August 2022

Climate Bonds Initiative
Social & Sustainability
Bond Database
Methodology

Climate Bonds Initiative Social and Sustainability Bond Database Methodology

1Table of Contents
1. Introduction

3

2. The Climate Bonds Initiative Socialand Sustainability Bond Database analysis process

4

Classification

4

Prerequisites for inclusion

5

Bond analysis process

5

Methodology update process and implications

7

Annex A: Analytical Framework for classifying use of proceeds

8Annex B: SDG mapping and Climate Bonds’ GSS bond Use ofProceeds categories

9

Annex C: Minimum climate change mitigation
and adaptation safeguards

11

Climate Bonds Initiative Social and Sustainability Bond Database Methodology

2

1. Introduction
The rapid transition to a sustainable economy requires action from all
sectors, and significant financing to enable this. In the capital markets
this has given rise to a variety of financial instruments aimed at providing
environmental and social benefits alongside financial returns. Such
instruments demonstrate the potential for financial markets to enable solutions
to global problems such as climate change and its myriad physical and societal
effects, including extreme weather, natural disasters, and pandemics.

Glossary:
GSS bonds: Green, Social and Sustainability-labelled bonds
External review: A document which confirms compliance with
the Social Bond Principles (SBP) or Sustainability Bond Guidelines(SBG). Types of external review include Second Party Opinions (SPO)
sustainability bond ratings, assurance, etc.
SDGs: The 17 United Nations Sustainable Development Goals

The Social bond label includes bonds
where proceeds have a focus ondelivering positive social outcomes.
The labels used to describe such bonds
may range from e.g. ‘Pandemic’ to‘Gender inclusion’ but all are covered
within the Social theme.

SSBDB: Climate Bonds Social and Sustainability Bond Database
Sustainable Finance Framework: An issuance framework which
defines eligibility categories for use of proceeds and reporting forsocial and/or sustainability bonds.
UoP: Use of proceeds

The Sustainability bond label covers
bonds with proceeds directed to a mixof both green and social projects. Labels
include e.g. SDG, SRI, and ESG.
The Green bond label describes
bonds with proceeds dedicated toenvironmental and climate outcomes.
Labels may include e.g. green, green
resilience, and climate awareness.
To date, the majority of this type of funding has come in the form of labelled
debt, predominantly bonds and loans. An array of labels and structures
can and have been used with such instruments, typically at the issuer’s
discretion. Since 2009, Climate Bonds Initiative (Climate Bonds) has
been working solely to mobilise the global debt market for climate changesolutions. While Climate Bonds continues to focus primarily on climaterelated outcomes, environmental and social issues are clearly linked. Inorder to ensure a just transition to a low-carbon economy and meet all 17of the UN Sustainable Development Goals (SDGs), a range of persistentinequalities must be addressed.
Climate Bonds has added a Climate Bonds Social and Sustainability
Bond Database (SSBDB) to its suite of GSS debt databases. The SSBDB
complements the Climate Bonds Green Bond Database in order to provide amore complete snapshot of the GSS debt market.
The aim of the SSBDB is to provide transparency on global social andsustainability debt, ranging from individual deal-level analysis to theidentification of general market developments and trends. The database
will evolve with the market.

Climate Bonds Initiative Social and Sustainability Bond Database Methodology

32. The Climate Bonds Initiative Social andSustainability Bond Database analysis process
Classification
As with green bonds, Climate Bonds screens self-labelled debt instruments
to identify bonds and other debt instruments as eligible for inclusion in the
SSBDB. The screening references the Climate Bonds Taxonomy, albeit usinga modified sector list rather than directly using the Taxonomy screening
indicators. This document provides information on the approach and the
database maintenance process.

Climate
Bonds
Initiative
databasecoverage

LabelledbondsGreen Bond
Database

Climate-Aligned
Bond Database

Social andSustainability
Bond Database

Green &
climate-themed

Social-themed

Unlabelledbonds

The Database covers two overarching debt themes based on the projects/
activities financed:
1. Use of Proceeds (UoP) social and sustainability bonds, and
2. Performance-linked bonds, mainly sustainability-linked bonds (SLBs).

Social &Sustainability
Bond
Database

Use of proceeds socialand sustainability bonds

Sustainability
theme

Pandemic

Social theme

Sustainability-linked bonds

ESG-linked, SDG-linked, etc.

