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DUBAI — Saudi Arabia’s sovereign wealth fund (PIF) laid out plans on Monday for raising green debt as the world’s top oil exporter strives to reach net zero carbon emissions by 2060.
The PIF is at the center of Saudi Arabia’s ambitious plans to create new sectors and diversify revenues away from hydrocarbons.
PIF published its green finance framework that will allow it tap world markets to issue debt linked to environmentally friendly goals, including through the sale of green bonds.
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PIF Governor Yasir al-Rumayyan said in September the fund would issue green debt “soon,” becoming the first sovereign wealth fund in the world to do so.
Net proceeds from such debt sales will go towards eligible projects, which include renewable energy, energy efficiency sustainable water management, clean transport, green buildings and pollution prevention.
PIF will publish allocation and impact reports annually when such debt is outstanding.
Fitch Ratings assigned PIF an ‘A’ credit rating earlier this month, in line with Saudi Arabi’s sovereign rating given its strong support for the fund and PIF’s central role in driving the kingdom’s diversification agenda.
The framework is in compliance with the International Capital Market Association’s Green Bond Principles 2021 and Loan Market Association’s Green Loan Principles 2021.
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PIF said it may also choose to seek certification for its green bond issuance from CBI, a London-based non-profit which promotes investment in the low-carbon economy, and the Climate Bonds Standard.
“In such event, and before any bond issuance, PIF will engage a CBI-approved verifier to…report on the conformance of Green Financing Instruments with pre and post-issuance requirements of the Climate Bond Standard,” PIF said.
The Saudi government is also preparing its own green debt sales. Finance Minister Mohammed al-Jadaan said in October that advisers had been appointed but the format had not yet been decided.
(Reporting by Yousef Saba; editing by John Stonestreet, Kirsten Donovan)
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