Second-Party Opinion Download

Sustainalytics is of the opinion that Chile’s Sustainability-Linked Bond Framework aligns with the Sustainability-Linked Bond Principles 2020. This assessment is based on the following:

Selection of Key Performance Indicators

Chile’s Sustainability-Linked Bond Framework includes three KPIs: i) Absolute GHG emissions, ii) Share of non-conventional renewable energy in the National Electric System, and iii) Percentage of women in board member positions at companies that report to the Financial Market Commission (CMF) (see Table 1). Sustainalytics considers KPI 1 and KPI 3 to be very strong, and KPI 2 to be strong, based on their materiality, relevance, scope of applicability and comparability to external benchmarking.

Calibration of Sustainability Performance Targets

Sustainalytics considers the SPTs to be aligned with Chile’s sustainability strategy. Sustainalytics considers SPT 1 to be ambitious based on its improvement over past performance and its alignment with a slightly below 2°C scenario; SPT 2 to be highly ambitious based on it being consistent with efforts to limit global temperature increases to below 1.5°C; and SPT 3 to be highly ambitious based on past performance and its performance against countries in the same region.

Bond Characteristics

Chile will link the bond’s financial characteristics to the achievement of the SPTs, such as a coupon step-up or a premium payment in case an SPT, including an intermediate SPT, is not met at the target observation date. In the event that more than one SPT is not met, the premium paid will be cumulative. 

Reporting

Chile commits to report on its progress on the KPIs on an annual basis via an SLB report. Information regarding KPI 1 will be produced biennially,  consistent with the UNFCCC’s requirements. While the SLBP state that up-to-date information on KPI progress should be reported on an annual basis, Sustainalytics recognizes that Chile follows the guidance set by the UNFCCC for developing economies, and therefore finds it to be in alignment with the Sustainability-Linked Bond Principles 2020.

Verification

Chile commits to have external verification conducted on its progress towards each SPT for each KPI at least once a year, which is aligned with the Sustainability-Linked Bond Principles 2020.