Based on the themes that these instruments are financing, UoP bonds arefurther categorised as either social or sustainability. In 2020, the market also saw
the emergence of thematic bond labels related to mitigating the impacts of the
COVID-19 pandemic, which sit under the social theme.

The labels themselves provide a broad description of the type(s) of projects
financed and/or their benefits, with social and sustainability being the mostcommon. The below table provides a summary of other common labels fallingunder other common labels falling under the social and sustainability themes.

Social and sustainability bonds are defined as instruments that:

In addition to social and sustainability UoP bonds, the SSBDB will include SLBs.
While the proceeds raised from these deals are not earmarked or ring-fenced fora specific list of eligible projects, they comprise a fast-growing segment of GSS+
debt with significant potential to help facilitate the sustainability transition.

a. have been labelled as such by the debt issuer, andb. finance social and/or sustainability-related assets, projects
and/or activities.

Climate Bonds Initiative Social and Sustainability Bond Database Methodology

4The process for selection is as follows:
Debt
labelled by
the issuer†

Sustainability,
social andrelated labels

All proceeds are for green purposes
and meet Climate Bonds Green Bond
Database requirements
Note: these bonds will be included in bothGreen bond and social & sustainability
bond databases

Climate Bonds Green Bond
Database

Climate Bonds Initiative
Social and Sustainability
Bond Database

Proceeds are partly or solely
for social purposes

Table 1. Illustrative examples of labels used insocial and sustainability debt instruments

Prerequisites for inclusion
Climate Bonds tracks self-labelled GSS-themed issuance to identify andanalyse bonds and similar debt instruments eligible for inclusion in the
Climate Bonds SSBDB. The eligibility screening and analysis references
the Social and Sustainability Debt Analytical Framework (see Annex A).
This document provides information on the analysis and the databasemaintenance process. There are three overarching requirements for inclusion:
1. Debt instrument includes but is not limited to bonds, asset-backed
securities and loans. Short-term debt, such as deposits and commercial
paper, is not included.
2. Self-labelled, defined as a decision by the issuer to tag the
instrument under the social and/or sustainability themes. This is typicallycommunicated in deal documentation including, but not limited to, offer
prospectuses, sustainable financing frameworks, and independent external
reviews (e.g., Second Party Opinion, SPO). Deals that finance the right types ofassets, projects and activities, but are not self-labelled by the issuer, are excluded.

Sustainability

Social

ESG
SDG
Sustainable development
Sustainability
Sustainability awareness

Affordable housing
Gender equality
Education
Pandemic
SocialSocial impact

Bond discovery
Climate Bonds discovers labelled bonds via data platforms and sources of
documentation, including, for example, stock exchanges’ sustainable bondlisting segments, financial and ESG data provider platforms, dedicatedregulator data platforms, and primary networks of issuers, underwriters,
advisors, and external review providers.

3. Disclosure: Eligibility rests on public disclosure that is sufficient to:

Use of Proceeds information sources

a. determine if the financed assets, projects, activities, and expenditures fallunder relevant categories within the social or sustainability themes, andA variety of sources are used for collecting the UoP information. Thesemay include, but are not limited to, the bond prospectus, final term sheet,news releases, SPOs, and other external reviews, and written confirmationfrom the issuer itself or from other involved parties, such as underwriters or
external review providers.

b. allow the entry of the debt instrument into the database, most notably
including an amount outstanding and settlement date.

Bond analysis process
If the above-listed requirements of self-labelled debt instrument withadequate public disclosure to determine classification into social andsustainability thematic areas are met, Climate Bonds applies a three-stepscreening process to classify a labelled bond as eligible.

Step 1: Identification of labelled social andsustainability debt
The issuer of a social and sustainability debt instrument must declare thatthe debt funding raised is or will be dedicated to generating sustainability orsocial benefit(s).
This is communicated by labelling the debt instrument. At least 70 labels werevisible in the market as of July 2022. Some common examples of labels arelisted in table 1.

