## Sustainable finance in the 2025 SNA and BPM7 — Issues Note (final version incorporating AEG-BOPCOM outcomes)

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### Introduction, objectives and context
- The 2025 System of National Accounts (SNA) and Balance of Payments Manual 7 (BPM7) aim to expand information on the interplay between the economy and the environment, including statistics that quantify funding activities which actively contribute to green and climate outcomes (for example the transition to low-carbon economies).
- The 2015 Paris Agreement led to rapid growth in demand for sustainable finance statistics, especially green bonds, equities and investment funds.
- Including sustainable finance measures in the financial accounts and balance sheets of the national accounts is important for tracking investment in the green and climate/transition economy and informing monetary and fiscal incentives (OECD, 2020).

### Rationale, endorsement process and timeline
- SNA update Guidance Note WS.12 recommends reporting stocks and flows (issuances and holdings) of ESG and Green financial instruments as ‘of which’ categories in the financial accounts and balance sheets of the 2025 SNA when material (WS.12 paragraph 14).
- Advisory Expert Group on National Accounts (AEG) agreed at its 22nd meeting in March 2023 to include ‘of which’ categories for ESG Bonds, Loans and Equity and Investment Fund Shares and for Green Bonds, Loans and Equity and Investment Fund Shares in the SNA Financial Asset classification (AEG, 2023).
- IMF Committee on Balance of Payments Statistics (BOPCOM) supported the work during its 42nd meeting in October 2023.
- An Issues Note on sustainable finance (Barahona, Girón and Tebrake, 2023) was prepared in late 2023 and discussed at the Joint 43rd meeting of BOPCOM and 25th meeting of the AEG on 20 February 2024.
- AEG and BOPCOM members endorsed the proposed sustainable finance changes and provided views on remaining questions at the 20 February 2024 meeting; the document summarized here is the final version incorporating that outcome.

### Scope and structure of the Issues Note
- Original aim: review WS.12 working definitions of ESG and green financial instruments (WS.12 paragraph 19; Annex 1).
- The Note also addresses classification principles, labelling and certification, and metadata.
- Content organization signposted: background (Section 2); general principles (Section 3); instrument-specific breakdowns and definitions (Section 4); metadata (Section 5); summary of endorsed changes (Section 6).

### Relation to complementary initiatives (DGI-3 Rec 4)
- DGI-3 Rec 4 Task Team (coordinated by BIS, ECB and IMF, established 2023) collects data on green debt securities and green listed shares and agreed that data on debt securities should include sustainability and sustainability-linked debt securities as well as green debt securities.
- The Task Team agreed reporting templates in October 2023 for issuances, holdings and from-whom-to-whom statistics on green debt securities, sustainability debt securities, sustainability-linked debt securities and green listed shares.
- Reporting targets: basic intermediate target for core data on green debt securities by end-2025 and a final target for other data by end-2027, subject to member country self-commitments.
- DGI-3 Rec 4 securities data are important inputs into institutional sector financial accounts and balance sheets and would be primary sources for many producers to populate the proposed ‘of which’ categories.

### General principles for recording sustainable finance
- Adopted principle: provide ESG and green ‘of which’ breakdowns in financial assets and liabilities (stocks in financial balance sheets) in the 2025 SNA, with flows (transactions in financial accounts) as second priority.
- Differentiated approaches by instrument:
  - Proceeds approach for most debt securities.
  - Revenue approach for equity.
  - Achieves objectives/performance approach for sustainability-linked debt securities, investment fund shares and loans where appropriate.
- Restrict ESG/green assessment criteria to the instrument or issuer under examination; do not extend to third-party supply-chain or ‘enabling’ activities for now.
- Establish greenness on basis of positive contribution to the environment (rather than a ‘do no harm’ test).

### Classification, reclassification and stability
- Reclassification:
  - If revenues or uses no longer align with the ESG objective, instruments should be (re)classified outside the ESG perimeter.
  - Recommendation supports a stable framework to avoid frequent reclassifications, but recommends reclassification when information (for example revoked certification or business model change) is available.
  - Reclassification recommendation also applies to objectives/performance and proceeds approaches when formal post-issuance monitoring exists (example: EU European Green Bond Standard post-issuance SPOs and supervision).
- Transition bonds:
  - G20 DGI-3 Rec 4 Task Team excludes ‘transition bonds’ from its scope; AEG-BOPCOM advised generally excluding transition bonds from ESG debt securities.
  - Countries may record transition bonds as part of ‘other ESG debt securities’ if they wish or cannot exclude them; such inclusion must be made clear in metadata.
  - Note: no international definition of ‘transition’ agreed; EU is considering an amber taxonomy category.

