POST-ISSUANCE VERIFIER REPORT(LIMITED ASSURANCE REPORT)
By Vigeo Eiris
For Republic of Chile’s 2019 Green Bond issuance
Based on Climate Bonds Standard version 2.1
June 2020
SCOPE
The Republic of Chile (hereafter “the Issuer” issued a Green Bond in May 2019 (“the Bond”) intending to (re)financethe construction and operation of transportation, solar energy, green buildings, and water management projects(the “Nominated Projects and Assets”).
In this context, Vigeo Eiris (“the Verifier”) has been commissioned by the Issuer to perform the Post-Issuance
Verification of this Bond under a Limited Assurance engagement, as an independent third party approved by the
Climate Bonds Standard Board. The verification is based on the assessment of the compliance of the Bond with
the Climate Bonds Standard version 2.1 for post-issuance requirements and with associated sector-specifictechnical criteria, as defined on the Climate Bonds Initiative (CBI)’s website.
We have conducted our verification between June 3rd and June 24th, 2020. The methodology, criteria, findings andassurances addressed by this Assurance Report are in accordance with relevant general principles & professional
standards of independent auditing, and in line with the International Standard on Assurance Engagements otherthan Audits or Reviews of Historical Financial Information (ISAE 3000).
RESPONSIBILITIES OF THE ISSUER AND OF VIGEO EIRISThis statement relies on the information provided by the Issuer to the Verifier: documentation and explanations
presented during the assessment, based on the understanding that this information was provided to Vigeo Eiris ingood faith. Vigeo Eiris has not performed an audit nor other tests to check the accuracy of the information provided
by the Issuer.
The Issuer is fully responsible for attesting the compliance with its commitments as defined in its policies, for theirimplementation and their monitoring, and for the information provided.
POST-ISSUANCE VERIFICATION
Based on the supporting elements and explanations provided by the Issuer, nothing has come to our attention thatcauses us to believe that, in all material respects, the Republic of Chile ’s Bond is not in conformance with the
Climate Bonds Standard’s Post-Issuance Requirements (version 2.1) and with associated relevant sector-specifictechnical criteria. This level of assurance applies altogether to the Nominated Projects & Assets, the environmental
benefits of the Bond, the evaluation and selection process of the assets, the proposed financial accounting system,and the monitoring & reporting system associated to the Bond, to be implemented over the term of the Bond. The
details and areas covered by the verification are summarized in the following pages (see Detailed results section).
This Verifier Report is limited to the Republic of Chile’s 2019 Green Bond. It is provided by Vigeo Eiris to the Issuer forlater submission to the Climate Bonds Standard Secretariat.
Santiago, June 26th, 2020
Project team

For more information, contact:

Adriana Cruz Félix

Sustainable Finance Team

Research Manager
Project Leader

VEsustainablefinance@vigeo-eiris.com

Maximiliano León

Emilie Beral

Sustainability Consultant

Executive Director

Disclaimer
Transparency on the relation between Vigeo Eiris and the Issuer: Vigeo Eiris has conducted one pre-issuance verification of the 2019 Green Bond issued by the Republicof Chile. No established relationship (financial or other) exists between Vigeo Eiris and the Issuer.
Liability: this Assurance Report is a document prepared by the Verifier that conveys the Verifier’s opinion on the Bond alignment with the relevant requirements of the Climate
Bonds Standard, but it does not provide Climate Bonds Certification itself. Providing this opinion does not mean that Vigeo Eiris certifies the tangibility, the excellence or theirreversibility of the projects financed by the Bond. No assurance is provided by Vigeo Eiris regarding the financial performance of the Issuer nor of the Bond, nor the valueof any investment in the Bond, nor of the environmental footprint of the Bond or the compliance with the commitments taken by the Issuer. Vigeo Eiris cannot be liable forany loss suffered as a result of information or data provided by the Issuer. Vigeo Eiris is not liable for the induced consequences when third parties use this opinion either tomake investments decisions or any kind of business transaction. Restriction on Distribution and use of this Assurance Report: at the discretion of the Issuer.

