IN SIMPLE TERMS: A “SUSTAINABLE” MINI-BOND
Wednesday 04 November 2020
Together with Silvia Bernardi, UniCredit Area Manager for the Marche region in Italy, we discover what a "Sustainable" mini-bond is
A sustainable mini-bond is a type of bond loan, formally issued by a company, and underwritten by a qualified investor, whose objective is to finance projects with social and environmental implications, contributing to the development of positive externalities in the environment in which the company operates.
Recently UniCredit has underwritten the first mini-bond of this type issued by an industrial company in Italy, Loccioni and Silvia Bernardi, the Area Manager for Marche region, followed this deal.
The qualification of “sustainable” mini-bond takes place following a special evaluation process by the bank in its role of Sustainability Coordinator, which includes a dedicated certification released by a third party company.
The standards and guidelines to be followed to structure a “sustainable” mini-bond are defined by the International Capital Market Association (ICMA). The so-called Green, Social and Sustainability Bond Principles define, in fact, the main characteristics that distinguish this product from a traditional mini-bond:
- selection of the project to be financed or refinanced;
- income tied to the selected project;
- annual reporting of the use of the proceeds;
- second party opinion, precisely the mentioned validation of documents and objectives by a third party certifying body.
Issuing a sustainable financial instrument for a company means confirming and consolidating its commitment to sustainability with concrete projects that are useful to the environment and society with both reputational and, more and more, competitive advantages.