Bank of Cyprus intends to issue green bonds, via a Sustainability Bonds Issuance Framework which it announced recently, the first step in this endeavour. At the same time, the bank is putting in place the internal infrastructures that will enable the implementation of this future issuance.

In an interview with InBusiness News, Christina Georgiadou Kypri, Funding & Liquidity Manager at Bank of Cyprus, points out that sustainability bonds are a financial instrument attracting a great deal of attention from international investors, and how this is expected to help draw more and new investors to bank bond issuances.

As she notes, earnings from these bonds will be used to finance projects that form part of Cyprus' transition to a more sustainable model of 'green' and 'social' growth, providing loans to sectors that help the bank's clients in their 'green transition'.

Asked to determine when the bank might issue the first such bonds, she said the date has not been decided yet.

"The first step has been taken with the drafting of the Sustainability Bonds Issuance Framework, while internally we are creating the infrastructures so that at the right time we can implement this objective," she explains.

You recently announced the Sustainability Bonds Issuance Framework. What is your goal?

The Framework allows the Bank to issue sustainability bonds - in particular, green bonds, social bonds, or a combination of these two. In order that a bond qualify as sustainable, the earnings from it must be channeled into financing projects compatible with the principles of sustainability.

Sustainability bonds are a financial instrument that attracts particular interest from international investors, and this is expected to help draw more and new investors to future bank bond issuances.

The Bank aspires to augment its positive impact on the environment, while maintaining its leading role in the pillar of social projects and governance.

The rollout of the Sustainability Bonds Issuance Framework plays a part in this objective, creating the necessary link between the Bank' s wider ESG strategy and the strategy for raising financing via bond issuances.

Where will earnings from these bond issuances go to?

Earnings from these bonds will be used to finance projects that contribute to our country's transition to a more sustainable model for 'green' and 'social' growth, providing loans to sectors that help our clients in their 'green transition'.

The framework lays out in detail the types of financing which are compatible with the standards and guidelines for sustainability bonds of the International Capital Market Association and which include:

•           Renewable energy sources

•           Improving energy efficiency

•           Environmentally-friendly transport

•           Green Buildings

•           Access to essential services - healthcare

•           Creating jobs, financing small-to-medium-sized businesses

For example, the funds drawn from these bond issuances can be channeled to client loans for the purchase of electric vehicles, or loans for renovating buildings and rendering them more energy-efficient. Other financing options would include loans for installing solar panels and other domestic-use systems that conserve energy.

Aiming to help support the community in a sustainable way, the Framework enables the financing of projects which secure access to healthcare for all social strata. It also includes supporting efforts to create jobs and the financing of small-to-medium-sized businesses.

How will this affect your clients?

The Bank offers a suite of environmentally-friendly products that are in line with the social projects pillar. We've already mentioned a few examples. The Bank aims, on the one hand, to continue evolving the range of 'green products' on offer, and on the other hand to start raising awareness among our clients about ESG matters during the loan-issuance process.

Is this endeavour linked to ESG strategies?

Bank of Cyprus recognises what challenges the transition to a sustainable economy entails. The shift toward a more sustainable banking model requires transforming our assets, incorporating into decision-making processes issues relating to climate change risk, governance structure, and determining strategy and risk management.

Our clients face similar challenges. In this context, the Bank seeks to create an ongoing partner relationship with our clients, supporting the financing of projects with a positive impact on managing climate change.

Rolling out the Sustainability Bonds Issuance Framework helps align the Bank's programme for raising funds from international markets, with our broader ESG strategy that plays a part in transitioning Cyprus to a sustainable future.

Have you determined when you'll be issuing the first green bond?

We haven't decided that yet. The first step has been taken with the drafting of the Sustainability Bonds Issuance Framework, while internally we're creating the infrastructures so that at the right time we can implement this objective.