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Governance framework

 GREEN BOND PRINCIPLES GOVERNANCE

17 June 2015


1 GREEN BOND PRINCIPLES

The Green Bond Principles (“Principles”), included here by reference, have been developed and published as voluntary guidance to bond market participants for the issuance of Green Bonds. The 2014 promulgated version was issued on January 13, 2014.

2 GOVERNANCE PURPOSE

Green Bond Principles Governance (“the Governance”) is established to clarify the decision making process with respect to: 1) updates to the Green Bond Principles; 2) oversight of a Green Bonds Principles Secretariat (“Secretariat”); and, 3) all other matters that may arise in the Governance.

3 GOVERNANCE STRUCTURE

The Governance is comprised of four components: 1) Members and Observers; 2) an Executive Committee; 3) a Drafting Committee (if appointed by the Executive Committee); and, 4) a Secretariat.

3.1 MEMBERS

Members shall be organizations that have issued, underwritten or placed, or invested in a Green Bond. To be admitted as a Member, an organization applies in writing to the Secretariat and is approved by the Secretariat. No new Members shall be admitted between the date of the notice of an ordinary General Meeting in accordance with 5.1, para. 4 of the Governance and the date of the ordinary General Meeting concerned.

A Member may resign from membership by giving notice in writing to the Secretariat.

The Members elect the Executive Committee, decide on changes to the Governance, provide input to updates to the Principles, and resolve on such items as may be brought before them by the Executive Committee.

3.2 OBSERVERS

Observers can be organizations which are active in the field of green finance but do not qualify as Members pursuant to 3.1, para. 1 above, such as but not limited to, NGOs, universities, auditors, consultants and service providers. To be admitted as an Observer, an organization applies in writing to the Secretariat and is approved by the Secretariat.

An Observer may resign by giving notice in writing to the Secretariat.

Observers provide input to updates to the Principles.

Observers are invited to attend the General Meeting but shall have no right to vote or to take part in elections or decisions, and shall not be entitled to form part of the Executive Committee or the Drafting Committee.

3.3 EXECUTIVE COMMITTEE

3.3.1 CONSTITUTION OF THE EXECUTIVE COMMITTEE

The Interim Executive Committee was constituted by the four financial institutions (see Appendix 1) that originally developed the Principles. The Interim Executive Committee appointed the Secretariat and published the first version of the Governance on 14 April 2014.

The Interim Executive Committee subsequently appointed the Initial Executive Committee on 4 June 2014 with advice from the Secretariat and following a call for applicants in May 2014. The composition of the Initial Executive Committee is based on the extent of the organizations’ historic activity in the Green Bond market, and criteria such as transaction volume, diversity of type and geographic balance. The Initial Executive Committee was formed with 18 organizations comprising a balanced distribution between investors, issuers and underwriters (see Appendix I).

The Executive Committee (“EC”) 2015 will be constituted in part by the Initial Executive Committee of which 6 members (2 issuers, 2 intermediaries and 2 investors) to be chosen by lot during the final meeting of the Initial Executive Committee, will serve for a term expiring at the end of the ordinary General Meeting in 2017 while the remaining 12 will serve for a term expiring at the end of the ordinary General Meeting in 2016. In addition, Members will elect a further 6 member institutions by a ballot by mail (electronic or postal) organized by the Secretariat to join the EC 2015 for a term expiring at the end of the ordinary General Meeting in 2017. Accordingly, Members will be asked if they wish to put themselves forward as candidates to join the EC. Details of such candidates will be circulated to the full membership not later than 10 days before the date when such ballot is opened by the Secretariat. Members can vote for their preferences by issuer, investor and underwriter category and the 6 candidates with most votes (2 from each category) will join the EC 2015 bringing its total composition to 24 members. Each Member shall have one vote, but no Member shall have more than one vote. Voting by proxy shall not be permitted, and the vote of each Member shall be cast by that Member individually.

