Sustainability has become a mainstream consideration for the financial sector as illustrated among others by the success of the green, social and sustainability bond markets underpinned by the Green Bond Principles & Social Bond Principles (GBP SBP), which are supported by ICMA. Policy makers and regulators have also launched initiatives in this sector with the most visible being the EU Action Plan on Financing Sustainable Growth and China’s vigorous actions in support of green finance.
With these promising developments there is however a need for convergence on terminology among markets participants, wider stakeholders, as well as policy makers and regulators.
Specifically, the use of “climate”, “green” and “sustainable” as if they were interchangeable terms may dilute the urgency of making progress in climate mitigation and sustainable growth policy goals as outlined notably in the Paris Agreement or in the United Nations Sustainable Development Goals. It is also important to note for example that the definition of Social Finance incorporates funding health and healthcare projects and, therefore especially relevant in the current context, those related to COVID-19.
These High-level definitions are the second publication of ICMA’s Sustainable Finance Committee set up in September 2019. This Committee brings together various ICMA committees, including its buy-side arm, corporate issuer forum, legal and documentation committee as well as the Executive Committee of GBP SBP, and aims to address crosscutting sustainable finance developments.
In this publication, ICMA is proposing high-level definitions building on current market usage and existing official sector terminology that pertain to the most commonly used terms in the sustainable finance field. The objective is to clarify the debate and to ensure that all participants and stakeholders have a common and transparent vocabulary to refer to. This publication is also designed as a contribution to other ongoing efforts in the financial industry to develop a consensus around key terms and definitions in sustainable finance.
Read more: https://www.icmagroup.org/assets/documents/Regulatory/Green-Bonds/Sustainable-Finance-High-Level-Definitions-May-2020-110520v4.pdf