External reviews
We consider all types of external assessment (see summary table below). An
external review is recommended but not required if equivalent information
is clearly disclosed by the issuer in a bond framework, prospectus or otherdocument. Equivalent information covers the four principles of the ICMA
Social Bond Principles (SBP), Sustainability Bond Guidelines (SBG), andSustainability-Linked Bond Principles (SLBP), namely:
1. Pre-determined eligibility criteria
2. Information on the asset or project selection process
3. Management of proceeds to ensure allocation
4. Post-issuance reporting (at least on allocations)Obtaining an external review does not lead to automatic inclusion in the Climate
Bonds SSBDB, as compliance with SBP, SBG, or SLBP does not mean that the useof proceeds categories meet all the inclusion criteria. The review as well as otherinformation disclosed by the issuer is independently assessed by Climate Bonds.
Disclosure
The assessment is typically based on publicly available information. Occasionally,
Climate Bonds may obtain private information to determine alignment.
Information made available on the Climate Bonds website about Certified
instruments is considered publicly available even if the issuer has not madeit publicly available on their website.

Climate Bonds Initiative Social and Sustainability Bond Database Methodology

5Table 2. Overview of external review types and providers
Pre-issuance review

Scope

Providers (examples)

Assurance

Positive or negative assurance on compliance with the Social
Bond Principles (SBP) or Sustainability Bond Guidelines (SBG)

EY, Deloitte, KPMG

Second Party Opinion (SPO)

Confirms compliance with SBP or SBG. Provides assessment ofissuer’s sustainable finance bond framework.

CICERO, DNV-GL, Sustainalytics, Vigeo
Eiris, ISS-Oekom

Pre-issuance verification of the
Climate Bonds Certification

Third party verification confirms that the process followed by
the issuer and use of proceeds adhere to the Climate Bonds
Standard and sector specific criteria. Only applicable forsustainability bonds where 100% of the net proceeds meetcriteria – please see the Interaction with the Climate Bonds
Green Bond Database section below.

Approved Verifiers under the Climate
Bonds Standard

Post-issuance review

Scope

Providers

Assurance, audit or post-issuance
SPO

Assurance of actual allocation of proceeds to eligible projects.

Audit firms, ESG service providers

Post-issuance verification of the
Climate Bonds Certification

Third party verification confirms the allocation of proceeds is
to eligible projects and that the types of projects conforms torequirements of the Climate Bonds Standard.

Approved Verifiers under the Climate
Bonds Standard

Impact report

Assessment that seeks to quantify the environmental impactof financed projects/assets (often not considered an external‘review’ per se as the assessment is done by the provider itself,
and does not cover UoP information).

ESG service providers, scientificexperts, other specialised consultants

Step 2: Use of Proceeds analysis
1. Use of Proceeds instrument:
Each bond or other debt instrument is reviewed based on its declared UoP.
The UoP is classified against the relevant social use of proceeds categories(see Annex A). Each bond must also clearly identify an appropriate
target population, i.e., the group(s) of people that will benefit from theinvestments made with the funding raised.
Provided that the bond’s UoP can be classified, a target population
identified, and the proceeds do not include any categories that can beconsidered to breach the minimum climate safeguards outlined in Annex
C, the label and accompanying disclosure are sufficient for inclusion.
2. Performance-linked instruments:
Performance- or KPI-linked debt instruments, specifically Sustainabilitylinked bonds (SLBs) and loans (SLLs) are instruments that raise general
purpose finance for the issuer. The coupon may step up, or down, if
the issuer meets predefined, time bound KPIs related to sustainability
improvements at the entity level. Common labels used to identify SLBs
and SLLs include ESG-linked, SDG-linked and sustainability-linked.
Development of the criteria to evaluate the robustness of the sustainability
contribution of such deals is ongoing. Such deals are recorded in the
SSBDB, and their UoP is denoted as sustainability-linked general corporate
purpose funding.

Step 3: Key information and SDG mapping
In addition to recording relevant basic information, such as the issuer name,deal size, and dates, Climate Bonds also classifies each debt instrument’s
UoP according to their respective social and/or sustainability outcomes,
where applicable. These are accompanied by links to theissuer’s bondframework and SPO or other external review documentation.

In addition, Climate Bonds analysts map each instrument’s UoP against therelevant Sustainability Development Goals (SDGs), and the relevant project
categories detailed in the Climate Bonds Social and Sustainability Debt
Analytical Framework. The SDG mapping is available in Annex B.

