The market for green bonds has rapidly increased over the last years and will continue to grow because the demand for sustainable assets exceeds the supply by far. Issuers usually benefit from lower funding costs and from attracting new investor groups. In turn, green bonds come with additional challenges for issuers. A new whitepaper of our ESG experts describes the aspects of operational readiness for green bond issuances for the Treasury Divisions of banks.
The whitepaper already considers the upcoming EU Green Bond Standard and covers the following topics: ·
- Strategy and governance: Green bond issues need be aligned with the overall corporate strategy. Furthermore, Treasury needs to set up appropriate governance processes, which ensure that green bond proceeds are actually invested in green projects.
- Project selection: The assessment which assets are eligible for re-financing through green bonds requires gathering of additional data.
- Steering: The management of sustainable assets and liabilities must be integrated into the overall steering processes of the banking book.
- Reporting: The reporting requirements for green bonds have to be fulfilled.
Moreover, the whitepaper outlines a possible software solution that helps Treasury to handle these challenges. A Green Bond Treasury Cockpit automates the eligibility check of new assets and is the golden source for all sustainability-relevant information. Based on a common data set, Treasury has all steering-relevant information at a glance and can automatically generate the required reports.
The whitepaper can be downloaded here: https://www.l-p-a.com/consulting/green-bonds