### Thresholds and the revenues approach
- Applying the revenues approach often requires a numerical threshold because revenues typically derive from multiple sources.
- A 50% threshold principle is recommended for AF.4 loans and AF.51 equity (see Table 6, Section 4), though the threshold is considered less than ideal for equity.
- The AEG-BOPCOM meeting in February 2024 recommended including wording that if the DGI-3 Rec 4 Task Team develops a better approach than the 50% threshold for equity, that approach should be adopted by the SNA and BOP/IIP.
- Authors do not recommend using a threshold for AF.52 Investment fund shares.
- Established standards for investment funds often use a similar >50% revenue criterion (example: London Stock Exchange’s Green Economy Mark); some standards (example: French government’s ISR label) use ‘best in class’ approaches.

### Taxonomies, labelling and certification
- No single international taxonomy recommended for the 2025 SNA and BPM7; flexibility is advised to enable initial compilation amid varying national/regional taxonomies and private standards.
- Development of official taxonomies is encouraged; private and regional taxonomies may be used where applicable.
- Three assurance tiers for determining ESG/green status:
  - Self-labelling (issuer decides; low tier of assurance).
  - SPO (second party opinion; intermediate assurance).
  - Certification (specialised entity; highest assurance).
- Reporting recommendation: indicate how determination was made by breaking down issuances and holdings by assurance tier (for example, self-labelled, SPO, certified) to inform users on data quality and comparability.
- AEG and BOPCOM endorsed aligning SNA/BPM with DGI-3 Rec 4 approach to labelling and certification, allowing flexibility (including private standards) and strongly encouraging metadata provision.

### Instrument-specific breakdowns and exact definitions (selected AF labels)
- Proposed AF label structure:
  - AF.3 Debt securities
    - Of which: ESG debt securities
    - Of which: Social debt securities
    - Of which: Green debt securities
    - Of which: Sustainability debt securities
    - Of which: Sustainability-linked debt securities
    - Of which: Other ESG debt securities
  - AF.4 Loans
    - Of which: ESG loans
    - Of which: Green loans
  - AF.51 Equity
    - Of which: ESG equity
    - Of which: Green equity
  - AF.52 Investment fund shares
    - Of which: ESG investment fund shares
    - Of which: Green investment fund shares
- Exact formulations (selected definitions preserved verbatim):
  - AF.3 Debt securities — Of which: ESG debt securities are debt securities where the use of proceeds is restricted to financing or refinancing activities or projects or where the issuer agrees to achieve performance objectives that improve the condition of the environment or society or governance practices. These include green debt securities, social debt securities, sustainability debt securities, sustainability-linked debt securities, and other ESG debt securities.
  - AF.3 Debt securities — Of which: Social debt securities are debt securities where the use of proceeds is restricted to financing or refinancing activities or projects that improve the condition of society.
  - AF.3 Debt securities — Of which: Green debt securities are debt securities where the use of proceeds is restricted to financing or refinancing activities or projects that improve the condition of the environment.
  - AF.3 Debt securities — Of which: Sustainability debt securities are debt securities where the use of proceeds is restricted to financing or refinancing activities or projects that improve the condition of the environment and society.
  - AF.3 Debt securities — Of which: Sustainability-linked debt securities are debt securities in which certain characteristics, such as the associated cash payments, are linked to achieving performance objectives that improve the condition of the environment or society.
  - AF.3 Debt securities — Of which: Other ESG debt securities are any ESG debt securities other than those identified as social debt securities, green debt securities, sustainability debt securities or sustainability-linked debt securities.
  - AF.4 Loans — Of which: ESG loans are funds lent by creditors to debtors in which 50% or more of the debtor’s activities improve the condition of the environment or society or governance practices.
  - AF.4 Loans — Of which: Green loans are funds lent by creditors to debtors in which 50% or more of the debtor’s activities improve the condition of the environment.
  - AF.51 Equity — Of which: ESG equity are equity investments by investors to institutional units in which 50% or more of the institutional unit’s revenue comes from activities improve the condition of the environment or society or governance practices.
  - AF.51 Equity — Of which: Green equity are equity investments by investors to institutional units in which 50% or more of the institutional unit’s revenue comes from activities improve the condition of the environment.
  - AF.52 Investment fund shares — Of which: ESG investment funds are funds investing in financial instruments, companies, projects or other funds that intend to achieve performance objectives that improve the condition of the environment or society or governance practices.
  - AF.52 Investment fund shares — Of which: Green investment funds are funds investing in financial instruments, companies, projects or other funds that intend to achieve performance objectives that improve the condition of the environment.

