Circular 03-26 — Guidelines for the Issuance of Sustainable, Green, Social and Sustainability-Linked Public Offering Securities in the Dominican Republic Securities Market

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CIRCULAR
No. 03/26
To: Participants in the Securities Market and the general public.
Subject: Guidelines for the issuance of sustainable, green, social and sustainability-linked public offering securities in the Securities Market of the Dominican Republic.

Seen:
a. The Constitution of the Dominican Republic, proclaimed by the National Assembly on October twenty-seven (27), two thousand twenty-four (2024). b. Law No. 167-21, on Regulatory Improvement and Simplification of Procedures, dated August twelve (12), two thousand twenty-one (2021) and its modification in Law 14-25 dated January sixteen (16), two thousand twenty-five (2025).
c. Law No. 249-17, of the Securities Market of the Dominican Republic, which repeals and replaces Law No. 19-00 of May eight (8), two thousand (2000), promulgated on December nineteen (19), two thousand seventeen (2017) (hereinafter, "Law No. 249-17").
d. Law No. 107-13, on the Rights of Persons in their Relations with Administration and Administrative Procedure, dated August six (6), two thousand thirteen (2013). e. Law No. 1-12, National Development Strategy 2030, dated January twenty-five (25), two thousand twelve (2012). f. Law No. 200-04, General Law on Free Access to Public Information, dated July twenty-eight (28), two thousand four (2004). g. Decree No. 486-22, dated August twenty-four (24), two thousand twenty-two (2022), which approves the Implementation Regulation of Law No. 167-21 on Regulatory Improvement and Simplification of Procedures. h. Resolution No. 0017/2024 of the Ministry of Environment and Natural Resources (MINARN), and Sole Resolution of the Superintendent of the Securities Market, R-NE-SIMV-2024-04-MV, dated June four (4), two thousand twenty-four (2024), which approves the Green Taxonomy of the Dominican Republic.
i. Circular C-SIMV-2020-02-MV, dated February twenty-six (26), two thousand twenty (2020), which approves the Guidelines for the issuance of sustainable, green and social public offering securities in the Securities Market of the Dominican Republic (hereinafter, the "Guidelines").
j. First Resolution, R-CNMV-2025-19-SIMV, of the National Securities Council, dated October twenty-one (21), two thousand twenty-five (2025), which approves the Agenda or Regulatory Planning of the Superintendent of the Securities Market for the period from September one (1st), two thousand twenty-five (2025) to March thirty-one (31), two thousand twenty-six (2026). k. The practical guide for the issuance of thematic securities, prepared on May fifteen (15), two thousand twenty-five (2025), prepared by the Ministry of Environment and Natural Resources (MINARN), Superintendent of the Securities Market (SIMV), Association of Multiple Banks (ABA) and Stock and Securities Market of the Dominican Republic (BVRD), with the technical support of the Global Green Growth Institute (GGGI).

Considering:

1. That the Dominican Constitution, article 138, subjects the action of the Public Administration to “the principles of effectiveness, hierarchy, objectivity, equality, transparency, economy, publicity and coordination, with full submission to the legal order of the State (…)”.
2. That the Superintendent of the Securities Market, in its capacity as regulator of the Securities Market and in accordance with article 7 of Law No. 249-17, shall have as its objective to promote an orderly, efficient and transparent securities market, protect investors, ensure compliance with the law and mitigate systemic risk, through the regulation and supervision of natural and legal persons operating in the securities market.
3. That the Superintendent is the highest executive authority of the Superintendent of the Securities Market, having under his charge the direction, control and representation thereof.
4. That Law No. 249-17, article 17, numerals 1 and 2, empowers the Superintendent of the Securities Market to: “1) Execute the securities market policy in accordance with the guidelines established by the Council, and 2) Comply with and enforce the provisions of this law and its regulations, ensuring the correct application of its principles, policies and objectives.
5. That numeral 14) of said article, empowers the Superintendent of the Securities Market to: “issue the resolutions, circulars and instructions required for the development of this law and its regulations”.
6. That article 25 of Law No. 249-17, establishes that: “(…) It corresponds to the Superintendent of the Securities Market the development of technical or operational norms derived from said law, the applicable regulations and necessary norms, for the exercise of its power of internal self-organization”. That it is the criterion of the Superintendent of the Securities Market the standardization of requirements, criteria or guidelines that allow cataloging these issuances, as appropriate; which has proven to be effective and has contributed enormously to the good performance and good organization of the securities market.
7. That the Guidelines will contain information regarding the regulation and international principles followed by issuers interested in using sustainable, green, social and sustainability-linked securities to finance themselves.
8. That the Guidelines constitute an important input for the boost of the Dominican market of sustainable, green, social and sustainability-linked securities since the Dominican Republic has great potential in projects that could be eligible for the issuance of these securities. Therefore, the country has the potential to play a transcendental role in the financing of solutions to climate change and green bonds will have a central role in this process.
9. That the Guidelines were elaborated in concordance with the Green Taxonomy of the Dominican Republic, internationally recognized standards such as the Green Bond Principles (“Green Bond Principles”), the Social Bond Principles (Social Bond Principles), the Sustainability-Linked Bonds Principles (SLBP) and the Sustainable Bonds Guidelines elaborated by the International Capital Market Association (ICMA) and the International Climate Bonds Standard created by the Climate Bonds Initiative.
10. That the Superintendent of the Securities Market recognizes the importance and legitimacy of the initiative developed by the International Capital Market Association (ICMA) in order to develop, integrate, harmonize and provide transparency to the market of sustainable, green, social and sustainability-linked securities at the international level.
11. That these Guidelines intend to incentivize, with the widest possible scope and within the role corresponding to the Superintendent of the Securities Market, new financial instruments that allow developing the responsible investment industry through projects of an environmental or social nature within the scope of the securities market.
12. That it is necessary for the Securities Market to have an updated regulatory framework adjusted to international guidelines and standards in this matter.
13. That, as a result of the approval and publication of the Green Taxonomy of the Dominican Republic, it becomes necessary to update the guidelines for the issuance of green, social and sustainable bonds, with the purpose of incorporating, referencing and harmonizing said guidelines with this new regulatory instrument, thus strengthening the transparency and credibility of issuances in the local market.
14. That, it is necessary to include specific guidelines for the issuance of sustainability-linked bonds, with the objective of promoting transparency, integrity and credibility of these financial instruments, as well as fostering the development of the sustainable securities market in the Dominican Republic, in coherence with national and international commitments in environmental, social and governance (ESG) matters.
15. That in this sense, the Superintendent of the Securities Market, from the beginning of the process, had the collaboration of the International Finance Corporation (IFC), jointly reviewing the provisions regulating the Guidelines for the issuance of sustainable, green and social public offering securities in the Securities Market of the Dominican Republic.
16. That, in compliance with the legal mandate, through First Resolution R-CNMV-2025-19-SIMV, dated October twenty-one (21), two thousand twenty-five (2025), the National Securities Council approved the agenda or regulatory planning of the Superintendent of the Securities Market, corresponding to the period from September two thousand twenty-five (2025) to March two thousand twenty-six (2026), in which was included, among other projects, the project of Circular that concerns us.
17. That, for its part, Law No. 107-13, on the Rights of Persons in their Relations with Administration and Administrative Procedure, dated August six (6), two thousand thirteen (2013) (hereinafter “Law No. 107-13”), establishes in its article 30 that “[t]he minimum mandatory standards of administrative procedures that seek the adoption of regulations that have a general scope, whose purpose is that the Public Administration obtains the necessary information for its approval, in addition to channeling dialogue with stakeholders and the general public, “promoting the fundamental right to citizen participation as support for good democratic governance”.
18. That, for its part, article 23 of the General Law on Free Access to Public Information, No. 200-04, dated July twenty-eight (28), two thousand four (2004) (hereinafter “Law No. 200-04”), establishes the obligation of entities that perform public functions or administer State resources to “publish through official or private media of wide dissemination, including electronic media or mechanisms and with sufficient advance notice to the date of its issuance, the draft regulations that intend to adopt by regulation or acts of a general nature, related to requirements or formalities that govern relations between individuals and administration or that are demanded of persons for the exercise of their rights and activities”.

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19. That, added to the above, article 24 of said Law No. 200-04, provides that entities that fulfill public functions or that administer State resources must foresee in their respective budgets the necessary sums to publish in mass communication media, with wide national dissemination, the draft regulations and acts of a general nature that are detailed in article 23 of Law No. 200-04.
20. That the paragraph of the aforementioned article 24 expresses that the entity or person that fulfills public functions or that administers State resources, that has an Internet portal or a page on said communication medium, “must foresee the existence of a specific place in that medium so that citizens can obtain information on 1os draft regulations, of service regulation, of acts and communications of general value, that determine in some way the form of protection of services and access of persons of the mentioned entity. This information must be current and explanatory of its content, with language understandable to the common citizen.”
21. That, article 3, numeral 8, of Law No. 167-21, on Regulatory Improvement and Simplification of Procedures of August twelve (12), two thousand twenty-one (2021) (hereinafter “Law No. 167-21”) establishes that public consultation is “a mechanism of citizen participation that is used to transparent the process of production and review of regulations, allowing the reception of comments by different stakeholder groups and the general public.”
22. That the draft modification of Circular, in compliance with the applicable current legal order, was submitted to public consultation from December twenty-six (26), two thousand twenty-five (2025) to March nine (09), two thousand twenty-six (2026), inclusive.
23. That as a product of said consultative process, a comment was received from the Dominican Association of Investment Fund Administrating Societies (ADOSAFI).
24. That, by virtue of the observation received, a virtual working table was held with the interested sector on March twenty (20), two thousand twenty-six (2026).
25. That the draft circular did not contemplate improvements from the public consultation process.

Therefore:
The Superintendent of the Securities Market, in the use of the faculties granted to him by article 17, numeral 14), of Law No. 249-17 of the Securities Market of the Dominican Republic, which repeals and replaces Law 19-00 of May eight (8), two thousand (2000), promulgated on December nineteen (19), two thousand seventeen (2017), resolves:

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I. Authorize the definitive version of the Circular that establishes the provisions on the “Guidelines for the issuance of sustainable, green, social and sustainability-linked public offering securities in the Securities Market of the Dominican Republic”.
II. Inform issuers of securities that the commitment to allocate funds to sustainable, green, social and sustainability-linked projects constitutes a voluntary decision by the issuer. However, once the issuer of securities opts for this type of instrument, the application of this regulation is mandatory in all its parts.
III. Inform that the Annex forms an integral part of this Circular on Guidelines for the issuance of sustainable, green, social and sustainability-linked public offering securities in the Securities Market of the Dominican Republic.
IV. Inform that this Circular renders ineffective C-SIMV-2020-02-MV, dated February twenty-six (26), two thousand twenty (2020), which approves the Guidelines for the issuance of sustainable, green and social public offering securities in the Securities Market of the Dominican Republic.
V. Inform that the provisions of this Circular enter into force from the next business day after its publication.
VI. Instruct the Direction of Regulation and Innovation of the Superintendent of the Securities Market to publish the content of this Circular on the institution's website.
VII. Instruct the Communications Direction to disseminate the content of this Circular on the institution's social networks.

