GB Framework? Issuance of Listed, Rated, Unsecured, Senior, Redeemable Green 4 & 5-year Bonds 2025

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Contents

1. Introduction 2

   1. RESUS Energy PLC 2

   2. Commitment to Sustainability 2

   3. Achieving Positive Environmental Outcomes 3

2. Green Bond Framework 3

   1. Use of Proceeds 4

      1. Project Eligibility 4

      2. Exclusion 5

   2. Evaluation and Selection of Projects and Assets 5

      1. Financing New Projects 6

      2. Refinancing Existing Projects 7

      3. Continuation of Compliance 7

   3. Management of Proceeds 7

   4. Reporting 7

      1. Allocation Reporting 8

      2. Impact Reporting 8

3. External Review 9

   1. Pre-Issuance External Review 9

   2. Post-Issuance External Review 9

Annex: Summary of RESUS Energy PLC's ESG System 10

1. ‌Introduction
   1. ‌RESUS Energy PLC

      Incorporated in 2003, RESUS Energy PLC (RESUS) made its initial foray into the power sector through a joint venture that developed a 100MW thermal power plant. After launching its first renewable energy project in 2007, RESUS became a pureplay renewable energy company in 2015. Currently, RESUS operates eight small hydropower stations and two ground-mounted solar PV stations across five districts in Sri Lanka, dispatching approximately 70GWh to the national grid. Its third solar PV station is currently under construction.

      Most RESUS power stations are located in rural hamlets. Apart from generating clean energy, RESUS plays a pivotal role in protecting the natural environment, uplifting the livelihoods of families, and providing employment to villagers, including women, in the surroundings of its power stations. Our ethos is built around our vision, mission, and core values (Figure 1).

      Figure 1: The Vision, Mission, and Core Values of RESUS Energy PLC

      
      
      

      RESUS has also won multiple awards across numerous spheres for its valuable work and sound governance. It was among the first batch of Colombo Stock Exchange (CSE)-listed companies to adopt the Global Reporting Initiative (GRI), which established guidelines for organizations to understand and report on their impacts on the economy, environment and people in a comparable and credible way, thereby increasing transparency on their contribution to sustainable development.

   2. ‌Commitment to Sustainability

      Electricity generation from burning fossil fuels is a major contributing factor to greenhouse gas emissions and climate change. RESUS promotes renewable energy as a means to reduce carbon emissions. In doing so, it also contributes to achieving several Sustainable Development Goals

      (SDGs) as well as the fulfillment of Sri Lanka's Nationally Determined Contributions. Examples of our dedication to sustainability are featured in the RESUS Energy PLC Annual Report 2023/24.1

   3. ‌Achieving Positive Environmental Outcomes

      RESUS' Environmental, Social, and Governance (ESG) System offers the guidance necessary for sustainable development and the preservation of valuable resources and biodiversity to minimize our environmental footprint and maximize our environmental stewardship. A few such examples are provided in Table 1.

      Table 1: Minimizing RESUS Energy PLC's Environmental Footprint

      Greenhouse Gas (GHG) Emissions Avoidance (2023/24)	GHG emissions avoidance: 43,051 tons of CO₂ GHG emissions: 321 tons of CO₂ Net GHG emissions avoidance: 42,730 tons of CO2
      Preservation of Biodiversity	RESUS has supported 1.5 hectares of forest enrichment programs since 2017 at the Knuckles Nature Reserve, a UNESCO world heritage site.
      Waste Recycling	More than 80% of all kitchen waste at RESUS properties in 2023/24 was recycled for composting and animal feed. 100% of all electronic waste (e.g., computers, mobile phones, printers) in 2023/24 was directed to recycling centers.
      Social Responsibility	Over 70% of RESUS employees come from rural villages.

      RESUS's ESG System, which is described in detail in the Annex, comprises goals and targets that are categorized into prefixed indicators to evaluate their impact on both the natural environment and the goals of surrounding communities, enabling the achievement of desired outcomes.

2. ‌Green Bond Framework

   RESUS' objective in developing its Green Bond Framework (GBF) is to showcase our dedication to raising green finance by issuing Green Bonds that will be listed on the CSE. These bonds will be used to finance and/or refinance a portfolio of renewable energy projects. RESUS' vision and mission align with SDG No. 7 with regard to affordable clean energy. RESUS' GBF key Goal is for the company "to be an affordable and competitive clean energy provider." In addition, RESUS' Green Bonds to be issued under this framework will align with the Green Bond Principles (GBP) 2021 (with June 2022

   ‌1 https://www.resusenergy.lk/pdf/2024.pdf

   Appendix 1) 2 issued by the International Capital Markets Association (ICMA) RESUS' GBF covers the following four core elements:

   1. Use of Proceeds

   2. Evaluation and Selection of Projects and Assets

   3. Management of Proceeds

   4. Reporting

   1. ‌Use of Proceeds
      1. ‌Project Eligibility

         The net proceeds of RESUS' Green Bond issuances will be used exclusively to finance and/or refinance, in whole or in part, expenditures, investments, and existing loans directly related to eligible green projects and subject to eligibility criteria stated in Table 2. The eligibility criteria were established to achieve the GBF's goals and objectives, which are in alignment with SDGs No. 7 and 13, and the ICMA's GBP.

