Green Bonds and Loans

ACRA provides clients with an assessment of the level of compliance of their debt instruments with the International Capital Market Association’s (ICMA) Green Bonds Principles and assesses them for compliance with national standards. For green loans, the Agency assesses the level of their compliance with the Green Loan Principles of the Loan Market Association (LMA) and the Loan Syndications and Trading Association (LSTA).

WHY CHOOSE ACRA?

QUESTIONS AND ANSWERS

What are green bonds and green loans?

Green bonds are very similar to plain vanilla bonds placed on the stock market. Their key difference lies in the fact that the issuer uses the proceeds received from investors exclusively for financing or refinancing green projects.

If an issuer does not want to enter the public debt market, it can obtain a green loan from a bank. As in the case of green bonds, the borrower undertakes to use the loan funds to finance or refinance green projects.

Green bonds are defined in the ICMA’s Green Bond Principles.

Green loans are defined in the Green Loan Principles of the LMA/LSTA.

What is a green debt assessment for?

If an issuer/borrower wants to finance its green projects and at the same time clearly highlight its positive contribution to environmental protection, it can label its financial obligations as green. This has the following advantages:

1. Creates a positive image of a green company.
2. Helps to increase the pool of investors and creditors.
3. Results in potential oversubscription for the issue.
4. Increases the transparency of the transaction.
5. Allows the issuer to receive benefits from the state¹. 

Preparing for green bonds/loans

Step-by-step algorithm of actions for issuing green bonds/obtaining a loan:

1. Understand your needs: determine the project(s) for which funding will be attracted.
2. Conduct an initial assessment of the project(s): is the project green and does it comply with the principles established by the national and/or international taxonomies?
3. Develop a Green Finance Framework (GFF), which is an officially approved public document that defines:
   1. Use of proceeds.
   2. Process of evaluating and selecting projects
   3. Management of proceeds.
   4. Management of proceeds.
   5. Reporting.
4. Determine whether additional policies and procedures are needed for each of the GFF clauses, and if necessary, develop them.
5. Verify the bonds/loans planned for placement with a certified verifier — ACRA.
6. Prepare documentation for the placement of bonds or obtaining a loan.
7. Choose an exchange for placement/creditor bank.
8. Carry out a financial transaction and enter the national and/or international registries.
9. Maintain annual reports on the use of received funds to maintain the green status.

ACRA’s subsidiary — ACRA RM — assists the issuer at every stage of preparation for the issuance of green bonds or obtaining a loan in terms of marking a green instrument.

Is a project green?

To understand whether a project is green or not, you need to compare its characteristics with one of the taxonomies² (categories of green projects):

• list of eligible ICMA projects
• Climate Bonds Initiative taxonomy
• EU taxonomy of green projects
• VEB.RF’s taxonomy²

If a project is not being implemented in Russia, you should refer to the taxonomy of the country of placement.

Recommended materials

• ICMA’s green bond principles and guidelines
• LSTA/LMA green loan principles and guidelines
• VEB.RF’s principles and guidelines
• Moscow Exchange’s listing rules
• Bank of Russia’s securities issue standards

Why choose ACRA?

ACRA is included in the list of independent verifiers of ICMA, VEB.RF and the Moscow Exchange.

After assigning an assessment to green debt obligations, an issue can be included in the databases of ICMA, VEB.RF, the Sustainability Sector of the Moscow Exchange and/or other databases at the request of the issuer.

ACRA’s green obligation verification process

ACRA carries out the assessment in no more than 30 (thirty) business days following the client’s provision of the necessary documents and information.

¹Under discussion.

²This list of taxonomies is not exhaustive.

³VEB.RF's taxonomy takes priority for Russian issuers..