Interaction with the Climate Bonds Green Bond Database
The GSS themes addressed by social and sustainability debt may overlap
with those financed by green bonds. The Climate Bonds Initiative Green
Bond Database requires 100% of net proceeds to be allocated to eligible
green assets, projects and activities, irrespective of the label of the bond.
Therefore, if the proceeds of a social or sustainability bond are partially or solely
allocated to social purposes, the instrument is only included in the SSBDB.
However, in the following two examples, where the UoP meets the green
bond database requirements, the bond will be included in both the Greenand the Social and Sustainability Bond Database.
1. A bond is labelled sustainability or other label following the issuer’s
general sustainable finance framework, but only finances eligible green
projects. (e.g., a sustainability bond financing wind power)
2. A bond is labelled sustainability or other related label but the nominatedassets, projects, activities, and expenditures generate clear climate orenvironmental benefits that meet the Climate Bonds Initiative Green Bond
Database Methodology requirements. A typical example is a social housing
bond where the building also carries a green building certification (e.g.,
BREEAM, LEED) that meets the Green Bond Database requirements.
In the above cases, the bond will be included in the SSBDB, because of thecorresponding label it carries, as well as the Green Bond Database, because
100% of the net proceeds finance eligible green categories.

Climate Bonds Initiative Social and Sustainability Bond Database Methodology

6

Methodology update process
and implications
The approach taken in this methodology seeks demonstration of ambition
from social and sustainability bond issuers. The requirements for inclusion
will be tightened over time.

Bond classifications will not be retrospectively changed as Climate Bonds
develops, deploys, and tightens the screening criteria used in this methodology.
Changes in and updates to assessment criteria will be notified, but theaim is to encourage high levels of ambition in the labelled GSS bondmarket and promote a rapid transition to a low carbon, sustainable,
and resilient economy.

The methodology will be reviewed at least semi-annually. In line with the
Climate Bonds Green Bond Database Methodology, the review process
will comprise inputs from independent subject matter experts, and will
include consultation with data users and other relevant stakeholders. Where
possible, the methodology will also aim to reflect relevant market updates,
such as the ongoing work by the International Platform for Sustainable Financeon the approach to a social taxonomy.

The process for classification is as follows:
The bond
carries asocial or
sustainability
label

The bond only finances eligible green
projects that meet the Climate Bonds
Initiative Green Bond Database
Methodology requirements

The assets, projects and/or activities alsodeliver climate/environmental benefits thatmeet the Climate Bonds Initiative Green Bond
Database Methodology requirements

Climate Bonds Initiative
Green Bond Database

Climate Bonds Initiative
Social and Sustainability
Debt Database

The proceeds are partially or solely used forsocial purposes

Climate Bonds Initiative Social and Sustainability Bond Database Methodology

7Annex A: Analytical Framework for classifying
use of proceeds
The Climate Bonds Social and Sustainability Analytical Frameworkprovides guidance for prospective issuers and investors. The current
diagram summarising eligible categories for assets, projects and activities
in GSS-themed bonds is reproduced below. Drawing on existing market
reference guidelines and extensive research, it provides broad guidanceon eligible sectors and subsectors that can be funded with social andsustainability-themed bonds.

Analytical Framework for classifying use of proceeds
ICMA SBP (2019 version)

Climate Bonds Initiative social andsustainability use of proceeds category

Social assets, projects or activities

Access to essential services (e.g., health,education and vocational training, healthcare,financing, and financial services)

Education

Education infrastructure
Education equipment
Educational activities
Research and development

Healthcare

Medical equipment manufacturing
Healthcare infrastructure
Healthcare services
Research and development

Employment and training

Vocational training
Job creation
Job retention
Welfare and wellbeing

Employment generation including through thepotential effect of SME financing and microfinanceMicrofinance

Financial services for micro and smallsized enterprises
Poverty alleviation

Food security

Food security

Food availability
Price stability

Affordable basic infrastructure (e.g., clean drinking
water, sewers, sanitation, transport, energy)

Non-green affordable infrastructure

EnergyTransport
Building
Waste
OthersAffordable housing

Non-green affordable infrastructure Housing

Socioeconomic advancement and empowerment

Equality

Gender equality
Human rights

Social adaptation and resilience (A&R)

Crisis response
Creating more robust social systems

Climate Bonds Initiative Social and Sustainability Bond Database Methodology

8Annex B: SDG mapping and Climate Bonds’ GSS
bond Use of Proceeds categories
Green definitions for the Climate Bonds Initiative Green Bond Database
Social and Sustainability Bond Database

SDG Benchmark

Green Bond Database

Social & Sustainability
Projects, assets &activities

Climate Bonds
Social &Sustainability Use ofproceeds categories

SDG
No.

