NDB’s Sustainable Bond framework gets ‘Second-Party Opinion’ from Fitch

Tuesday, 22 October 2024 00:09 - - {{hitsCtrl.values.hits}}

Sustainable Fitch (SP) has provided its Second-Party Opinion on the Sustainable Bond framework of National Development Bank (NDB).

SP considers transactions under the framework to be fully aligned with the ICMA Green Bond principles, Social Bond principles and Sustainability Bond guidelines. The Second-Party Opinion is that the framework’s alignment is ‘Good’, said SP.

The framework governs the bank’s sustainability bond issuances, which will finance or refinance projects under seven green use of proceeds (UoP) categories of renewable energy, green buildings, energy efficiency, clean transportation, sustainable water and wastewater management, environmentally sustainable management of living natural resources, and climate change adaptation; and four social UoP categories of affordable basic infrastructure, access to essential services, employment generation and unemployment alleviation, and food security and sustainable food systems.

SP said most green UoP categories describe activities that are eligible under the Sri Lanka Green Finance Taxonomy and meet the prescribed thresholds; however, some do not meet the thresholds of other international sustainable finance taxonomies. The social UoP categories describe activities with social benefits such as improving productivity and yields for farmers, strengthening financial security, increasing accessibility of healthcare services, and increasing job opportunities, with some specifically targeting defined populations. These UoP categories are aligned with the project categories recommended by the ICMA.

NDB is one of Sri Lanka’s largest commercial banks. Originally a state-owned development financial institution, it was privatised and listed on the Colombo Stock Exchange in 1993. Since 2005, it has operated as a full-service commercial bank structured across four segments: banking, capital markets, property investment and other activities. The banking division contributed 98% of NDB’s total revenue in 2023.

Fitch expects the UoP categories to support Sri Lanka’s national goal to reduce GHG emissions by 14.5% by 2030, achieve carbon neutrality by 2050, and expand its forest cover to 32% by 2030.

Sustainable Fitch’s ESG Ratings offer a global solution to assess Environmental, Social and Governance performance of all asset classes at an entity, framework and instrument level, helping the ESG financial community make better, informed decisions. It has developed a modular analysis framework, enabling it to provide a Second-Party Opinion (SPO) and a monitored suite of ESG Ratings including Entity Rating, Framework Rating and Instrument Rating.