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DETAILED RESULTS
The evidence, information and explanations supporting the Bond issuance provided by the Republic of Chile toVigeo Eiris were both historical (for assets evaluation and selection process, Nominated Projects & Assets),
hypothetical or ex-ante estimated (for the expected environmental benefits, the time for proceeds allocation) andex-post (for some reported indicators).

Summary criteria for assertions of compliance with the post issuance requirements of Climate Bonds Standard
version 2.1
Vigeo Eiris has assessed the Bond and the Nominated Assets against requirements that apply to all Certified
Climate Bonds after the issuance of the Bond, as set out within the Climate Bonds Standard version 2.1:•

Part A: requirements that shall be met to be eligible for post-issuance certification.

•

Part B: requirements that shall be met based on the projects & assets associated with the Bond and thespecified eligibility criteria.

•oSolar Sector Eligibility Criteria (Version 2.0, June 2018)o

Low Carbon Land transport Criteria (Version 1.0, February 2016)o

Low Carbon Buildings Criteria (September 2018)oWater Infrastructure Criteria (April 2018)

Part C: requirements that shall be met to be eligible for post-issuance certification and that are used
selectively, depending on the type of Bond in question.
o

Use of Proceeds Bond

Part A: General Requirements
Clause 4. Nominated Projects & Assets•

4.1. The Issuer shall maintain a decision-making process which it uses to determine the continuing
eligibility of the Nominated Projects & Assets

The Nominated Projects & Assets were identified by the Issuer prior to the issuance, and the compliance with the
Eligibility Criteria has been assessed by a third party prior to the issuance. The issuer reports the Ministry of Financewill verify annually that all Eligible Green Expenditures in the Green Portfolio continue to meet the eligibility criteria.
The traceability of decisions will be ensured by the creation of minutes of each of the meetings of the Ministry of
Finance and the Green Bond Committee.
o4.1.1. A statement on the environmental objectives of the bond

The Bond’s environmental objectives have been defined in the Republic of Chile’s Green Bond Framework.
These stated environmental objectives are:
- Reduction and/or avoidance of greenhouse gas (GHG) emissions- Improvement of air quality (reduction and/or avoidance)- Conservation and sustainable use of water resources- Energy savings

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•

4.2. All Nominated Projects & Assets funded by the bond’s proceeds shall meet the bond’s documented
objectives as stated under Clause 1.1, and shall be in conformance with the requirements of Part B of the
Climate Bonds Standard.
All Nominated Projects & Assets funded by the Bond’s proceeds meet the Bond’s documented objectives
and are in conformance with the requirements of Part B (Eligible Projects & Assets) of the Climate Bonds
Standard as they fall in four of the Climate Bonds Taxonomy1 categories, namely:•-

Energy: Solar-

Transport: public passenger transport-

Buildings: Public Buildings-

Water: water monitoring

4.3. Nominated Projects & Assets shall not be nominated to other Certified Climate Bonds unless it isdemonstrated by the Issuer that distinct portions of the Nominated Projects & Assets are being funded bydifferent Certified Climate Bonds or that the existing Certified Climate Bond is being refinanced via another
Certified Climate Bond.
The Issuer maintains its commitment that Nominated Projects & Assets will not be nominated to other
Certified Climate Bonds.

Vigeo Eiris reviewed the above elements based on the information and documentation provided by theIssuer during the verification, and nothing has come to our attention that causes us to believe that the Bond
does not, in all material respects, meet the criteria of the Climate Bonds Standard’s Post-Issuance
Requirements (version 2.1) stated in clause 4 “Nominated Projects & Assets”.

Clause 5. Use of Proceeds•

5.1. The Net Proceeds of the bond shall be allocated to the Nominated Projects & Assets.
All the Net Proceeds have been allocated to reimburse investments and finance new investments madein the Nominated Projects & Assets.

•

5.2. The Issuer shall allocate funds to Nominated Projects & Assets within 24 months of issuance of thebond. Funds may be reallocated to other Nominated Projects & Assets at any time during the term of thebond.
The Issuer allocated 24.8% of the Net Proceeds to the Nominated Projects & Assets within a year after
the issuance of the Bond, therefore there are outstanding unallocated funds. The Issuer expects that theoutstanding will be allocated by 2024 due to the public infrastructure nature of the projects and that their
allocation will be reported until full allocation.

