1. The Development of the Green Bond Market in Taiwan
To help green energy technology industries raise funds, and to promote sustainable environmental development, the TPEx promulgated “Operational Directions for Green Bonds” on April 21, 2017.TPEx established the Green bond accreditation Mechanism.
2. Definition of the Green Bond
Green Bond indicates the financing tool which all of the funds raised by the issuer are to be used for expenditures or loan on green investment projects, including climate change, environmental protection, renewable energy and carbon reduction…etc.
In accordance with the Taipei Exchange Operational Directions for Green Bonds, bonds with Green Bond Qualification accredited by Taipei Exchange, and applied to the Taipei Exchange for TPEx trading can be listed as Green Bond.
3. The Process of Green Bond Issuing And Listing
- Corporate Bond (excluding professional board international bond issued by foreign issuers)
- Professional Board NTD-denominated foreign straight bond (for foreign issuers)
- Professional Board International Bond (for foreign issuers)
4. Apply for Green Bond Accreditation
4.1. The Application Documents
An issuer applying for green bond accreditation shall apply to the TPEx by submitting a Green Bond Accreditation Application Form, along with the required documents, and specifying the required particulars.
The required documents shall include:
- Documentary proof issued by a government agency stating that the project meets green investment project criteria, or an assessment opinion or certification report issued by a domestic or foreign certification body stating that the project meets green investment project criteria.( if the issuer is a domestic bank, a Taiwan branch of a foreign bank, or a state-owned energy supply enterprise, it may issue its own assessment opinion that the project meets green investment project criteria in accordance with green bond principles adopted in customary practice in international financial markets.)
- With respect to the fund use plan, an assessment opinion or certification report issued by a certification body stating that the green investment project is feasible, reasonable, and effective. (If the issuer is a state-owned energy supply enterprise, it may submit its proposed budget that has been reviewed and passed by the Executive Yuan or the Legislative Yuan, and a statement explaining the relevance between the budget plan and the plan for the use of the funds raised by the green bonds, and issue its own assessment opinion.)
- Documentary proof that the domestic or foreign certification body meets the requirements, including possesses the professional expertise and the relevant assessment or certification experience.
- A statement from the Sukuk obligors, who guarantee to perform all public announcement and reporting obligations pursuant to the regulations of the TPEx.
- Other necessary documentary proof or materials.
4.2. The process and deadlines for green bond accreditation applications
- TPEx shall complete the review process within 3 business days after receiving the application documents.
- An issuer shall apply to the TPEx for trading of the bonds on the TPEx within 2 months from the issuance date of the accreditation certificate.
5. Eligible of Bond Instrument
An issuer issuing the following securities may apply to the TPEx for green bond accreditation.
- Straight corporate bonds.
- Financial debentures.
- New Taiwan dollar (NTD) denominated foreign straight bonds.
- Foreign Currency Denominated International Bonds, with the exception of securities having equity characteristics.
- Sukuk (Islamic fixed income security)
In addition to those listed above, Green bonds also include beneficial securities or asset-backed securities for which the issuer applies for TPEx trading pursuant to Article 7-1 of the TPEx Rules Governing the Review of Securities for Trading on the TPEx.
6. Use of proceeds of Green Bond
Proceeds of Green Bonds must be exclusively applied to invest, finance or re-finance in full new and/or existing eligible Green Projects.
- To pay for the expenditures of green projects
- To pay back the debt incurred in the green investment of green projects
- To provide loans to green investment projects (If the bond issuer or Sukuk obligor are financial institutions.)
As for beneficial securities or asset-backed securities, all of the assets in the asset pool should come from green investment projects.
7. Categories of Eligible Green Projects
In accordance with the Taipei Exchange Operational Directions for Green Bond, categories of potential eligible Green Projects are listed below. These projects must be substantial improvement to benefit the environment. The eligible green projects are listed below.
- Development of renewable energy and energy technology.
- Improvement of energy efficiency and energy conservation.
- Greenhouse gas reduction.
- Waste recycling or reuse.
- Agricultural and forestry resource conservation.
- Biodiversity conservation.
- Pollution prevention and control.
- Water resource conservation, purification, or reclamation, recycling, and reuse.
- Other climate change adaptation or matters approved by the TPEx.
8. The Requirement of External Review or Certification
|Before the issuance of bond
|Green investment project
||Documentary proof issued by a government agency or an assessment opinion or certification report issued by certification body.
|Fund use plan
||An assessment opinion or certification report issued by certification body.
|After the issuance of bond
||An assessment opinion or certification report issued by certification body for the annual report.
9. The Information Disclosure of Green Bonds
|Before the issuance of bond
||An issuer should disclose such information in their prospectus: the green investment project or the loan to a green investment project, the determination standards, the environmental benefits assessment, the fund use plan, and the certification body.
|After the issuance of bond
||An issuer shall report the status of use of the funds and the assessment opinion or certification yearly during the life of the green bonds or the period of use of the funds raised by the bonds.