Post-issuance       Both
                                     only            only                                                       only               only
                                  Amount issued (USDbn)                                                           Number of issuers

Post-issuance reporting in the green bond market 2021 Climate Bonds Initiative                                                                                   9
This makes sense given that a post-issuance            Higher reporting share in more mature markets
review reflects issuer engagement at the post-
issuance stage – in fact, many post-issuance                 Reporting         Non-reporting     Figures: Amount issued (USDbn)
reviews are included within green bond reports         100%
themselves – and confirms that reviews at
issuance should not be interpreted as a guarantee                    11.5          7.3            5.9           0.8            0.1
                                                                                                                                            0.9
of post-issuance reporting, but rather as a            80%
compliance check against the GBP (at issuance).

We also note the substantial difference between        60%
amount issued and issuer count shares when
a review is available (‘at issuance’ and ‘both’,
since ‘post-issuance only’ is at 100%), which is       40%           89.5          54.4          26.8           0.9            0.1          14
expected given that larger issuers report more
often. But when no review is available, the shares
                                                       20%
are very close, most likely because issuers that do
not obtain any review tend to be small anyway.
                                                       0
Regional ranking reflects
market size                                                         Europe       Asia-Pacific    North        Latin           Africa   Supranational
                                                                                                America      America
The regional analysis is clear: regions with
larger, more mature green bond markets                 Issuer count ranking same apart from Latin America and Africa
have higher reporting shares.
                                                             Reporting         Non-reporting     Figures: Number of issuers
As well as having more large issuers that are
more likely to report, they also tend to have          100%
more robust and consolidated issuing practices,                          24         35            31             8              4            1
including around reporting. In addition, the
                                                       80%
ranking is the same looking at both issue
volume and number of issuers, apart from
Latin America and Africa which trade places            60%
depending on the metric.

Supranationals have the strongest
                                                       40%
reporting share, with only one issuer (Asian
Development Bank) non-reporting at the time
                                                                         111       120            61             9              3            9
of our research – however, both its deals were         20%
issued in Q1 2019, and have subsequently had
post-issuance reports made available. In this
sense, ‘Supranational’ is the only exception to        0
the ‘market size leads to higher reporting’ rule, as                Europe       Asia-Pacific    North        Latin           Africa   Supranational
it is only the fourth largest group; but it consists                                            America      America
of several large and experienced issuers that
operate at global and regional scales, such as the
IFC, World Bank, EIB, NIB, etc.

Even so, the current performance of
Supranationals represents an increase from our
previous study and is a positive development.
It is particularly important for multilateral
institutions to set a good example as they often
set the tone for issuers in the regions where they
operate – in line with this, several MDBs are also
high-quality reporters (see pages 14-15).

NB: As with all our data, North America only
includes USA and Canada. Mexico is classified as
Latin America.

Post-issuance reporting in the green bond market 2021 Climate Bonds Initiative                                                                         10
Higher reporting levels in                                                 Over 90% of volume in 29 out of 50 countries has UoP reporting
   larger green bond markets
                                                                                                         Countries with one deal         Countries with more than one deal
   Our research dataset comprises issuers from                                                    20
   50 countries, five more than in our 2019 report.
   Nine countries have just one bond issued (e.g.
                                                                                                  15
   Uruguay, South Africa, Lebanon) and thus have

                                                                            Number of countries
   either 0% or 100% reporting.
                                                                                                  10    14
   It is worth noting that some of the results below
   are different to our last study, partly because                                                                                                                                 1
                                                                                                  5
   reporting practices do vary but also due to the                                                                   11
   particular set of deals issued during the analysis                                                   4                            5              5                5             5
                                                                                                  0
   period, including some large issuers that skew
   the results of their domiciles.                                                                     100%       90-100%          80-90%         60-80%        40-60%            0%