•

5.3. Where a proportion of the Net Proceeds of the bond are used for refinancing, the Issuer shall provide
an estimate of the share of the Net Proceeds used for financing and re-financing, and identify which
Nominated Projects & Assets may be refinanced.
The Issuer states that 7% of the proceeds were used for refinancing the Nominated Projects & Assets.

•

5.4. The Net Proceeds of the bond shall be tracked by the Issuer following a formal internal process as
disclosed to the Verifier by the Issuer under Clause 2.1.
There is a Green Bonds Committee with representatives from the main ministries involved in the
Nominated Projects & Assets, namely the Ministry of Environment, Ministry of Public Works, Ministry ofEnergy, Ministry of Transport and Ministry of Agriculture. This committee along with the Ministry of Financeis in charge of reviewing the allocation of proceeds, as well as reviewing and validating the selection of
nominated projects & assets.

1

https://www.climatebonds.net/standard/taxonomy
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•

5.5. The Net Proceeds of the bond shall be no greater than the total investment in the Nominated Projects& Assets or the total Fair Market Value of the Nominated Projects & Assets at the time of issuance
The portfolio of Nominated Projects & Assets identified by the Issuer prior to the issuance is 1.78 times
higher than the Net Proceeds of the Bond (USD 2.373 bn). Thereby, the Net Proceeds of the Bond are no
greater than the total investment in the Nominated Projects & Assets or the total Fair Market Value of theNominated Projects & Assets. According to the 2019 report, the issuer has allocated a total of USD 589
m, which represents 24.8% of the Net Proceeds of the Bond. This means that there are 75,2% of Net
Proceeds of the Bond to be allocated, equivalent to USD 1.784bn, while there are USD 3.634bn stillavailable in the portfolio of Nominated Projects & Assets.

Vigeo Eiris reviewed the above elements based on the information and documentation provided by theIssuer during the verification, and nothing has come to our attention that causes us to believe that the Bond
does not, in all material respects, meet the criteria of the Climate Bonds Standard’s Post-Issuance
Requirements (version 2.1) stated in clause 5 “Use of Proceeds”.

Clause 6. Non-Contamination of Proceeds•

6.1. The Net Proceeds of the bond shall be credited to a sub-account, moved to a sub-portfolio or otherwise
identified by the Issuer in an appropriate manner, and documented.
The Net proceeds are transferred by the Treasury to a General Account which is managed by the Ministryof Finance until these are allocated to the nominated and selected projects.

•

6.2. While the bond remains outstanding, the balance of the tracked proceeds shall be reduced by amounts
matching eligible investments or loan disbursements made. Pending such investments or disbursements
to Nominated Projects & Assets, the balance of unallocated proceeds shall be held in temporary
investment instruments that are cash, or cash equivalent instruments, within a Treasury function; or heldin temporary investment instruments that do not include greenhouse gas intensive projects which areinconsistent with the delivery of a low carbon and climate resilient economy; or applied to temporarily
reduce indebtedness of a revolving nature before being redrawn for investments or disbursements to
Nominated Projects & Assets.
The Issuer reports that the unallocated proceeds will be held in the General Account of Chile in instruments
issued by the Central Bank of Chile, repurchase agreements, bank term deposits, mutual funds investingin short-term debt instruments, sovereign titles, among others.

•

6.3. In the case of a Force Majeure, the Issuer may apply to the Climate Bonds Standard Board for an
extension to the asset allocation period. During the extension period the balance of unallocated proceeds
shall be deemed to be conforming to Clause 5.2.
The Issuer wants to apply to an extension of the asset allocation period as it estimates that the total amountof the Net Proceeds of the 2019 Bond will be completely allocated in 2024, this is due to the public
infrastructure nature (i.e. Clean Transports) of its Nominated Projects & Assets. The Issuer commits toreport on the allocation of proceeds each year until full allocation. The Issuer’s commitment regarding
unallocated proceeds management remains applicable after the extension and until full allocation.

