JSE releases green bond guide
Published:Wednesday | July 24, 2024 | 12:08 AMSteven Jackson/ - Senior Business Reporter
The Jamaica Stock Exchange, JSE, has released its green, blue and sustainability bond guidelines to the market, giving brokers a list of additional procedures for such ‘thematic’ investments.
“This guide sets the necessary foundations to further catalyse the Jamaican market by representing an opportunity to attract investments with positive environmental and social impact in the country,” stated the document titled ‘Jamaica Green Social Sustainability and Sustainability Linked Bond Guide’ released this month.
Experts expect US$6 billion in green investments to flow into Jamaica over 25 years. The green bond market forms part of steps to facilitate such flows.
The JSE already operates a traditional bond trading platform, along with local and US denominated equity platforms. The green bond platform would list debt that holds green, blue or sustainable metrics. Some brokers were, however, unaware of the release of the bond guidelines when contacted.
“What’s this,” said the CEO of one brokerage house.
Another CEO told the Financial Gleaner to send questions via mail.
The new bond platform will list debt instruments that adhere to green, blue, or sustainable metrics. Green bonds focus on environmental or renewable energy projects, blue bonds on ocean and water projects, and sustainability bonds on broader societal impacts. These bonds, like traditional bonds, must comply with the JSE’s listing rules and regulations. Additionally, issuers of thematic bonds are expected to follow the ICMA or International Capital Market Association principles. These are a set of voluntary frameworks that indicate that issuers should choose one theme whether green, blue or sustainable; that the issuer should choose assets that directly relate to the funding; that the use of the proceeds go towards the precise project; and that issuers publish their financials.
According to the Development Bank of Jamaica, Jamaica needs to invest US$5 billion in climate mitigation measures and US$1 billion in climate adaptation measures by 2050.
Such investments are seen as crucial for addressing the impacts of a changing climate and resilience to natural disasters.
“Given Jamaica’s challenges related to climate change and social inequality, there is a need to unlock financial flows to support the Jamaican sustainability agenda and contribute to the transition to a low-carbon and just economy. Enabling the growth of the Green, Social, Sustainability, and Sustainability-linked (‘GSS+’ or ‘thematic’) bond market in Jamaica is an opportunity to utilise the capital markets to help achieve national and global environmental and social objectives,” said the JSE guide.
The stock exchange developed the green guidelines with the support of the Inter-American Investment Corporation, otherwise known as IDB Invest, and sustainable finance consulting firm HPL since 2023.
The document indicated that some companies listed on the JSE provide an existing market to tap into ‘thematic’ bonds.
“There is an opportunity to support companies in these sectors to prepare for the issuance of thematic bonds, which would help mobilise investments towards financing environmental and social objectives that contribute to the ‘Nationally Determined Contributions’ target goals, such as emission reduction or alleviation of poverty,” the JSE said.
There are no thematic bond issuances in Jamaica yet, but the document indicated examples of loans to Jamaican companies with a strong sustainability focus, the largest being a Jamaica Public Service US$100 million loan issued in February to modernise the country’s power grid.
Finance Minister Dr Nigel Clarke in January announced that the JSE in conjunction with consultants were expected to launch the green bond initiative by mid-year.
The JSE did not immediately respond to requests for comment on a timeline for the launch.