On March 30, Moody's Investors Service published its Green Bonds Assessment (GBA) methodology. The document explains the five key factors Moody’s uses to evaluate an issuer’s green bond offering. These factors are: organization, use of proceeds, disclosure on the use of proceeds, management of proceeds, and ongoing reporting and disclosure on environmental projects financed or refinanced with such securities. Moody's defines green bonds as fixed-income securities -- both taxable and tax-exempt -- that raise capital for use in projects or activities with environmental benefits. Moody’s acknowledges in the methodology that green bond criteria will continue to evolve over time and therefore additional classifications of green bond types and refinements to those classifications are expected.
Moody’s indicated that the final methodology was improved based on comments from AMWA and other stakeholders. Specifically, the document better explains the assumptions and limitations of the methodology. It also provides a more complete description of several subfactors outlined in the GBA methodology, including the use of proceeds and disclosure on that use. In addition, the methodology includes an assessment scale for green bond grades from 1 (excellent) to 5 (poor) and definitions of what the grade means.