Green bonds and social bonds are taking off as the investment vehicle of choice for the private and public sectors to finance projects with environmental and social benefits, such as clean power, low-carbon transport, energy efficient buildings, and affordable housing and infrastructure.
Green bonds have proved attractive to the growing number of investors with an interest in sustainable investment options and are generally oversubscribed. No wonder the labelled green bond market grew by an average of 60% per year between 2015 and 2020, with a record-breaking US$270 billion worth of bonds issued in 2020 alone, despite difficult economic circumstances due to the COVID-19 pandemic.
This increase in volume is also being fueled by an increased standardization effort by regulators and market participants (e.g. the development of the new EU Green Bonds Standard).
While most green bonds are issued by banks, it is increasingly common for corporations to issue their own bonds. Big brands in the technology, utilities, automotive and consumer products sectors are among those that have done so.
Along with the advantages, there are also challenges and uncertainties for green and social bond issuers as the market is still new (the first green bond was issued in 2007). Many organizations can benefit from expert advice on how to navigate the pitfalls or from independent assurance on ways to maximize the credibility and appeal of their bonds.
How we can help
Our network of advisory and assurance professionals has solid experience in supporting clients on green bond issuance and offer a range of services to support you during the lifecycle of your green or social bond.
- Review financing options: KPMG professionals review and challenge your financing objectives and alternatives, enabling you to optimize the capital structure and make the most of debt market appetite. KPMG specialists can help determine a preferred funding route and act as a sounding board for your management team.
- Design green bond criteria: KPMG specialists can help you develop a green or social bond framework, “green” or "social" criteria and specifications for the management of proceeds. KPMG professionals advise on project selection and evaluation, fund management processes and controls, and we benchmark your processes against industry best practice and evolving standards.
- Execution: KPMG professionals advise on the presentation of your business’s credit story and green or social credentials to potential investors, the issuance process of the debt and liaison with stakeholders including credit rating agencies.
- Ongoing stakeholder management: KPMG specialists can help you assess the performance of a green or social bond through independent bond investor studies, giving you unbiased insight into bondholders’ perspectives and into the profile of bondholders.
- Third-party independent assurance: To increase the credibility of the bond, KPMG professionals can provide assurance on the issuer's processes and controls for selecting green or social projects and managing proceeds, as well as on the issuer's progress reports.
- Monitoring and reporting: KPMG specialists can help you develop performance indicators and project evaluation metrics to monitor and report on the financial, environmental and social outcomes of projects. We support you in reporting to your company’s internal and external stakeholders.