At each ordinary General Meeting following the ordinary General Meeting in 2015, one-half of the total number of EC members shall retire by rotation by reference to those who have been longest in office since their last election or re-election (which at the time of the ordinary General Meeting in 2016 shall be those 12 members who were not chosen by lot at the final meeting of the Initial Executive Committee to serve for a term expiring at the end of the ordinary General Meeting in 2017. These members and all other members will be asked whether they wish to put themselves forward as candidates for election (or re-election) for a term of approximately two years. Details of such candidates will be circulated to the membership not later than 21 days before the date of the ordinary General Meeting. At the ordinary General Meeting members can vote for their preferences by issuer, investor and intermediary category and the 12 candidates with most votes (4 from each category) will join the EC restoring its total composition to 24 members. Elections shall be held by ballot at the ordinary General Meeting. Alternatively, if the EC so decides, the elections shall be held by a ballot by mail (electronic or postal) organized by the Secretariat and to be closed not later than 5 days before the date of the ordinary General Meeting. In the event of a ballot by mail, voting by proxy shall not be permitted, and the vote of each Member shall be cast by that Member individually. Each Member shall have one vote, but no Member shall have more than one vote.

Candidates shall be elected in the order of relative majority. If two or more candidates obtain the same number of votes and if there are no corresponding vacancies, the remaining place(s) available shall be filled by drawing lots from those candidates who obtained the same number of votes.

In the event of there being an insufficient number of candidates in any year to complete the EC, the existing EC is empowered to appoint a willing institution (or institutions) of the appropriate category to join the EC for a term of approximately two years.

In the case of any ad hoc vacancies created by the resignation of a member of the EC during its term of office, the EC is empowered to appoint a willing institution of the same category to replace the resigning member and complete its term of office.

Each member of the EC shall designate a permanent representative and an alternate representative. Designations of representatives (permanent and alternate) may only be made in respect of persons who are employed by a member.

3.3.2 ROLE OF THE EXECUTIVE COMMITTEE

The EC has the authority to address all matters relating to the GBP, except those expressly reserved to the Members. Specifically, the EC 1) appoints and oversees the Secretariat; 2) approves formal Green Bonds Principles communications; 3) appoints the Drafting Committee if deemed necessary; 4) votes on amendments to the Principles; and, 5) can propose and validate issue-specific, Member and Observer-led working groups.

3.4 DRAFTING COMMITTEE

The EC may appoint a Drafting Committee (“DC”) for up to a calendar year of service. The DC would be comprised of EC Members including 1 to 3 previous Green Bond underwriters, 1 to 3 previous Green Bond issuers and 1 to 3 previous Green Bond investors, and shall not exceed six.

The DC, through consensus, would 1) elect a Chair for a calendar year of service; 2) review Member and Observer feedback on edits to the Principles; 3) provide the EC with recommendations for changes to the Principles to accept and rationale for changes to reject; 4) provide a revised draft for approval by the EC; 5) drafts guidance documents for approval by the EC; and, 6) performs other functions in support of the governance of the Principles.

3.5 SECRETARIAT

An outside Secretariat shall be appointed by the EC. Secretariat functions are determined and carried out in accordance with a scope of work prepared by the Secretariat and approved by the EC and includes 1) host the Principles; 2) receive and approves Member and Observer applications; 3) maintain a web-page with the list of Members, Observers, the EC, the DC, and key communication elements regarding the Principles; 4) organize and run general meetings of the Members and Observers; 5) manage other meetings and calls, including maintaining minutes; 6) advise on governance issues; and, 7) handle other administrative matters. The Secretariat shall not be a regulatory body for the Principles.

4 RECURRING ISSUES

4.1 PRINCIPLES UPDATES

The Principles shall be updated at most annually through Secretariat-led solicitation of Member and Observer input, and drafting by the EC. Each enacted version of the Principles shall be identified by the year promulgated, and remain in effect until replaced by a subsequent version is approved by the EC. Supplementary Guidance Documents can be issued by the EC.

4.2 PRINCIPLES APPENDIX

The Principles Appendix includes guidance on investment criteria, is managed by the EC, and cannot be amended until a process for amending is determined by the EC.

5 MEETINGS

5.1 GENERAL MEETINGS

The Members and Observers shall have an ordinary General Meeting during the first six months of every calendar year on a date and at a time to be determined and announced by the EC. This meeting serves as an informational update, provides an opportunity to have a report on activities by the EC and conducts any necessary business in the running of the Principles, in particular the election of the EC.

In addition, the EC may call such extraordinary General Meetings of the Members and Observers as it deems necessary. The EC shall also call extraordinary General Meetings of the Members and Observers on the receipt of a request of at least one-third of the Members.

All General Meetings of the Members and Observers shall be chaired by the Chair of the EC or in the case of the Chair’s inability, by one of the Deputy Chairs, if any, or by an EC member appointed ad-hoc by the EC for the particular meeting.

