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  • Writer's pictureMatthew Wright

Revolutionising Sustainable Finance: A New Approach for Transparency in Second Party Opinions

In a recent update, S&P Global Ratings has revamped its analytical approach for Second Party Opinions (SPOs) on the use of proceeds, aimed at enhancing transparency for investors in the sustainable bond market. This strategic update follows S&P Global Ratings' acquisition of Shades of Green from the CICERO climate research foundation in December 2022. The revised approach integrates key features from both S&P Global Ratings and Shades of Green methodologies, providing investors with heightened transparency regarding potential contributions to a sustainable future.


Lynn Maxwell, Chief Commercial Officer at S&P Global Ratings, emphasised the significance of this update in catering to the expanding sustainable bond market, projected to reach $900 billion-$1 trillion this year. The revised SPOs aim to deliver the benefits of a robust, transparent, science-based approach by incorporating an instantly comprehensible Shades of Green assessment into S&P Global Ratings' existing methodologies.


The updated analytical approach outlines the process for providing SPOs, introduces the concept of an S&P Global Ratings Shade of Green, and elucidates its assignment to environmental projects. This approach contextualises how a sustainable finance project addresses the issuer's most material sustainability factors and manages other pertinent considerations in the realm of sustainable financing. The comprehensive analysis yields four key outputs:

  • Alignment assessment: Evaluates the alignment of financing documentation with specific third-party sustainable finance principles and guidelines.

  • Shade of green: Provides an opinion on the consistency of a green project with a low-carbon, climate-resilient future.

  • Issuer sustainability context: Offers insights into how the financing contributes to addressing the issuer's most material sustainability factors.

  • EU Taxonomy assessment: Provides an assessment of a financing's alignment with the EU taxonomy upon request.


These SPOs serve as independent evaluations of a company's financing alignment with market standards, typically offered before any borrowing takes place. It is essential to note that SPOs are distinct from credit ratings, as they do not consider credit quality and do not influence S&P Global Ratings' credit ratings. This strategic move aligns with S&P Global Ratings' commitment to enhancing transparency and sustainability in the financial market.


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