Vigeo Eiris reviewed the above elements based on the information and documentation provided by theIssuer during the verification, and nothing has come to our attention that causes us to believe that the Bond
does not, in all material respects, meet the criteria of the Climate Bonds Standard’s Post-Issuance
Requirements (version 2.1) stated in clause 6 “Non-Contamination of Proceeds”.

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Clause 7. Confidentiality•

7.1. Information about the Nominated Projects & Assets shall be provided to the Verifier and to the Climate
Bonds Standard Board to support the assessment of conformance with the Climate Bonds Standard.
Information about the Nominated Projects & Assets has been provided to the Verifier and shall be provided
to the Climate Bonds Standard Board to support the assessment of conformance with the Climate Bonds
Standard.

•

7.2. The Issuer should disclose information about the bond and the Nominated Projects & Assets to themarket.
The Issuer has disclosed the list of Nominated Projects & Assets to all investors through the Green Bonds
2019 Allocation and Environmental Impact Report.

Vigeo Eiris reviewed the above elements based on the information and documentation provided by theIssuer during the verification, and nothing has come to our attention that causes us to believe that the Bond
does not, in all material respects, meet the criteria of the Climate Bonds Standard’s Post-Issuance
Requirements (version 2.1) stated in clause 7 “Confidentiality”.

8. Reporting•

8.1. The Issuer shall provide to bond holders and to the Climate Bonds Standard Secretariat at least
annually a report containing the list of Nominated Projects & Assets to which proceeds of the bond havebeen allocated (or reallocated). The report shall include a brief description of the projects and the amounts
disbursed, as well as the expected impact of the Nominated Projects & Assets.
The list of Nominated Projects & Assets (including a brief description and amounts disbursed) is in theGreen Bonds 2019 Allocation and Environmental Impact Report which is publicly available in the Finance
Ministry website.
This report includes an environmental impact assessment of the Nominated Projects & Assets, with thecalculation methods of indicators for the projects developed under the Transport and Telecommunications
Ministry, the Public Works Ministry and the Energy Ministry.

Vigeo Eiris reviewed the above elements based on the information and documentation provided by theIssuer during the verification, and nothing has come to our attention that causes us to believe that the Bond
does not, in all material respects, meet the criteria of the Climate Bonds Standard’s Post-Issuance
Requirements (version 2.1) stated in clause 8 “Reporting”.

Part B. Eligible Projects & Assets
Clause 9. Climate Bonds Taxonomy•

9.1. Nominated Projects & Assets, as identified by the Issuer under Clauses 1.3 and 4.2, shall fall into one
or more of the investment areas contained in the latest version of the Climate Bonds Taxonomy (see Annex
A).
Nominated Projects & Assets, as identified by the Issuer under Clauses 4.2., fall into four investment area
contained in the latest version of the Climate Bonds Taxonomy, namely: Solar, Public Passenger
Transport, Low Carbon Buildings, and Water Monitoring.

Vigeo Eiris reviewed the above elements based on the information and documentation provided by theIssuer during the verification, and nothing has come to our attention that causes us to believe that the Bond
does not, in all material respects, meet the criteria of the Climate Bonds Standard’s Post-Issuance
Requirements (version 2.1) stated in clause 9 “Climate Bonds Taxonomy”.

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Clause 10. Technical Criteria (Solar Sector Eligibility Criteria - Version 2.0)•

10.1. Nominated Projects & Assets shall meet the specific eligibility criteria provided in the latest versionof the relevant Sector Specific Criteria document.
The Nominated Projects & Assets meet the specific eligibility criteria provided in the relevant SectorSpecific Criteria document, namely:-

Solar Projects - Sector Criteria for Solar (version 2.1): Eligible Green Expenditures falling in thiscategory will not have more than 15% of electricity generated from non-renewable sources.

-

Public Passenger Transport Projects - Low Carbon Land Transport (Version 1.0): Eligible Green
Expenditures falling in this category are automatically eligible for Certification.

-

Public Building certification Projects - Low Carbon Buildings Criteria (September 2018): Eligible
Green Expenditures falling in this category will only cover Green Building construction and retrofits
with an associated 30% carbon reduction target based on the Chilean national building certification
scheme "Certificación Edificio Sustentable".

