Project Details
Project
FMO Sustainability Bond Framework Second-Party Opinion
Client
FMO
Project Type
Green Bond/Loan
Industry Group
-
Use of Proceeds
-
Location
Netherlands
Evaluation Date
Dec 2018
Evaluation Summary
Sustainalytics is of the opinion that the FMO Sustainability Bonds Framework 2018 is credible and impactful and aligns with the Sustainability Bond Guidelines 2018. This assessment is based on the following:
USE OF PROCEEDS
The eligible categories for the use of proceeds – (i) Climate Change Mitigation, (ii) Climate Change Adaptation, (iii) Other Footprint, (iv) Investments in Least Developed Countries (LDCs), and (v) Investments in Inclusive Business – are aligned with those recognized by the Green Bond Principles 2018, Social Bond Principles 2018 and Sustainability Bond Guidelines 2018. Sustainalytics recognizes that the eligible projects can contribute to decreasing GHG emissions and provide positive social impact in emerging markets. In addition, they will contribute to advancing the UN Sustainable Development Goals.
PROJECT EVALUATION/SELECTION
FMO implemented a two-step process for the selection of eligible projects, namely an initial classification by its deal team as ‘green’ or ‘reduced inequality’ (depending on the nature of the project) and a validation process by the FMO “Development Impact Sustainability team.” FMO includes environmental and social risk assessments in the first step of its project selection process. Sustainalytics views this process as in line with market best practice.
MANAGEMENT OF PROCEEDS
FMO’s management of proceeds process is aligned with market practice as the bank will hold the net proceeds of any issuance in a separate sub-portfolio linked to FMO’s green finance and inclusive finance lending operations. Pending allocation, the net proceeds will be held in FMO’s liquidity portfolio. The bank intends to fully allocate the bond proceeds no later than 24 months post issuance date.
REPORTING
FMO commits to providing investors with an annual allocation and impact newsletter. (i) The allocation reporting will cover progress on the allocation of proceeds on a portfolio basis, along with case studies, while the (ii) impact reporting will cover portfolio-wide estimation on the annual GHG emissions reduction for is direct investments and an estimate number of direct and indirect jobs supported per each target group for all investments. Sustainalytics considers the reporting to be aligned with market practice but encourages FMO to also report on the impact of indirect investments through intermediaries or private equity funds.