Second-Party ESG Debt Opinions

What is a Secondary Party Opinion?

SPOs are appraisals of issuers’ ESG frameworks published by independent agencies. They assess whether the frameworks meet the minimum standards of the Green and Social Bond Principles or the Climate Bonds Initiative and, by extension, will meet market expectations.

Who provides a Secondary Party Opinion?

Almost 50 organizations are included in the Climate Bonds Initiative's directory of accredited verifiers for its certification scheme. Verifications and SPOs are a growing industry.

The leading providers of SPOs for international ESG bonds are companies like CICERO, DNV GL, ISS-ESG, Sustainalytics and Vigeo Eiris; and for US municipal green bonds; BAM Greenstar.

Issuers ESG Frameworks

• Explains the selection and evaluation criteria for the projects to be financed by the bonds.
• Defines the corporate-level ESG strategy and values.
• Describes the expected social or environmental impacts of the bonds.
• What investors can expect in terms of the use-of-proceeds and impact reporting over the life of the bond.

What are the benefits of SPO?

SPOs add:

• Comfort
• Credibility
• Transparency to a market that after so many years still lacks a credible definition of what green actually means.

What are the fundamental ethical and professional principles that external reviewers should meet?

To drive standardisation, the Green and Social Bond Principles have issued voluntary guidance for SPO providers. Their Guidelines for Green, Social and Sustainability Bonds External reviews seek to encourage best practice and provide consensus on professional practices and ethical standards as well as content and organisation of external reviews. External reviewers should meet five fundamental ethical and professional principles:

• Integrity
• Objectivity
• Professional Competence and Due Care
• Confidentiality, 
• And professional Behaviour