-

Water monitoring Projects - Water Infrastructure Criteria (April 2018): Eligible Green Expenditures
falling in this category are automatically eligible for Certification.

10.2. Where the proceeds of a bond are allocated to Nominated Projects & Assets that are covered bymore than one Sector-Specific Criteria, then each of the Nominated Projects & Assets shall meet the
specific eligibility criteria provided in the Sector-Specific Criteria relevant to that Nominated Project & Asset.
The Net Proceeds of the Bond are allocated to Nominated Projects & Assets that are covered only by four
Sector-Specific Criteria (Solar, Low Carbon Transport, Low Carbon Building, Water Monitoring).2
Investment area

Eligibility Criteria Assets

Comments

Solar

Climate Bonds Initiative Solar Standard(Version 2.1)

Based on the supporting elements andexplanations provided by the Issuer,
Nominated Assets operate in the following
activity:

Eligible Project & Assets relating to solar
energy generation shall be projects orassets that operate or are underconstruction to operate in one or more of
the following activities:•

Low Carbon
Transport

Generation Facilities (power &
heat)

•

Supply chain facilities•

Infrastructure

Climate bonds initiative Low Carbon Land
Transport (Version 1.0)
Eligible Project & Assets operate or are
under construction to operate in one ormore of the following activities:

2•

Trains

•

Buses

•

Supply chain facilities•

Infrastructure•

Photovoltaic generation facilities(onshore, installations in publicbuildings and solar heating water
systems for households).

The Issuer confirms that facilities have no
more than 15% of electricity generated
from non-renewable sources.

Based on the supporting elements andexplanations provided by the Issuer,
Nominated Assets operate in the following
activity:•

Public passenger electrictransport (metro-train, metro lines
and electric buses)•

Dedicated infrastructure forelectric public buses

The issuer confirms the passenger
transport projects are 100% electric.

https://www.climatebonds.net/files/files/CBI_Taxonomy_Tables_January_20.pdf
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Investment area

Eligibility Criteria Assets

Comments

Low Carbon
Buildings

Low Carbon Buildings Criteria (September
2018)

Based on the supporting elements andexplanations provided by the Issuer,
Nominated Assets operate in the following
activity:

Eligible Project & Assets operate or are
under construction to operate in one ormore of the following activities:

Water
Infrastructure•

Commercial buildings (including
offices, hotels, retail, buildings,
public buildings, educationalbuildings, healthcare buildings
etc.)

•

Residential buildings•

Other buildings

Water Infrastructure Criteria (April 2018)
Eligible Project & Assets operate or are
under construction to operate in one ormore of the following activities:•

Water monitoring•

Public buildings construction andretrofits with an associated 30%
carbon reduction target based on
the Chilean national building
certification scheme "Certificación
Edificio Sustentable"

The Issuer confirms the environmental
impact of its green building projects include
a reduction of 60.09% CO2 eq. in 2018 and54.63% in 2019.
Based on the supporting elements andexplanations provided by the Issuer,
Nominated Assets operate in the following
activity:•

Projects for monitoring, analysis,
diagnosis and studies of water
resources, of basin master plans
and strategies for the conservationof water resources, analysis ofwater resources in the face of
extreme events and climatechangeVigeo Eiris reviewed the above elements based on the information and documentation provided by theIssuer during the verification, and nothing has come to our attention that causes us to believe that the Bond
does not, in all material respects, meet the criteria of the Climate Bonds Standard’s Post-Issuance
Requirements (version 2.1) stated in clause 10 “Technical Criteria”.

Part C: Requirements for Specific Bond Types
Bond Type is a “Use of Proceeds Bond”.
Clause 11. Project Holding•

11.1. The Issuer of the bond shall continue to hold Nominated Projects & Assets which have Fair Market
Value at least equal to the original principal amount of the bond at the time of issuance.
At the moment of the issuance, the Issuer identified a portfolio of Green Eligible Projects (NominatedProject & Assets) equal to USD 4.222bn, 1.78 times bigger than the amount issued (USD 2.373 bn).
o11.1.1. Additional Nominated Project & Assets may be added to, or used to substitute or replenish,
the portfolio of Nominated Project & Assets as long as the additional Nominated Project & Assets
are eligible under Part B of the Climate Bonds Standard and the bond’s environmental objective
as set out in Clause 1.1.
No Additional Nominated Project & Asset has been added to, or used to substitute or replenish,
the portfolio of Nominated Projects & Assets since the Pre-issuance verification.