   More than half the countries (29 of 50) have                                                        Reporting share
   a reporting level of 90% or more by amount
   issued. Of these, 18 boast 100% reporting, but                             USD2.0bn) and one by LISEA EUR900m/                           (45% reporting). Taiwan is the only market in
   are mostly relatively small green bond markets                             USD1.0bn). However, they were all issued in                   this group with more than five deals (7), of which
   with less than five deals (see 100% Reporters                              Q1 2019 and have since made post-issuance                     three, representing 48% of the issue volume,
   chart further down). Owing to the size of their                            reporting available.                                          lacked reporting at the time of analysis.
   green bond markets, the standouts in this group
                                                                              The USA is very different. American issuers had               Almost all countries with no reporting (i.e. 0%)
   are clearly the Netherlands (13 deals, USD9.0bn)
                                                                              USD5.6bn of non-reporting volume from 40 deals.               had only one deal issued. The exception is
   and Italy (eight deals, USD5.1bn), both of which
                                                                              The vast majority of these deals were US Munis,               Fiji, which had four bonds but all sovereigns:
   have improved since our last report.
                                                                              which is to be expected, but over half (52%) of the           however, reporting has since been made
   Most large markets with 90%+ reporting                                     volume was contributed by two energy companies:               available for all of them.
                                                                              MidAmerican Energy (USD2.2bn) and Xcel Energy
   Nonetheless, most countries with larger,                                                                                                 The reporting share among smaller markets
                                                                              (USD700m). Of their combined four deals, two were
   more mature green bond markets (mainly                                                                                                   fluctuates considerably. For instance, Switzerland
                                                                              from Q1 2019 and two from 2018 – again, all now
   developed economies) fall in the 90-100%                                                                                                 and South Africa, which featured in the low-
                                                                              have reporting available, although MidAmerican’s
   reporting level bracket, such as China,                                                                                                  reporting group in our 2019 study, both achieved
                                                                              only seems to include UoP information.
   Germany, Sweden, Canada, Belgium, and the UK.                                                                                            100% reporting this time.
   A few others follow in the 80-90% range, namely                            While it is true that the USA’s reporting share has
                                                                                                                                            Between pages 14-17 we assess the quality of
   Japan and Spain.                                                           risen from 71% in our previous study, we expect
                                                                                                                                            reporting through a scoring method, explained
                                                                              and hope to see this increase further. Now that
   Only four countries with over USD1bn issued                                                                                              there in more detail. However, it is worth noting
                                                                              sustainable finance is gaining more traction under
   – within our analysis cut-off dates – have a                                                                                             here that countries with higher reporting levels
                                                                              the Biden Administration, continued development
   reporting share below 80%: the USA (77%),                                                                                                also tend to score better in terms of the quality
                                                                              of the USA’s green bond market is also likely to
   India (74%), Indonesia (72%) and France (68%).                                                                                           of reporting, even though there are several
                                                                              bring improving post-issuance disclosure practices
   With USD24bn each issued, the USA and France                                                                                             exceptions; for instance, China, Belgium,
                                                                              from both private and public sector entities.
   deserve a closer look.                                                                                                                   Singapore and Thailand have high reporting
                                                                              Lowest reporting entirely from small markets                  shares but relatively low average scores. A
   France’s relatively low share is largely due
                                                                                                                                            summary of all countries ranked by quality score –
   to a few deals over USD1bn classified as                                   All countries with under 60% reporting have
                                                                                                                                            and with corresponding reporting shares – can be
   non-reporting: one by Société du Grand Paris                               a relatively small issuance volume, below
                                                                                                                                            found in Appendix 4.
   (EUR2bn/USD2.3bn), one Green OAT (EUR1.7bn/                                USD500m apart from Mexico with USD787m

   Countries with all deals reporting are mainly markets with under 5 deals and/or USD2bn issued

                                        Amount issued (LHS)           Number of deals (RHS)
                        10                                                                                                                                                             15

                        8                                                                                                                                                              12
Amount issued (USDbn)

                        6                                                                                                                                                                9
                                                                                                                                                                                               Number of deals

                        4                                                                                                                                                                6

                        2                                                                                                                                                                3

                        0                                                                                                                                                                0
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   Post-issuance reporting in the green bond market 2021 Climate Bonds Initiative                                                                                                              11
Post-issuance UoP broadly similar to estimates at issuance - largest increases in Energy and Buildings
       Energy              Buildings                Transport                     Water       Waste             Land Use            Industry           ICT

At issuance

Post-issuance

                          0                                   20%                             40%                          60%                        80%                        100%
NB: Unallocated A&R excluded as only allocated amounts included post-issuance.

