The Green Bond Principles (GBP) define a green bond as any type of debt instrument where the proceeds are used to finance or refinance green projects. The GBP also require that the bonds be aligned with four core components: (i) how the proceeds are used; (ii) the process used for project evaluation and selection; (iii) how the proceeds are managed; and (iv) reporting.
To evaluate the environmental and social benefits of green bonds, close attention must be paid to components (i) and (iv). This means that it is important to look at the type of projects selected and financed by the proceeds, as well as their outcome and impact.
With this in mind, BNP Paribas Asset Management has developed an engagement process specific to green bonds, with the aim of avoiding any reputational risk associated with project implementation.