         Table 2: Eligibility Criteria for Use of Proceeds under the Green Bond Framework

         Project Category	Project Type	Environm ental Obj ecti ve	Eligibility Criteria	Alignment with SDGs
         Renewable energy	Small hydropower plants	Climate change mitigation
         	Ground-mounted solar PV power plants	Climate change mitigation
         			hydropower <100gCO2e/kWh with verification by an independent third party.

         • Financing, development, acquisition, expansion, and management of small hydropower and ground- mounted solar PV plants with<10MW capacity.

         • Refinancing the operations of small hydropower and ground-mounted solar PV plants commissioned during the 4 years preceding issuance of the proposed Green Bond, conditional upon financing approval through other financial instruments or institutions

         • For hydropower plants:

           • The hydropower plant is a run-of-river plant and does not have an artificial reservoir; or

           • Power density >5W/m2; or

           • Lifecycle GHG emissions from the generation of electricity from the

         ‌2 https://www.icmagroup.org/assets/documents/Sustainable-finance/2022-updates/Green-Bond-Principles-June-2022-060623.pdf

         ‌RESUS will issue green financing instruments worth LKR 1,000 million, with proceeds allocated over two years to support financing and re-financing for renewable energy projects, specifically small hydropower plants and Ground mounted solar PV plants. The exact allocation of proceeds per project will be determined once project feasibility is accepted. RESUS will provide transparent updates on this as the project progress and market conditions evolve.

      2. Exclusion

         The following activities are excluded from RESUS Green Bond financing:

         • new development projects in highly environmentally sensitive areas such as nature reserves, jungle corridors, and marine reserves;

         • projects that impact three or more sensitive receptors-such as schools, religious places, and hospitals-within 100 meters of the project's boundary;

         • hydropower projects with a capacity exceeding 10 MW; and

         • projects, assets, or expenditures associated with human or labor rights violations or environmental harm.

   2. ‌Evaluation and Selection of Projects and Assets

      The governance of the GBF will be led by the Sustainability Financing Working Group (SFWG), headed by the Managing Director, as shown in Figure 2. The SFWG is responsible for ensuring the GBF is effective in establishing and aligning with investment plans, targets, and impact indicators. The SFWG is also responsible for monitoring the allocation of proceeds, ensuring that eligible projects align with the criteria set forth in the GBF and allowing impacts and metrics to be tracked and measured in a credible manner.

      Figure 2: RESUS Energy PLC's Green Bond Governance Structure

      
      
      
      1. ‌Financing New Projects

         The SFWG evaluates, selects, and approves the financing of new projects. As illustrated in Figure 2, the SFWG consists of senior representatives from the

         • Project Team,

         • Engineering Team,

         • ESG Team,

         • Human Resource Management Team,

         • Finance Team, and

         • Board of Directors.

           The senior members of each -team adhere to the process as depicted in Figure 3 for evaluating, selecting, and approving projects.

           Figure 3: RESUS Energy PLC's Process for Project Selection and Financing

           Step 1: Project Identification

           The Project and Engineering Teams identify a potential project that meets the criteria outlined in section 2.1.1 and recommend the project for further evaluation for financing under the GBF.

           Step 2: ESG Confirmation

           The ESG and Human Resource Management Teams review the proposed project under the exclusion criteria outlined in section 2.1.2 and confirm its ESG sustainability and the contribution to the GBF's Goal.

           Step 3: Final Evaluation and Recommendation

           The Chief Finance Officer conducts a financial evaluation and recommends the allocation of Green Bond proceeds if the project is feasible. The project is then approved by the Managing Director and submitted to the Board of Directors for final approval.

           Step 4: Disbursement

           After the project is approved by the board, the Green Bond proceeds to be allocated for the project will be disbursed.

           Step 5: Review and Reporting

           Each year, an external reviewer will review the allocation and utilization of proceeds, as outlined in section 3. Allocation and impact reporting will be conducted quarterly and annually, following the guidelines outlined in section 2.4. (The impact report will be prepared following the CSE listing rules guidelines given in sections 2, 3, and 7, and relevant subsections.)