In Santo Domingo, National District, capital of the Dominican Republic, on the thirty (30) days of the month of March of two thousand twenty-six (2026).
Digitally signed by:
Ernesto Bournigal Read
Superintendent
EBR/omna/ch/ru

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I. Preamble
The Superintendent of the Securities Market (hereinafter the “Superintendency” or by its full name), as an autonomous and decentralized organism of the State, in accordance with what is established in article 7 of Law No. 249-17 of the Securities Market, promulgated on December nineteen (19), two thousand seventeen (2017) 1, has as its objective to promote an orderly, efficient and transparent securities market, protect investors, ensure compliance with this law and mitigate systemic risk, through the regulation and supervision of natural and legal persons operating in the securities market. The Superintendency joins the commitments assumed at the country level in Law No. 1-12 National Development Strategy 2030, dated January twenty-five (25), two thousand twelve (2012) 2, by virtue of which public entities are urged to articulate public policies around said law and its four (4) Strategic Axes. For the elaboration of these guidelines, the objectives established in the third and fourth Axis of said Law have been taken especially into account, which seek to promote an articulated, innovative and environmentally sustainable economy 3, as well as a society with a culture of sustainable production and consumption, that manages risks and the protection of the environment and natural resources with equity and efficiency, and that promotes adequate adaptation to climate change. 4 With the desire to contribute to the achievement of such objectives, the Superintendent of the Securities Market intends to promote the issuance of sustainable, green, social and sustainability-linked securities in the Dominican Republic, observing, especially, the principles and standards instituted at the international level and best market practices. With this instrument, it is expected to contribute to the development of the securities market and attract new investors, as well as motivate companies and the State itself, at the national level, to carry out a transition towards a more sustainable economy and promote a greener and more sustainable culture in the country.

1 Law No. 249-17 of the Securities Market, promulgated on December nineteen (19) of the year two thousand seventeen (2017): https://simv.gob.do/leyes/ 2 Law No. 1-12 National Development Strategy 2030, dated January twenty-five (25) of the year two thousand twelve (2012): http://www.siteal.iipe.unesco.org/sites/default/files/sit_accion_files/siteal_republica_dominicana_0341.pdf 3 Law No. 1-12 National Development Strategy 2030, dated January twenty-five (25) of the year two thousand twelve (2012); p. 12. 4 Law No. 1-12 National Development Strategy 2030, dated January twenty-five (25) of the year two thousand twelve (2012); p. 13.

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II. What are sustainable, green, social and sustainability-linked securities?
In this section, the concepts of sustainable, green, social and sustainability-linked securities are developed in accordance with international principles and standards in the matter and best market practices, also taking into consideration the definitions provided in Law No. 249-17 and the applicable regulations.

1. General Information:
   Definition:
   On a generalized basis, the global market denominates “green, social and sustainable bonds” to fixed income public offering securities labeled as green, social and sustainable.
   Attending to the peculiarities of the securities market of the Dominican Republic, for the purposes of these guidelines, we will speak of “securities” instead of “bonds”, in conformity with the definition established in numeral 43) of Article 3 of Law No. 249-17 5 Fixed Income Securities: are debt securities originating from the issuer's liability, whose yield does not depend on their financial results, therefore they represent an obligation to return the invested capital plus a predetermined yield, in the terms and conditions indicated in the respective security. Consequently, the scope of these Guidelines will extend only to those sustainable, green, social or sustainability-linked securities that meet the following characteristics:
2. Green Securities: fixed income securities where the funds are destined, exclusively, to finance, or refinance, either partially or totally, new or existing projects that are eligible as “green projects”6. The funds of the issuance will be destined exclusively to finance activities with environmental benefits, which may include intangible assets. The eligibility of these projects may be determined based on green project classification standards, such as the Green Taxonomy of the Dominican Republic, which establishes assets and activities that, according to technical criteria, generate substantial environmental benefits. Green projects, in turn, can generate social benefits.

5 Law No. 249-17 of the Securities Market, promulgated on December nineteen (19) of the year two thousand seventeen (2017); pages 7 and 8.
6 Eligible green projects shall be understood as those that represent benefits for the environment, such as, for example, projects related to transport, energy, water, construction, waste and pollutant control, and agriculture, among others. In the Dominican context, the Green Taxonomy of the Dominican Republic constitutes the main technical reference framework for identifying eligible green activities, in accordance with national environmental objectives and defined technical criteria.

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2. Social Securities: fixed-income securities where the funds are destined, exclusively, to finance or refinance, either in part or in their entirety, new or existing projects that are eligible as "social projects"7. The funds from the issuance will be directed to projects with social benefits. In turn, social projects can also generate environmental benefits.

3. Sustainable Securities: fixed-income securities where the funds are destined to finance or refinance, in part or in their entirety, a combination of eligible green projects and social projects, generating both environmental benefits and social benefits.

4. Sustainability-Linked Securities: fixed-income securities in which the use of funds is not necessarily assigned to specific green or social projects, but are structured based on the compliance or non-compliance with key sustainability objectives (known as Sustainability Performance Targets or SPTs). These objectives are linked to key performance indicators (KPIs) that reflect the issuer's strategic commitments in environmental, social, or governance matters. Their structuring can be supported by technical frameworks such as the Green Taxonomy of the Dominican Republic, to define indicators, establish ambitious objectives, and reinforce the credibility of the instrument.

Securities issued under these guidelines will be identified in the Centralized Trading Mechanisms as "VS".

Origin and dynamics:
The green bond market emerged globally in 2007-2008, in the context of growing concern about climate risks and the financial costs associated with the emission of Greenhouse Gases (GHG). The first green bond issuances were carried out by multilateral development banks. In Latin America, the first green bond issuers entered the market in 2014. As of the issuance of these guidelines, the green bond market in Latin America and the Caribbean (LAC) represents only two percent (2%) of the global volume of green bond issuances. 8

Gradually, other types of labels emerged in the market to differentiate bond issuances whose funds are destined for other types of projects – distinct from green ones – which can cover a wide range of issues (generation of social impacts, ocean protection, promotion of culture, etc.). However, the green bond continues to dominate the climate bond market, followed by sustainable bonds and social bonds.

7Eligible social projects are understood to be those whose objective is to help address or mitigate a specific social problem or achieve positive social results, especially, but not exclusively, for a specific group of the population.

8Climate Bonds Initiative (2019). Latin America Green Finance State of the Market.

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Green bonds represent a valuable opportunity for the global financial system to contribute to the achievement of commitments assumed in the Paris Agreement 9, and to the mobilization of resources towards climate projects. Under the Paris Agreement, all countries committed to reducing Greenhouse Gas (GHG) emissions, setting Nationally Determined Contributions (NDCs) per country over the coming decades. 10

In addition, both green bonds and social, sustainable, and sustainability-linked bonds act as catalysts for the achievement of the seventeen (17) United Nations Sustainable Development Goals 11, adopted on the twenty-fifth (25) of September of two thousand fifteen (2015) by world leaders with the purpose of eradicating poverty, protecting the planet, and ensuring prosperity for all as part of a new sustainable development agenda (the 2030 Agenda).

More frequently, issuers of sustainable, green, or social securities are multilateral development banks, Financial Intermediation Entities, commercial companies, municipal entities, and public service institutions.

2. Conceptual and regulatory frameworks:
   Conceptual framework

Sustainable, green, or social securities are "regular" securities12 to which an additional characteristic is required: the funds obtained must be destined exclusively to finance only green projects, only social projects, or a set of green and social projects, which generate positive impacts on the environment or on society, respectively.

Such impacts can manifest in different ways such as: the reduction of carbon emissions, the improvement in energy or water consumption efficiency, replacement of fossil fuels with renewable energies, job generation, access to essential services such as housing, education, health, among others.

The commitment to direct funds to this type of green or social projects with positive impacts constitutes a voluntary decision of the issuer, which is usually reflected in its entirety in the bond framework (document that details the four (4) pillars developed by

9Paris Agreement: https://unfccc.int/sites/default/files/spanish_paris_agreement.pdf

10Taking 2010 as the base year, the Dominican Republic's Intended Nationally Determined Contribution (INDC) is 25% of base year emissions for 2030. This is conditioned on favorable, predictable support, the viability of climate financing mechanisms, and the correction of existing market mechanism failures. See: https://www4.unfccc.int/sites/ndcstaging/PublishedDocuments/Dominican%20Republic%20First/INDC-RD%20Agosto%202015%20(espa%C3%B1ol).pdf

11United Nations Organization (2019). Sustainable Development Goals (SDGs) of the United Nations Organization. [Online]. Available at: https://www.un.org/sustainabledevelopment/es/objetivos-de-desarrollo-sostenible/

12For the purposes of these guidelines, regular securities are understood as those defined as fixed-income securities in subsection 43) of Article 3 of Law No. 249-17 on the Securities Market: they are debt securities originating from the issuer's liability, whose performance does not depend on their financial results, thus representing an obligation to return the invested capital plus a predetermined yield, under the terms and conditions indicated in the respective security.

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International Capital Markets Association (hereinafter "ICMA", from its English acronym) in the Green Bond Principles (GBP), the Social Bond Principles (SBP), and the Sustainability Bonds Guidelines (SBG) and in some aspects of the issuance prospectus, subjecting the security issuer to compliance with said voluntary commitment towards investors, who trust that the invested funds will be directed to the projects identified by the issuer.

Consequently, investors will base their investment decision in the security on the information provided by the issuer, as well as on the level of credibility of this and the statements contained in the security framework.

On the other hand, sustainability-linked securities present a differentiated structure, as they are not based on the specific use of funds, but on the issuer's commitment to achieve certain sustainability performance objectives (SPTs), measured through relevant, measurable, and verifiable key indicators (KPIs). The funds obtained are conceived to be used for general corporate purposes, so their specific use is not determinative for their categorization. However, in some cases, issuers may opt to combine the GBP/SBP approach. This voluntary decision of the issuer is also reflected in the bond framework in which the five (5) pillars developed by ICMA in the Sustainability-Linked Bond Principles (SLBs) are addressed and relevant information for the investor is detailed.

Consequently, there is a clear need to ensure that the development of the sustainable, green, social, and sustainability-linked securities market is consistent and transparent, understanding it to be absolutely necessary to define a common framework of guidelines for this segment of the market.

Regulatory framework:

In the Dominican Republic, there is no special regulation for sustainable, green, social, and sustainability-linked securities, making the general norms for the issuance of fixed-income securities applicable to them.

These guidelines will prevail over any other norm or regulation, whether national or international, that contradicts what is stipulated in this document, which have been prepared in accordance with international standards in the matter and following market best practices.

Precisely, in the following section, the main initiatives, principles, and guidelines for the standardization of issuance requirements applicable to sustainable, green, social, and sustainability-linked securities recognized by the Superintendence are exposed.

3. Principles, initiatives, and best practices recognized by the Superintendence of the Securities Market of the Dominican Republic:

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The Superintendence recognizes the following initiatives, principles, and guidelines, which have been especially observed for the elaboration of these guidelines.

