ICMA Green Bond Principles

Meggie Eloy

5 years: Technical analysis

In this video, Meggie breaks down the International Capital Market Association’s (ICMA) key principles that drive transparency and integrity in sustainable finance. She explains the Green Bond Principles (GBP), Social Bond Principles (SBP), and Sustainability-Linked Bond Principles (SLBP), highlighting their unique features and how they guide issuers and investors. She further discusses how these principles build market trust, support high standards, and foster the growth of the sustainable finance market.

ESG Bond Markets

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ICMA Green Bond Principles

8 mins 15 secs

Key learning objectives:

Understand the purpose and role of the ICMA Green Bond Principles (GBP) in sustainable finance
Identify the four core components of the Green Bond Principles
Recognise the similarities and differences between GBP, Social Bond Principles (SBP), and Sustainability-Linked Bond Principles (SLBP)
Outline the role of transparency, reporting, and verification in maintaining market credibility

Overview:

The ICMA’s principles ensure transparency and integrity in green, social, and sustainability-linked bonds. The Green Bond Principles (GBP) guide issuers and investors with four components: Use of Proceeds, Evaluation and Selection, Management, and Reporting. The Social Bond Principles (SBP) apply a similar framework for social outcomes. The Sustainability-Linked Bond Principles (SLBP) add measurable ESG goals through Key Performance Indicators, Targets, and Verification. These frameworks build market trust, foster sustainable finance, and support high standards in labelled bonds.

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Summary

What is the ICMA, and what role does it play in the financial market?

The ICMA is a self-regulatory organisation that supports participants in capital markets by promoting high standards, appropriate regulation, and trade support. It provides secretariat services for the Green Bond Principles (GBP) and related guidelines for labelled bonds, offering a framework for transparency and integrity. By producing market conventions and documentation, the ICMA helps ensure the orderly growth of the sustainable finance market.

What are the Green Bond Principles (GBP), and what do they aim to achieve?

The GBP are voluntary guidelines that support the issuance of green bonds by focusing on transparency and disclosure. They help issuers, investors, and underwriters understand the key components of green bonds, including Use of Proceeds, Project Evaluation and Selection, Management of Proceeds, and Reporting. The GBP ensure issuers maintain high standards and provide investors with the necessary information to assess the environmental impact of their investments.

What are the Social Bond Principles (SBP), and how do they differ from the GBP?

The SBP are similar to the GBP but focus on bonds that finance projects with positive social outcomes, such as affordable housing or access to essential services. They share the same four core components as the GBP, Use of Proceeds, Project Evaluation and Selection, Management of Proceeds, and Reporting, and emphasise transparency and integrity to ensure stakeholder trust in the social bond market.

What are the Sustainability-Linked Bond Principles (SLBP), and how do they support ESG goals?

The SLBP provide guidelines for bonds tied to measurable ESG outcomes. They emphasise selecting Key Performance Indicators (KPIs), setting ambitious Sustainability Performance Targets (SPTs), and ensuring clear reporting and independent verification. Unlike the GBP and SBP, the SLBP are forward-looking and focus on aligning bonds with an issuer’s long-term sustainability strategy, fostering accountability and promoting progress toward ESG goals.

How do these principles promote transparency and integrity in sustainable finance?

The GBP, SBP, and SLBP establish voluntary frameworks that guide issuers in clear reporting, disclosure, and accountability. By standardising approaches to labelled bonds, they provide investors with the necessary tools to assess environmental and social impacts while ensuring issuers uphold high standards. These principles build market trust, facilitate credible transactions, and support the growth of the sustainable finance sector globally.

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Meggie Eloy

Meggie Eloy is a Senior Technical Analyst in CBI's Capacity Building and Technical Assistance team, providing technical assistance to prospective debt issuers through portfolio reviews, entity readiness assessments, GSS+ training, and capacity building. She also supports clients in creating credible transition plans by reviewing existing plans to ensure they follow best practice guidelines. Prior to her role, she worked in CBI's Certification team, reviewing and processing green bond applications to determine certification. She has assisted in delivering over 300 billion US Dollars of Use of Proceeds debt instruments, focusing on limiting global warming to at or below a 1.5°C future. Meggie has worked across sectors such as Renewable Energy, Low Carbon Buildings, Low Carbon Transport, and the transition of hard-to-abate sectors like Steel, Cement, Hydrogen, and Basic Chemicals. She holds an MSc in Corporate Environmental Management from the University of Surrey, a BSc in Geography from the University of Leicester, and a CFA Level 4 qualification in Climate and Investing.

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