At issuance versus post-                                                    specific set of deals we looked at, and the fact that   Most issuers delivered on reporting
issuance comparison                                                         the post-issuance split only includes allocated         commitments
                                                                            amounts (i.e. not the full amount issued).
Actual allocations replace estimates                                                                                                We also compared actual post-issuance reporting
at issuance                                                                 A closer look behind allocations                        with commitments made at issuance. Whilst
                                                                                                                                    providing post-issuance reporting is the single
One of the reasons for researching post-issuance                            Since UoP allocations are typically estimated
                                                                                                                                    most important aspect of disclosure on a green
reporting is to determine the actual allocation of                          based on the information in issuer frameworks
                                                                                                                                    bond’s UoP and impacts, planning to do so and
green bond proceeds. At issuance, Climate Bonds                             and/or external reviews such as SPOs, it is
                                                                                                                                    communicating this effectively at issuance is also
screens deals to determine alignment with the                               sometimes the case that fewer categories are
                                                                                                                                    important. This is especially relevant given the
Climate Bonds Taxonomy (see Appendix 2) and                                 actually financed, as some issuers may prefer to
                                                                                                                                    different possible ‘types’ of reporting: none, UoP
identify or estimate allocations.                                           list many categories at issuance, giving them the
                                                                                                                                    only, impacts only, and both UoP and impacts.
                                                                            option to finance such projects or assets.
Since most issuers do not or cannot provide
                                                                                                                                    In line with our last report, we found that 70%
sufficient detail at issuance, allocations are                              This happens most often for repeat issuers
                                                                                                                                    of issuers, accounting for 77% of the amount
often estimated. As new information becomes                                 with green bond programmes that fall under
                                                                                                                                    issued, did as promised, i.e. the actual reporting
available – i.e. post-issuance – these are adjusted                         one framework, and is especially relevant
                                                                                                                                    action was as per the commitment made at
to reflect the actual use of proceeds.                                      for financial institutions – such as banks and
                                                                                                                                    issuance (for instance, an issuer planning to
                                                                            development banks – that are able to lend
The post-issuance disclosure analysed as part of                                                                                    report only on UoP and delivering that). The
                                                                            to many different borrowers, as well as some
our study confirms that proceeds were indeed                                                                                        higher share by amount indicates larger issuers
                                                                            large corporates that could potentially finance
allocated to assets aligned to the Climate Bonds                                                                                    are more likely to fall into this group.
                                                                            various types of green projects.
Taxonomy, and no deals were removed from our
                                                                                                                                    The rest either over-promised or over-delivered.
Green Bond Database following this research.                                In such cases, the issuer may end up financing
                                                                                                                                    Over-promising includes failing to report, as well
However, actual allocations to some categories                              only one or two project types, and/or it could
                                                                                                                                    as committing to report on UoP and impacts but
were lower than estimated at issuance, whereas                              be that the bond(s) issued during our analysis
                                                                                                                                    only reporting one of them. Under-promising, or
some saw higher allocations.                                                period happened to only finance some of the
                                                                                                                                    over-delivering, is the opposite: delivering more
                                                                            categories listed in the issuer’s framework, while
The post-issuance split in the chart above                                                                                          than the initial commitment.
                                                                            future ones may finance a different set.
only includes allocated amounts, since the
split of unallocated proceeds would have to be                              A good example is the North American                    Smaller issuers more likely
estimated – similarly to how it is rare for issuers                         Development Bank (NADB), which has issued               to over-promise
to disclose the proceeds split at issuance (apart                           two green bonds (the latest a two-part deal)
                                                                                                                                         Over-promised (plan > actual)
from asset refinancing, where the expenditure is                            included in the Climate Bonds Green Bond
known a priori), it is rare to see issuers disclosing                       Database – but only the first, from 2018, was                In line (plan = actual)
the expected split for unallocated proceeds at the                          included in our post-issuance research.
                                                                                                                                         Under-promised (plan < actual)
post-issuance stage. However, it does happen,
                                                                            NADB’s Green Bond Framework, which covers
and where possible we would encourage issuers                                                                                       100%
                                                                            both deals, lists renewable energy, water and
to indicate this, assuming they are confident
                                                                            wastewater management, energy efficiency in                             26.1                  93
enough to do so.
                                                                            buildings, and pollution prevention and control         80%
Based on this analysis, the largest increases are in                        as eligible project categories. In the absence
Energy (35% to 40%) and Buildings (21% to 24%),                             of a concrete split, Climate Bonds allocated            60%
with the most noticeable drop in Water (10% to 6%).                         proceeds evenly between applicable categories
The reasons for this are unclear, but could be related                      at issuance; in this case 25% respectively to                           164.0                307
                                                                                                                                    40%
to our methodology at issuancei underestimating                             Energy, Water, Buildings and Waste. However,
allocations to the largest categories and/or to                             post-issuance reporting for the 2018 bond
                                                                                                                                    20%
proceeds in these being allocated more rapidly                              confirmed that only renewable energy projects
than in other categories, potentially due to a larger                       were financed, i.e. 100% to Energy and 0% to the
share of refinancing. However, the results are slightly                     other categories. The differences contribute to         0               22.1                  37
different to those in our last report, so part of the                       those in the chart above, and have been reflected                     Amount             Number of
changes are likely due to natural variation, the                            in the Climate Bonds Green Bond Database.                              issued             issuers
                                                                                                                                                  (USDbn)
i. i.e. splitting proceeds equally between eligible categories, when not known.

