water criteria of the climate bonds standard … letter_sfpuc_wsip.pdf · water criteria of the...
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WATERCRITERIAOFTHECLIMATEBONDSSTANDARDVERIFICATIONLETTERIssuingEntity:TheSanFranciscoPublicUtilitiesCommissionKindofengagement:AssuranceEngagementPeriodengagementwascarriedout:September1st2016toSeptember29th2016Approvedverifier:SustainalyticsUSInc.,Contactforengagement:24SchoolStreet,Suite803,Boston,MA,02108,U.S.A.Engagementteamleader:VikramPuppala,[email protected]+16473173694Professionalteammember:AnkitaShukla,[email protected]+14168610403Scope:TheSanFranciscoPublicUtilitiesCommission(“SFPUC”),hasengagedSustainalyticstoreviewandverifythatSFPUC’sgreenbondmeetstherequirementsfortheWaterCriteriaoftheClimateBondsStandard.The proceeds of the bond will finance the projects under theWater System Improvement Program(“WSIP”).TheWSIPprogramincludesatotalof87projectsofwhichthefollowing largeprojectswereprioritizedforassessmentastheycompriseasignificantportionoftheWSIPprogrambudget.
• 35201:AlamedaCreekRecaptureProject• 37401:CalaverasDamReplacement• 37402:CalaverasReservoirUpgrades• 35401:LowerCrystalSpringsDamImprovement• PWI-WSIPCloseout–PeninsulaRegion(newproject2016)• 38801:ProgrammaticEnvironmentalImpactReport(EIR)
Therestoftheprojectswereconcludedtohaveinsignificantsensitivitytocurrentandfutureclimateimpactsovertheiroperationallifetimes.CriteriaA.WaterCriteriaoftheClimateBondStandardB.AdaptationTheme
1. Allocation-allcriteria2. Governance-allcriteria3. DiagnosticAssessment-allcriteria4. AdaptationPlan-allcriteria
PleasefinddetailsofAllianceforGlobalWaterAdaptation’s(AGWA)AssessmentinSchedule2.
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IssuingEntity’sResponsibilitySFPUCisresponsibletoprovideinformationanddocumentsrelatingto:
• Thedetailsconcerningwaterallocationandavailability• Thegovernanceprocessforwaterentitlementsandallocation,managementsystems,andconflict
resolutionmechanisms• Thedetailsconcerningthediagnosticassessmentconducted• Thedetailsconcerningtheadaptationplanproduced
IndependenceandQualityControlSustainalytics,aleadingproviderofESGandcorporategovernanceresearchandratingstoinvestors,conductedtheverificationofSFPUC’sgreenbond,issuedtofinanceeligibleprojectsincludedinitsWaterSystemImprovementProgram(“WSIP”),andprovidedanindependentopinioninformingtheconformanceofthegreenbondwiththeWaterCriteriaoftheClimateBondsStandard.SustainalyticsreliedontheassessmentconductedbyAllianceforGlobalWaterAdaptationtoprovidethisopinion.SustainalyticsmakesalleffortstoensurethehighestqualityandrigorduringitsassessmentprocessandenlisteditsSustainabilityBondsReviewCommitteetoprovideoversightovertheassessmentofthebond.Verifier’sResponsibilityTheworkundertakenaspartofthisengagementincludedconversationswithrelevantSFPUCmanagementandstaffandthereviewofrelevantpublicandinternaldocumentstoassessthefollowing:
• ConformanceofSFPUC’sgreenbondwiththeWaterCriteriaoftheClimateBondsStandard;• ConformancewiththecriteriaundertheAdaptationTheme:Allocation,Governance,Diagnostic
Assessment,andAdaptationPlan;• ConformancewiththeInternalProcesses&Controlsrequirements;• ConformancewithReportingPriortoIssuancerequirements.
BasisoftheOpinionSustainalyticsconductedtheverificationinaccordancewiththeClimateBondStandardVersion2.0andwithInternationalStandardonAssuranceEngagements3000–AssuranceEngagementsotherthanAuditsorReviewsofHistoricalInformation.Sustainalyticshasreliedontheassessment,informationandthefactspresentedbyAllianceforGlobalWaterAdaptationwithregardstothebond’scompliancewithClimateBondStandards.PleasefinddetailsofAllianceforGlobalWaterAdaptation’s(AGWA)AssessmentinSchedule2.Sustainalyticsisnotresponsibleforanyaspectoftheprojectsreferredtointhisopinionandcannotbeheldliableifestimates,findings,opinions,orconclusionsareincorrect.Thus,SustainalyticsshallnotbeheldliableifanyoftheinformationordataprovidedbySFPUCand/orAGWAthatisnotcorrectorcomplete.
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RestrictiononDistributionandUseofReportThisreportalongwiththeinformationprovidedisfortheuseandpublicationofSFPUCandClimateBondStandardBoardonlyandnotfortheuseofanyotherexternalparties.OpinionBasedontheassessmentofSFPUC’sgreenbondundertheWaterCriteriaoftheClimateBondsStandard,nothinghascometoSustainalytics’attentionthatcausesustobelievethat,inallmaterialrespects,SFPUC’sgreenbond,issuedtofinanceeligibleprojectsincludedintheWaterSystemImprovementProgram,isnotinconformancewiththeWaterCriteriaoftheClimateBondsStandardPre-IssuanceRequirements.SustainalyticsbelievesthattheNominatedProjectsandAssetswilladdressvulnerabilitiesoftheSFPUC’swatersupplytoclimatechangeandotherfactorsandwillcontributetoensurethelong-termreliabilityoftheregionalwatersystem.