Green Bond Principles, Social Bond Principles, Sustainability-Linked Bond Principles, Sustainability Bond Guidelines:

The Superintendence recognizes the importance and legitimacy of the initiative developed by ICMA in order to develop, integrate, harmonize, and provide transparency to the market of sustainable, green, and social securities at the international level.

To this end, ICMA has prepared for Green and Social Bonds a series of principles that are structured in four (4) pillars: the use of funds, the process of evaluation and selection of projects, the management/handling of funds, and the reporting. While for Sustainability-Linked Bonds, five (5) pillars were defined: selection of key performance indicators (KPIs), calibration of sustainability performance targets (SPTs), bond characteristics, reporting, and verification.

Likewise, to ensure compliance with the principles, ICMA recommends that issuers ensure that issued securities undergo review by an external and independent entity with recognized experience in environmental or social sustainability matters, to ensure compliance with the issuer's sustainability standards and the claims made by the security issuer through the projects financed with the issued security.

ICMA developed the Green Bond Principles 13 (GBP, from its English acronym), the Social Bond Principles 14 (SBP, from its English acronym), the Sustainability-Linked Bond Principles (SLBP, from its English acronym) 15 and the Sustainability Bond Guidelines 16 (SBG, from its English acronym), and defines these principles as "a series of minimum commitments that issuers who wish to add the sustainable, green, or social label to their issuances must comply with", which are characterized by being voluntary, collaborative, and consultative in procedure.

Therefore, through this document, the Green Bond Principles, the Social Bond Principles, the Sustainability-Linked Bond Principles, and the Sustainability Bond Guidelines of ICMA are recognized as the roadmap to be followed by issuers who wish to label their security issuances as sustainable, green, social, and sustainability-linked.

13International Capital Markets Association (2021). Green Bond Principles. [Online]. Available at: Green Bond Principles » ICMA

14International Capital Markets Association (2023). Social Bond Principles. [Online]. Available at: Social Bond Principles (SBP) » ICMA

15 International Capital Markets Association (2024). Sustainability-Linked Bond Principles (SLBP) [Online]. Available at: Sustainability-Linked Bond Principles (SLBP) » ICMA

16International Capital Markets Association (2021). Sustainability Bond Guidelines. [Online]. Available at: Sustainability Bond Guidelines (SBG) » ICMA

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Below, the basic components or pillars of these principles are detailed, whose theme differs depending on the type of security in question (green, social, or sustainability-linked).

The Green Bond Principles establish in each of its four (4) components the following:

1. Use of Funds: the funds from the issuance must be destined exclusively to finance green projects with clear environmental benefits, and the legal documentation of the bond must include details regarding the use of funds, as well as the identification and quantification of benefits for the environment. In case green projects are to be refinanced, it must be clearly specified that it is a refinancing. There are ten (10) major categories of eligible green projects according to ICMA 17: (1) renewable energies; (2) energy efficiency; (3) pollution prevention and control; (4) sustainable management of natural resources and land use; (5) conservation of terrestrial and aquatic biodiversity; (6) clean transport; (7) sustainable management of water and wastewater; (8) climate change adaptation; (9) products, production technologies, and processes adapted to the circular economy; and (10) green buildings. These categories are indicative and not exhaustive, and there may be others of similar characteristics that are also eligible.

2. Process of Evaluation and Selection of Projects: the issuer of a green security must communicate to investors its environmental sustainability objectives, the clear and defined process through which it is determined that the green projects to be financed fit within the aforementioned eligible green project categories, and the eligibility criteria related to each category, and complementary information on the process by which the issuer identifies and manages the environmental and social risks associated with the projects.

3. Management of Funds: a strategy or methodology must be established to follow the traceability of funds and their effective assignment to identified eligible projects, recommending that the issuer have an external auditor or another independent third party to verify the management and assignment method of the funds of the issued green security.

4. Publication of Reports: issuers must prepare and keep available updated information on the use of funds, which must be renewed annually until total assignment has been made, and made available promptly in case of relevant developments. Likewise, they must maintain an updated list of financed projects, including a description of the project, the amount allocated, and the expected environmental impact. This information must be renewed annually until the total assignment of funds.

17 To establish the Use of Funds, one can follow these categories established by ICMA or use other classification standards such as the Green Taxonomy of the Dominican Republic or the Climate Bonds Initiative Taxonomy.

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The Social Bond Principles establish in each of its four (4) components the following:

1. Use of Funds: the funds from the issuance must be destined exclusively to finance social projects that seek to address or mitigate a specific social problem or seek to achieve positive social results, especially, but not exclusively, for one or several target populations 18. In the legal documentation of the bond, details regarding the use of funds must be included, as well as the identification and quantification of intended social benefits. In case social projects are to be refinanced, it must be clearly specified that it is a refinancing. The Social Bond Principles suggest a non-exhaustive list of six (6) major categories of eligible social projects: (1) affordable basic infrastructure; (2) access to essential services; (3) affordable housing; (4) job generation and programs designed to prevent and/or alleviate unemployment derived from socio-economic crises, economic transition projects, and/or other considerations related to the "just transition"; (5) food security and sustainable food systems; and (6) socioeconomic advances and empowerment. Likewise, the Social Bond Principles suggest some examples of target populations such as people living below the poverty line, people with low education levels, or vulnerable groups, even as a result of natural disasters.

2. Process of Evaluation and Selection of Projects: the issuer of a social security must communicate to investors its social objectives, the clear and defined process through which it is determined that the social projects to be financed fit within the aforementioned eligible social project categories and show the intended benefit for the target population, and the eligibility criteria related to each category, and complementary information on the process by which the issuer identifies and manages the environmental and social risks associated with the projects.

3. Management of Funds: a strategy or methodology must be established to follow the traceability of funds and their effective assignment to identified eligible projects, recommending that the issuer have an external auditor or another independent third party to verify the management and assignment method of the funds of the issued social security.

18In the latest available version of the Social Bond Principles published by ICMA, it is recognized that the definition of target population may vary depending on contexts and that, in some cases, these target populations can also be addressed by addressing the general public.

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4. Publication of Reports: issuers must prepare and keep available updated information on the use of funds, which must be renewed annually until total assignment has been made, and made available promptly in case of a relevant event. Likewise, they must maintain an updated list of financed projects, including a description of the project, the amount allocated, and the expected social impact. This information must be renewed annually until the total assignment of funds.

On the other hand, the Sustainability-Linked Bond Principles establish in each of its five (5) components the following:

1. Selection of Key Performance Indicators (KPIs): the selected KPIs must be relevant, strategic, and significant for the issuer. Likewise, they must be aligned with their sustainability strategies or policies; and must be consistently measurable, externally verifiable by independent third parties, and comparable with external or international references 19. It is recommended to prioritize KPIs that have already been included in previous reports (annual, sustainability, Nationally Determined Contributions (NDC), national emission inventories, among others), to facilitate the analysis of historical performance. If they have not been disclosed before, it is suggested to present verified data of at least the last three years.

Likewise, the process and justification for the selection of KPIs must be communicated, defining their scope, calculation methodology, baseline, and standards or references used (preferably aligned with SMART principles 20).

2. Calibration of Sustainability Performance Targets (SPTs): the calibration process of one or more SPTs for each KPI is key to the structuring of SLBs as it will be the expression of the level of ambition with which the issuer is willing to commit and, therefore, is considered realistic. SPTs must be ambitious, comparable, coherent, and time-bound. The objective-setting exercise must be based on a combination of benchmarking approaches, such as the issuer's historical performance (minimum 3 years), historical data of the selected KPIs, and, when possible, prospective guidance on the KPI, and positioning relative to sector peers, and science-based scenarios. Additionally, published information on the establishment of objectives should clearly refer to: the dates and key events for the evaluation of SPTs, the baseline used and its justification, possible future adjustments in case of relevant changes, the strategy to achieve the objectives (operational levers, investments, governance

19 For corporate issuers, KPIs must be material and aligned with their sustainability strategy and business model, addressing sector-specific ESG challenges and under the control of management. In the case of sovereign issuers, they must reflect their key sustainability policies and environmental, social, or governance objectives.

20 SMART: Specific, measurable, achievable, relevant, time-bound.

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ESG 21), and the external factors that may affect compliance. It is recommended that issuers designate an external reviewer to issue a Second Party Opinion (SPO).

3. Bond characteristics: In SLBs, the financial and/or structural conditions of the bond are subject to changes based on compliance with SPTs linked to KPIs. The most common triggering event is a coupon variation, although other financial or structural adjustments may apply. These variations must be proportional and significant with respect to the original conditions of the bond; and clearly defined in the issuance documentation. Any backup mechanism should be explained in case the SPTs cannot be calculated or measured satisfactorily. Issuers may also consider including, when necessary, language in the bond documentation to account for possible exceptional events (such as a significant change in scopes resulting from mergers and acquisitions operations) or extreme events, including drastic changes in the regulatory environment that could substantially affect the calculation of the KPI, the reformulation of the SPT, and/or proforma adjustments to the baselines or scope of the KPI.

4. Reporting: Issuers must prepare and keep available updated information on the results of the selected KPIs, including baselines when relevant; an assurance/verification report regarding the SPTs describing performance against the SPTs and the related impact, and the timing of said impact, on the financial and/or structural characteristics of the bond; and any information that allows investors to monitor the level of ambition of the SPTs. Such information must be renewed annually or in any case relevant to assess SPT performance that leads to a possible adjustment of the financial and/or structural characteristics of the SLB.

5. Verification: Issuers should obtain external and independent verification of their performance level with respect to each SPT for each KPI by a qualified external verifier at least once a year, or in any case relevant to assess SPT performance that leads to a possible adjustment of the financial and/or structural characteristics of the SLB. Furthermore, verification of performance with respect to the SPTs must be publicly available.

With the aim of promoting the integrity of the sustainable securities market and ensuring that issuers are able to anticipate and meet investor expectations, in June 2018, ICMA launched the updated Sustainable Bond Guide in 2021, applicable to sustainable securities, which are defined as those in which funds will be exclusively allocated to finance or refinance a combination of green projects and social projects, social projects that also generate environmental benefits, or green projects that likewise generate social benefits. In this case, the guide determines that the issuer must follow, jointly, the Green Bond Principles and the Social Bond Principles.

It is important to highlight that ICMA recommends the use of independent external reviews to determine the alignment of sustainable, green, social, or sustainability-linked securities with the four or five components of the GBP, the SBP, or the SLB, as applicable. The following table summarizes the main aspects of the GBP, SBP, and SLBP:

Element	Green/Social Bonds	Sustainable Bonds	Sustainability-Linked Bonds (SLB)
Based on use of funds	Yes	Yes	No
Performance targets	No	No	Yes
Change in bond conditions if targets are not met	No	No	Yes
Requires framework and verification	Yes
Expected external review	Yes

Dominican Republic Green Taxonomy:
The Securities Market Superintendence of the Dominican Republic recognizes the Dominican Republic Green Taxonomy as the official technical framework for the classification of environmentally sustainable economic activities in the country. This tool seeks to facilitate the channeling of financial resources towards projects that generate significant and verifiable environmental benefits.