      2. ‌Refinancing Existing Projects

         The refinancing of existing projects will require financial justification based on a 4-year (maximum) look-back period prior to the bond's issuance. The Chief Financial Officer will recommend such projects for refinancing. Then, the activities described in Figure 3 (steps 2-5) will follow.

      3. ‌Continuation of Compliance

         The SFWG will ensure that all projects stay compliant with the GBF throughout the duration of the financing facility. Any non-conformities will be escalated during the performance evaluation. The causes for such non-conformities will be identified and corrective actions will be taken as provided in the CSE Listing Rules. Thereafter, the effectiveness of the corrective actions will be reviewed and documentary evidence maintained.

         RESUS performs a comprehensive risk assessment for each project to identify potential ESG impacts that need to be addressed in order to ensure the compliance with RESUS's Green Bond Framework before any investment decisions being made.

   3. ‌Management of Proceeds

      A separate bank account will be used for the management of Green Bond proceeds and the proceeds will be managed on portfolio approach. RESUS's finance division will allocate funds to specific projects based on recommendations from the SFWG. The finance division will keep records of all projects either financed or refinanced with the Green Bond proceeds. Unallocated proceeds will be temporarily invested in cash, cash equivalents, or Sri Lankan government securities, as per RESUS' cash management policies. Unallocated funds will be monitored and tracked in the accounting system. All Green Bond proceeds will be fully allocated within 24 months from the date of bond issuance.

   4. ‌Reporting

      The Finance Team and the SFWG will work together to prepare and submit allocation and impact reports to the Board of Directors on a periodic basis. Information regarding the allocation of proceeds and their corresponding environmental impacts resulting from the Green Bonds will be integrated with the RESUS Energy PLC Annual Report. RESUS will provide and maintain up-to-date information on the use of proceeds, which will be available for review annually. Our annual report will feature a comprehensive set of reporting indicators to illustrate progress toward the achievement of the GBF's goals and objectives. The annual report is accessible online at https://www.cse.lk and https://www.resusenergy.lk/. Printed copies will also be made available on request.

      1. ‌Allocation Reporting

         The Finance Team will submit a funds allocation report to the Board of Directors for review by the SFWG on a quarterly basis until all proceeds have been fully allocated. The quarterly report will offer a breakdown of the funds allocated to each project and include the following details:

         Transactions

         • issuer entity, transaction date, amount of proceeds, settlement date, and maturity date;

           Details of Use of Proceeds

         • details of eligible projects and expenditures in accordance with this GBF,

         • amount of proceeds earmarked for each eligible project,

         • confirmation from the SFWG that the project is eligible as per the GBF, and

         • unallocated proceeds yet to be earmarked for eligible projects.

           In addition, a summarized report containing the following details will be included in the annual reports and the quarterly interim financial reports published on the CSE website:

           • list of projects with funds allocated from Green Bond proceeds, including information about each project and the amount allocated;

           • details of refinanced loans and related projects; and

           • unallocated proceeds as of the publication date.

      2. ‌Impact Reporting

         The RESUS Energy PLC Annual Report will present both qualitative and quantitative information on ESG impacts across a range of identified indicators (Figure 4). These indicators complement the GBF's Goal, which aligns with SDG No. 7 and 13 and provides an overview to assess the ESG impact from this GBF.

         Figure 4: SDGs and Indicators Used to Assess ESG Impacts

         Project Category	Project Type	Impact Indicators	SDGs
         Renewable energy	Small hydropower plants Ground-mounted solar PV power plants

         • Annual renewable energy produced (MWh/year)

         • Capacity (MW) of power plant(s) constructed

         • Annual GHG emissions avoided (tCO2e/year) from renewable energy generation

         • Annual GHG emissions (tCO2e/year) under Scope 1, 2, and 3 emissions3

         ‌3https://ghgprotocol.org/sites/default/files/standards/Corporate-Value-Chain-Accounting-Reporing-Standard_041613_2.pdf

3. ‌External Review
   1. ‌Pre-Issuance External Review - Verification

      RESUS will seek an independent external review of the GBF from a reputable service provider prior to the issuance of Green Bonds. The independent external review will assess the alignment of this framework with the relevant principles, guidelines, and standards of the ICMA.

   2. ‌Post-Issuance External Review

After the bond is issued, RESUS will collaborate with an independent external verifier to provide an annual review and a post-issuance assurance report in compliance with the GBF. This report will encompass an examination of internal processes and controls, allocation reports, and impact reports, and will be published in the RESUS Energy PLC Annual Report.

