Société Générale SFH is set to sell the first green French covered bond, having announced plans for a “positive impact” issue today (Monday), with proceeds earmarked for financing residential lending against low carbon homes in alignment with energy efficiency and climate SDGs.

SG SFH is starting a roadshow this Wednesday and, subject to market conditions, plans to launch a euro-denominated benchmark after a series of investor meetings in Europe. ABN Amro, Commerzbank, Danske, ING and UniCredit are mandated alongside sole structuring advisor and global coordinator SG.

The proceeds of the proposed bond will refinance projects falling into one eligible category, namely new residential buildings belonging to the “top 15% low carbon buildings in their region”. To define the eligibility criteria, SG consulted external green real estate agent Wild Trees. Buildings will further be required to align with the Climate Bond Initiative’s existing standards for low carbon residential properties to be eligible.

The issue is set to be a French first, despite the market having seen a variety of novel sustainable covered bonds and with France having been at the forefront of green finance initiatives.

In February, Caffil sold the first French covered bond in either green or social format, a EUR1bn deal with proceeds earmarked for refinancing public sector assets in the healthcare sector. In April, La Banque Postale inaugurated a green, social and sustainability bond framework; however, it is yet to issue a covered bond under the framework.

SG has previously issued four times under its “positive impact” framework: two unsecured bonds of EUR500m in 2015 and 2016, a Taiwanese issue in 2018, and a EUR500m deal in 2018 from ALD, a SG car leasing subsidiary.

In its framework documentation, SG notes that it was a founding member of the UN Environment Programme Finance Initiative (UNEP FI) “Positive Impact Finance Initiative” and how its programme is aligned with the UNEP FI’s Principles for Positive Impact Finance, which are defined thus:

“It is that which serves to deliver a positive contribution to one or more of the three pillars of sustainable development (economic, environmental and social), once any potential negative impacts to any of the pillars have been duly identified and mitigated. By virtue of this holistic appraisal of sustainability issues, Positive Impact Finance constitutes a direct response to the challenge of financing the Sustainable Development Goals (SDGs).”

Many investors have called for issuers to report on how their programmes relate to the SDGs, and SG cites SDGs 7 and 13 – Affordable & Clean Energy and Climate Action – as those its issuance will contribute towards.

SG’s framework received a second party opinion from Vigeo-Eiris, which confirmed its environmental credentials and alignment with the Green Bond Principles and the Principles for Positive Impact Finance.

“We express a reasonable assurance (our highest level of assurance) on the issuer’s commitments and the bond’s contribution to sustainable development,” it said.