The Taxonomy is aligned with national environmental objectives, Nationally Determined Contributions (NDCs), and international commitments assumed by the country under the Paris Agreement. Its purpose is to offer a common language to identify economic activities that contribute substantially to the environmental objectives of climate change mitigation; climate change adaptation; sustainable use and protection of water and coastal-marine resources.

The Taxonomy addresses six (6) environmental objectives: 1. Climate change mitigation; 2. Climate change adaptation; 3. Sustainable use and protection of water and coastal-marine resources, 4. Ecosystems and Biodiversity, 5. Pollution Prevention and Control, 6. Circular Economy. The first three objectives are addressed through substantial contribution criteria, meaning activities can be considered aligned if they generate direct and measurable environmental benefits in any of these areas. On the other hand, the Ecosystems and biodiversity objective is addressed partially under the substantial contribution approach, focusing on ecosystems directly linked to the water and water resources objective.

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Finally, all objectives, including pollution prevention and control and circular economy objectives, are incorporated from the perspective of No Significant Harm (NSH), which implies that all eligible activities must demonstrate that they do not generate relevant negative impacts on these areas to be considered aligned with the Taxonomy.

The environmental objectives included in the Taxonomy are related to a specific set of economic sectors. For example, the climate change mitigation objective covers activities distributed in 7 sectors, while the sustainable use and protection of water and coastal-marine resources objective comprises 4 sectors, and one additional one that also has substantial contributions to the ecosystems and biodiversity objective. On the other hand, the climate change adaptation objective is addressed transversally, through tools and guidelines applicable to multiple sectors.

In total, the Taxonomy identifies sixty-five (65) activities, fifty-eight (58) activities for climate change mitigation, six (6) activities for sustainable use and protection of water and coastal-marine resources, and one (1) activity that contributes both to the ecosystems and biodiversity protection and restoration objective and to the sustainable use and protection of water and coastal-marine resources objective (co-benefits). For each asset or activity to be considered aligned with the Taxonomy, it must comply with three types of requirements: 1. Substantial contribution criteria, 2. No Significant Harm (NSH) requirements to other environmental objectives, and 3. Minimum Social Safeguards (MSS).

Chapter V. International Standards and Green Bond Classification Taxonomies, is dedicated to explaining in greater detail how issuers can use the Taxonomy to structure and align their green securities issuances according to this national framework.

Climate Bonds Initiative:
The Superintendence recognizes the validity of the International Standard for Climate Bonds 22 (CBS, in English), developed by the Climate Bonds Initiative 23 (CBI, in English), a non-profit organization that seeks to mobilize the green bond market to finance climate change solutions. To this end, CBI facilitates information and periodic studies about the global green bond market, prepares specialized sector guides for green bond certification, and provides advice for the elaboration of public policies in this matter.

The Climate Bonds Standard and its scheme for obtaining CBI certification are designed as an easy-to-use tool for investors and issuers with the objective of helping them prioritize investments that truly contribute to addressing the climate change problem. The CBS is composed of two parts: (i) a main standard that details the

22 Climate Bonds Standard and Certification Scheme: https://www.climatebonds.net/standard/about 23 Climate Bonds Initiative: https://www.climatebonds.net/

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management and reporting processes and (ii) a set of sectoral criteria that detail the requirements that assets must meet to be eligible. The certification scheme requires issuers to obtain independent, prior, and post-issuance verification, carried out by an entity approved by CBI 24, to ensure that the bond meets the CBS requirements. Likewise, CBSs are aligned with the GBP. The intention is that the development of such a standard produces a higher level of confidence, quality, and transparency in the green bond market.

The aforementioned Taxonomy developed by CBI for the identification of eligible assets is summarized in the following table 25:

International Organization of Securities Commissions:

24List of Verifiers approved under the Climate Bonds Standard: https://www.climatebonds.net/certification/approved-verifiers 25The colored circles found in each of the assets show whether they are assets for which CBI has already developed certification criteria (blue), assets whose certification criteria are in the development phase (orange), and finally, those assets for which CBI is about to start developing the corresponding certification criteria.

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The Superintendence recognizes the final Report on sustainable finance in emerging markets and the role of the securities market regulator FR08/2019 26 issued by the Committee on Growth and Emerging Markets of the International Organization of Securities Commissions (IOSCO, in English) in June 2019, in which ten (10) recommendations are instrumented that member countries must consider when issuing regulation or guidelines on sustainable instruments. These recommendations are grouped into the following categories:

1. Integration of ESG (environmental, social, and corporate governance) factors by issuers and regulated entities in their general risk assessment and governance (Recommendation 1);
2. Integration of ESG factors by institutional investors in their investment analysis, strategies, and general governance (Recommendation 2);
3. Disclosures, reports, and performance reports on ESG matters (Recommendation 3);
4. Definition and Taxonomy of sustainable instruments (Recommendation 4);
5. Specific requirements on sustainable instruments (Recommendations 5 to 9); and,
6. Capacity and expertise building for ESG securities issuance (Recommendation 10).

For the elaboration of these guidelines, Recommendations 4, and 5 to 9 have been especially observed, namely: (4) definition of sustainable instruments; (5) definition of eligible projects and activities that can be financed with the funds of the issued instruments; (6) establishment of requirements for the issuance of sustainable securities as, among others, the use and management of the funds raised with the issuance, and the processes used by issuers for the evaluation and selection of eligible projects; (7) establishment of requirements regarding monitoring and reporting on the use of funds, including their allocation and the destination of unallocated funds; (8) development of measures to prevent, detect, and sanction issuers who make improper use of funds; and (9) the consideration of the use of independent external reviews in sustainable securities issuances, for the purpose of checking the consistency of the same and of the eligible projects financed with the eligible project definitions that result from application.

26International Organization of Securities Commissions (2019). Sustainable Finance in Emerging Markets and the Role of Securities Regulators. [Online]. Available at: https://www.iosco.org/library/pubdocs/pdf/IOSCOPD630.pdf

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III. The process of issuing sustainable, green, social, or sustainability-linked securities:

For the request for authorization of thematic securities — sustainable, green, social, or sustainability-linked — issuers must present a series of documents that support the nature and commitment of the instrument to sustainability principles. These requirements include: (1) the sustainable, green, social, or sustainability-linked security framework; (2) an independent external review report of the security framework; (3) the issuer's document or autonomous equity formally designating the reviewing entity; (4) documents supporting the professional qualification of the company that carried out said review; (5) the communication of presentation of the independent external reviewing company accompanied by a sworn statement; (6) a certification and/or opinion from an independent verifying entity that confirms the nature of the security; (7) the incorporation of sustainability reports and indicators in the Annual Corporate Governance reports; (8) maintaining the corresponding regulatory and operational framework for the type of fixed-income security, which will be issued through the stock exchange mechanism and custodied in the centralized securities depository.

1. Prior to issuance:

Issuers of sustainable, green, social, or sustainability-linked securities must have the technical advice that is precise for the elaboration of the sustainable, green, social, or sustainability-linked security framework that is intended to be issued. The framework consists of a document in which the issuer's sustainability strategies and objectives are described, as well as its voluntary adherence to the GBP, the SBP, the SLBP, or the SBG, depending on the type of security structured.

In the case of green, social, or sustainable securities, the framework must identify the eligible green or social categories of projects to be financed or refinanced in whole or in part with the funds of the issued security, specifying the classification standard used to determine these categories, such as the Dominican Republic Green Taxonomy, the GBP, the SBP, or the SBG.

In the case of sustainability-linked securities, the framework must focus on the definition of key performance indicators, the calibration of sustainability performance objectives, and the clear description of financial or structural consequences in case of non-compliance with said objectives. In these securities, funds are not necessarily allocated to specific projects, but can be destined for general corporate purposes, with the measurable commitment to improve sustainability being the basis of their structure. Nevertheless, the issuer can rely on technical frameworks such as the Dominican Republic Green Taxonomy and the SLBP.

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Identification of eligible projects for sustainable, green, or social securities:

The issuer must clearly define in the sustainable, green, or social security framework the projects that will be financed with the funds of the same, as well as the social or environmental impacts that are expected to be achieved with those projects, to the extent possible. It may be projects identified individually or well projects not identified that meet clear eligibility criteria in relation to one of the eligible categories proposed by the Dominican Republic Green Taxonomy, the GBP, the SBP, or the SBG.

In the case of projects not individually identified, the issuer must pay special attention in the framework to the development of clear and consistent eligibility criteria, and guarantee that a process of evaluation and selection of projects will be followed to ensure that funds are allocated to eligible green or social projects under each of the eligible categories that have been defined.

As stated above, issuers can rely on the Dominican Republic Green Taxonomy as a technical reference framework to identify economic activities with substantial environmental benefits. Additionally, there are various internationally recognized standards that can be of great use to issuers in order to identify eligible green or social projects. This is the case of the green and social categories suggested in the GBP and the SBP, respectively, as well as the green project categories defined in the CBS.

To facilitate the application of the Dominican Republic Green Taxonomy in the issuance process, these guidelines include in Chapter VI a detailed procedure that describes the steps that issuers must follow to align their green securities with the technical, environmental criteria defined by the Taxonomy. This procedure seeks to offer clarity and practical guidance throughout the entire structuring cycle of the financial instrument.

Selection of key indicators (KPIs) and calibration of performance objectives (SPTs) for sustainability-linked securities:

In the case of sustainability-linked securities (SLB), the issuer must define in the security framework a clear and justifiable set of KPIs, as well as the SPTs that allow evaluating compliance with the commitment assumed in environmental, social, or governance matters. The selected KPIs must be relevant, strategic, and aligned with the issuer's sustainability objectives, and must have a robust, verifiable, and consistent measurement methodology over time. Whenever possible, these indicators should be previously disclosed by the issuer in corporate reports, sustainability reports, or other public instruments.

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The SPTs must represent a substantial improvement with respect to the issuer's historical performance, and must go beyond the "business as usual" scenario. Likewise, the framework must clearly describe the time horizon of the SPTs, the baselines used, and, when applicable, assumptions for proforma adjustments in the face of relevant events (such as mergers, acquisitions, or regulatory changes).

When the selected KPIs are related to environmental dimensions, issuers may consider as reference the technical criteria and objectives established in the Dominican Republic Green Taxonomy. This can contribute to strengthening the coherence of the instrument with national climate and environmental priorities and provide greater technical robustness to the indicators.

Independent external review:

In the international market for sustainable, green, social, or sustainability-linked securities, it is a usual and recommended practice that issuers of this type of securities ensure that the security framework has some type of independent external review. As explained below, there are different types of external reviews offered by various entities specialized in environmental, social, or governance sustainability matters.

The purpose of this type of external reviews is to provide certainty to investors on the credibility of the issued security and its alignment with the principles of the GBP, the SBP, the SBG, or SLBP. In the case of green securities issued in the Dominican Republic, this review may also include verification of alignment with the Dominican Republic Green Taxonomy. This contributes to strengthening the plausibility of the sustainable, green, or social label of the issued security.

In the particular case of sustainability-linked securities (SLB), the external review takes on special relevance, as it evaluates the quality, relevance, and ambition of the indicators (KPIs) and objectives (SPTs) established by the issuer. The review must confirm that the KPIs are relevant, measurable, and verifiable, and that the SPTs represent an ambitious commitment, aligned with the issuer's ESG strategy.

