Over the past few years, we have seen growing interest in Commercial Paper (CP) programmes with a sustainable focus.
Traditionally used by corporations, financial institutions, sovereigns, and other issuers for short-term liquidity needs, CP is now being adapted to align with environmental, social, and governance (ESG) objectives.
The International Capital Market Association (ICMA) has recognised this shift in its October 2024 paper, The Role of Commercial Paper in the Sustainable Finance Market, underscoring the growing investor demand for sustainable short-term instruments.
As sustainable CP gains traction, several key questions have arisen when structuring these programmes, including:
- How are the sustainability objectives of the Issuer best integrated into a CP programme?
- What should Issuers disclose in the offering documentation for sustainable CP?
- Should sustainable CP be issued under a separate programme, distinct from conventional CP?
- What else should be considered, taking into account the recommendations of the ICMA paper and the short-term nature of CP?
This piece explores these issues in the context of broader market trends and regulatory developments. Read more here.