Post-issuance reporting in the green bond market 2021 Climate Bonds Initiative                                                                                                       12
Over-promising seems to be more common than
under-promising, which perhaps is not surprising
given that many non-reporting deals now have
reporting (i.e. would no longer be over-promising).
The share of over-promising also falls significantly
when looking at amount (12%) versus issuer count
(21%), suggesting that smaller issuers are much
more likely to over-promise than larger ones,
which again is hardly surprising.

Factor in quality assessment

The relationship between actual post-issuance
reporting and commitments at issuance is
one of the metrics used to assess the quality
of reporting. In general, for a given level of
reporting – ranging from none to both UoP and
impacts – the best option is to have planned
to report to that level and then do so. In other
words, over- and under-promising to report
should be avoided, although over-promising (i.e.
under-delivering) is, of course, worse. An issuer
that committed to report on UoP but did not
demonstrates bad practice, more so than one
that did not commit to anything but ended up
reporting on UoP.

The other way to assess quality regarding
commitments is to consider a given level of
commitment. In this case, issuers should still
strive to provide the best reporting possible even
if it means under-promising. For example, if an
issuer commits to report on UoP but then realises
it is also able to report on impacts, it should do
so. Such an issuer, therefore, scores higher than if
it only disclosed the UoP.

These – and other – considerations are reflected
in our quality scoring analysis, which forms the
next section.

