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Second-Party Opinion Download

Project Details

Project

Philips Green and Sustainability Innovation Bond Framework

Client

Koninklijke Philips NV

Project Type

Sustainability Bond/Loan

Industry Group

-

Use of Proceeds

-

Location

Netherlands

Evaluation Date

Apr 2019

Evaluation Summary

Sustainalytics is of the opinion that the Philips Green & Sustainability Innovation Bond Framework is credible and impactful and aligns with the Green Bond Principles 2018, Social Bond Principles 2018 and Sustainability Bond Guidelines 2018. This assessment is based on the following:

USE OF PROCEEDS

The eligible categories for the use of proceeds are aligned with those recognized by both the Green Bond Principles and Social Bond Principles. Sustainalytics considers green and sustainable innovation in R&D, circular products and solutions, operational efficiency and the promotion of access to healthcare to have positive environmental or social impacts and to primarily advance the UN Sustainable Development Goals (3) Good health and well-being; (7) Affordable and clean energy; (9) Industry, Innovation and Infrastructure and (12) Responsible consumption and production. Sustainalytics also notes an indirect contribution to SDG 13, Climate Action, the targets for which are more focused on policy makers.

PROJECT EVALUATION/SELECTION

Philips’ internal process for evaluating and selecting projects is carried out by the sustainability department in collaboration with the innovation sites. Projects that will be funded by Green or Sustainability Bonds are identified for eligibility in line with the criteria outlined in the Framework. The group makes yearly recommendations to the treasury department. Sustainalytics views this approach to be in line with market practice.

MANAGEMENT OF PROCEEDS

Philips’ processes for management of proceeds is carried out by the treasury and sustainability departments and is based on a portfolio approach. Allocation of proceeds will be tracked through Philips’ internal accounting system. Pending full allocation, proceeds may be temporarily held or invested in Philips’ treasury liquidity portfolio. If selected projects become ineligible, proceeds will be re-allocated to new eligible projects. Sustainalytics views this approach as aligned with market practice.

REPORTING

In line with market practice, Philips intends to report on allocation of proceeds and relevant impact metrics in an annual Green and/or Sustainability Innovation Bond report. The report will be made available on the company website. Philips will contract an independent auditor to verify the allocation and reporting. Sustainalytics views Philips’ use of a third-party auditor as best practice.

https://mstar-sustops-cdn-mainwebsite-s3.s3.amazonaws.com/docs/default-source/spos/philips-green-and-sustainability-innovation-bond-frame-second-party-opinion-08052019.pdf?sfvrsn=2adab38d_3