Green Loan Overview Expected Elements of Green Loans

Proceeds of Green Loans should be used for Green Projects that have clear environmental benefits. Examples of the possible approaches and elements that Green Loans are expected to possess are the same as those of Green Bonds. Please visit here.

Borrowers should provide lenders with information in advance regarding the following: the environmental sustainability objectives that the borrowers intend to achieve through the Green Loans; the criteria for determining the appropriateness of Green Projects based on the environmental sustainability objectives described above; and the process for determining how Green Projects fit the criteria for the achievement of the environmental sustainability objectives.
Loans, traditionally, are a transaction based on the relative relationship between the borrower and lender and smooth financing would be facilitated by the financial institution, that is the lender assisting the borrower in the formulation of a green finance framework.

Green Loan proceeds should be tracked and managed in an appropriate manner to ensure that the funds raised by the procurement of Green Loans are used for Green Projects without fail. These tracking and managing activities should be controlled by the borrower's internal processes. Until the Green Loan is redeemed, borrowers should conduct periodic checks (at least yearly) to ensure that the amount used for Green Projects is equal to the amount raised by the procurement of Green Loans or the sum of the amount used for Green Projects and the amount of the unallocated proceeds match the total amount of Green Loan proceeds.

Borrowers should report the latest information on the use of Green Loan proceeds to the financial institutions that are lenders and took part in the Green Loans after the procurement. Borrowers should also post above information on their websites to the public.
As for the timing of disclosure, borrowers should report or disclose the usage status of funds at least once a year and each time if there is a significant change in circumstances until all the proceeds are used. Borrowers should report or disclose such information in a timely manner even after all the proceeds are allocated if there has been any major change in the situation.
For specific information on reporting or disclosure and examples of disclosure methods, please visit here.

It is recommended that issuers utilize an external review in case that they need an objective assessment of the alignment of their approaches with the framework for Green Loan procurement regarding the matters described in the above 1 to 4.
If borrowers have their Green Loans externally reviewed, it is recommended that borrowers should report the review results to their lenders.
Further, it is recommended to publicly disclose the external review result or summary of the review result on a website, etc. after considering duty of confidentiality and competitiveness.

For matters that should be evaluated by external review providers, please visit here.

For more information on Green Loan Guidelines, please visit here.

For the flow of the Green Loan borrowing procedure, please visit here.