CMA approves guidelines for GSS bonds

The Capital Market Authority (CMA) approved a regulatory guide for issuing green, social, sustainability, and sustainability-linked (GSS) debt instruments, with the framework taking effect today, May 27.

The decision supports the CMA’s role in implementing the national corporate sustainability strategy, launched by the Ministerial Committee in collaboration with public and private sector stakeholders. It also aligns with the CMA’s 2024–2026 strategic objectives to enhance the sukuk and debt capital market.

According to the CMA, the guide is a key outcome of the initiative to establish a regulatory framework for sustainable debt. It aims to promote local issuances and deepen the domestic fixed-income market, contributing to economic financing and supporting Vision 2030’s Financial Sector Development Program.

The CMA clarified that while the guide is advisory in nature, issuers of SAR-denominated green, social, sustainable, or sustainability-linked debt instruments, whether public or private, must disclose any non-compliance with the guide in their bond framework or offering document. The framework does not alter existing market laws or offering procedures.

The guide covers instruments whose proceeds fund or refinance projects with environmental or social benefits. It defines four categories: green bonds, social bonds, sustainable bonds, and sustainability-linked bonds.

GSS bonds must allocate proceeds exclusively to projects with positive environmental or social outcomes. By contrast, sustainability-linked bonds can be used for general corporate purposes, with classification tied to performance targets rather than use of proceeds.

CMA noted that global sustainability-linked assets grew to $3.52 trillion by end-2023, marking a 92.7% increase from 2020. Green bond issuance alone surpassed $580 billion in 2023, reflecting rising global demand for sustainable investment vehicles.

In the Saudi market, the number of listed firms disclosing sustainability practices rose to 94 in 2024, up from 81 in 2023. Among the top 100 listed companies, sustainability disclosure climbed to 65% in 2024, from 58% the year prior, indicating stronger commitment to transparency and ESG principles.

The CMA said the framework allows investors to back sustainable development while earning returns. It aims to encourage diverse issuances, expand funding channels, enhance transparency, and bring the Saudi market in line with global ESG standards.

To view Guidelines for Issuing Green, Social, Sustainability, and Sustainability-Linked Debt Instruments