British Land’s latest update to bondholders has underlined the lack of consensus over the use of money raised in the growing green finance market.
The company has issued a supplement to its existing £2bn medium-term note programme, established last summer. The main addition comes in the “risk factors” section and relates to any bond issuances which British Land says will be used to finance or refinance sustainable projects.
The company said: “It should be noted that there is currently no clear definition (legal, regulatory or otherwise) of, nor market consensus as to what constitutes, a ‘green’, ‘social’, ‘sustainable’ or equivalently labelled project, or as to what precise attributes are required for a particular project to be defined as ‘green’, ‘social’ or ‘sustainable’ or such other equivalent label, nor can any assurance be given that such a clear definition or consensus will develop over time.”
As a result, the company said, it can give “no assurance… that the use of such proceeds will satisfy… any present or future investor expectations or requirements as regards any investment criteria or guidelines with which such investor or its investments are required to comply”, including through the environmental or social impact of British Land’s own projects.
Other corporate bond issuers have a similar statement in their own prospectuses for proceeds raised to finance sustainable or environmentally friendly projects.
The International Capital Market Association’s Green Bond Principles lay out guidelines for companies issuing green bonds around how to define the use of proceeds, what kind of projects should be financed though such an issuance, and how issuers should then report on the projects to bondholders.
According to the Climate Bonds Initiative thinktank, global issuers have raised more than $69bn through green bonds so far in 2020, following a total of $257.5bn in 2019.
To send feedback, e-mail tim.burke@egi.co.uk or tweet @_tim_burke or @estatesgazette