Annex: Summary of RESUS Energy PLC's ESG System

1. System Objective

   • The objective of the ESGS is to establish and achieve the Environmental Social Governance (ESG) goals, reflective of our Vision, Mission, Values and obligations, enabling the conduct of our business operations in an international best practice environment.

2. Scope

   • Applicable to all subsidiaries, their operations and to all development projects.

3. System Guidelines

   • The management is responsible for defining, documenting, implementing, and maintaining the ESGS for sustainable operations and development. ESGS guides the establishment and evaluation of ESG goals, targets and indicators to ensuring that they:

     1. align with the nature, scale, and environmental impacts of its activities;

     2. include a commitment to continuous improvement and the prevention of pollution;

     3. comply with legal requirements and other standards related to its ESG aspects;

     4. serve as the framework for setting and reviewing ESG goals, targets and indicators;

     5. ESG goals, targets and indicators are documented, implemented, and measured;

     6. are effectively communicated to all individuals working for or on behalf of Resus and made available to the public; and

     7. ensure transparency and accountability in our environmental practices.

4. ESG Goals

   Develop ESG goals for the Organization goals, reflective of our Vision, Mission, Values and obligations. Table illustrates some ESG goals with their alignment with the UNSDG's.

   Table 1:Some of RESUS' SDG Goals

   No	RESUS Goals	Linked SDG	Target
   1	Take initiatives to reduce poverty in rural areas.		power plant workers.
   2	Provide education support for children, undergraduates, and other trainees.
   3	Promote a culture of gender equality within the organization.
   4	Provide affordable clean energy in Sri Lanka.
   5	Provide renewable energy to the rural community via national grid
   6	Enhance the stewardship in biodiversity protection and conservation to safeguard life on Earth.

   • Recruit workers from the surrounding rural areas for power plant operations.

   • Profit sharing with workers, whereby a certain percentage of income over the monthly generation target is paid to the

   • Provide books and stationery to the schoolchildren of the employees free.

   • Provide training for students from technical colleges and universities.

   • Facilitate field tours for school children.

   • Recruitment of females from rural areas to promote diversity and inclusivity in the workforce.

   • Establish as a leading low-cost renewable energy company.

   • Expand the provision of renewable energy to 400,000 households in the country.

   • Enhancing Conservation Efforts for Terrestrial Biodiversity

5. ESG Targets for Development Projects

   • Develop ESG targets for each project based on ESGS to achieve ESG goals considering internal and external issues, stakeholders, ESG aspects, and compliance obligations.

   • Create a List of Risks s Opportunities to address them related to significant ESG aspects, health and safety hazards, compliance obligations, and internal and external issues.

   • Address risks and opportunities through promotional actions to achieve desired outcomes, prevent negative effects on the organization, and drive continual improvement.

   • Prepare Project-Specific ESG Plan outlining the procedures and processes for establishing, implementing, and monitoring the construction phase of a project.

   • Project-Specific ESG Plan encompasses areas to ensure that the necessary ESG actions and internal controls align with the project activities. It requires to:

     1. State the legal framework and the all-legal requirements of the project;

     2. Identify social and environmental sensitive receptors affected by the project;

     3. Do risk analysis including the sensitive receptors with a scoring system;

     4. Plan for the ESG protection measure according to the risk assessment;

     5. Prepare an emergency response plan for the project;

     6. Implement schedule of the site-specific ESG measure;

     7. Prepare grievance redress mechanism for the project;

     8. Monitor and measure the ESG plan for the project; and

     9. Prepare site restoration and rehabilitation plan.

   • Prepare A Monitoring and Measurement Plan (MMP) which includes:

     1. The parameters to be monitored or measured;

     2. Method of monitoring and measuring if applicable;

     3. Frequency of the monitoring and measurement;

     4. Criteria and indicators of the parameter; and

     5. Responsibility for the monitoring and measurement activity.

6. ESG Targets for Operational Plants

   • Develop the Operational Control Procedure (OCP) aligned with RESUS' Internal Controls and implemented to effectively manage and mitigate identified significant risks and

     opportunities in operational plants.

   • Communicate OCPs to employees within the organization.

   • Monitor OCP compliance regularly via operational reports.

7. Support

   • Providing the necessary resources for establishing, implementing, maintaining, and continually improving the ESGS.

8. Monitoring

   • The management to monitor ESGS effectiveness and performance of ESG goals, targets and indicators, based on predefined measurements and review progress on a regular basis to ensure that the ESG goals and met and the ESG obligations are complied with.

     G. Performance Evaluation and Improvement

   • In the event of a non-conformity, the Company will take corrective measures immediately, determine the root causes and strive to continually enhance the effectiveness of the ESGS.