Post-issuance reporting in the green bond market 2021 Climate Bonds Initiative   13
4. Quality scoring
Process overview                                         confidence, especially in emerging markets (EM).
                                                                                                                Case studies:
As well as looking at the availability                   Other variables considered important for best          examples of good practicei
of reporting (i.e. reporting/non-                        practice are included in the quality scoring model.
reporting) and its level (UoP and/                       Most fall under two broad aspects of reporting: (1)    Sociedade Bioelétrica do
or impacts), we capture data on                          clarity and ease of finding information, and (2)       Mondego - SBM (Portugal)
many other variables as part of our post-issuance        granularity of the disclosure.
                                                                                                                SBM, a Portuguese company wholly owned
research. Almost all of these refer to each deal’s
                                                         Clarity and ease of access                             by the Altri Group, was one of only five
overall reporting characteristics, i.e. are not
                                                                                                                issuers scoring the maximum of 25 points,
specific to either UoP or impacts.                       A key aspect of good reporting is providing
                                                                                                                which is especially impressive since it is a
                                                         information in a clear and easy-to-find way.
12 of these variables are used to evaluate the                                                                  one-time issuer. The fact that it only finances
                                                         Having a dedicated green bond webpage with all
quality of reporting for a given bond, computed                                                                 one project – a biomass power plant – makes
                                                         the relevant material related to the issuer’s green
as a score which can range from 0 to 25 points. A                                                               reporting easier, and its green bond page is
                                                         bond issuance, including clear descriptions and
value is attached to each variable based on what                                                                both easily reached and laid out very clearly.1
                                                         links to all documents, is highly advised, as it
is reported by issuers, and variables are weighted
                                                         considerably facilitates the process of accessing      The report is correspondingly simple but has
depending on their importance for the quality
                                                         information.                                           all the key information, including the relevant
assessment. We have tried to be as objective as
                                                                                                                time period for allocations and impacts (which
possible in doing so, and many of the variables          Anecdotally, we noticed an improvement in
                                                                                                                is not as common to find as one might think),
feed into the best practice recommendations in           this regard versus our 2019 research, with more
                                                                                                                the share of financing attributable to the
the Conclusion.                                          issuers a) displaying all the information related to
                                                                                                                green bond, impact data according to four
                                                         their green bonds on their websites, and b) doing
Only deals with post-issuance reporting are                                                                     different metrics, and a methodology for
                                                         so more clearly, largely through dedicated pages.
included. When there are multiple bonds per                                                                     calculating GHG emissions avoided.2 A post-
issuer, an average is calculated for the issuer to       Furthermore, publishing separate green bond            issuance external review from Sustainalytics
avoid skewing the results.                               reports – either individually for UoP and impacts,     as well as a limited assurance report from
                                                         or combined – again makes it much easier to            Deloitte form the rest of the document.
Variables considered crucial for                         obtain the relevant information. If provided
best practice                                            within annual, sustainability or CSR reports, it       Swire Properties (Hong Kong)
                                                         should be via dedicated, clearly labelled sections.
Communicating commitment                                                                                        Swire Properties is another maximum
at issuance and reporting in                             Also included in this category are:                    scorer with exemplary reporting. Several
line with this: the quality scoring                                                                             property developers have particularly
                                                         • List of deals: particularly relevant for repeat
model assigns most points to                                                                                    simple reporting when they only finance a
                                                           issuers, providing a list of the bonds issued
bonds that have post-issuance reporting on                                                                      few buildings/projects, but Swire combines
                                                           and their key details (e.g. issue date, amount
both the UoP and impacts, and which also                                                                        simplicity with comprehensiveness.
                                                           issued) – either on webpages or ideally within
committed to report this at issuance. If a report
                                                           green bond reports – is a plus. This is a variable   As well as a visually appealing green financing
is not available but the issuer committed to
                                                           we added this year.                                  page3 which summarises most of the data and
producing one, then a penalizing system kicks in
                                                                                                                details of its green financing in a very clear
and less points are assigned than if there was no        • Report language: providing an English copy
                                                                                                                way, its green bond report4 has bond-level
commitment at all. This is closely related to the          of reports alongside local languages supports
                                                                                                                allocations and granular information on
discussion on pages 12-13.                                 transparency. Even if issuers do not have
                                                                                                                each project, including environmental
                                                           a website with an English version (which
Project-level disclosure, at and post-issuance:                                                                 impacts that go far beyond the building
                                                           would also be advised), at least translating
comparing at and post-issuance scenarios is also                                                                certifications achieved – this is refreshing,
                                                           green bond documents into English helps
relevant for the degree of project-level disclosure,                                                            since many issuers only rely on disclosing
                                                           significantly, especially since some formats do
which is the second most important variable.                                                                    building certifications as a form of impact
                                                           not allow copying text and/or data.
Here, bonds with specific projects disclosed                                                                    reporting, which is not ideal (see page 27).5
both at and post-issuance score higher than              Granularity
                                                                                                                A summary of the reporting process and
bonds with projects only disclosed at one stage,
                                                         Arguably the most important aspect of high-            calculation methodology is also provided,
which in turn score higher than bonds with only
                                                         quality green bond reporting is the breadth            along with a limited assurance report from
broad project categories (e.g. energy, wind, solar,
                                                         and level of detail of the information.                PwC. Reporting is available for all the green
transport, rail etc) listed. This is discussed in more
                                                                                                                bonds issued so far, and Swire’s webpage also
detail below.                                            The main features of granular reporting can
                                                                                                                includes a summary of the green loan obtained
                                                         broadly be divided into two areas: project
External reviews: another influential variable in                                                               in 2020 and the sustainability-linked loan
                                                         versus portfolio reporting for a given bond;
the model captures whether the bond received                                                                    obtained from Crédit Agricole in 2019, which is
                                                         and bond versus programme reporting when
reviews from second- or third-party entities –                                                                  contingent upon a target reduction in energy
                                                         multiple bonds are issued (i.e. at issuer level).
this reflects the reliability and robustness of                                                                 use intensity of Swire’s real estate portfolio as
the disclosure. While external reviews released          Project versus portfolio reporting                     well as continued listing on the DJSI World.
at issuance (e.g. SPOs) are important to verify          Most issuers report at project level, although
                                                                                                                i. There are many more good reporters in the market, including
compliance with the GBP and are included in the          occasionally only for UoP and/or impacts rather        many of the larger, more experienced issuers (e.g. financial
scoring, a higher score applies if post-issuance         than both (the reason is unclear, but for impacts      institutions, especially from Europe). These are simply some
                                                                                                                examples, and to some extent we tried to pick some less
auditing is in place. On that note, audited UoP          could be related to difficulties in measuring or       well-known issuers.
reports have been noticed to increase investors’         estimating impacts at project level).

