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What is the Green bond Process?

Using the World Bank (IBRD) process as an example, the steps followed by most green bond issuers generally fall into four categories:

DEFINE Project Selection Criteria

The issuer defines the kind of green projects it seeks to support with green bonds. For the World Bank, such eligible projects must support the transition to low-carbon development and climate-resilient growth. The selection criteria are often reviewed and assessed by an external expert party to provide investors the assurance that they meet generally accepted technical definitions. The World Bank's green bond criteria were defined in consultation with the initial investors and underwent an independent review by the Center for International Climate and Environmental Research at the University of Oslo (CICERO). CICERO concurred that, combined with the governance structure of the World Bank, the World Bank eligibility criteria provided a sound basis for selecting climate-friendly projects.

Establish project selection process

All World Bank projects –including the projects supported by its green bonds– undergo a rigorous review and approval process, which includes early screening, identifying and managing potential environmental and/or social impacts, and obtaining the approval of the Bank's Board of Executive Directors. Subsequently, environmental specialists then screen the approved projects to identify those that meet the World Bank’s green bond eligibility criteria.

Earmarking and allocating proceeds

The issuer discloses how it will separate green bond proceeds and make periodic allocations to eligible investments. The World Bank credits green bond proceeds to a special account and invests the funds in accordance with its conservative liquidity policy until they are used to support eligible green bond projects.  Funds are periodically allocated in an amount equal to the disbursements of eligible projects.

Monitor and Report

The issuer monitors the implementation of the green projects and provides reports on the use of proceeds and the expected environmental sustainability impacts. Summaries and key impact indicators for green-bond-eligible projects are provided on the World Bank’s Green Bond website with links to relevant documents and more detailed project information. (“Green Bond – Water & Energy Efficiency.” The World Bank. 2014).