This is the cornerstone of a Green Bond which requires that utilisation of the proceeds of the bond are exclusively for Green Projects. All designated Green Projects should provide clear environmental benefits, which will be assessed and, where feasible, quantified by the issuer.Process of Project EvaluationThe issuer of a Green Bond is required to clearly communicate to investors - the environmental sustainability objectives; - the process by which the issuer determines how the projects fit within the eligible Green Projects categories identified above; - the related eligibility criteria, including, if applicable, exclusion criteria or any other process applied to identify and manage potentially material environmental and social risks associated with the projects
The net proceeds of the Green Bond, or an amount equal to these net proceeds, are required to be credited to a sub-account, moved to a sub-portfolio or otherwise tracked by the issuer in an appropriate manner, and attested to by the issuer in a formal internal process linked to the issuer’s lending and investment operations for Green Projects. For as long as the Green Bond is outstanding, the balance of the tracked net proceeds should be periodically adjusted to match allocations to eligible Green Projects made during that period.
Issuers are required to make, and keep, readily available up to date information on the use of proceeds to be renewed annually until full allocation, and on a timely basis in case of material developments. The annual report should include a list of the projects to which Green Bond proceeds have been allocated, as well as a brief description of the projects and the amounts allocated, and their expected impact.
The Green Bond Principles stipulate that eligible projects include, but are not limited to, the following:- renewable energy (including production, transmission, appliances and products);- energy efficiency (such as in new and refurbished buildings, energy storage, district heating, smart grids, appliances and products); - pollution prevention and control (including reduction of air emissions, greenhouse gas control, soil remediation, waste prevention, waste reduction, waste recycling and energy/emission efficient waste to energy); - environmentally sustainable management of living natural resources and land use (including environmentally sustainable agriculture; environmentally sustainable animal husbandry; climate smart farm inputs such as biological crop protection or drip-irrigation; environmentally sustainable fishery and aquaculture; environmentally-sustainable forestry, including afforestation or reforestation, and preservation or restoration of natural landscapes);
- terrestrial and aquatic biodiversity conservation (including the protection of coastal, marine and watershed environments);
- clean transportation (such as electric, hybrid, public, rail, non-motorised, multi-modal transportation, infrastructure for clean energy vehicles and reduction of harmful emissions);
-sustainable water and wastewater management (including sustainable infrastructure for clean and/or drinking water, wastewater treatment, sustainable urban drainage systems and river training and other forms of flooding mitigation);
-climate change adaptation (including information support systems, such as climate observation and early warning systems);
-eco-efficient and/or circular economy adapted products, production technologies and processes (such as development and introduction of environmentally sustainable products, with an eco-label or environmental certification, resource-efficient packaging and distribution);
-green buildings which meet regional, national or internationally recognised standards or certifications.
For a domestic Green bond issuer, the projects must align with Nigeria's Nationally Determined Contributions which include