SDGs

SDG
No.

Climate Bonds
Green Taxonomy

Education
infrastructure

Education

G4

Quality education

G4/

Healthcare

G3Good health andwell-being

G3/

Employment &training

G8

Decent work andeconomic growth

G8/

Microfinance

G1

No poverty

G1/

Food security

G2

Zero hunger

G2/

Non-green
Affordable
infrastructure

G6

Clean water andsanitation

G6

Water

Green Projects,
assets & activities

Educationequipment
Educational
activities
Research anddevelopment
Medical equipment
manufacturing
Healthcare
infrastructure
Healthcare services
Research andDevelopment
Vocational training
Job creation
Job retention
Welfare andwellbeing
Financial services for
micro and smallsized enterprises
Poverty alleviation
Food availability
Price stability
EnergyTransport

Water infrastructure
Water monitoring

Building

Water storage

Waste

Water treatment

OthersWater distribution
G7

Affordable andclean energy

G7

EnergySolar
Wind
Geothermal
Bio-energy
Hydropower
Marine renewables

Climate Bonds Initiative Social and Sustainability Bond Database Methodology

9Green definitions for the Climate Bonds Initiative Green Bond Database(Continued)
Social and Sustainability Bond Database
Social &Sustainability
Projects, assets &activities

Climate Bonds
Social &Sustainability
Use of proceeds
categories

SDG Benchmark

Green Bond Database

SDG
No.

SDGs

SDG
No.

Climate Bonds
Green Taxonomy

Green Projects,
assets & activities

G11

Sustainable cities
and communities

G11

Buildings

Commercial,residential & energy
efficiency
Urban development

Gender equality

Equality

Human rights
/

/

G5
G10

Gender equality

G5

reduced inequality

G10

G9

Industry,
innovation andinfrastructure

G9
G12

G12

/

Industry

Clean up
Supply chain

Responsible
consumption andproduction
/

/

G13

Climate action

Primary resources

G13

All themes

EnergyBuildings
Transport
Water
Waste
Land use & marine
resources
ICT

/

/

G14

Life below water

G14Land use & marine
resources

Fisheries andaquaculture

/

/

G15

Life on land

G15Land use & marine
resources

Agriculture (including
mixed use productive
systems)
Commercial forestry
Natural Ecosystem
protection &restoration
Supply chain assets
management

Crisis response
Creating more robustsocial systems/

Social adaptation
and resilience

G16

Peace and justicestrong institutions

G16

/

/

G17

Partnerships toachieve the goal

G17/

Climate Bonds Initiative Social and Sustainability Bond Database Methodology

10Annex C: Minimum climate change mitigation,
adaptation, and resilience safeguards
Exclusions based on a breach of minimum climate safeguards

Adaptation and resilience measures

In the spirit of evolving binding and voluntary market guidelines, Climate
Bonds maintains that an activity contributing to positive social outcomesshould do no significant harm (DNSH) to climate change mitigation andadaptation. Therefore, the SSBDB includes a red flag identifying all labelled
instruments in the database where more than 5% of the proceeds may
be allocated to areas that have a potentially negative impact on climatechange. Such deals will be separately recorded as excluded labelledsocial and sustainability debt instruments (cf. Climate Bonds Green Bond
Database Methodology).

Climate Bonds set up an Adaptation & Resilience Expert Group to
develop high-level guidance for determining when projects and assets
are compatible with a climate-resilient economy. Climate resilience
covers assessment of risks, which tend to be idiosyncratic depending on
geographic location and local climate, as well as developing measures toaddress and adapt to acute events (e.g., storms) and long-term changes(e.g., temperature and sea level rises).

