As an observer organization of the Green Bond Principles and the first approved verifier of the Climate Bonds Standard based in China, SynTao Green Finance will help green bond issuers on pre- and post- issuance verification, continuing monitor of the proceeds, reporting and information disclosure, as well as capacity building on green finance.
In February 2016, SynTao Green Finance was approved to be the third Chinese observer organization of the Green Bond Principles (GBP) launched by the International Capital Market Association (ICMA).
The GBP is a mainstream green bond standard that aims to encourage transparency and disclosure, providing investors more assurance that green bonds serve for positive environmental outcomes. According to the GBP, the green bond market is growing rapidly. In 2014, the issuances were over US$35 billion, and almost US$40 billion green bonds were issued in 2015.
The GBP defines Green Bonds as bonds that raise funds for new and existing eligible projects with environmental benefits. The GBP also suggests a process for designating, disclosing, managing, and reporting on the proceeds of the bond. Eligible projects include the following categories: renewable energy, energy efficiency, sustainable waste management, sustainable land use, biodiversity conservation, clean transportation, sustainable water management, and climate change adaption.
China is facing serious environmental challenges, which will give a great push to the potential for the green industry. According to the Green Finance Committee of China Society of Finance and Banking, China needs at least 2 trillion yuan ($308.84 billion) of green investment annually over the next five years, and 85% of the investment needs to be private capital. Diversified tools, including green bonds, green indices, green funds and green credit, will be used to collect the investment. Green bond has become one of the most efficient tools since the launch of a notice on issuance of green financial bonds in the interbank bond market by the People’s Bank of China (PBoC).
On January 20, Shanghai Pudong Development Bank managed to raise 20 billion Yuan ($3 billion) green bond at a coupon rate of 2.95% and maturity of 3 years. On January 21, the China Industrial Bank raised 10 billion Yuan ($1.52 billion) by offering investors instruments at the same coupon rate and maturity duration. The two banks have a quota of 50 billion Yuan ($7.6 billion) each on green bonds. On February 22, the Bank of Qingdao, as the first city commercial bank, issued a green bond of up to 8 billion yuan ($1.23bn).
The issuer of green bond needs to provide enough detailed information for investors to evaluate how green the bond is, and the GBP helps to provide guidance and standard for the issuers and other players in the market. The opinion or the verification from independent and professional third parties can help to decrease the risk of “green wash” for investors by improving transparency. Both the GBP and the notice of PBoC encourage evaluation and verification on the “green” nature of the bonds.
The GBP has 108 members (issuers and investors) and 63 observers (NGOs, academia, auditors and service providers) so far. As an observer organization of the GBP, SynTao Green Finance is also the first approved verifier of the Climate Bonds Standard in China. SynTao Green Finance provide services on pre- and post- assurance, continuing monitor of the proceeds, reporting and information disclosure, as well as capacity building of green finance for issuers. The assurance will be designed to meet both the new PBoC regulations for financial institution bonds and the international standard.
SynTao Green Finance is founded by the leading Corporate Social Responsibility (CSR) and Socially Responsible Investment (SRI) consulting firm, SynTao Co., Ltd, in China. SynTao Green Finance focuses on providing services include building green finance strategy, environmental and social risk management, green finance product innovation, research on green finance and responsible investment, and capacity building on green credit and responsible investment. SynTao Green Finance is one the founders of the China Social Investment Forum (China SIF), devoting to build a responsible capital market in China. SynTao is a member of the Green Finance Committee of China Society of Finance and Banking, providing continuous support to establish a green finance system in China.
For more information of SynTao Green Finance’s green bond services, please contact contact@syntaogf.com.