noor solar plant

Noor solar plant, Morocco

The Moroccan Securities Commission (AMMC), in partnership with the World Bank, published in June 2018 a guide on green, social and sustainable bonds. The guide, which seeks to encourage sustainability financing, is divided into the following parts:

  • General presentation of green, social and sustainable bonds mostly based on international standards such as the Social and Green Bonds Principles of the International Capital Markets Association (ICMA) and the Climate Bonds Standard of the Climate Bonds Initiative (CBI)
  • The issuance process of such bonds in Morocco : Before the issuance and throughout the bond life
  • Frequently asked questions on green, social and sustainable bonds

Personally, I think that publishing the current guide is a good and timely initiative as it provides clarity on financing sustainability in Morocco. It is worth mentioning that the Moroccan Securities Commission has already published a first guide on green bonds in 2016. Using ICMA approach, the current guide covers now a broader scope by addressing Green, Social and Sustainable projects. Sustainable projects are defined as the ones with both green and social impact.

However, I believe that the guide should mention sukuk as alternative instruments to finance sustainability for three reasons. First, sukuk are mentioned along with bonds in the Climate Bonds Initiative, upon which the current guide is based. Second, the Moroccan government is currently finalizing the issuance the first Moroccan sovereign Sukuk. Third, the requirement to classify a bond as green, social or sustainable are the same for Sukuk.

On another note, the document states that there are four levels of external revues: 1) Second party opinion, 2) Verification, 3) Certification and 4) Rating/Scoring. Presented that way, it may create confusion as it supposes that there is a kind of hierarchy between those levels. Which is obviously not the case. For instance, Rating/scoring can focus on the use of proceeds whereas certification can cover the entire framework.

Overall, the guide is a milestone that should be applauded. The Moroccan Securities Commission and Government should, however, find ways to channel more funds to financing sustainability. So far, only four Green bonds have been issued totaling around 230 M USD. This figure is ridiculously low for a country that seeks to source 42% of its energy from sustainable sources by 2020 and 52% by 2030. The opportunities are important and Sukuk can definitely help.

NB1: This article was originally published at IFN Volume 15 Issue 33 dated the10th August 2018

NB2: The published version of the guide is not the final one; the author sent an official note to the Moroccan Securities Commission with suggestions of amendments.

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