According to ICMA, the most common types of external review are 27:

1. Second Party Opinion: opinion that can be issued by an institution with experience in environmental, social, or sustainability matters in general, which is independent of the issuer, regarding the framework of sustainable, green, social, or sustainability-linked securities. The entity that carries out

27 Guidelines for Green Social and Sustainability Bonds External Reviews (June, 2018). ICMA: https://www.icmagroup.org/assets/documents/Regulatory/Green-Bonds/June-2018/Guidelines%20for%20Green%20Social%20and%20Sustainability%20Bonds%20External%20Reviews%20-%20June%202018%20140618%20WEB.pdf

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This review must be independent of the consulting firm that has advised the issuer in the development of the framework. The second-party opinion usually implies an evaluation of the alignment of the framework with the GBP, SBP, SBG, SLBP, or the Green Taxonomy of the Dominican Republic, as applicable. In particular, it must include an evaluation of the issuer's sustainability objectives, strategy, and policies, as well as the evaluation of the environmental, social, or sustainable performance characteristics of the types of projects or indicators considered. In the case of sustainability-linked securities, it is recommended that this opinion also analyze the relevance and ambition of the defined KPIs and SPTs.

2. Verification: The issuer may obtain an independent verification regarding the compliance of the framework with a series of designated environmental, social, or sustainable performance sustainability criteria, whether they are internal standards or processes of the issuer, or external principles/standards such as the GBP, SBP, SLBP, CBS, or the Green Taxonomy of the Dominican Republic, with which the issuer has committed. Likewise, it can also evaluate the sustainable characteristics of the assets to be financed, or in the case of SLB, the logic of the KPIs, the baseline, and the monitoring system. This type of review (verification) can be carried out both prior to and after the issuance.

3. Certification: An issuer may also obtain a certification of its sustainable, green, social, or sustainability-linked security, as well as of its framework or the use of funds or established indicators. The certification accredits that the security, framework, use of funds, or bond structure complies with a series of certification standards or a label recognized in the market. A standard or label specifies a series of criteria, and the certifying entity checks that they are properly met. These types of certifying entities are generally qualified and specialized entities approved by the institution granting the certificate or label.

4. Sustainable, green, or social security rating: A final possibility is that the issuer decides to submit the issued security to a rating process developed by rating agencies or specialized entities that will assign a score/rating to the issued security in relation to its environmental, social, or sustainable performance characteristics against the committed objectives.

The issuer may accredit compliance with the criteria and/or references used for the selection of projects or definition of indicators, as well as adherence to the main components defined by ICMA 28, through an independent expert with recognized experience in sustainability, environmental, and social issues. This expert must be independent of the issuer.

28 https://www.icmagroup.org/sustainable-finance/external-reviews/

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Both the GBP, SBP, SBG, SLBP, and the Green Taxonomy of the Dominican Republic recognize that this type of external reviews can be partial, covering only certain aspects of the issuer and the issued security, or they can be broader, also evaluating the alignment of the four components of the framework with the applicable principles and criteria.

2. Characteristics of the security framework:
   The framework consists of a document in which the issuer has previously determined the scheme of eligible projects that could be financed with the type of security issued, or in the case of sustainability-linked securities, the Key Performance Indicators (KPIs) and Sustainability Performance Targets (SPTs) that structure the instrument. The development of this type of framework is a commonly extended practice among issuers of sustainable, green, social, or sustainability-linked securities, and they generally have an external and independent verification that evaluates the framework in one of the forms described in the previous section.

Generally, the framework of sustainable, green, and social securities follows the structure proposed by the GBP and SBP, that is: (1) use of funds; (2) process for the evaluation and selection of projects; (3) management of funds; and (4) reporting. In the case of sustainability-linked securities, the framework is usually structured according to the five components established by the SLBP: (1) selection of KPIs; (2) calibration of SPTs; (3) bond characteristics; (4) reporting; and (5) verification.

Likewise, apart from providing the framework to investors, the issuer must ensure that it is published in publicly accessible media, it being ideal that the second-party opinion issued by the external reviewer regarding the framework is also published.

3. During the life of the security:
   During the life of the sustainable, green, social, or sustainability-linked security, and until the allocation of funds has been completed (when applicable), the issuer must carry out a series of actions aimed at providing the transaction with maximum transparency and providing investors with relevant information.

Allocation of funds:
It is important that, during the life of the sustainable, green, or social security, the issuer periodically informs investors about the destination given to the net funds obtained from the security, which should be credited to a sub-account, transferred to a sub-portfolio, or, in any case, controlled by the issuer in an appropriate manner, it being also relevant that the issuer verifies these allocations through an internal and formal process, linked to its own credit and investment operations for eligible green or social projects.

Likewise, the balance of net funds must be adjusted periodically to match the allocations to eligible green or social projects carried out during the corresponding period. The issuer must also inform investors about the intended types of temporary placement of the balances of net funds not yet allocated. The GBP promote a high level of transparency and recommend that the management of funds by the issuer be complemented through an external and independent review carried out by an auditor or another third party to verify the method of fund traceability and their allocation.

Specifically, the GBP and SBP establish the duty of issuers to have and maintain easily available updated information on the use of funds, which will be renewed annually until its total allocation, and from time to time as necessary in case of a relevant event 29. Likewise, ICMA recommends that, in the annual report, the issuer include a list of the projects to which the funds of the sustainable, green, or social security have been allocated, along with a description of the projects and the amounts allocated, and the expected environmental or social impact.

29 See Green Bond Principles and Social Bond Principles.

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Tracking of compliance with sustainability objectives (SLB):
It is important that, during the life of the sustainability-linked security, the issuer periodically informs investors about the progress in the compliance of the sustainability performance objectives (SPTs), defined in the framework of the instrument. This tracking must be based on the established Key Performance Indicators (KPIs) and clearly reflect whether the SPTs have been reached or not.

Likewise, the issuer must timely disclose any triggering event that activates a modification in the financial or structural characteristics of the security, such as a coupon adjustment, in accordance with what is provided in the instrument documentation. In case of significant changes affecting the calculation methodology, baselines, or perimeter of the KPIs, the issuer must transparently explain these adjustments and their justification.

The SLBP promote a high level of transparency and recommend that performance against the SPTs be verified by an independent third party, with experience in sustainability, who must issue a verification report supporting the information reported by the issuer. This report, along with the issuer's annual report, must be publicly available and kept updated throughout the life of the instrument.

In particular, ICMA recommends that these reports include, when possible, a detailed description of the KPIs, the results obtained in the corresponding period, the degree of compliance with the SPTs, the factors that have influenced performance, and any relevant adjustment that should be taken into account in the evaluation of the issuer's progress.

Impact reporting:
It is especially important to communicate the expected impact of the projects in the framework of the sustainable, green, or social security, and to report annually on the impacts effectively generated. In the case of sustainability-linked securities, the emphasis of the report is not on the impacts associated with the use of funds, but on the performance against the defined Key Indicators (KPIs) and the compliance with sustainability objectives (SPTs).

The GBP and SBP recommend the use of qualitative performance indicators and, when feasible, quantitative performance measures (for example, energy capacity, electricity generation, greenhouse gas emissions reduced/avoided, number of people provided access to clean electricity, decrease in water consumption, reduction in the number of cars required, etc.), and publication of the underlying methodology and/or assumptions used in the quantitative determination 30.

For SLBs, the SLBP recommend that issuers periodically report the results obtained for each KPI, including the level of progress towards the SPTs, any methodological adjustment made, and, if necessary, an explanation of deviations or non-compliance. This report must be accompanied, preferably, by external verification 31.

ICMA provides a series of voluntary guides aimed at creating a harmonized framework for the publication of reports on the impact of energy efficiency, renewable energy, water and wastewater, and waste management projects, in the case of green securities 32. The guides include templates for the publication of impact reports at the project and portfolio level, which issuers can adapt to their own circumstances. ICMA has also developed voluntary guides aimed at a harmonized framework for impact reporting for social projects 33. For SLBs, ICMA makes available a non-exhaustive checklist of elements recommended to be disclosed in the context of their issuance, as well as an illustrative KPI register by sector, accompanied by an indicative list of sectoral and global reference initiatives that can be used to support the selection and ambition of the indicators 34. Currently, ICMA is in the development phase of guides for other sectors other than those mentioned.

30 See Green Bond Principles and Social Bond Principles.
31 See Sustainability-Linked Bond Principles.
32 See documents in the ICMA Resource Centre at https://www.icmagroup.org/green-social-and-sustainability-bonds/resource-centre/ 33 See guidance documents in the ICMA Resource Centre: https://www.icmagroup.org/green-social-and-sustainability-bonds/resource-centre/

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To support issuers in the selection and use of relevant indicators for their projects, these guidelines include a specific chapter (Chapter VI. Indicators and metrics associated with green bond classification frameworks), where general guidance is presented on the role of indicators in the design and monitoring of green securities, as well as an illustrative table with examples by economic sector. Although the proposed indicators are not exhaustive, they can serve as a starting point for establishing clear, verifiable metrics aligned with the environmental objectives of the instrument.

IV. Rules to be executed pre and post issuance:

1. Legal Nature of Issuers:
   The Superintendent of the Securities Market is the highest executive authority at the Superintendency and is the one who has the faculty to grant authorization for the registration of the public offering of securities throughout the scope of the Dominican Republic in the Securities Market Register. In this sense, these guidelines have the objective of promoting the development of this type of instrument in the Securities Market of the Dominican Republic.

Article 46 of Law No. 249-17 of the Securities Market provides that the issuer wishing to carry out a public offering in the Dominican securities market must be constituted under one of the following forms:
a) Anonymous company in accordance with the Companies Law 35. b) Limited liability company and simplified anonymous company, in accordance with the Companies Law, only as issuers of fixed-income securities. c) Financial intermediation entity authorized by the law regulating it. d) Foreign anonymous company or its equivalent. e) Differentiated issuer; and f) Another modality of commercial society or legal person that the National Securities Market Council establishes regulationally.

Likewise, fiduciary societies that issue fixed-income trust securities against a constituted trust patrimony and securitization societies that issue fixed-income securities against a separated patrimony in the process of securitization are considered as issuers within the framework of a public offering of securities.

35 Commercial Companies Law and limited liability companies No. 479-08 and its modifications.

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2. Corporate Governance:
   Societies that opt to carry out issuances of sustainable, green, social, or sustainability-linked securities, as applicable, must apply to the structure of the issuance, in terms of compliance with the regulatory framework of the Securities Market, the same structuring processes applicable to the issuances of securities of an ordinary public offering. That is, no regulatory distinction is foreseen between fixed-income security issuances (such as corporate bonds) and issuances labeled as sustainable, green, social, or sustainability-linked.

Title XIV, Chapter I, articles 214 to 226 of Law No. 249-17 of the Securities Market, relating to the transparency regime and protection of investors, establishes a series of rules regarding the Corporate Governance of the entities participating in the Securities Market. With regard to aspects concerning the corporate governance structure for fixed-income security issuers, Law No. 249-17 of the Securities Market determines in the paragraph of article 214 that the application and adoption of the regulatory provisions on Corporate Governance by these is of voluntary compliance.

