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Transparency in green investments

With over 35 years of experience in the environment and sustainability area, ISQ continues to invest in knowledge and implementation of innovative services in the green sector.

This time, it follows global market trends by investing in audits that promote the transparency of the use of proceeds statement in the acquisition of debt instruments to finance green projects: the so-called green bonds, or green loans.

In fact, changing times lead to changing mentalities and, with them, lifestyles that reflect a greater awareness and sense of action on the socio-environmental conjuncture. This (pro)activity and commitment to environmental and social goals (KPI’s) have been exponentially adopted by organizations determined to assume their corporate social responsibility, attributing shared social value to their economic activity.

In this sense, organizations tend to invest in projects that, in the course of their development, meet environmental, social, and corporate governance criteria (ESG) in the most sustainable way possible.

However, the requirements for the admission of ESG bonds, or of green loans, by investors are not governed by an universal regulation, but rather by self-regulations defined by the various entities that issue those bonds, making the process of project suitability for green financing more intricate.

Therefore, who can guarantee that the service provided correctly meets all the requirements? Well, the International Capital Markets Association (ICMA) – a global organization of relevance in the self-regulation of capital markets – suggests that investing organizations hire an external review for the impartial validation of the categories of green eligibility to which projects are proposed.

“In response to this market need, the Instituto de Soldadura e Qualidade (ISQ) – as Portugal’s largest Technological Interface Centre in Engineering, Consulting, Inspection, Testing, I&D and Innovation services – presents itself as a second-party opinion (SPO) that provides both Financial Institutions and Investors with the assurance that their funds are aligned with the main sustainable finance frameworks and with their own goals”, explains João Safara, ISQ Administrator.

In a methodology that contemplates all green principles already regulated – namely, the Green Bond Principles (GBP), Social Bonds (SBP), Sustainability Bond Guidelines (SBG), Climate Bonds Standard (CBS) of the International Capital Market Association (ICMA) and the Green Loan Principles (GLP) of the Loan Market Association (LMA) – and taking into account the compliance with policies and objectives of sustainable development (SDG) and environmental responsibility, social and corporate governance (ESG), “ISQ is committed to guiding investors throughout the cycle of their green projects and to make informed decisions”, adds João Safara.

ISQ is particularly dedicated to the reputable and independent verification of the implementation of the four components of the GBP/GLP – i.e., revenue management, the project selection and evaluation process, and the transparent communication of its implementation (report) – by means of meetings, interviews, consultations with the client, document analysis, on-site observation, completion of a checklist, and finally the preparation of a technical opinion.

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