### Proposed label and disaggregation changes for debt securities
- Change label from “Of which: ESG bonds” to “Of which: ESG debt securities” to cover all ESG debt securities (not just bonds) and align labelling across instruments.
- Introduce optional disaggregation of ESG debt securities into:
  - green debt securities,
  - sustainability debt securities,
  - sustainability-linked debt securities,
  - social debt securities,
  - ‘Other ESG debt securities’ (which can capture transition bonds if advised by AEG).
- The detailed ‘of which: ESG’ breakdowns for debt securities (other than green debt securities) are optional because some countries may lack source data or consider some breakdowns less relevant.

### Integration with BPM/IIP reporting
- Proposed updates to ESG/green classification definitions can be included in IIP (stocks) and BOP (flows) consistent with BPM6 update Guidance Note B.6.
- Suggested reporting structure: introduce a separate table in Annex 14 of BPM7 rather than adding ESG breakdowns to main BOP/IIP tables to simplify compilers’ tasks and avoid introducing maturity breakdowns into standard tables.
- Integrated IIP already includes exchange rate changes, other price changes, and other changes in volume as standard components; a separate Annex 14 table simplifies presentation.

### Metadata, assurance tiers and stylized presentation examples
- Metadata requirement: include only the specified definitions in SNA and BPM at this time and require macroeconomic accountants to provide sufficient metadata indicating how and who determined that the instrument was ESG or green (para 49).
- Three determination approaches to be reported:
  - Self-declaration by issuer (self-labelled) — low assurance.
  - Assessment by another party (SPO) — intermediate assurance.
  - Certification by a specialised entity — highest assurance.
- Reporting recommendation: indicate breakdown by assurance tiers when reporting issuances and holdings (para 53).
- Stylized presentation examples for new issuances, AF.3 Debt securities:
  - Option 1 — Of which: Green debt securities: 100
    - Self-labelled: 25
    - Second Party Opinion: 50
    - Certified: 25
  - Option 2 — Of which: Green debt securities 1 — 100
    - Note: 1. Includes self-labelled, SPO and certified new issuances.

### Practical coverage notes
- ‘Of which: green equity’ category is likely to comprise mainly or exclusively green listed shares in the near term because the DGI-Rec 4 Task Team collects data for green listed shares but not other green equity types (para 47).
- ESG and green investment funds are likely to be exclusively Non-Money Market Funds (non-MMFs) because MMFs are short-term financing mechanisms unlikely to finance ESG or green activities (para 48).

### AEG and BOPCOM endorsed changes (decisions endorsed 20 February 2024)
- a) Provide ESG and green ‘of which’ breakdowns in the 2025 SNA for financial assets and liabilities (stocks, in the financial balance sheets), with flows (transactions, in the financial accounts) as second order of priority — paragraphs 19 and 21.
- b) Introduce supplementary ‘of which’ categories, consistent with the ESG and green breakdowns proposed for the 2025 SNA, for the BOP (flows) and IIP (stocks) as a separate table in Annex 14 of BPM7.
- c) If possible, provide ESG and green breakdowns in the 2025 SNA for all main sectors and sub-sectors of the accounts as well as for the main aggregates — paragraphs 20 and 21. In BPM7 all available sector breakdowns are to be provided for the BOP and the IIP.
- d) Adopt the proceeds approach for (most) debt securities and the revenue approach for equity; for sustainability-linked debt securities, investment fund shares and loans, follow the achieves objectives/performance approach — paragraphs 22 to 28, and Table 5.
- e) Produce the ESG and green breakdowns of financial instruments in the 2025 SNA and BPM7 using the structure, principles and definitions in Tables 3, 4, 5 and 6. The ‘Of which: ESG’ and ‘Of which: green’ breakdowns are required; further breakdowns of ESG debt securities are optional.
- f) Use a 50% threshold approach for loans and – for the time being – equity (see paragraph 55(i)), but do not include a threshold for debt securities and investment fund shares — paragraphs 30-31 and Table 5.
- g) Exclude financing of ‘enabling’ activities from ESG/green financial instrument estimates — paragraph 32.
- h) In general, do not include transition bonds in ESG debt securities; if a country wishes to include them or cannot exclude them, record them as part of ‘other ESG debt securities’ and make this clear in the metadata — paragraph 33.
- i) Establish greenness on the basis of positive contribution to the environment (rather than ‘do no harm’) — paragraph 33.
- j) Do not adopt a single taxonomy for sustainable finance activities in the 2025 SNA and BPM7; development of official taxonomies is encouraged and may be used in some regions (such as Europe) — paragraphs 34-37.
- k) Align the 2025 SNA and BPM7 with the DGI-3 Rec 4 approach to labelling and certification, allowing flexibility (including the use of private standards) while strongly encouraging the provision of metadata — paragraphs 38-40 and Section 5.

