KPMG launches guide for issuing green bonds

Market expected to grow by $100 billion in 2015

With growing interest and market for ‘green bonds’, KPMG has launched a guide on the process of issuing a green bond. Green bonds are becoming an attractive mechanism for both public and private sector companies to raise capital to fund projects with an environmental benefit such as renewable energy, low carbon transport and forestry projects.

The global green bond market is growing rapidly, with $100 billion of bond issues predicted for 2015. Several KPMG member firms, including India, France, Australia and the UK, have recently won green bond-related engagements, said a report by KPMG.

“Green bonds are an attractive mechanism for organisations to raise capital for sustainable projects. These bonds can be raised by not only financial institutions, but also by any private sector or public sector organisations. The government has ambitious plans to promote the renewable energy segment and the green bonds will play a significant role in realising the same,” said Raajeev B Batra, head of climate change and sustainability, KPMG (India).

YES Bank in February 2015 floated India’s first green bonds worth Rs 500 crore against which it received commitments of around Rs 450 crore at sub-9 per cent interest rates. The proceeds of the bonds, which are for 10 years, will be invested in renewable energy projects. KPMG is providing the assurance services annually on the use of proceeds in line with the green bond principles.

“With the increasing demand, it is also important to be cautious on the green label. This can be done by defining their green bond in line with the available guidance and investor expectations and also through an assurance of the use of proceeds,” said Santhosh Jayaram, director, sustainability advisory, KPMG (India). KPMG member firms have provided advice and independent third-party assurance to some of the first organisations to issue green bonds across the world, including clients in Australia, India and the UK. KPMG was the first major accountancy firm certified to provide green bond verification to the Climate Bonds Standard and member firms continue to play a role in the development of market standards and guidance.