Sustainability-Linked Bonds

Finance your sustainability strategy, accelerate your transition and create visibility of your security by displaying your SLB on LGX.
 

Implement your ambitious sustainability strategy with SLBs

Sustainability-Linked Bonds (SLBs) are the latest addition to the universe of sustainable debt instruments and contribute to financing the issuer’s strategy towards achieving predefined sustainability objectives within a set timeline.

Unlike Green, Social and Sustainability Bonds, which are “Use-of-Proceeds” instruments, SLBs can be used to finance any corporate activity and their proceeds do not need to be allocated to specific projects. Yet, the issuer commits to reaching ambitious, science-based and measurable Sustainability Performance Targets (SPTs) around pre-determined KPIs, and to having these reviewed by an external party. A lot of the investor scrutiny around these products is placed at the level of the issuer’s strategy, namely the level of ambition and materiality of its SPTs/KPIs. Another core feature of SLBs is that the financial and/or structural characteristics of the bond can vary depending on whether the issuer achieves the predefined sustainability objectives. SLBs represent a source of financing for companies from any sector that set clear and ambitious science-based targets to become more sustainable.

Sustainability-Linked Bond issuers on LuxSE

Sustainability standards and labels

A number of different standards, frameworks, taxonomies, methodologies and labels are included in the LGX eligibility criteria:

  • Bond standards: ICMA’s Green Bond Principles (GBP), Social Bond Principles (SBP), Sustainability-Linked Bond Principles (SLBP) and Sustainability Bond Guidelines (SBG), the Climate Bonds Taxonomy, the People’s Bank of China Green Bond Endorsed Projects Catalogue, the ASEAN Green Bond Standards and other frameworks.
  • Fund labels: LuxFLAG’s Climate Finance, Environment, Social and ESG labels, FNG’s label for sustainable mutual funds, the Nordic Swan Ecolabel for funds, the French government’s SRI and TEEC labels and the Austrian ecolabel for financial products (Österreichisches Umweltzeichen).
  • Issuer methodologies: Climate Bonds Initiative (CBI)’s Climate-Aligned Data Set.
Note that (as per CBI) the PBOC Green Bond Endorsed Project Catalogue accepts retrofits of fossil fuel power stations, clean coal and coal efficiency improvements, and rail lines that mainly transport fossil fuels, which are not accepted under the Climate Bonds Taxonomy.

More information on international standards related to sustainable securities is available here.

ICMA’s Sustainability-Linked Bonds Principles

In June 2020, the International Capital Market Association (ICMA) established its Sustainability-Linked Bond Principles (SLBP). The SLBP are voluntary guidelines that cover five core principles:

  • Selection of Key Performance Indicators (KPIs)
  • Calibration of Sustainability Performance Targets (SPTs)
  • Bond characteristics
  • Reporting
  • Verification
SLB-ICMA_SLBP.png

SLB eligibility criteria for display on LGX

The LGX eligibility criteria are built on ICMA’s Sustainability-Linked Bond Principles and can be summarised as follows:

  • Pre-issuance Second Party Opinion (SPO) covering the bond’s alignment with the 5 SLBP principles
  • Appropriate post-issuance disclosure in case of any material change to the perimeter, KPI methodology and/or the Sustainability Performance Targets (SPT) calibration
  • Inclusion of a financial and/or structural impact involving trigger event, depending on whether the selected KPI(s) reach (or not) the predefined SPT(s), in pre-issuance legal documentation
  • Commitment to reporting - ideally on a yearly basis or (where the intrinsic nature of the KPI(s)/SPT(s) would not allow for such frequency) at least once prior to the trigger event - containing information in line with the recommendations of the SLBP
  • Commitment to verification- ideally on a yearly basis or (where the intrinsic nature of the KPI(s)/SPT(s) would not allow for such frequency) at least once prior to the trigger event -  in line with SLBP recommendations

Why list Sustainability-Linked Bonds on LuxSE

  • Increase the visibility of your security

  • Enhance your reputation as an issuer committed to the highest standards and levels of transparency

  • Access a broad range of ESG and impact-conscious investors

  • Rely on LuxSE’s leading expertise in sustainable finance

  • Join the LGX community without any additional costs

If you need more information

Contact us

portrait-CCA.jpg
Chiara Caprioli

Business Development Manager

+352 47 79 36 417 cca@bourse.lu
portrait-YKE.jpg
Yann Kerhoas

Sustainable Finance Manager

+352 47 79 36 604 yke@bourse.lu