Mobilising bonds for the just transition: an exploratory assessment methodology of thematic sovereign bonds
Authors: Antonina Scheer, Lily Burge, Judith Tyson, Oleksandra Plyska, Zuzanna Charkowska and Valeria Dagnino Contreras
This report from the Just Transition Finance Lab presents a novel methodology to assess the presence of just transition elements in green, social, sustainability and sustainability-linked (GSS+) bond frameworks. Taking an evidence-based approach, this methodology demonstrates how GSS+ bonds can be leveraged for the just transition, which can inform both issuers’ bond design and investor decision-making. The authors classify certain GSS+ bond framework characteristics – eligible expenditures, performance targets and post-issuance reporting – as just transition-related where activities cover both climate change mitigation and one of the following social themes: education, employment or equality. Where there is a causal link between the mitigation and social activities in question, the expenditure, target or reporting is considered just transition-focused. Using this methodology, the report assesses nearly all existing sovereign GSS+ bond frameworks, amounting to 68 in total, finding moderate evidence that just transition elements are present.