Sustainable finance
Use-of-Proceeds Bond
Definition
A use-of-proceeds bond is a labelled bond whose proceeds are exclusively allocated to defined eligible project categories, governed by framework principles: the Green Bond Principles (environmental projects), Social Bond Principles (social projects) and Sustainability Bond Guidelines (a combination). The four core components — use of proceeds, project evaluation and selection, management of proceeds, and reporting — with external review recommended, distinguish these instruments from sustainability-linked bonds, where proceeds are general-purpose but pricing ties to KPIs.
References
Source imported for editorial provenance.
This reference provides supporting context for how “Use-of-Proceeds Bond” is defined and used.
Overview
How it is used
The structure structures green and social bond issuance, second-party opinion practice, allocation and impact reporting, and regulatory green bond standards.
Why it matters
Use-of-proceeds bonds are the workhorse of labelled finance — the instrument that put "where does my money go?" into the bond market.