*Source: Issues Note: Sustainable finance definitions in the 2025 SNA and Balance of Payments Manual 7 (Barahona, S.; Girón, C.; Tebrake, J., December 21, 2023) and decisions endorsed by AEG and BOPCOM members at their meeting on 20 February 2024.*

### Section 1: Introduction

### Section 1: Introduction

### Objectives and context
- The 2025 System of National Accounts (SNA) and Balance of Payments Manual 7 (BPM7) aim to provide expanded information on the interplay between the economy and the environment, including statistics related to sustainable finance that quantify funding activities which actively contribute to green and climate outcomes (for example the transition to low-carbon economies).
- The 2015 Paris Agreement led to rapid growth in demand for related sustainable finance statistics, especially green bonds, equities and investment funds.
- From a user/policy perspective, including such measures in the financial accounts and balance sheets of the national accounts is important for tracking investment in the green and climate/transition economy and informing decisions on monetary and fiscal incentives relating to it (OECD, 2020).

### Rationale for the Issues Note and endorsement process
- SNA update Guidance Note WS.12: Environmental Classifications recommends that countries report stocks and flows (issuances and holdings) of ESG and Green financial instruments (bonds, loans, equity and investment fund shares) as ‘of which’ categories in the financial accounts and balance sheets of the 2025 SNA, when these are material (WS.12 paragraph 14).
- At its 22nd meeting in March 2023, the Advisory Expert Group on National Accounts (AEG) agreed “to include ‘of which’ categories for ESG Bonds, Loans and Equity and Investment Fund Shares and for Green Bonds, Loans and Equity and Investment Fund Shares in the SNA Financial Asset classification, as proposed in the guidance note” (AEG, 2023).
- The International Monetary Fund (IMF) Committee on Balance of Payments Statistics (BOPCOM) supported the work during its 42nd meeting in October 2023.
- An Issues Note on sustainable finance (Barahona, Girón and Tebrake, 2023) was prepared in the second half of 2023 and discussed at the Joint 43rd meeting of the BOPCOM and 25th meeting of the AEG on 20 February 2024.
- AEG and BOPCOM members endorsed the changes proposed in the sustainable finance Issues Note and gave their views on remaining questions at the February 2024 meeting. The document provided is the final version of the note, incorporating the outcome of the AEG-BOPCOM meeting.

### Purpose and scope of the Issues Note
- Original aim: review the WS.12 working definitions of ESG and green financial instruments in light of ongoing definitional discussions in related areas of work (WS.12 paragraph 19 provides working definitions; Annex 1).
- As work progressed, the Issues Note also addressed classification principles, labelling and certification for recording sustainable finance in the accounts.
- The Issues Note:
  - Provides background on sustainable finance work for the BPM and SNA update processes and parallel work under DGI-3 Recommendation 4 (Section 2).
  - Presents final proposals for sustainable finance changes in the 2025 SNA and BPM7 (Sections 3–6).
  - Proposes general principles for recording sustainable finance in the national accounts, balance of payments, and international investment position (Section 3).
  - Elaborates revised breakdowns and associated definitions for each financial instrument to be included in the 2025 SNA and BPM7 sustainable finance breakdowns (Section 4).
  - Emphasizes the importance of metadata for clear communication with users (Section 5).
  - Summarizes the sustainable finance changes to the SNA and BPM endorsed by the AEG and BOPCOM on 20 February 2024 (Section 6).

### Relation to existing guidance and complementary initiatives
- WS.12 paragraph 19 supplies working definitions for ESG and green financial instruments (Annex 1) and AEG requested periodic review and consultation with economic-environmental accounting community and the DGI-3 Recommendation 4 task team (WS.12 paragraph 20).
- BPM6 update Guidance Note B.6 acknowledged ongoing international work and the need to adapt to new developments (BOPCOM, 2023).
- Guidance from DGI-3 Rec 4 (Climate Finance) Task Team:
  - The DGI-3 Rec 4 Task Team, coordinated by BIS, ECB and IMF, was established in 2023 to collect data from G20 and other countries on green debt securities and green listed shares.
  - At its first workshop, the Task Team agreed that data on debt securities should include sustainability and sustainability-linked debt securities as well as green debt securities.
  - In October 2023, the Task Team agreed reporting templates for issuances, holdings and from-whom-to-whom statistics on green debt securities, sustainability debt securities, sustainability-linked debt securities and green listed shares.
  - Reporting targets include a basic intermediate target for core data on green debt securities by end-2025 and a final target for other data by end-2027, subject to member country self-commitments.
- Complementarity between SNA/BPM proposals and DGI-3 Rec 4:
  - DGI-3 Rec 4 data on securities are an important input into institutional sector financial accounts and balance sheets; data compiled for DGI-3 Rec 4 would be a primary source for many producers to populate the proposed ‘of which’ categories.

