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ACCESS BANK PLC

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29/05/2020


Green Bond

Frequently Asked Questions

 

Green Bond FAQs


Subject to any applicable law or regulation, all types of issuers in the debt capital markets can issue a Green Bond if it is aligned with the four core components of the GBP/SBP or CBI. Issuers could be Countries, States, Corporates, banks and Government Agencies.
 
  1. Central Bank of Nigeria – Regulators to the Issuer (Bank)
  2. Securities and Exchange Commission – Regulators to the Financial Instrument (Green Bond)
  3. Financial Markets Dealers Quotation / Nigerian Stock Exchange – Listing House
  4. Climate Bonds Initiatives – Green Bond Certifiers
  5. PwC - Green Bond verifiers.
The framework is the substantive policy document principally designed to drive the Access Bank Green Bond procedure/process/activities and as such adopts four core pillars as follows:
  1. Use of Proceeds– Green Assets
  2. Governance- Process for Identification and Approval for use of proceeds
  3. Management and Tracking of the Proceeds
  4. Reporting
The Access Bank Green Bond Committee has the overall responsibility for ratifying all sustainable projects, which are initially proposed by the business units and evaluated by Group ESRM team via a highly-disciplined, multi-step risk management process following clear and consistently applied guidelines, ensuring conformity with the Access Bank Plc Green Bond Framework.
 
Access Bank’s issuance is the first corporate bond to benefit from the Nigerian Green Bond Market Development Programme launched in June 2018, by FMDQ, Climate Bonds Initiative and the Financial Sector Deepening Africa (FSD Africa).
 
Since the inaugural of the first Nigerian Sovereign Green Bond launch by the Federal Government in December 2017, and the Corporate Bond issued in 2018 by Access Bank to accommodate a wider scope of impact investing, providing investors avenues to place their money in products that make a long-term, climate-conscious and social economic difference across the world.
 
In a view to developing the Green Bond market in Nigeria, Access Bank has partnered with the FMDQ and the CBI to develop the green bond market in Nigeria through the Nigerian Green Bond Market Development Programme.
 
Access Bank Plc, in the drive to becoming a truly sustainable bank, understanding that its responsibilities are not only towards its customers and shareholders, but more importantly, to the communities in which we operate, issued Africa’s first Certified corporate green bond in Africa, raising N15 billion (USD41 million).
 
The five-year, 15.5% fixed rate bond was fully subscribed and has been awarded an Aa- rating by Agusto & Co., with underlying Green Bond framework verified by PwC (UK), and certification by the Climate Bonds Initiative.
 
The Bond (Project Olive), which was issued to finance and refinance environmentally beneficial projects have been utilized to earmarked projects covering renewable energy, flood defence and agriculture irrigation projects.
 
  1. Applicable Nigerian Laws
  2. Access Bank’s Environmental and Social Risk Management Policy
  3. IFC Performance Standards.
  4. Federal Ministry of Environment on Green Bond guidelines
  5. Climate Bonds Standard
Access Bank Green Bonds provides opportunities for investment in projects that deliver sustainable development in the green space, other Issuance benefits includes:
  • Funding a range of climate-related initiatives.
  • Access to capital for sustainability-related projects.
  • Attracts new investors.
  • Transition from fossil fuels.
Bonds are debt securities issued by Governments, Governmental Agencies or corporate bodies in order to raise capital.
 
Green Bonds are bonds that are used to raise capital specifically for environmentally beneficial projects i.e. projects that are climate friendly and leave little or no significant adverse effect on the environment.
 
Yes, Access Bank set the pace for other corporate issuers, by listing the first Climate Bond Certified Corporate Green Bond. The Access Bank Green Bond was listed on The Nigerian Stock Exchange and FMDQ OTC Securities Exchange in April 2019. 
 
The Access Bank Green Bond was issued in line with the Climate Bonds Initiative/standards. The standards recommend transparency and disclosure and promote integrity in the development of the Green Bond market by clarifying the approach for issuance of Access Bank Green Bond.  
Climate Bond Initiative components:
  1. Use of Proceeds  
  2. Process of Project Evaluation and Selection
  3. Management of Proceeds
  4. Reporting
Generally, until bonds mature. The exception could be a situation where the financial or physical completion of some of the green projects may take longer and Access bank wishes to continue reporting until completion.
 
