CS Professional · Environmental, Social and Governance (ESG) - Principles and Practice · Green Initiatives
Before issuing its first green bond, Neerja Infra Ltd. wants investors to be confident that the funds will be used as claimed. Which step best addresses this concern in line with accepted green bond practice?
The best step is to obtain an independent external review or second-party opinion on the green framework and report periodically on how proceeds are allocated. This gives investors credible assurance, whereas a mere board declaration, silence, or a higher coupon does not.
- AAppointing an independent external reviewer to give a second-party opinion on the green framework and reporting periodically on allocation of proceedsCorrect
- BRelying only on a board resolution declaring the bond green
- CAvoiding any post-issue disclosure to protect confidential strategy
- DGiving the bond a higher coupon so investors assume it is green
Explanation
Green bond practice emphasises an external review of the framework and regular reporting on how proceeds are allocated. A board declaration alone lacks independent assurance, and silence after issue defeats transparency. Coupon level does not evidence green use.
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