Post-issuance reporting in the green bond market 2021 Climate Bonds Initiative                                                                                               14
This may be harder for larger issuers that            Bond versus programme reporting                          The EIB discloses which individual bond(s)
finance many projects. Bonds issued by                Most repeat issuers, especially financial                were used to finance each project, although the
financial institutions, for example, often            institutions, report at programme level (i.e. for        proportion is not given when proceeds from
lack specific project disclosure. Limitations         a combination of multiple bonds, normally those          more than one deal were used. However, unlike
might derive from loan-level confidentiality          outstanding). While this provides less granularity       Iberdrola and Bank of China, a summary of
agreements with borrowers and/or portfolio            compared to reports at bond level, it is a reasonable    the allocations and impacts is not provided at
granularity (i.e. due to the number of bonds to       approach when there are many bonds issued.               deal level, so to obtain this one would have to
report on, e.g. 14 of Credit Agricole CIB’s green                                                              calculate manually using data from each project,
                                                      Financial institutions are usually large organisations
bonds were covered in our research).                                                                           which is very time-consuming.
                                                      with access to more comprehensive systems
The EIB is a leader in granularity among large,       and greater resources dedicated to reporting. In         Other aspects
repeat issuers funding many projects. It gives        this regard, they have a greater ability to provide      Other aspects of granular reporting include
detailed information on the UoP and impacts           reporting in a timely and granular manner; but           providing detail on:
for each individual project (there are hundreds),     doing so at bond level is often not possible given
                                                                                                               • Share of refinancing (if applicable)
including the share attributable to EIB financing.    that money is fungible, and the proceeds are
The World Bank (IBRD) and the IFC are other           disbursed to borrowers from one pool of funds.           • Balance – and ideally expected allocation – of
leaders, following a similar approach – the                                                                      unallocated proceeds
                                                      Nevertheless, some issuers of multiple – in some
IFC additionally identifies contributions to the
                                                      cases many – bonds do report at bond level.              • Other sources of financing (if applicable),
Sustainable Development Goals (SDGs) for each
                                                      One of the largest and most frequent issuers               which can be used to pro-rata impacts
project.
                                                      falling in this group is Iberdrola, which provides
                                                                                                               • Several others linked to impact reporting
The proportion of issuers reporting at project        allocations and impacts separately for each green
                                                                                                                 (e.g. clarifying the time periods of impacts,
level – both for UoP and impacts – seems to           bond within a single document (but curiously not
                                                                                                                 whether impacts are calculated ex-post vs. ex-
be rising. This may be due to more advanced           combined for the overall programme/portfolio).
                                                                                                                 ante, measured vs. estimated, etc).
tracking capabilities among issuers, greater
                                                      Among financial institutions, this is rare. The
adherence to best practice guidelines, and                                                                     These did not feature in our quality scoring
                                                      best example is Bank of China, which has issued
investor demand. However, we note that best                                                                    model, but may be included in our next study.
                                                      several bonds with different labels and provides
practice is to also provide aggregate figures                                                                  Another criterion we may add is whether issuers
                                                      allocations, impacts, case studies and other
for the bond overall, which should at least be                                                                 offer the ability to download/export data (e.g. in
                                                      supporting information for each one, as well as
possible for allocations and some impacts – most                                                               Excel format), which is still relatively uncommon.
                                                      for the overall portfolio.
issuers do so, but several do not.

