SECP issues guidelines for Green Bonds' issuance in Pakistan

The Securities and Exchange Commission of Pakistan (SECP) has issued guidelines for issuance of Green Bonds in Pakistan.

The SECP has defined Green bonds as “debt securities, including sukuks, issued by an issuer including corporates, entities owned or controlled by the government, whether through public offer or by way of private placement, where the proceeds exclusively applied to finance or re-finance, in part or in full, new and/or existing eligible Green Projects.”

All issuers who are eligible to issue debt securities, including Sukuk either by way of public offer or private placement, are eligible to issue green bonds while ensuring compliance with applicable regulatory framework.

The SECP said that in order to qualify as a green bond, the proceeds must finance or refinance green projects or activities that bring energy efficiency, protect environment, utilise renewable energy, prevent and control pollution, use natural resources, projects related to land management, pollution free transportation, wastewater and water treatment, etc.

Green bonds can be issued based on globally accepted standards/goals such as the International Capital Market Association (ICMA)’s Green Bond Principles, the UN’s Sustainable Development Goals (UN SDGs) etc.

The apex regulator said that the issuance of Green Bonds will help initiate sustainable projects for combating climate change, and facilitate issuers of debt securities to diversify their source of financing.

It will also provide an additional financing instrument to those investors who are conscious of financing/re-financing projects that contribute to the environment, maintained the SECP.

Days ago, Pakistan's first green Eurobond was formally launched with Water and Power Development Authority (Wapda) managing to raise $500 million.

The bond attracted a number of international investors, with oversubscription by about six times.

As per the green bond database, Green Bonds worth $1.2 trillion have been issued by different countries till date including $297 billion in 2020 and $130.9 billion in 2021 (till April).

A total of 640 issues of Green Bonds have been made by 60 countries, revealed International Capital Market Association (ICMA)’s database.