Issuing societies of fixed-income securities that decide, voluntarily, to adhere to the provisions established by the Corporate Governance Regulation 36, will adopt the general corporate governance regime for participants in the securities market, in accordance with what is provided in title II of said regulation.

These societies may adopt, literally or with adjustments they consider pertinent, all or some of the corporate governance provisions. In such case, they must report annually to the market the degree of compliance with the provisions, or in its defect, justify their omission under the "comply or explain" format.

3. Form of the issuances and registration of securities in the Register:
   Sustainable, green, social, and sustainability-linked securities are subject to the same regulatory and operational framework that applies to fixed-income instruments applicable. The registration process of the securities will be in accordance with what has been established in the Regulations and norms corresponding to the type of issuer or autonomous patrimony and in accordance with the information requirements established in these guidelines.

The authorization deadlines will correspond to the ordinary deadlines for the evaluation of public offering requests. Understanding that the Superintendency may establish differentiated regimes in accordance with what is established in the current regulation.

36 Corporate Governance Regulation approved through the Single Resolution of the National Securities Market Council, dated two (2) of April of two thousand nineteen (2019) R-CNMV-2019-11-MV and the Fourth Resolution of the National Securities Market Council, R-CNMV2023-04-MV, dated seven (7) of February of two thousand twenty-three (2023).

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4. Use and management of funds:
   The central axis of a sustainable, green, or social security is the correct definition of the use of the funds raised to finance green or social projects. Therefore, in order to proceed to the registration of said securities in the Register, it must be accompanied by the Framework described in section III, ordinal second of this document.

Likewise, in relation to the use and management of funds, this Superintendency requires that:
a) In case the funds are to be used to refinance projects, the issuer indicates an estimated proportion between what it will refinance and what it will finance with the funds from the issued securities. In addition, in this case, the issuer must ensure that there are eligible projects to finance in a reasonable period of time after the issuance whose amounts correspond to the unapplied amount of the issued transaction. b) The issuer ensures that the funds from this type of issuance are used in accordance with the principles agreed upon at the time of its issuance. For this, the assets must be assigned to specific accounts, or other reliable mechanisms that guarantee traceability and transparency in the use of funds. c) The issuer establishes a monitoring process of the obtained funds that allows linking the funds of the issuance with the allocations in sustainable, green, or social projects carried out, until their total allocation, distinguishing between the invested funds and those that have not been allocated. d) During the life of the security, the funds that have not yet been assigned to a project may be temporarily invested in other financial instruments. e) The investment of unassigned funds is carried out in short-term instruments, high liquidity, and with investment grade rating, in accordance with what is defined in the corresponding regulation.

Prior to the presentation of the authorization request for registration, the issuer must evaluate and certify that the project complies with the criteria established in the Green Bond Principles, Social Bond Principles, Sustainable Bond Guide, or Climate Bond Standard (CBS, in English), as applicable, depending on the chosen structure. In the case of green securities issued in the Dominican Republic, it is recommended to prioritize the use of the Green Taxonomy of the Dominican Republic as a technical framework to determine the environmental eligibility and alignment of the projects. In case another regional or international Taxonomy is applied that determines the environmental, social, or sustainable character of an asset, it may be taken into account as long as it is backed by an independent external review.

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5. Tracking of sustainable performance in sustainability-linked securities:
   The central axis is the compliance with the sustainability performance objectives (SPTs) linked to defined Key Indicators (KPIs) in the framework of the instrument. Therefore, this Superintendency requires that:
   a) The issuer establishes internal monitoring mechanisms to periodically track progress against the committed SPTs, ensuring traceability, methodological consistency, and comparability of data. b) The instrument documentation includes a detailed description of the data sources, evaluation frequency, procedures for proforma adjustments, and possible exceptional events (such as mergers or regulatory changes) that may affect the compliance of the SPTs. c) The issuer documents, in the framework of the security, the financial or structural consequences applicable in case of non-compliance with the established objectives, such as increases in the interest rate or other contractually defined adjustments. d) Independent external review of information related to KPIs and SPTs is prioritized, both at the time of structuring and during the validity of the instrument, in order to reinforce the transparency and credibility of the assumed sustainability commitment. e) In cases where KPIs are related to environmental dimensions, it is required that their definition, tracking, or verification can be supported, when pertinent, in the objectives and technical criteria established by the Green Taxonomy of the Dominican Republic, as a national reference for climate and environmental action.

6. Independent external review:
   Issuers of sustainable, green, social, and sustainability-linked securities must accompany the security framework with an independent external review, consisting of a Second-Party Opinion or an External Verification prior to issuance. In any case, these types of external reviews should meet the following conditions:
   a) The review must be carried out by an external entity independent of the issuer and of the consulting firm that has advised the issuer for the structuring of the sustainable, green, or social security in question. b) Issuers are responsible for appointing the entity that will carry out the independent external review.

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SC-07-03-05 Edition 3 Page 32 of 53 c) The independent external reviewer must have experience in the analysis of technical characteristics and performance of projects with green or social benefits. d) The independent external reviewer responsible for carrying out the external review will be subject to a prior verification process by the Superintendency regarding aspects such as conflicts of interest and independence criteria, professional qualification, and review of the standards used in the verification processes. e) The issuer must publicly present the opinion issued by the entity that has carried out the independent external review that assesses, certifies, validates, or rates the compliance of the principles of the issued securities. f) The opinion of the external reviewer may be granted by external audit firms or risk rating agencies registered in the Registry that have developed evaluation methodologies for sustainable, green, social, and sustainability-linked securities. Likewise, it may also be one of those approved by CBI, as well as specialized research providers.

7. Annual Report on Fund Allocation and Impact:
   The issuer must report annually on the following matters:
   In the case of sustainable, green, or social securities:
   a) The list of projects to which the funds of the issued securities will be allocated or reallocated, indicating the corresponding amounts individually and specifying the expected impact thereof. b) The destination given to the funds that have not yet been allocated during the current period (for example, if they have been temporarily invested in other financial instruments). c) The results obtained through the application of qualitative performance indicators of the financed projects, and quantitative indicators regarding the expected impact of the issuance of this type of instrument. Likewise, when the issuer reveals the expected environmental or social impacts of the projects, as well as their quantitative and qualitative indicators, the report must contain annexed the opinion on the validity of such estimates, issued by an independent verification entity. In the case of sustainability-linked securities:

SC-07-03-05 Edition 3 Page 33 of 53 a) The status of compliance with the key performance indicators (KPIs) established within the framework of the instrument, indicating whether the sustainability performance targets (SPTs) have been achieved or not during the corresponding period. b) In the event of non-compliance with the SPTs, the activation of the financial or structural consequences provided for (for example, adjustments in the interest rate), as defined in the security documentation. c) Any adjustment or modification made to the calculation methodologies, baselines, or scopes of the KPIs, explaining its technical justification. d) The presentation of an external verification report supporting the information reported by the issuer, validating the evolution of the KPIs and the degree of compliance with the SPTs. Such information must be provided to investors along with the independent verification report post-issuance, and both documents. Likewise, they must be published on the issuer's website.

V. International Standards and Green Bond Classification Taxonomies:
This chapter aims to provide an overview of the main classification standards for green bonds used nationally and internationally that can be used as a reference for the definition of the Use of Proceeds of securities labeled as green. These guidelines recognize frameworks such as the ICMA Green Bond Principles and the CBI Climate Bond Standard, as well as the Green Taxonomy of the Dominican Republic as part of the technical references for the structuring of issuances labeled as green. Throughout this section, the key elements of each standard will be presented, such as structure and technical considerations; and at the end, a structured comparison table between them and practical recommendations for their complementary use is shown.

1. ICMA Green Bond Principles:
   ICMA proposes ten (10) major categories of green projects that can be financed through green bonds, as an indicative and non-exhaustive guide. This flexible classification allows issuers to adapt their projects to national and sectoral contexts, maintaining alignment with the fundamental environmental principles promoted by ICMA.

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Table 1 Categories and types of projects applicable in the GBP 37

Category	Type of Projects
Renewable Energies	Production, transmission, devices and products Energy Efficiency

37 International Capital Markets Association (2021). Green Bond Principles. [Online]. Available at: https://www.icmagroup.org/assets/documents/Regulatory/Green-Bonds/Translations/2021/Spanish-GBP-2021.pdf?vid=2 38 Or river training. Refers to river channelization works.

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Category	Type of Projects
Products, Production Technologies, and Processes Adapted to the Circular Economy	Design and introduction of reusable, recyclable, and refurbished materials, components, and products; circular tools and services Green Buildings

These categories have multiple sectoral applications and may coincide with activities defined in other taxonomies, such as that of the Dominican Republic. Their indicative nature allows issuers to use this structure as a reference point for classifying their projects, provided that their environmental contribution is adequately justified.

2. Taxonomy of the Dominican Republic:
   The Green Taxonomy of the Dominican Republic is the official framework for classifying environmentally sustainable economic activities in the country. It was officially launched in June 2024 by the Ministry of Environment and Natural Resources (MMARN) and the Securities Market Superintendency (SIMV). This technical tool aims to guide the direction of financial flows towards activities and assets that significantly contribute to the country's environmental and climate objectives. The Taxonomy is based on international standards such as the European Union Taxonomy, the Common Framework for Sustainable Finance Taxonomies for Latin America and the Caribbean, the CCSBSO regional green finance taxonomy, and national taxonomies of other countries in the region, adapted to the economic, institutional, and environmental context of the Dominican Republic. This Taxonomy establishes a common language to identify green activities, contributing clarity to the market, regulatory alignment, and facilitating transparency in sustainable financial instruments, such as green bonds. The Green Taxonomy of the Dominican Republic includes activities that generate a substantial contribution to environmental and climate objectives, without covering social objectives. Therefore, the use of this classification will be oriented towards the environmental component of bonds labeled as green or sustainable. The following figure summarizes the hierarchical structure of the Green Taxonomy, from general environmental objectives to the technical and social requirements applicable to each evaluated economic activity:

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Illustration 1 General Structure of the Taxonomy The Taxonomy addresses six environmental objectives: 1. Climate Change Mitigation; 2. Climate Change Adaptation; 3. Sustainable Use and Protection of Water and Coastal-Marine Resources; 4. Ecosystems and Biodiversity; 5. Pollution Prevention and Control; 6. Circular Economy. The Mitigation, Adaptation, and Water Resources objectives are under a substantial contribution approach, while the Ecosystems and Biodiversity objective is addressed partially under substantial contribution, focusing on ecosystems directly linked to the water resource objective (co-benefits). Meanwhile, all objectives, including Pollution Prevention and Control and Transition to a Circular Economy, are addressed through the DNSH (Do No Significant Harm) criteria. Each of the main objectives is related to prioritized economic sectors, and for each sector, a set of eligible assets and activities is identified that contribute substantially to the fulfillment of said objectives. For each asset or activity to be considered aligned with the Taxonomy, it must comply with three types of requirements: 1. Substantial contribution criteria, 2. Do No Significant Harm (DNSH) requirements to other environmental objectives, and 3. Minimum Social Safeguards (MSS) (See Illustration 1). In this way, each activity identified in the Taxonomy is associated with a set of technical substantial contribution criteria, which allow evaluating whether the project or investment generates a relevant positive environmental impact. Additionally, every activity must be evaluated with respect to the principles of no significant harm (DNSH) to other environmental objectives and comply with a set of minimum social safeguards, based on national and international standards of labor rights and human rights. Below is a summary of each environmental objective along with the associated economic sectors.

