Publication / 06 Sep 2016

An Environmental Performance Based Assessment Framework to Support the China Green Bond Market

Framework aims to build consensus on assessing the environmental performance of green bonds to provide issuers, investors and policymakers with confidence and certainty on the benefits achieved.

Trucost and Golden Credit Rating International partnered to develop this framework to share it with all market players in China as a contribution to the debate on how to assess green bonds. By enabling a green rating in parallel to a bond’s credit rating, the assessment will provide investors with a clear indication of how green a green bond is and how well it conforms with market expectations.

The design of this framework consists of four key elements: align with expectations of key stakeholders such as the investor community, and China’s bond market regulators and green finance think tanks; prevent greenwashing in environmental performance assessment; review common practices of environmental performance assessment in the market; identify areas of connection between the green bond assessment framework and environmental regulations in China.

The framework will also keep track of the achievement of the expected environmental benefits of projects financed by the bond, and the implementation of impact mitigation measures as proposed in the project’s Environmental Impact Assessment prior to bond issuance. This mechanism will cover the pre- and post-issuance stages, and may even be extended to operational stage of the project, depending on the maturity of the bond.

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