Sustainable Projects

Description

SUSTAINABLE FINANCE DEVELOPMENT

HICP follows the International Capital Marketing Association (ICMA) framework, which defines sustainable development projects not by a single, prescriptive definition, but through a clear set of voluntary process guidelines and eligible project categories for various sustainable bonds:

Mapping To SDGs

ICMA links its guidelines to eligible projects aligned with the United Nations Sustainable Development Goals (SDGs). This assists issuers and investors in understanding how their financed projects contribute to global sustainability objectives.

Instruments

These widely recognized principles of sustainable finance shape the definition of the following instruments: 

• Green Bond Principles 

• Social Bond Principles 

• Sustainability Bond Guidelines

• Sustainability-Linked Bond Principles

The ICMA framework emphasizes transparency, disclosure, and impact reporting. It addresses the interconnected challenges of environmental preservation, social equity, and economic advancement, ensuring that future generations can meet their needs.

Focus on the Use of Proceeds 

Sustainability Bonds are an “umbrella” term that encompasses Green Bonds, Social Bonds, and social elements. The core definition highlights the exclusive use of bond proceeds to finance or refinance eligible projects that provide specific environmental and/or social benefits.

Core Components for Project Governance

Beyond the "Use of Proceeds," the ICMA Principles also detail the process and governance surrounding these projects. These elements are crucial for their credibility as “sustainable": project evaluation, proceeds management, reporting, and external review.

Sustainability-Linked Bonds (SLB)

Instead of defining eligible projects based on "use of proceeds," these bonds are linked to the issuer's overall sustainability performance. The proceeds may be used for “general corporate” purposes. However, the bond's financial characteristics (e.g., coupon rate) are tied to the issuer's achievement of pre-defined, ambitious Sustainability Performance Targets (SPTs), measured through Key Performance Indicators (KPIs).

Examples

• Renewable Energy Projects: Developing solar farms, wind power plants, or hydropower facilities as alternatives to fossil fuels.
• Sustainable Agriculture: Implementing crop rotation, no-till farming, organic methods, and integrating livestock to improve soil health and reduce environmental impact.
• Green Infrastructure: Creating urban green spaces, using permeable paving, and implementing green roofs to manage stormwater, improve air quality, and promote biodiversity.
• Circular Economy Initiatives: Projects aimed at minimizing waste through recycling, upcycling, and extending product lifecycles (e.g., community recycling programs, sustainable packaging solutions).
• Clean Water and Sanitation Initiatives: Ensuring access to clean water and improving sanitation systems, often incorporating water treatment plants and rainwater harvesting techniques.
• Sustainable Urban Planning: Creating walkable and bike-friendly neighborhoods, investing in efficient public transportation, and developing sustainable cities and communities.
• Community-Based Initiatives: Projects that concentrate on local empowerment, such as training rural women in solar technology (e.g., India's Solar Mamas) and creating community gardens.

Journey

Sustainable development projects can be structured as public-private partnerships, adhering to the ICMA guidelines. 

Project developers may also pursue sustainable bond credit enhancements, which are financial mechanisms or guarantees that improve the creditworthiness of green, social, or sustainability-linked bonds (SLBs). These enhancements make projects more attractive to investors while ensuring alignment with ICMA principles. They reduce risk, lower borrowing costs, and expand investor pools, critical for funding high-impact but potentially risky sustainable projects.

Keys to developer success hinge on eligibility, third-party validation, and robust reporting, which ensure alignment with ICMA’s core principles, compliance after issuance, proper allocation of the Use of Proceeds, and impact reports to maintain transparency and investor trust. 

We invite you to contact us to discuss the potential eligibility for sustainable bond financing.