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Climate Change Mitigation Objective:
The Taxonomy identifies a total of 58 eligible activities with the objective of climate change mitigation, distributed in 7 economic sectors (See Table 1). The following table presents the detail of the sectors included under this objective, along with the corresponding number of eligible activities in each of them:
Table 2. Sectors and activities of the Green Taxonomy of the Dominican Republic

Sector	Number of Activities
Waste Management and Emissions Capture	11
Energy	21
Construction	4
Transport	6
Water Supply and Treatment	5
Industry	8
Information and Communication Technologies (ICT)	3

The activities defined in these sectors respond to technical criteria that ensure their substantial contribution to the reduction of GHG emissions. The energy sector focuses on the decarbonization of the energy matrix through the generation, transmission, distribution, and storage of renewable energies. The integrated waste management and emissions capture sector seeks to advance towards a circular economy model that allows the reduction of emissions generated by waste, with activities that seek to improve their management, such as anaerobic digestion systems and composting of organic waste. Meanwhile, the construction sector promotes sustainable buildings from design and throughout their useful life, seeking to reduce the energy consumption of buildings and operational emissions. The transport sector includes assets such as low or zero-emission vehicles, as well as the development of infrastructure for sustainable and intermodal mobility. Meanwhile, the industry sector seeks to drive the low-emission technological transformation process in key sectors such as the cement, aluminum, iron and steel industry, and other organic chemicals; as well as the manufacturing of products and technologies for other economic sectors with potential for emission reduction, including green hydrogen, wind turbines, electric cars, and industrial products.

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Finally, the water supply and treatment and information and communication technologies (ICT) sectors support mitigation from a cross-cutting perspective. The first includes efficient aqueduct, sewerage, and water treatment systems, capable of avoiding emissions and optimizing energy use. The ICT sector acts as a digital enabler of solutions for efficiency and sustainability in other sectors, promoting the use of smart technologies, data analytics, automation, and interconnected platforms that enhance climate action on multiple fronts.

Climate Change Adaptation Objective:
The climate change adaptation objective in the Green Taxonomy of the Dominican Republic seeks to reduce the vulnerability of human and natural systems to current and future climate impacts. Unlike the approach applied for mitigation, this objective does not establish a closed list of eligible activities, but relies on a series of technical tools and guidelines that allow greater flexibility according to the territorial and sectoral context of the project. This approach recognizes that climate risks are localized and variable, so the alignment of a project depends on its ability to respond to the specific threats it faces. Therefore, it is fundamental that activities are designed and implemented in accordance with existing development and adaptation plans at the local, regional, and national levels. To be considered aligned, an economic activity must demonstrate a substantial contribution to adaptation, which can be expressed in two complementary ways: 1. through the direct reduction of physical and material risks on the project itself (adapted activity); or 2. through its contribution to the adaptation of other systems, such as communities, ecosystems, or territories. In both cases, a climate vulnerability assessment based on data and projected scenarios is required, along with an adaptation plan that details the measures adopted, their effectiveness, and their coherence with national instruments such as the National Adaptation Plan or the NDCs. Additionally, when activities enable the adaptation of others, they must demonstrate how they facilitate technical, governance, or financial solutions that eliminate structural barriers to resilience. Likewise, activities must comply with the requirements of no significant harm to other environmental objectives. In the case of the adaptation objective, these requirements cover areas such as biodiversity protection, sustainable use of water resources, pollution prevention, circular economy, and coherence with existing adaptation efforts. For example, it is required that activities are not located in vulnerable ecosystems, do not increase climate risks for other actors, nor contradict sectoral or territorial adaptation plans. They must also comply with current environmental regulations, guarantee efficient use of natural resources, and respect the principles of the circular economy.

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Sustainable Use and Protection of Water and Coastal-Marine Resources Objective:
For this objective, the Taxonomy identifies 6 activities within 4 economic sectors, which include actions oriented towards efficient management and proper use of the water resource, promoting access to drinking water and sanitation, improving water quality, and protecting watersheds, aquifers, and associated ecosystems, in order to guarantee water security. Below is a table with the detail of the sectors included in this objective and the number of activities assigned to each of them.
Table 3. Sectors and activities of the Water and Coastal-Marine Resources objective

Sector	Number of Activities
Water Supply, Sewerage, Wastewater Management, and Remediation	3 Disaster Management

The activities included for the water supply, sewerage, wastewater management, and remediation sector seek to improve access to safe, clean, and drinking water, control the discharge of contaminants into water bodies to reduce health risks, and protect receiving water sources. The disaster management sector includes the activity of nature-based solutions for the prevention and protection against flood and drought risks. The ICT and industry sectors, for this environmental objective, focus on data-based solutions and manufacturing and installation of technologies specifically to control, manage, reduce, and mitigate leaks in water supply systems. Finally, the environmental protection and restoration sector seeks to maintain or improve the ecological function of aquatic ecosystems, strengthen climate resilience, and protect water-related biodiversity.

Ecosystems and Biodiversity Objective:
The ecosystems and biodiversity objective, which is addressed partially under the substantial contribution approach, focusing on ecosystems directly linked to the water and water resources objective, seeks to conserve and recover the ecological integrity of habitats, ecosystems, and species through a single eligible activity: Conservation, including restoration, of habitats, ecosystems, and species. This activity can be carried out in terrestrial, aquatic, or marine ecosystems, provided it is done in situ and with native or endemic species, excluding ex situ approaches such as zoos or seed banks. This activity generates co-

SC-07-03-05 Edition 3 Page 40 of 53 benefits directly for the other three objectives of the taxonomy: 1. Contributes to climate change mitigation by preserving natural sinks such as mangroves and wetlands; 2. Supports climate change adaptation by reducing risks from floods, storms, or coastal erosion; and 3. Strengthens water management by guaranteeing freshwater supply and protecting watersheds. Additionally, it is key for biodiversity conservation, as it offers essential habitats for a wide range of species. To demonstrate a substantial contribution, the activity must ensure the maintenance or restoration of ecosystems towards a good ecological state. This requires an initial description of the intervened area, a management or restoration plan updated every ten (10) years, an independent audit of compliance with conservation objectives, and legal or contractual guarantees that ensure the permanence of the results. Additionally, specific compliance requirements must be met, such as not counting benefits as compensation for other activities, prevention of invasive species, participation of local communities, and responsible management of the water resource. From a social and economic perspective, this activity also promotes job generation, ecotourism, sustainable aquaculture, and the integration of local knowledge in conservation efforts.

3. Climate Bonds Initiative (CBI) Taxonomy:
   The Taxonomy developed by the Climate Bonds Initiative (CBI) is structured based on economic sectors that play a role in the transition to a low-carbon economy. Each sector includes a set of activities, assets, and technologies that, according to scientific criteria, contribute to climate change mitigation. Table 4 presents the number of eligible activities identified by CBI in each of these sectors:
   Table 4 Sectors and activities in the Climate Bonds Initiative Taxonomy
   Sector | Number of Activities
   --- | ---
   Energy | 29
   Transport | 14
   Water | 7
   Construction | 8
   Land Use and Marine Resources | 10
   Industry | 12
   Waste | 11
   ICT | 7

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For example, in the energy sector, renewable generation projects (solar, wind, or hydroelectric) are considered eligible, while in transport, electric trains, zero-emission vehicles, and charging infrastructure are included. The construction sector covers buildings with advanced energy efficiency standards, and waste incorporates technologies for recycling and energy conversion with emission controls.
Each of these sectors is backed by specific technical criteria, which define minimum environmental performance requirements, permitted technologies, and quantifiable thresholds. These criteria are developed by independent technical groups and validated by the CBI Scientific Committee, which guarantees that only projects with high climate integrity can access Climate Bonds certification. This approach ensures the credibility of the financial instrument and prevents risks of greenwashing.

4. Relationship between international standards and Green Bond Classification Taxonomies:
   Frameworks such as the Green Taxonomy, the ICMA Green Bond Principles (GBP), and the CBI Climate Bond Standard (CBS) share the common goal of promoting the channeling of financing towards activities with environmental benefits, but present differences and similarities regarding their structure, technical criteria used, and scope. Understanding these differences and similarities is important for issuers to strategically select or combine frameworks according to the type of bond and market expectations. Below is a comparative table with the main differentiating criteria between these frameworks:

Table 5 Main similarities and differences of the frameworks

Criterion	Green Taxonomy	ICMA – GBP	CBI – CBS
Geographic Scope	National (Interoperable with other national taxonomies)	International	International
Mandatory or Voluntary	Non-binding, national technical framework	Voluntary	Voluntary, but required for certification
Approach	Technical classification of activities	Bond structure and transparency	Climate certification based on eligibility
Structure	By environmental objective, economic sector, activities and assets, and technical criteria	By categories of eligible projects	By environmental objective, economic sector, activities and assets, and technical criteria
Environmental Objectives	Mitigation and adaptation to climate change, sustainable use and protection of water and coastal-marine resources	Not specified, allows any project with clear environmental benefits according to indicative typologies	Climate change mitigation
Level of Technical Detail	Very high (technical criteria, NSDS, social safeguards)	Qualitative guide based on eligible project typologies, without quantitative technical criteria	High (specific technical criteria per sector)
External Review	Recommended for alignment verification	Recommended (second opinion/verification)	Mandatory for certification

VI. Indicators and metrics associated with green bond classification frameworks:
Indicators and metrics are fundamental in the structuring, monitoring, and accountability of green securities. They allow translating the environmental and technical objectives of each project into concrete metrics that can be evaluated, compared, and monitored over time. From the issuer's perspective, indicators help justify the eligibility of financed activities, as well as demonstrate compliance with the criteria established by the applicable reference frameworks.

In the Taxonomy, the technical criteria defined for each activity can be used as a basis to establish performance indicators that measure a project's substantial contribution to national environmental objectives. In the case of international standards such as the ICMA GBP or the CBI Climate Bond Standard, indicators are a tool to demonstrate alignment with technical principles and to support the impact reports required by investors.

Below is a table with illustrative examples of environmental indicators required by the Dominican Republic Green Taxonomy to validate the substantial contribution to environmental objectives and that can be used to evaluate, monitor, and report the performance of projects in different economic sectors. This selection is not exhaustive or prescriptive, but aims to offer a practical reference for issuers to identify relevant metrics according to the nature of the financed projects. The choice of indicators should respond to criteria of relevance, measurability, and alignment with the environmental objectives of the green security.

