ESG Terms
Focused definitions for labelled-debt standards and climate-transition terminology that are referenced from the ISS-STOXX instrument glossary.
C
Climate Transition Finance
Climate transition finance refers to capital raised to help high-emitting sectors move toward lower-carbon business models without requiring them to already qualify as fully green activities. In practice this includes transition bonds, sustainability-linked bonds, and financing frameworks that tie funding cost or eligibility to credible decarbonization targets and transition plans.
G
Green Bond Principles
The Green Bond Principles are voluntary market guidelines published by the International Capital Market Association (ICMA) for green-labelled bond issuance. They define four core components: use of proceeds, project evaluation and selection, management of proceeds, and reporting.
S
Social Bond Principles
The Social Bond Principles are the ICMA guidelines for bonds whose proceeds are allocated to projects with defined social objectives such as affordable housing, healthcare access, food security, or employment generation. They mirror the same four-part structure used in the Green Bond Principles.
Sustainability Bond Guidelines
The Sustainability Bond Guidelines extend the ICMA labelled-debt framework to bonds financing a mix of environmental and social projects. They require the issuer to describe eligible project categories, governance, proceeds tracking, and ongoing reporting with the same discipline expected for green and social bonds.
Sustainability Performance Targets
Sustainability Performance Targets (SPTs) are the measurable ESG outcomes embedded in sustainability-linked bonds and related financing structures. They typically set dated thresholds for emissions, energy intensity, diversity, safety, or other material KPIs, with financial penalties or step-up coupons if the issuer fails to meet them.
U
Use-of-Proceeds
Use-of-proceeds describes the requirement that capital raised through a labelled bond be ring-fenced for predefined eligible projects rather than general corporate purposes. It is one of the core governance concepts across green, social, and sustainability bond frameworks because it determines whether the financing claim is tied to specific assets or programs.