### Structure and next steps signposted in the Introduction
- The Issues Note outlines background material (Section 2), general principles (Section 3), instrument-specific breakdowns and definitions (Section 4), the role of metadata (Section 5), and a summary of endorsed changes (Section 6).
- The AEG’s March 2023 agreement to include green and ESG breakdowns for specified financial instrument classes (debt securities AF.3, loans AF.4, equity AF.51, investment fund shares AF.52) frames the proposed additions to the 2025 SNA financial accounts and balance sheets.

*International Monetary Fund (IMF) Issues Note on sustainable finance — final version incorporating the outcome of the AEG-BOPCOM meeting of 20 February 2024.*

### 29. For some financial instruments following the revenues approach it might be argued that

### 7-issues-note-sustainable-finance-in-the-2025-sna-and-bpm7 - 29. For some financial instruments following the revenues approach it might be argued that

### Revenues approach and reclassification
- If revenues end up not coming from the ESG objective, instruments should be (re)classified outside the ESG perimeter.
- The authors support a stable framework to avoid many reclassifications, but recommend reclassification where information is available about changes (for instance certification is revoked, or a company changes its business model and the company and its shares are then certified as green).
- This reclassification recommendation applies also to the objectives/performance approach and the proceeds approach if formal post-issuance monitoring exists (example referenced: EU European Green Bond Standard introduces post-issuance second party opinions (SPOs) and supervision of external reviewers).

### Thresholds for classification (applying the revenues approach)
- Applying the revenues approach often requires establishing a numerical threshold for classification because revenues typically do not come from a single source.
- Thresholds could be set to 50%, in line with practice in similar cases.
- A 50% threshold principle is recommended for AF.4 loans and AF.51 equity (see Table 6, Section 4), although the threshold approach is considered to be less than ideal for equity.
- The AEG-BOPCOM meeting in February 2024 recommended that the 2025 SNA and BPM7 include wording that if the DGI-3 Rec 4 task team develops a better approach than the 50% threshold principle for equity, this should be adopted by the SNA and BOP/IIP.
- Established standards for investment funds often use a similar >50% revenue criterion (e.g., London Stock Exchange’s Green Economy Mark), but some standards (e.g., French government’s ISR label) follow a ‘best in class’ approach rather than a threshold.
- Consequence: Authors do not recommend using a threshold for AF.52 Investment fund shares.

### Scope: supply-chain and enabling activities
- Recommendation to restrict ESG and green assessment criteria to the instrument or issuer under examination, not extending to third-party activities linked via the supply chain (including so-called ‘enabling’ activities).
- Rationale: conceptual extension makes sense but implementation would be difficult before market standards adopt it.

### Green debt securities: harm vs positive contribution; transition bonds
- Debate exists whether greenness criteria should require ‘causing no harm’ or making a ‘positive contribution’. WS.12 recommends the latter; the Issues Note reaffirms this in line with G20 DGI-3 Rec 4 Task Team and ICMA principles.
- G20 DGI-3 Rec 4 explicitly excludes ‘transition bonds’ from its scope of work, but exclusion does not imply transition bonds are conceptually outside the green ecosystem.
- AEG-BOPCOM (February 2024) advised to exclude transition bonds generally, but allowed countries to include them in ‘other ESG debt securities’ if they wish or cannot exclude them; such inclusion should be made clear in metadata.
- Note: no international definition of ‘transition’ agreed; EU considering an amber taxonomy category; exclusion from DGI-3 Rec 4 may limit source data availability; practical difficulties may arise excluding them from some financial data sources.

