We are proud to announce our accreditation as the first approved External Reviewer for Green Bonds in Malta by the Malta Stock Exchange (MSE). Our accreditation as an external reviewer for Green Bonds demonstrates our commitment to promoting sustainable investment and environmental responsibility in Malta.
Green Bonds are a financial instrument specifically used to finance or refinance eligible green projects. The proceeds generated from the bond issuance or an equivalent amount must be solely applied to support environmentally sustainable projects.
These projects can be either new or existing initiatives that meet specific eligibility criteria for green investments. In other words, Green Bonds provide investors with the opportunity to support environmentally responsible projects and initiatives while also earning a financial return on their investment. They have grown rapidly in the international market, due to the individual investors feeling they could impact climate change.
According to a 2022 Central Bank of Malta study, 90% of Maltese investors expressed a strong interest in investing in Green Bonds, yet only 13% of issuers have considered them to raise capital. This disconnection between investors and issuers presents a significant opportunity for the sustainable finance market to grow in Malta.
It is evident that the demand for Green Bonds is increasing, and investors are looking for sustainable sources of finance to invest in. It is expected that Green Bonds will gain popularity, as more people consider them as a viable option for raising capital and contributing to sustainable development. The issuance of Green Bonds not only presents an opportunity for Issuers to access capital at potentially lower rates but also signals to the market their commitment to sustainability and addressing environmental challenges.
The types of projects funded by Green Bonds globally have evolved rapidly over time. In the past, more than 60% of Green Bond proceeds were invested in renewable energy projects. However, this has decreased in recent years, with the energy sector now representing only 35% of Green Bond issuances.
As a result, Green Bonds are being used to finance a more diverse range of projects, including building projects, which now represent the second most prevalent type of Green Bond project, accounting for 30% of issuances in 2020. This is a significant shift from 2017 when building projects were not even a distinct category for Green Bond investments. The evolving trends in Green Bond issuance demonstrate a clear shift toward a more diverse and integrated approach to sustainable investing.
Grant Thornton Malta's accreditation as the first local External Reviewer for Green Bonds is a significant milestone for sustainable finance in Malta as Issuers can now raise Green Bonds in Malta while also providing investors with opportunities to support environmentally sustainable projects.
The ICMA's Green Bond Principles (GBP) serve as a voluntary guide for Green Bond frameworks and the transparency of the transfer of funds to environmentally sustainable activities. Their success across international markets has made them a preferred foundation for other guidelines to be built upon. The GBP recommend a clear process and disclosure of issuers, highlighting four core components:
- Use of Proceeds
- Project Evaluation
- Management of Proceeds
How can Grant Thornton help you?
As an accredited external reviewer for Green Bonds, Grant Thornton Malta is uniquely positioned to provide assurance and verification services to entities issuing these financial instruments, as well as act as the Reporting Accountant throughout the listing process. Our services enable investors to invest with confidence in Green Projects that contribute to a more sustainable future.
If you're interested in launching a Green Bond to finance your next environmentally sustainable project, we can help. Our team of experts can provide guidance on eligibility criteria, assist with the verification process, and ensure compliance with relevant standards and regulations.
Investing in a Green Bond can benefit both your organization and the planet. Contact us today to learn more about how we can support you in launching your next Green Bond and contribute to a more sustainable future.