The notice of a General Meeting containing the full agenda and all relevant material shall be made available to all Members and Observers (by publication on the relevant section on the Secretariat’s website or) in such manner as the EC thinks appropriate, not later than 21 days before the date of any such General Meeting.

The quorum necessary for the transaction of business at a General Meeting of the Members and Observers shall be the presence of not less than one half of the Members from time to time. Unless otherwise stated in this Governance, decisions by the Members shall require the concurrence of a simple majority of the votes present (i.e. the Members present and the Members represented by proxy).

If at the scheduled date and time for a General Meeting of the Members and Observers a quorum is not present, notice may be given to all Members that a further General Meeting of the Members and Observers will be held within 30 days of the first General Meeting and that such later General Meeting may then transact business irrespective of the number of Members present.

In any vote each Member shall have one vote, but no Member shall have more than one vote.

Members may be represented at General Meetings of the Members (i) by one person from within their organization (a “Voting Delegate”), (ii) by a person not from within their organization provided that such person is a Voting Delegate of a Member which is a duly authorised proxy of the Member in question, or (iii) by the Secretariat provided the Secretariat is a duly authorised proxy of the Member in question. A Member may give a proxy in writing (by email, fax or letter) to another Member or the Secretariat to represent it at a General Meeting. A Member may not be appointed as the proxy for more than two Members.

5.2 EXECUTIVE COMMITTEE MEETINGS

The EC will regularly schedule meetings with the support of the Secretariat. Meetings of the EC shall be called by the Chair of the EC or by at least one-third of its members. At the first meeting of the EC 2015 and subsequently at the EC following each ordinary General Meeting, the EC shall elect from amongst its members a Chair and, if it so decides, two Deputy Chairs, who shall serve until the end of the next ordinary General Meeting.

The quorum necessary for the transaction of business at meetings of the EC shall be the presence of at least half of its members. Unless otherwise stated in the Governance, resolutions by the EC shall require the concurrence of a simple majority of the votes present (i.e. the EC members present and the EC members represented by proxy). In no event shall the Chair of the EC or the Deputy Chair of the EC chairing, or any other EC member appointed ad-hoc by the EC to chair, an EC meeting in the Chair’s inability, have a casting vote.

An EC member shall be deemed to be present at a meeting if its representative (permanent or alternate) is able (directly or by telecommunication) to speak to and be heard by all those present or deemed to be present simultaneously. An EC member so deemed to be present shall be entitled to vote and be counted in the quorum accordingly. Such a meeting is deemed to take place where it is convened to be held or (if no EC member is present in that place) where the largest group of those participating is assembled, or, if there is no such group, where the EC member chairing the meeting is.

Any EC member may give a proxy in writing (by email, fax or letter) to another EC member to represent it at a specified EC meeting. An EC member may not be appointed as the proxy for more than one other EC member.

In addition to passing resolutions or making decisions at EC meetings, the EC may pass resolutions or make decisions in writing (which may be by mail, telefax or e-mail) provided that no EC member requests oral discussion. Such a resolution or decision in writing shall require the concurrence of a simple majority of the number of members of the EC in writing (which may be by mail, telefax or e-mail).

6. AMENDING THE GOVERNANCE

The Governance may be amended upon recommendation by the EC by a qualified majority of 60% of the number of Members (and if 60% results in a fraction, the next whole number exceeding 60%) present at a General Meeting where not less than one half of the number of Members are present and represented by their own delegate or by proxy given to another Member (whereby a Member may not be appointed as proxy for more than two Members) or to the Secretariat.


APPENDIX 1


The Interim Executive Committee:
  • BofA Merrill Lynch
  • Citi
  • Credit Agricole CIB
  • JPMorgan Chase & Co

The Initial Executive Committee:

Investors:
  • Blackrock, Inc.
  • California State Teacher’s Retirement System (CalSTRS)
  • Natixis Asset Management / Mirova
  • Standish Mellon Asset Management Company LLC
  • TIAA-CREF
  • Zurich Insurance Group
Issuers:
  • EDF S.A.
  • European Investment Bank (EIB)
  • GDF SUEZ
  • International Finance Corporation (IFC)
  • Unilever
  • World Bank
Underwriters:
  • BofA Merrill Lynch
  • Citi
  • Credit Agricole CIB
  • HSBC
  • JPMorgan Chase & Co.
  • Skandinaviska Enskilda Banken AB (SEB)


The Green Bond Principles