Project Details
Project
Hungary Green Bond Framework Second-Party Opinion (2023)
Client
Hungary Government Debt Management Agency Pte. Ltd. (ÁKK)
Project Type
EU Taxonomy Assessment; Green Bond/Loan;
Industry Group
Sovereign
Use of Proceeds
Water/waste water management; Renewable energy; Pollution prevention and control; Natural resources/land use management; Green buildings; Energy efficiency; Clean transport; Climate change adaptation;
Location
Hungary
Evaluation Date
Jul 2023
Evaluation Summary
Sustainalytics is of the opinion that the Hungary Green Bond Framework is credible and impactful and aligns with the four core components of the Green Bond Principles 2021. This assessment is based on the following:
USE OF PROCEEDS
The eligible categories for the use of proceeds –Clean Transportation; Land Use and Living Natural Resources; Energy Efficiency (incl. Green Buildings); Renewable Energy; Pollution Prevention and Control; Sustainable Water and Wastewater Management; Climate Adaptation; and Research, Innovation and Awareness Raising – are aligned with those recognized by the Green Bond Principles. Sustainalytics considers that the eligible categories will lead to positive environmental impacts and advance the UN Sustainable Development Goals, specifically SDGs 2, 6, 7, 9, 11, 12, 13 and 15.
PROJECT EVALUATION AND SELECTION
The Government Debt Management Agency Private Company Limited by Shares (“ÁKK”), in co-operation with the Ministry of Finance, has established a Steering Committee and an Inter-Governmental Working Group responsible for the project evaluation and selection process. Hungary has comprehensive laws and control procedures in place to mitigate environmental and social risks associated with the eligible green expenditures under the Hungary Green Bond Framework. Sustainalytics considers the project evaluation and selection process to be in line with market practice.
MANAGEMENT OF PROCEEDS
Hungary’s Ministry of Finance, supported by the Steering Committee and the Inter-Governmental Working Group, will be responsible for the management of proceeds. Hungary aims to fully allocate net proceeds to the expenditures i) made within the two budget years preceding the year of issuance; ii) made in the same year as the issuance; and iii) future budget expenditures up to two years after issuance. Pending full allocation, unallocated proceeds will be managed according to the Treasury Department’s general liquidity management policy. This is in line with market practice.
REPORTING
Hungary commits to publicly report on the allocation of proceeds and corresponding impact through an Integrated Green Bond Report on ÁKK website on an annual basis until full allocation. The allocation report will include information on the total amount of proceeds allocated to eligible projects, the balance of unallocated proceeds and information on any updates to the eligibility criteria of the green expenditures. In addition, Hungary intends to report on relevant impact metrics. This is in line with market practice.