  More case studies:                                  Danske Bank                                              San Francisco Public Utilities
  examples of good practice                           (Denmark)                                                Commission - SFPUC (USA)
                                                      Danske Bank’s green bond page is easily reached          SFPUC stands out as the US Muni issuer with
  Manulife Financial                                  from the Investor Relations section of its website,      highest quality reporting, closely related to
  (Canada)                                            and includes various relevant documents.8                the Programmatic Certification it obtained
  Manulife issued two green bonds in our sample                                                                under the Water Infrastructure Criteria of the
                                                      Danske Bank may have an advantage versus some
  period, one of which was a Certified Climate                                                                 Climate Bonds Standard. We experienced
                                                      other banks (especially European) in that its green
  Bond financing wind and solar energy.                                                                        issues accessing SFPUC’s website on multiple
                                                      issuance programme is smaller; but its report is
                                                                                                               occasions, but the reporting is still easily
  Manulife’s green bond report6 is easy-to-find       nonetheless very well structured, with UoP and
                                                                                                               reached from the Climate Bonds website.10
  within the company’s Sustainability section,        impact data given separately for the green bond
  although there is a page7 dedicated to green        issued by Danske Bank and those issued by its            The annual green bond report includes the
  bonds that is harder to access from within the      mortgage subsidiary, Realkredit Danmark.9                amounts allocated and pending allocation
  website.                                                                                                     at bond- and project-level (there are many),
                                                      Clear charts provide a summary of allocations
                                                                                                               along with qualitative and quantitative
  The report is clearly structured, and despite       and size of the eligible green loan pool, while
                                                                                                               information on each one in supporting
  being short and simple has a good amount            a simple table gives the impacts according to
                                                                                                               tables, including contributions to the SDGs
  of detail. Both bonds are included with their       several metrics (depending on the category),
                                                                                                               (particularly rare among US Munis).11
  relevant details, and the allocations, impacts      along with contributions to the SDGs. The share
  and project case studies are disclosed at bond      of impacts attributable to the green bond is             The green issuance programme is clearly
  level, which is a plus. The name and location       provided separately, although this could be              framed within the issuer’s sustainability plans
  of projects is also given, along with the correct   directly referenced in the table.                        at the start of each report, and the pre- and
  pro-rata share of impacts, a clear explanation                                                               post-issuance verification required by the
                                                      Other positive features include a clear methodology
  of the calculation methodology (referencing                                                                  Climate Bonds Certification scheme – in this
                                                      for impact calculation and table with all the
  ICMA’s Harmonized Framework and data                                                                         case provided by Sustainalytics – is attached
                                                      baselines used, various case studies, details of each
  sources), qualitative project information, and                                                               at the end. One area for improvement,
                                                      bond with a useful breakdown of the allocation
  the value of net proceeds.                                                                                   however, would be to provide project-level
                                                      to investors, an independent auditor’s assurance
                                                                                                               quantitative impact data more consistently
                                                      report, and relevant contact details.
                                                                                                               in the report (although there is more
                                                                                                               information on this on its website).

Post-issuance reporting in the green bond market 2021 Climate Bonds Initiative                                                                                   15
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