Project Details
Project
New World Development Company Limited Sustainability-Linked Bond Second-Party Opinion
Client
New World Development Company Limited
Project Type
Sustainability Linked Bond or Note
Industry Group
Real Estate
Use of Proceeds
N/A
Location
Hong Kong
Evaluation Date
Jan 2021
Evaluation Summary
Sustainalytics is of the opinion that the New World Development’s Sustainability-Linked Bond aligns with the Sustainability-Linked Bond Principles 2020 and considers the KPI to be relevant and material to the issuer and the SPT to be impactful. This assessment is based on the following:
Selection of Key Performance Indicators (KPIs)
New World Development Company Limited has selected the KPI ‘percentage of Renewable Energy in Rental Properties in the Greater Bay Area’ for the Sustainability-Linked Bond (SLB). Sustainalytics considers the KPI chosen to be relevant to and material for New World Development, and further considers it to be clear and credible.
Calibration of Sustainability Performance Targets (SPTs)
New World Development Company Limited has established the SPT of increasing the share of renewable energy consumed by its Greater Bay Area rental properties from less than 1% currently to 100% by FY-end 2025/2026. Sustainalytics considers the SPT to be aligned with the issuer’s commitment to measurably reduce the carbon footprint of its business by FY-end 2029/2030. The SPT contributes to SDG 7 and SDG 11.
Bond Characteristics
New World Development will outline in its bond offering document the penalty to be paid in case it fails to achieve the said SPT. NWD has disclosed that failure to achieve the SPT will result in annual purchase of carbon offsets equivalent to a 25 bps increase in the coupon of the issuance until bond maturity.
Reporting
New World Development commits to report on an annual basis on its performance on the KPI in its Annual Report, which is aligned with market expectations. New World Development also commits to provide a verification report of the Company’s performance of the SPT and related impacts contained within the Annual Report. From FY2025/2026, additional bond level review or assurance will also be obtained prior to Annual Report disclosure and made available on its corporate website. Sustainalytics finds this to be in alignment with the SLB Principles.
Verification
New World Development commits to having an independent and external assurance provider to provide limited assurance on the published KPI performance figures as well as its performance levels against the set SPT. This will be performed each fiscal year up to until the maturity of the bond which is aligned with the SLB Principles on verification.