Sustainability and Climate Risk (SCR) — Question 11

A telecommunications corporation issues a green bond to finance energy efficiency improvements for the company’s office space worldwide. The company’s risk management department commissions an independent advisory assessment of the bond to check bond alignment with components of the Green Bond Principles.
What action does the corporation take to align the bond with the “process for project evaluation and selection” component of the Green Bond Principles?

Answer options

• A. Submit legal documentation providing clear quantifiable environmental benefits of the project.
• B. Establish an internal process for tracking and allocating funds from the proceeds of the bond.
• C. Create an identification process for environmental and social risks related to energy efficiency improvements.
• D. Make available an annual summary on the use of proceeds, stating the project’s progress.

Correct answer: C

Explanation

The correct answer is C because creating an identification process for environmental and social risks ensures that the projects funded align with sustainability goals and are properly vetted. Options A and B focus on documentation and fund tracking rather than risk assessment, while D concerns reporting after the fact rather than the evaluation and selection process.