Vigeo Eiris reviewed the above elements based on the information and documentation provided by theIssuer during the verification, and nothing has come to our attention that causes us to believe that theBond does not, in all material respects, meet the criteria of the Climate Bonds Standard’s Post-Issuance
Requirements (version 2.1) stated in clause 11 “Project Holding”.
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Clause 12. Settlement Period•

12.1. Issuers shall demonstrate that the Net Proceeds of the bond have been distributed to the NominatedProjects & Assets within 24 months of the issuance of the bond
The Issuer reports 24.8% of the Net proceeds have been invested in the nominated projects.
The issuer also reports the percentage of undistributed funds for each category of projects and states they
expect to complete these investments by 2024.
12.2. Where full distribution of the Net Proceeds is not achieved within 24 months of the issuance of thebond, the Issuer shall demonstrate that: The surplus or undistributed funds have been invested in Eligible
Projects & Assets not otherwise nominated for a specific Climate Bond or the Issuer has made temporary
investments of surplus or undistributed funds in conformance with the provisions of Clause 6.
The Issuer has identified a portfolio of Nominated Projects & Assets and this have not been financed byother Climate Bonds. As reported under clause 6, the unallocated funds are held in cash within the General
Account.

Vigeo Eiris reviewed the above elements based on the information and documentation provided by theIssuer during the verification, and nothing has come to our attention that causes us to believe that the Bond
does not, in all material respects, meet the criteria of the Climate Bonds Standard’s Post-Issuance
Requirements (version 2.1) stated in clause 12 “Settlement Period”.

13. Earmarking•

13.1. The Issuer of the bond shall maintain the earmarking process to manage and account for funding to
the Nominated Projects & Assets as disclosed under Clauses 2.1 and 2.1.3.
The issuer has an internal process to track and manage the allocation of funds. In addition, it publicly
reports that 13.7% of the Net Proceeds of the Bond were used for refinancing Nominated Projects & Assets
of 2018 and 11.1% of the Net Proceeds of the Bond have been invested in Nominated Projects & Assets
of 2019.

Vigeo Eiris reviewed the above elements based on the information and documentation provided by theIssuer during the verification, and nothing has come to our attention that causes us to believe that the Bond
does not, in all material respects, meet the criteria of the Climate Bonds Standard’s Post-Issuance
Requirements (version 2.1) stated in clause 13 “Earmarking”.

List of supporting elements provided by the Issuer:•

Supporting documents provided for Post-issuance verification and confirmed by the Issuer:oAnswers to the Verifier’s Post-Issuance questionnaireoVigeo Eiris’ pre-issuance Report of Factual Findings (dated March 29, 2019)oIssuers Green Bonds 2019 Allocation and Environmental Impact Report.

8/9Vigeo Eiris is an independent international provider of environmental, social and governance (ESG)
research and services for investors and public & private organisations. We undertake risk
assessments and evaluate the level of integration of sustainability factors within the strategy andoperations of organisations.
Vigeo Eiris offers a wide range of services:•

For investors: decision-making support covering all sustainable and ethical investment
approaches (including ratings, databases, sector analyses, portfolio analyses, structured
products, indices and more)•

For companies & organisations: supporting the integration of ESG criteria intobusiness functions and strategic operations (including sustainable bonds, corporate
ratings, CSR evaluations and more).

Vigeo Eiris methodology and rating services adhere to the highest quality standards.
With a team of more than 240 experts of 28 different nationalities, Vigeo Eiris is present in Paris,
London, Brussels, Casablanca, Hong Kong, Milan, New York, Rabat, and Santiago.
The Vigeo Eiris Global Network, comprising 4 exclusive research partners, is present in Brazil,
Germany, Israel and Japan.
For more information: www.vigeo-eiris.com

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