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ICMA’s newly released KPI registry to discipline SLB issuances

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On June 28th 2022, at the occasion of its Annual General Meeting, the ICMA Green Bond Principles published an “illustrative KPI Registry”.

As it faced some criticism regarding the integrity of the SLB market, one of the main objectives for the SLB Working Group, co-chaired by Natixis, was to offer suggestions on how to identify, select and use KPIs for SLB structuring purposes. The intention was to provide additional guidance to market participants, arrangers, issuers and investors, in their design and assessment of SLBs with a sector entry point, to enhance clarity and integrity.

Considering materiality in the KPI selection is fundamental to strengthen the credibility of that market. The “illustrative KPIs Registry” was built on a ‘materiality matrix’ designed to map the most material sustainability themes per sector. From this basis, samples of KPIs have been suggested[1]. In order to ensure abidance by the core, relevant and material fundamental principle of the SLBP, the suggested KPIs fall under the two following categories,

  • Core: the KPI in itself is generally material, relatively mature and holistic enough, it can supposedly be used in standalone. Only few KPIs are sufficiently holistic to be considered as core for a given sector. Issuers are encouraged to select at least one core KPI.
  • Secondary: whilst desirable and necessary, the KPI is subject to important limitations and cannot be used in standalone. For example, secondary KPIs are therefore suggested to be used only as part of a basket as long as they would effectively add up to the equivalent of a core KPI.

It has been an extensive collaborative work with the 150 members of the SLB WB (investors, issuers and underwritters) , leading to a comprehensive tool covering more than 20 sectors.

As Co-chair of this Working Group, Natixis is keen to actively contribute to set demanding market standards and therefor increase market integrity. Natixis is looking forward to participating constructively in the WG next season to continue with this document and to providing further guidance for the SLB market.

[1] The examples in the table are illustrative only and are not intended to be the exclusive approach for the selection of KPIs for SLBs.