Key areas for minimum safeguards
The most significant climate safeguards relate to assets, projects, activities
and expenditures across industry value chains and economic sectors thatcan contribute to locking in the use or extending the life of fossil fuels.
This covers all types of fossil fuels, including fossil gas. As new low-carbon
technologies make alternative sources of energy mainstream (e.g. zero- andlow-emission vehicles), the list of assets that are not supportive of or hinder
rapid decarbonisation is expected to grow.
An illustrative list is provided in the table below.

Key areas for minimum safeguards
Fossil fuel exploration, production, and refining
Fuel production from petrochemicals
Fossil fuel-based heat, cool, and electricity generation
Transportation of fossil fuels
Fossil fuel-powered transport (e.g. ICE passenger and freight vehicles)
Road infrastructure (with exceptions – please see below)

As a first step, Climate Bonds has published the Climate Resilience
Principles (see https://www.climatebonds.net/climate-resilience-principles).
These provide a framework for issuers to demonstrate that, for the assets andactivities (re)financed via the bond, they:• understand the climate risks faced by the asset, activity or system in question;• have addressed those risks by undertaking risk-reduction measuresand adopting flexible management plans that take account of inherent
uncertainties around climate change, and ensuring that the asset, activity orsystem is robust, flexible and fit-for-purpose in the face of that uncertainty;• can deliver resilience benefits over and above addressing identified risks(for system-focused investments); and• are undertaking regular (re)evaluation of the asset and/or system’s
climate resilience performance, adjusting to risk reduction measures overtime as needed.
These types of measures and programmes could involve for example
physical assets (e.g., coastal flood defences such as levees (Louisiana)or dykes (Netherlands)), nature conservancy (e.g., land banks) andreforestation (e.g., Indonesia’s TLFF I), as well as project management that
improves resilience and ongoing assessment of impact. So far, investments
have been primarily in physical assets and projects, often in combination
with mitigation measures in water management and sustainable land use.

Weapons
This list of activities will be continuously updated and expanded, and newsafeguards will be announced and introduced as part of the Methodology
updates described in the relevant section above. These safeguards may
also later be developed into more detailed DNSH criteria, with details on
multiple climate and environmental objectives.

Geographical variation: Road infrastructure
Climate Bonds recognises that financing the interconnected sustainable
development outcomes captured in the SDGs is highly contextual andrequires a flexible approach to minimising environmental and climate
harm together with maximising human opportunity and equality. The
Methodology takes a more nuanced approach to road infrastructure
financing, in which the assessment of eligibility for infrastructure funding
raised via labelled bonds depends on both the phase of economic
development as well as the per-capita emissions of the jurisdiction
where the proceeds are deployed. For very low-intensity, less-developed
economies, road infrastructure to allow access to basic amenities andservices may be eligible. These instances will be assessed on a case-by-casebasis, taking into account the Climate Resilience Principles developed by
Climate Bonds. These are described below.

Climate Bonds Initiative Social and Sustainability Bond Database Methodology

11Climate Bonds Initiative Market Intelligence TeamFor data partnership enquiries please contact:
partnerships@climatebonds.net
Design: Godfrey Design, Joel Milstead© Published by Climate Bonds Initiative, August 2022
www.climatebonds.net

Prepared by Climate Bonds Initiative

Disclaimer: The information contained in this communication does not constitute investment advice in any form and the Climate Bonds Initiative is not an investment adviser. Any reference
to a financial organisation or debt instrument or investment product is for information purposes only. Links to external websites are for information purposes only. The Climate Bonds Initiative
accepts no responsibility for content on external websites. The Climate Bonds Initiative is not endorsing, recommending or advising on the financial merits or otherwise of any debt instrument
or investment product and no information within this communication should be taken as such, nor should any information in this communication be relied upon in making any investment
decision. Certification under the Climate Bond Standard only reflects the climate attributes of the use of proceeds of a designated debt instrument. It does not reflect the credit worthiness of thedesignated debt instrument, nor its compliance with national or international laws. A decision to invest in anything is solely yours. The Climate Bonds Initiative accepts no liability of any kind, for
any investment an individual or organisation makes, nor for any investment made by third parties on behalf of an individual or organisation, based in whole or in part on any information contained
within this, or any other Climate Bonds Initiative public communication.

Climate Bonds Initiative Social and Sustainability Bond Database Methodology

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