Sustainable investments are needed to transform the economy and to deliver on climate, environmental and social sustainability goals, including the Paris Agreement and more broadly the UN Sustainable Development Goals.
Bonds as a major asset class play an integral role to achieve such goals and the market for Green, Social, Sustainability or Sustainability-linked bonds is growing rapidly both due to bottom-up (i.e. investor demand) as well as top-down drivers (i.e. board-level request and legislation).
Since 2014, SIX has been a trading venue for Green bonds when the European Investment Bank listed the first Green bond on SIX. In 2019, Raiffeisen Schweiz followed with the first Sustainability bond and in fall 2020, Novartis listed the first Sustainability-linked bond on SIX.
Definitions and frameworks
Currently, there are no legal and binding definitions for Green, Social and Sustainability bonds on a global level. However, the three “Principles” by ICMA have become the leading global and voluntary framework and include guidelines on project selection, use of proceeds and reporting. In June 2020, ICMA has published the Sustainability-linked Bond Principles in addition. Sustainability-linked bonds are forward-looking performance-based debt instruments where the issuer commits to achieve predefined Sustainability/ESG objectives within a given timeline, while the proceeds are intended to be used for general purposes.
Eligibility for SIX-Flagging
To help strengthening sustainable investing, to give such bonds higher visibility and to facilitate investors’ search, special flags have been introduced by SIX in the Bond Explorer that allows to filter for existing Green, Sustainability or Sustainability-linked bonds. To be eligible and “SIX-flagged” as either a Green, Social, Sustainability or Sustainability-linked bond, the criteria outlined below must be met:
- Green bonds must be certified under the Climate Bonds Standard set out by the Climate Bonds Initiative (“CBI”) and be aligned with the Green Bond Principles by ICMA; Once a Green bond is certified by CBI, such Green bond will automatically be flagged by SIX.
- Sustainability bonds must be certified under the Climate Bonds Standard set out by CBI and be aligned with the Sustainability Bond Guidelines by ICMA. For the time being and upon listing/admission to trading, please inform SIX and submit the respective ancillary documentation so that a Sustainability bond is flagged by SIX.
- Sustainability-linked bonds are issued under the concept of an “issuer commitment”. Therefore, for the time being and upon listing/admission to trading,
please inform SIX and submit the respective ancillary documentation so that a Sustainability-linked bond is flagged by SIX.