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 2020, Novartis with the first Sustainability-linked bond. In fall 2021, the Central American Bank for Economic Integration (CABEI) listed the first social bond on SIX.
Sustainable Bonds on the Swiss Stock Exchange
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.