### Taxonomies, labelling, and certification
- Common ESG/green taxonomies would improve comparability, serviceability, and compilation consistency; inclusion/exclusion lists are typically developed when making taxonomies.
- ESG/green taxonomies are under development across jurisdictions; definitions differ (example: EU definition given for environmental sustainability).
- No international consensus exists on definitions or metrics for sustainable finance; Issues Note recommends not adopting a single taxonomy—flexibility is acceptable to enable initial compilation despite varying quality and comparability.
- Development of official taxonomies is encouraged; some countries (e.g., Japan) have official standards; private sources and regional taxonomies (e.g., ESA) may be used.
- Three labelling/certification modalities:
  - Self-labelling (issuer decides; no SPO or certification).
  - SPO (second party opinion by a trusted entity; no certification).
  - Certification (specialised entity grants ESG/green status in presence of standards).
- Two decisions for SNA reporting:
  - Whether all three assessment levels should be allowed: DGI-3 Rec 4 initially argued for SPO/certification to address greenwashing, but flexibility was allowed due to availability/cost issues and potential bias against small entities. DGI-3 Rec 4 decided to allow flexible approach with metadata; Issues Note aligns with and AEG-BOPCOM endorsed this (February 2024).
  - Whether private or public certifying entities should be allowed: private standards (e.g., Climate Bonds Initiative, ICMA principles, Green Economy Mark) may be only feasible option in some jurisdictions; WS.12 and DGI-3 Rec 4 Task Team advocate use of both private and official standards; AEG and BOPCOM supported this in February 2024.

### Integration with BPM/IIP and reporting structure
- Proposed updates to ESG/green classification definitions could be included in IIP (stocks) and BOP (flows) to align with BPM6 update Guidance Note B.6.
- Suggestion: introduce a separate table in Annex 14 of BPM7 rather than adding ESG breakdowns to main BOP/IIP tables (see Table 4, Section 4).
- Rationale: integrated IIP will include exchange rate changes, other price changes, and other changes in volume as standard components; separate table simplifies compilers’ task and avoids introducing maturity breakdowns.

### Proposed breakdowns and labels for the 2025 SNA and BPM7
- Amendments to WS.12 approach for ‘of which’ breakdowns of debt securities:
  - Change label ‘Of which: ESG bonds’ to ‘Of which: ESG debt securities’ to cover all ESG debt securities (not just bonds) and align labelling across instruments.
  - Introduce disaggregation of ESG debt securities to show separately: green debt securities, sustainability debt securities, sustainability-linked debt securities, social debt securities, and ‘Other ESG debt securities’ (which can capture transition bonds if advised by AEG).
- AEG and BOPCOM endorsed these proposals in February 2024.
- Decision: detailed ‘of which: ESG’ breakdowns for debt securities (other than green debt securities) should be optional because some countries may lack source data or consider some breakdowns less relevant.

### Proposed structure for ESG and green financial instruments (selected AF labels)
- AF.3 Debt securities
  - Of which: ESG debt securities
  - Of which: Social debt securities
  - Of which: Green debt securities
  - Of which: Sustainability debt securities
  - Of which: Sustainability-linked debt securities
  - Of which: Other ESG debt securities
- AF.4 Loans
  - Of which: ESG loans
  - Of which: Green loans
- AF.51 Equity
  - Of which: ESG equity
  - Of which: Green equity
- AF.52 Investment fund shares
  - Of which: ESG investment fund shares
  - Of which: Green investment fund shares

### Proposed principles (Table 5) summarized by instrument class
- AF.3 Debt securities
  - ESG debt securities: Improves the condition of the environment, social conditions, or governance practices; Use of Proceeds; Achieves Objectives/Performance.
  - Social debt securities: Sustains or improves social conditions; Use of Proceeds.
  - Green debt securities: Improves the condition of the environment; Use of Proceeds.
  - Sustainability debt securities: Improves the condition of environment and/or social conditions; Use of Proceeds.
  - Sustainability-linked debt securities: Improves the condition of the environment and/or social conditions; Achieves Objectives/Performance.
  - Other ESG debt securities: Improves conditions other than environmental and social conditions; Use of Proceeds; Achieves Objectives/Performance.
- AF.4 Loans
  - ESG loans: Improves the condition of the environment, social conditions, or governance practices; Revenue approach (business loans)/Proceeds approach (household loans).
  - Green loans: Improves the condition of the environment; Revenue approach (business loans)/Proceeds approach (household loans).
- AF.51 Equity
  - ESG equity: Improves the condition of the environment, social conditions, or governance; Revenue approach.
  - Green equity: Improves the condition of the environment; Revenue approach.
- AF.52 Investment fund shares
  - ESG investment funds: Funds investing in financial instruments, companies, projects or other funds that intend to achieve performance objectives that improve the condition of the environment or society or governance practices.
  - Green investment funds: Funds investing in financial instruments, companies, projects or other funds that intend to achieve performance objectives that improve the condition of the environment.