In line with the Green Bond Principle, Access Bank has adopted an annual Impact reporting method with clear and consistent guidelines for certain eligible Green Projects.

The categories with suggested impact metrics include renewable energy, energy efficiency, sustainable water and wastewater management, and waste management, Agriculture and Forestry etc.
Access Bank developed a Framework in line with the ICMA Green Bond Principles 2017 and the Framework is consistent with the current Green Bond Principles (GBP), as held by International Capital Market Association (ICMA) and the Climate Bond Initiatives (CBI).
 
The Access Bank Green Bond is tax exempt.
 
Yes, in line with best practice and the Green Bond Regulatory policies, Access bank reports to Securities Exchange Commission (SEC) and FMDQ the use of its Green Bond proceeds showing allocated amounts for each project on a quarterly basis for auditing purposes.
 
Repayment of proceeds from the issued Access Bank Green Bonds are subject to the cash flows from the planned use of stated proceeds and structure of the bonds.
 
Access Bank allocated the Green bond proceeds to four projects as listed below:
Project A: Water -Flood Defence
Project B: Solar Energy- General facilities
Project C: Solar Energy
Project D: Agriculture- water management.
 
The credit ratings of Access Bank Green Bonds called ‘Green Ratings’ are determined by Credit Rating Agencies. The five-year, 15.5% fixed rate bond has been awarded an Aa- rating by Agusto & Co. Access Bank seeks credible international rating agencies such as Moody’s/ S&P/ Fitch to rate its green bond thereby boosting its credit ratings profile.
 
So far, we have utilized 98.7% of the total bond proceeds, which have been earmarked to refinancing and financing projects across eligible sectors including Climate Change Adaptation (flood defence) representing 86.7% and Renewable Energy representing 12% in line with our Framework and Bond Prospectus.
 
The remainder 1.3% have been deposited as per prospectus requirements in the Green Bond account with the Bond Trustees to ensure that the funds are not used for non-green investments, in line with best practice and prospectus obligations.
 
As highlighted in our impact report, these projects have yielded immense environmental benefits ranging from shoreline protection of the Victoria Island’s (Lagos Nigeria) Greenhouse gas emissions reduction from the use of solar powered systems.
 
In line with global best practice and CBI Guidelines /standards, Access Bank will report on the impact metrics (per project or in aggregate for all projects financed by the Proceeds) on an annual basis until all proceeds are fully allocated, and until bonds mature, “and as necessary thereafter in the event of material developments.”
 
Here the developments referred to could include situations where the results reported before no longer hold because of various reasons (e.g., projects financed were stopped or ran into difficulties, estimates of outcomes were adjusted, or other causes).
 
In line with the Green Bond Principles, Access Bank reports the share of the total bond amount that is used for refinancing, which is done immediately, and preferable to the case of “new” projects, that is new investments being made as opposed to improving the financing costs of past projects.
 
There are requirements for reporting, third party auditing and proceeds allocation in the guidelines for Green Bonds. Access Bank also provides reports on both the use of proceeds and the impact achieved. These are achieved through external reviews and annual reporting.
 
The cornerstone of every Green Bond is the verifiable use of its proceeds to support sustainable investment. To facilitate this, Access Bank has a robust and transparent framework detailing, among other aspects, a strong project evaluation and selection process.
Access Bank’s Green Bond Framework is overseen and governed by the Green Bond Committee (GBC).
 
The GBC is chaired and co-chaired by the Group Executive Director, Chief Financial Officer and consists of ESRM team, sustainability specialists and senior members of staff from across the business units.
 
Access Bank will act in accordance to the CBI Guidelines /standards which guides that the net proceeds of a Green Bond or an amount equal to these net proceeds, should be credited to a sub-account, moved to a sub-portfolio or otherwise tracked by the issuer in an appropriate manner. This allows for the use of different currencies to finance Eligible Projects without necessarily using FX swaps or intercompany loans.