Overview of the principles

The handbook provides consolidated interpretative guidance for the Green Bond Principles (GBP), Social Bond Principles (SBP), Sustainability Bond Guidelines (SBG), and Sustainability-Linked Bond Principles (SLBP). It clarifies the distinction between Use of Proceeds (GSS/UoP) bonds and Sustainability-Linked Bonds (SLBs), setting out their respective core components. The guidance aims to enhance consistency, transparency, and integrity in the sustainable bond market through voluntary, market-led standards.

Introduction

Originally published in 2019, the Guidance Handbook responds to ongoing market demand for practical clarification on applying the Principles. The June 2025 edition incorporates additional guidance, including updates on securitisation, sovereign SLBs, secondary KPIs, and defence-related projects. It also reflects references to complementary guidance such as the Climate Transition Finance Handbook and Sustainability-Linked financing Bond Guidelines. The handbook is intended to support market development and ensure credible application of the Principles across evolving issuance structures.

Fundamentals

Green, Social and Sustainability Bonds require that an amount equal to 100% of net proceeds is allocated to eligible environmental and/or social projects. SLBs differ in that proceeds are generally for general purposes, with bond characteristics linked to predefined sustainability performance targets (SPTs). The handbook emphasises transparency, disclosure of risk management processes, and clear communication of sustainability objectives, particularly for issuers in high-impact or controversial sectors. External reviews and published bond frameworks are highlighted as key tools to enhance credibility and investor confidence.

Core components of the GBP/SBP

Use of proceeds must be clearly defined, eligible, and fully allocated, with disclosure of refinancing look-back periods and temporary placement of unallocated funds. Management of proceeds should involve formal tracking mechanisms such as sub-accounts or portfolios. Reporting is expected annually until full allocation and thereafter if material developments occur. Issuers are encouraged to report both allocation and impact, using ICMA’s harmonised frameworks and, where feasible, quantitative indicators alongside qualitative explanations.

Secured GSS bonds

The handbook distinguishes between Secured GSS Standard Bonds and Secured GSS Collateral Bonds, clarifying when eligible projects must form part of the collateral pool. A core principle is the avoidance of double counting of projects across multiple instruments. Reporting obligations align with those of unsecured GSS bonds, though securitisation structures may face higher disclosure expectations. The guidance also addresses synthetic structures, covered bonds, and refinancing scenarios.

Core components of the SLBP

SLBs must meet five core components: selection of material and relevant KPIs, calibration of ambitious SPTs, bond characteristics, reporting, and verification. KPIs may be absolute or intensity-based and should align with recognised benchmarks or science-based pathways where feasible. The handbook encourages intermediate observation dates and meaningful financial adjustments, such as coupon step-ups, to reinforce accountability. Annual reporting and independent external verification are expected, particularly at trigger events affecting bond characteristics.

Market and technical issues

The guidance notes that GSS bonds generally price at market and do not constitute a distinct asset class due to similar risk–return profiles to conventional bonds. Fungibility with non-aligned bonds is discouraged. Issuers are encouraged to maintain up-to-date frameworks, clearly state alignment with the latest Principles, and ensure transparency across documentation and disclosures.

Governance and membership

The Principles are overseen by an Executive Committee representing investors, issuers, and underwriters, supported by an Advisory Council and working groups. Membership and observer participation are open to market participants, reinforcing the collaborative and evolving nature of the guidance.

Other market and official sector initiatives

The Principles are aligned with international initiatives such as the Paris Agreement and the SDGs, while remaining independent. The handbook highlights the role of regional taxonomies, including the EU Taxonomy, in supporting project identification and KPI calibration, noting practical challenges across jurisdictions.

Indicative examples of types of social and sustainability bonds

Illustrative examples include bonds addressing pandemics and those supporting fragile and conflict states. Eligible projects include healthcare, employment support, and basic infrastructure. Issuers are expected to identify target populations, reallocate proceeds where assets mature, and include relevant indicators in impact reporting.