What is the SGX Sustainable Fixed Income Initiative?
With the increasing growth and demand for sustainable finance investment by investors, governments and businesses, the Singapore Stock Exchange (“SGX”) has launched the SGX Sustainable Fixed Income Initiative (“SFI Initiative”). The SFI Initiative aims to accredit wholesale and fixed income securities listed on the SGX that meet recognised standards for green, social or sustainability fixed income securities.
Benefits of the SFI Initiative
Issuers can use the recognition to demonstrate their commitment to accepted green, social or sustainability standards (“Recognised Standards”), and to raise their visibility and profile with investors that are interested in sustainable fixed income investments. They will be able to upload sustainability-related reports and other documentation through SGXNet to inform investors of their sustainable finance strategy.
The SFI Initiative will allow investors to more easily identify sustainable fixed income securities and to access sustainability-related information. Issuers will be able to use an SGX Sustainable Fixed Income mark to identify the securities as having met the requirements. Additionally, the criteria that SGX imposes provides investors with assurance that the fixed income securities recognised under the initiative have been independently verified for alignment with the Recognised Standards.
What is the eligibility criteria?
To be recognised under the SFI Initiative, the following criteria must be fulfilled:
- The fixed income securities must align with one or more of the following Recognised Standards:
- International Capital Market Association (“ICMA”) Green Bond Principles
- ICMA Social Bond Principles
- ICMA Sustainability Bond Guidelines
- Climate Bonds Standard
- Association of Southeast Asian Nations (“ASEAN”) Green Bond Standards
- ASEAN Social Bond Standards
- ASEAN Sustainability Bond Standards
- EU Green Bond Standard
- China Green Bond Principles
- A reputable external reviewer with an established track record of providing similar reviews must confirm that the fixed income securities are aligned with the Recognised Standards; and
- The report(s) setting out the fixed income securities’ alignment with the Recognised Standards must be freely accessible to the public.
In addition, for issuers to maintain recognition under the SFI Initiative, it is necessary for them to publish post-issuance reports or information on any material development as required under the applicable Recognised Standards. These reports and information must also be freely accessible to the public.
What is the application process?
To apply for recognition pursuant to the SFI Initiative, the following steps must be taken:
- Step 1: Application for listing - Issuers can apply for recognition under the SFI Initiative together with the application to list its fixed income securities on the SGX.
- Step 2: Review and approval – the SGX will review both the listing application and the application for recognition under the SFI Initiative concurrently.
- Step 3: Listing of fixed income securities - At the point of listing, the fixed income securities will, if approved, be recognised under the SFI Initiative.
- Step 4: Ongoing reporting requirements - To maintain recognition under the SFI Initiative, issuers are required to publish reports under the applicable Recognised Standard.
Notably, the prevailing SGX listing fees continues to apply and there is no additional fee for an application for recognition under the SFI Initiative.
The list of fixed income securities recognised under the SFI Initiative will be published on the SGX website and on Greennode (operated by Marketnode).
For further information regarding the SFI Initiative, please refer to the FAQs published by the SGX.
Hogan Lovells Lee & Lee regularly acts as SGX Listing Agent for issuers looking to list their fixed income securities and/or debt instruments on the SGX. Please contact Andy Ferris or Leon Yap for further information.
Authored by Andy Ferris, Leon Yap, and Audrey Koh.