### Proposed definitions (Table 6) — exact formulations
- AF.3 Debt securities
  - Of which: ESG debt securities are debt securities where the use of proceeds is restricted to financing or refinancing activities or projects or where the issuer agrees to achieve performance objectives that improve the condition of the environment or society or governance practices. These include green debt securities, social debt securities, sustainability debt securities, sustainability-linked debt securities, and other ESG debt securities.
  - Of which: Social debt securities are debt securities where the use of proceeds is restricted to financing or refinancing activities or projects that improve the condition of society.
  - Of which: Green debt securities are debt securities where the use of proceeds is restricted to financing or refinancing activities or projects that improve the condition of the environment.
  - Of which: Sustainability debt securities are debt securities where the use of proceeds is restricted to financing or refinancing activities or projects that improve the condition of the environment and society.
  - Of which: Sustainability-linked debt securities are debt securities in which certain characteristics, such as the associated cash payments, are linked to achieving performance objectives that improve the condition of the environment or society.
  - Of which: Other ESG debt securities are any ESG debt securities other than those identified as social debt securities, green debt securities, sustainability debt securities or sustainability-linked debt securities.
- AF.4 Loans
  - Of which: ESG loans are funds lent by creditors to debtors in which 50% or more of the debtor’s activities improve the condition of the environment or society or governance practices.
  - Of which: Green loans are funds lent by creditors to debtors in which 50% or more of the debtor’s activities improve the condition of the environment.
- AF.51 Equity
  - Of which: ESG equity are equity investments by investors to institutional units in which 50% or more of the institutional unit’s revenue comes from activities improve the condition of the environment or society or governance practices.
  - Of which: Green equity are equity investments by investors to institutional units in which 50% or more of the institutional unit’s revenue comes from activities improve the condition of the environment.
- AF.52 Investment fund shares
  - Of which: ESG investment funds are funds investing in financial instruments, companies, projects or other funds that intend to achieve performance objectives that improve the condition of the environment or society or governance practices.
  - Of which: Green investment funds are funds investing in financial instruments, companies, projects or other funds that intend to achieve performance objectives that improve the condition of the environment.

*Source: IMF Issues Note "Sustainable finance in the 2025 SNA and BPM7".*

### 1. This definition of sustainability-linked debt securities essentially the same as that used by the DGI-3 Rec 4

### 7-issues-note-sustainable-finance-in-the-2025-sna-and-bpm7 - 1. This definition of sustainability-linked debt securities essentially the same as that used by the DGI-3 Rec 4

### Definition: sustainability-linked debt securities
- Task Team definition: “sustainability-linked debt securities: debt securities whose characteristics (e.g. coupon payments) can vary depending on whether the issuer achieves predefined environmental or other sustainability objectives”.
- For business loans: the debtor’s activities would be reflected in the business’s revenue.
- For loans to households: the sustainability character would depend on the use of the loan proceeds.

### Metadata requirements and assurance tiers for ESG and green financial instruments (Section 5, paras 49–53)
- Recommendation: include only the specified definitions in the updated SNA and BPM at this time and require macroeconomic accountants to provide sufficient metadata indicating how and who determined that the financial instrument was an ESG instrument or green instrument (para 49).
- Three approaches to determination:
  - Self-declaration by issuer (self-labelled). Characterised as a low tier of assurance; may give rise to allegations of “greenwashing”; reputational risk acts as some deterrent (para 50).
  - Assessment by another party (SPO). Uses bespoke assessment frameworks; provides additional assurance but not necessarily rigorous certification (para 51).
  - Certification by a specialised entity. Provides the highest level of assurance that funds are directed to ESG or green activities (para 52).
- Reporting recommendation: when reporting issuances and holdings of ESG or green instruments, indicate how the determination was made by showing a breakdown (e.g., self-labelled, SPO, certified) to inform users of data quality and comparability (para 53).

### Stylized presentation examples for green debt securities (Tables 7 and 8)
- Table 7 – Stylized presentation green debt securities (option 1) — New Issuances, AF.3 Debt securities:
  - Of which: Green debt securities: 100
  - Self-labelled: 25
  - Second Party Opinion: 50
  - Certified: 25
- Table 8 – Stylized presentation green debt securities (option 2) — New Issuances, AF.3 Debt securities:
  - Of which: Green debt securities 1 — 100
  - Note: 1. Includes self-labelled, SPO and certified new issuances.

### Practical notes on likely instrument coverage (paras 47–48)
- The ‘Of which: green equity’ category is likely to comprise mainly or exclusively green listed shares in the next few years, since DGI-Rec 4 Task Team will collect data for green listed shares but not for other types of green equity (para 47).
- ESG and green investment funds are likely to be exclusively Non-Money Market Funds (non-MMFs) because MMFs are short-term financing mechanisms unlikely to be used for financing ESG or green activities (para 48).

