While noting the “impressive heights” of $960 billion reached by sustainable debt issuance in 2021, a new report from S&P Global Ratings (see here, log in required) describes the credibility and legitimacy of such instruments as “still sometimes murky”.
The report examines whether the proceeds of instruments are allocated exclusively to projects with clear environmental or social benefits, project selection criteria, how the issuer manages and monitors the funds, and commitment to reporting on the allocation and impact of the proceeds. In the last case, it found allocation reporting to have been “more advanced” while impact reporting was “more varied”.
The report also found significant variation in key performance indicators and the ambition level of sustainability performance targets.
However, the report also added a positive note, saying it expected “the transparency and detail disclosed in documentation to increasingly go beyond minimum requirements as the push toward greater granularity in disclosure from issuers, investors and intermediaries accelerates”.