VikramPuppalaSeptember29th,2016215SpadinaAve,Suite300,TorontoONM5T2C7,Canada
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Schedule1A:WaterCriteriaoftheClimateBondsStandardSelectionofNominatedProjects:
1.1 Statementontheenvironmentalobjectivesofthebond
1.2 NominatedProjectsmeettheClimateBondscriteria
1.3 DocumentalistofNominatedProjectsandAssets
1.4 ConfirmationthatNominatedProjectsandAssetswillnotbenominatedtootherClimateBonds
1.5 ConfirmationthatNetProceedsoftheGreenPrivatePlacementshallnotbegreaterthanthevalueoftheNominatedProjectsandAssets
InternalProcessesandControls
2.1.1Trackingofproceeds
2.1.2Managingofunallocatedproceeds
2.1.3EarmarkingfundstoNominatedProjectsandAssets
ReportingPriortoIssuance 3.1.1InvestmentareaofNominatedProjectsandAssets
3.1.2Intendedtypesoftemporaryinvestmentsofunallocatedproceeds
3.1.3ApproachofVerifier
3.1.4Whetherperiodicassuranceengagementwillbeundertaken
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Schedule1B:ConformancetotheWaterCriteriaoftheClimateBondsStandardProcedurePerformed FactualFindings Erroror
ExceptionsIdentified
VerificationofrequirementsspecifiedunderSelectionofNominatedProjects
1.1 TheobjectiveofthebondistoprimarilyuseproceedstofinancetheprojectsundertheWaterSystemImprovementProgram(“WSIP”)
1.2 TheprojectsmeettheminimumscoringrequirementsoutlinedinthePhase1:EngineeredWaterInfrastructureundertheWaterCriteriaoftheClimateBondsStandard(Schedule2).• Allocation:17of17(100percent)• Governance:12of15(80percent)• Diagnosticassessment:23of24(96percent)• Adaptationplan:Highpass
1.3 TheNominatedProjectsincludeallprojects(87)undertheWSIPprogramfromthefollowingwereprioritizedforassessment.
• 35201:AlamedaCreekRecaptureProject• 37401:CalaverasDamReplacement• 37402:CalaverasReservoirUpgrades• 35401:LowerCrystalSpringsDam
Improvement• PWI-WSIPCloseout–PeninsulaRegion(new
project2016)• 38801:ProgrammaticEnvironmentalImpact
Report(EIR)1.4 SFPUC’smanagementconfirmsthattheprojects
shallnotbenominatedtootherClimateBonds.
1.5 SFPUC’smanagementconfirmsthatthenetproceedsofthebondshallnotbegreaterthanthevalueoftheprojects.
None
VerificationofrequirementsspecifiedunderInternalProcessesandControls
2.1.1SFPUC’smanagementconfirmsthatproceedswillbesegregatedandtrackedinasystematicmannerandwillbeexclusivelyusedtofinanceEligibleProjects.
None
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2.1.2SFPUC’smanagementconfirmsthatallnetproceedswillbeimmediatelyused(i.e.allocatedatissuance)tofinancetheEligibleProjects.TherewillnotbeanyunallocatedNetProceeds.
2.1.3SFPUC’smanagementhasconfirmedthattheproceedsfromthebondwillbeimmediatelyusedfortherepaymentofdebtoriginallyraisedfortheNominatedProjects.
VerificationofrequirementsspecifiedunderReportingPriortoIssuance
3.1.1Thebond’sofferletterconfirmsthattheproceedsofthetransactionwillprimarilybeusedtofinancetheprojectsunderWSIP.ThesefallundertheWaterCriteriaoftheClimateBondsTaxonomy.
3.1.2Thebond’sofferletterconfirmsthatallnetproceedswillbeimmediatelyused(i.e.allocatedatissuance)tofinancetheWSIPprojects.
3.1.3Thebond’sofferletterconfirmsthatanapprovedthirdpartyverifierhasbeenappointedtoconfirmthebond’sconformancewithpre-issuancerequirementsoftheWaterCriteriaoftheClimateBondsStandard.
3.1.4Thebond’sofferletterconfirmsthatanapprovedthirdpartyverifierwillconductpost-issuanceassuranceexercisewithinayear’stimetoreaffirmconformanceofthebondwiththeWaterCriteriaoftheClimateBondsStandard.
None
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Schedule2:AssessmentofSFPUCBondundertheWaterCriteriaoftheClimateBondStandardPleasefinddetailsofAllianceforGlobalWaterAdaptation’s(AGWA)Assessmentinattachedfile.
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DisclaimerAllrightsreserved.Nopartofthisverificationlettermaybereproduced,transmittedorpublishedinanyformorbyanymeanswithoutthepriorwrittenpermissionofSustainalytics.ThisverificationletterisforinformationpurposesonlyandSustainalyticswillnotacceptanyformofliabilityforthesubstanceoftheopinionand/oranyliabilityfordamagearisingfromtheuseofthisverificationletterand/ortheinformationprovidedinit.Astheverificationletterisbasedoninformationmadeavailablebytheclient,Sustainalyticsdoesnotwarrantthattheinformationpresentedinthisverificationletteriscomplete,accurateoruptodate.Nothingcontainedinthisverificationlettershallbeconstruedastomakearepresentationorwarranty,expressorimplied,regardingtheadvisabilitytoinvestinorincludecompaniesininvestableuniversesand/orportfolios.Furthermore,thisverificationlettershallinnoeventbeinterpretedandconstruedasanassessmentoftheeconomicperformanceandcreditworthinessofthebond.Theissuanceandtheoutcomeofthegreenbondisoutsidethescopeofthisengagement.Theclientisfullyresponsibleforensuringitscommitments`compliance,implementationandmonitoring.
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