### Annex definitions for ESG and green financial instruments (Annex 1)
- Debt Securities:
  - Of which: ESG bonds — negotiable financial instruments serving as evidence of debt in which the use of the bond is restricted to finance or refinance activities or projects that sustain or improve the condition of the environment or society or governance practices. These include green bonds, social bonds, sustainability bonds, sustainability-linked bonds, and governance bonds.
  - Of which: Green bonds — negotiable financial instruments serving as evidence of debt in which the use of the bond is restricted to finance or refinance activities or projects that sustain or improve the condition of the environment.
- Loans:
  - Of which: ESG loans — funds lent by creditors to debtors in which the debtor agrees to restrict the use of the funds (in whole or in part) to finance or refinance activities or projects that sustain or improve the condition of the environment or society or governance practices. These include green loans, social loans, sustainability loans, governance loans.
  - Of which: Green loans — funds lent by creditors to debtors in which the debtor agrees to restrict the use of the funds (in whole or in part) to finance or refinance activities or projects that sustain or improve the condition of the environment.
- Equity:
  - Of which: ESG equity — equity investments by creditors to institutional units who agree to restrict the use of the funds (in whole or in part) to finance or refinance activities or projects that sustain or improve the condition of the environment or society or governance practices. These include green equity and social equity and governance equity.
  - Of which: Green equity — equity investments by creditors to institutional units who agree to restrict the use of the funds (in whole or in part) to finance or refinance activities or projects that sustain or improve the condition of the environment.
- Investment funds:
  - Of which: ESG investment funds — collective investment schemes that raise funds by issuing shares or units to the public. The proceeds are invested predominantly in whole or in part to finance or refinance activities or projects that sustain or improve the condition of the environment or society or governance practices.
  - Of which: Green investment funds — collective investment schemes that raise funds by issuing shares or units to the public. The proceeds are invested predominantly (in whole or in part) to finance or refinance activities or projects that sustain or improve the condition of the environment.

### Endorsed changes for inclusion in the 2025 SNA and BPM7 (Section 6, para 54 — endorsed by AEG and BOPCOM members at meeting on 20 February 2024)
- a) Provide ESG and green ‘of which’ breakdowns in the 2025 SNA for financial assets and liabilities (stocks, in the financial balance sheets), with flows (transactions, in the financial accounts) estimates as second order of priority — paragraphs 19 and 21.
- b) Introduce supplementary ‘of which’ categories, consistent with the ESG and green breakdowns proposed for the 2025 SNA, for the BOP (flows) and IIP (stocks) as a separate table in Annex 14 of the BPM7.
- c) If possible, provide ESG and green breakdowns in the 2025 SNA for all main sectors and sub-sectors of the accounts as well as for the main aggregates — paragraphs 20 and 21. In BPM7 all available sector breakdowns are to be provided for the BOP and the IIP.
- d) Adopt the proceeds approach for (most) debt securities and the revenue approach for equity; for sustainability-linked debt securities, investment fund shares and loans, follow the achieves objectives/performance approach — paragraphs 22 to 28, and Table 5.
- e) Produce the ESG and green breakdowns of financial instruments in the 2025 SNA and BPM7 using the structure, principles and definitions in Tables 3, 4, 5 and 6. The ‘Of which: ESG’ and ‘Of which: green’ breakdowns are required; further breakdowns of ESG debt securities are optional.
- f) Use a 50% threshold approach for loans and – for the time being – equity (see paragraph 55(i)), but do not include a threshold for debt securities and investment fund shares — paragraphs 30-31 and Table 5.
- g) Exclude financing of ‘enabling’ activities from ESG/green financial instrument estimates — paragraph 32.
- h) In general, do not include transition bonds in ESG debt securities; if a country wishes to include them or cannot exclude them, record them as part of ‘other ESG debt securities’ and make this clear in the metadata — paragraph 33.
- i) Establish greenness on the basis of positive contribution to the environment (rather than ‘do no harm’) — paragraph 33.
- j) Do not adopt a single taxonomy for sustainable finance activities in the 2025 SNA and BPM7; development of official taxonomies is encouraged and may be used in some regions (such as Europe) — paragraphs 34-37.
- k) Align the 2025 SNA and BPM7 with the DGI-3 Rec 4 approach to labelling and certification, allowing flexibility (including the use of private standards) while strongly encouraging the provision of metadata — paragraphs 38-40 and Section 5.

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_Source: https://www.imf.org/-/media/files/data/statistics/bpm6/approved-guidance-notes/7-issues-note-sustainable-finance-in-the-2025-sna-and-bpm7.pdf_