Table 6 Illustrative indicators for the climate change mitigation objective (Based on the Dominican Republic Green Taxonomy)

Sectors	Examples of indicators
Waste Management and Emissions Capture	• Tons of recycled or treated waste<br>• Percentage of waste diverted from landfill<br>• Emissions avoided by methane
Energy	• Tons of CO2 avoided per year<br>• Emission intensity (gCO2e/kWh)<br>• Installed capacity (MW) of renewable sources
Construction	• Energy efficiency (kWh/m²/year)<br>• Percentage of recycled materials used<br>• Building environmental certification
Transport	• Emissions avoided per passenger-km or ton-km<br>• % of low-emission fleet<br>• Number of electric charging stations
Water Supply and Treatment	• % of wastewater treated<br>• Volume of reused water<br>• Reduction in water consumption per unit
Industry	• Percentage reduction of emissions per unit produced<br>• Total energy savings<br>• Percentage of electrified processes
Information and Communication Technologies (ICT)	• Energy savings achieved by ICT solutions<br>• % efficiency of data centers<br>• Number of applications focused on sustainable management

As mentioned above, in the case of the climate change adaptation objective, the Taxonomy does not define specific activities, but proposes flexible tools and guidelines that allow adapting actions to the risks and particular conditions of each territory or sector. The following table offers examples of indicators that can be used to evaluate a project's capacity to reduce vulnerabilities, strengthen climate resilience, or integrate adaptation measures into its design. These indicators must adjust to the nature of the project and the local or regional context in which it develops:

Table 7 Illustrative indicators for the climate change adaptation objective (Based on the Dominican Republic Green Taxonomy)

Economic Sector (applicable according to context)	Example of indicators
Infrastructure and Construction	• Urban drainage capacity (m³)<br>• % of buildings adapted to climate risks<br>• Expected reduction in flood losses
Agriculture and Ecosystems	• Hectares under climate-resilient management<br>• Product diversification against climate risks<br>• Projects with integrated risk management
Territorial Planning and Management	• Integration of the project with local adaptation plans<br>• Climate vulnerability assessment performed and managed

For the objective of sustainable use and protection of water and coastal-marine resources, the Taxonomy establishes specific activities in sectors such as water management, water infrastructure, and ecosystem conservation. The following table presents examples of indicators that can be used to measure the environmental performance of this type of project. These indicators allow monitoring the efficient use of the water resource, the environmental quality of water bodies, the restoration of coastal ecosystems, and other key dimensions of water sustainability.

Table 8 Illustrative indicators for the objective of sustainable use and protection of water and coastal-marine resources (Based on the Dominican Republic Green Taxonomy)

Sectors	Example of indicators
Water Supply, Sewerage, Wastewater Management and Remediation	• Reduction of water losses in networks<br>• % of wastewater adequately treated<br>• Volume of treated or potable water (m³/year)
Disaster Management	• Surface protected against floods/droughts

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Information and Communication Technologies (ICT)	• Number of ICT systems installed for leak control<br>• Estimated water savings by intelligent systems (m³/year)
Industry	• Percentage of water recycled or reused thanks to leak control technologies<br>• Average response time to detected leak incidents
Environmental Protection and Restoration	• Hectares of aquatic habitats or ecosystems restored or conserved<br>• Number of protected or rehabilitated species<br>• Improvement in ecological indicators of intervened ecosystems

VII. Procedure for the alignment of green securities with the Dominican Republic Green Taxonomy:
This procedure complements the requirements established in this guide, especially those related to the elaboration of the security framework, regarding the definition of the use of funds, the process for the evaluation and selection of projects, as well as the management and disclosure of information. Alignment with the Dominican Republic Green Taxonomy facilitates the preparation of external reviews, impact reports, and other regulatory requirements.

To guide this process, a methodological diagram is presented below that summarizes the four main stages for the alignment of a green security with the Taxonomy. These include two preparatory phases (collection of technical information and understanding of the taxonomy), a central stage of technical alignment analysis (which develops the seven steps detailed below), and a final phase of project adjustment and monitoring:

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Illustration 2 General methodological process for alignment with the Green Taxonomy

[Diagram Description: The diagram shows four stages: 1. Understanding the Taxonomy (Review environmental objectives, sectors, and activities defined in the RD Green Taxonomy); 2. Collection of base information (Gather technical information of the project or activity); 3. Alignment Analysis (Evaluate if the project meets the criteria and requirements established); 4. Adjustment and Monitoring (Adjust the project, if necessary, to meet the taxonomy criteria).]

Subsequently, the steps included in the alignment analysis stage (steps 1 to 7) are detailed one by one, along with a summary table indicating what information can be collected at each step to facilitate its validation and compliance.

1. Understanding the taxonomy:
   In this first stage, the issuer must understand the fundamental elements of the Taxonomy: the three environmental objectives (mitigation, adaptation, water and coastal-marine resources), the prioritized sectors, the eligible economic activities and their respective technical criteria. It must also know the principles of No Significant Damage (NSDS) and minimum social safeguards (SSM). This review allows defining the type of projects covered by the taxonomy, the criteria that apply to their evaluation, and what information to request from issuers to establish the Use of Funds.

2. Collection of base information:
   In this stage, the issuer must gather the technical and environmental documentation of the project or activity. This information allows building the baseline necessary to evaluate the project's eligibility against the criteria established in the Taxonomy. Some key documents include:

• Environmental licenses or permits, if applicable.
• Environmental impact studies.
• Engineering technical sheets.
• Management plans or operational reports.
• Preliminary estimates of environmental benefits (e.g., energy savings, emission reduction, water efficiency).

3. Project alignment analysis:
   [Diagram Description: The diagram shows the steps: 1. Identify the environmental objective with which the asset or activity is aligned; 2. Identify the sector with which the asset or activity is aligned; 3. Verify the corresponding activity or asset within the identified sector; 4. Demonstrate that the activity or asset meets the substantial contribution criteria; 5. Ensure that the activity or asset meets the general compliance requirements that apply; 6. Demonstrate compliance with specific compliance requirements; 7. Demonstrate that the activity or asset does not generate a negative social impact.]

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Below is a graphical scheme with the steps an issuer must follow to align a green security with the Taxonomy. This procedure is designed to facilitate the identification, evaluation, and documentation of eligible activities, ensuring compliance with the technical, social, and sustainability criteria defined by the Taxonomy. Following the explanation of each of the steps to be followed, a summary table is included with the information necessary to comply with each of these steps.

Illustration 3. Steps for alignment with the Taxonomy of the Dominican Republic

Step 1. Identify the environmental objective
The first step for the alignment of a green security with the Taxonomy consists of clearly determining which of the environmental objectives defined in the Taxonomy the eligible economic activity or asset must substantially contribute to. Currently, the Taxonomy contemplates four environmental objectives with substantial contribution:

• Climate change mitigation
• Climate change adaptation
• Sustainable use and protection of water and coastal-marine resources
  Identify the environmental objective with which the asset or activity is aligned Identify the sector with which the asset or activity is aligned Verify the corresponding activity or asset within the identified sector.
  Demonstrate that the activity or asset meets the substantial contribution criteria.
  Ensure that the activity or asset meets the general compliance requirements that apply.
  Demonstrate compliance with specific compliance requirements.
  Demonstrate that the activity or asset does not generate a negative social impact.

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• Environmental protection and restoration
  Correct identification of the objective allows the issuer to locate the applicable technical framework, since eligibility criteria, compliance requirements, and evaluation methodology vary according to the objective. This identification must be based on the nature of the environmental impact expected to be generated and must be duly justified in the security framework. In complex projects, where there may be contributions to more than one objective, it is necessary to select the predominant objective or apply a separate analysis when technically viable.

Step 2: Identify the sector
Next, the economic sector in which the project, asset, or activity to be financed is located must be identified. The Taxonomy organizes eligible activities by sectors, which facilitates their consultation and application based on the technical nature of the project.
This identification allows determining if the activity is part of the sectors prioritized by the Taxonomy for the established environmental objectives. To do this, the issuer must review the sectoral structure of the Taxonomy and select the sector(s) that approximate the technical and functional approach of the security.
Correct sectoral classification is important, as each sector includes activities with specific technical criteria and requirements. In case a project integrates elements from more than one sector, it must comply with the technical criteria and specific requirements of all related sectors.

Step 3: Verify the corresponding activity or asset Once the economic sector is identified, the next step consists of verifying if the specific activity or asset to be financed is contemplated within the Taxonomy. Each sector includes a detailed list of eligible activities, accompanied by technical descriptions, economic codes (such as ISIC). This verification must be done carefully, as an activity must be specifically described in the Taxonomy to be considered eligible. If the project covers several activities, it is important to disaggregate them and analyze each component separately, verifying their inclusion within the list. In case the activity is not yet developed in the Taxonomy, the issuer may evaluate the possibility of relying on complementary international frameworks, such as the CBI sectoral criteria or ICMA guidelines, without losing sight of the fact that alignment with the Taxonomy is limited to activities officially defined in the national document.

Step 4: Demonstrate compliance with substantial contribution criteria Once the inclusion of the activity in the Taxonomy is confirmed, the issuer must demonstrate that the project or asset meets the technical criteria of substantial contribution established for the corresponding activity. These criteria define the minimum threshold of environmental performance that the activity must reach to be considered sustainable, and are adapted to the Dominican national context. They may include energy efficiency standards, greenhouse gas emission reduction, climate resilience improvements, water efficiency, among others. The evaluation of these criteria must be based on verifiable technical information, such as engineering designs, impact studies, performance metrics, or certifications. In this step, it is important that the issuer clearly and structuredly documents how each of the technical criteria applicable to the specific activity is met. This documentation will be fundamental both for the structuring of the security framework and for any external verification process or review by competent authorities.

Step 5: Ensure compliance with general requirements Once the compliance with substantial contribution criteria is verified, the issuer must ensure that the economic activity complies with the general compliance requirements established by the Taxonomy. These requirements apply transversally to all eligible activities and aim to ensure the existence of a robust environmental management system that controls the key impacts of the project in different environmental dimensions. In particular, the general requirements are grouped into five thematic areas: ecosystems and biodiversity; water and marine resources; prevention and control of pollution; and circular economy. Among the most relevant aspects are: avoiding the location of facilities in strategic ecosystems or protected areas; implementing monitoring programs in areas near the National System of Protected Areas; identifying and managing water risks using recognized tools; complying with current environmental regulations regarding emissions, waste, and discharges; and demonstrating ambition in the efficient use of materials, recycling, reuse, and equipment reparability. Compliance with these requirements must be reflected in the project's or issuing entity's management systems, supported by verifiable evidence such as environmental licenses, technical studies, contractual agreements, or performance reports. This step is essential to guarantee the environmental coherence of the security and its full alignment with the Taxonomy.

Step 6: Demonstrate compliance with specific requirements (NSDS) After validating the general requirements, the issuer must verify that the economic activity does not cause significant damage to any of the other environmental objectives defined in the Taxonomy. This principle, known as "No Significant Damage" (NSDS), seeks to ensure that an activity that contributes to one environmental objective does not have adverse effects on other aspects of the environment.

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The DNSH criteria are defined specifically for each activity within the Taxonomy. These criteria detail the technical, environmental, or operational conditions that must be met to ensure that, for example, water quality, biodiversity conservation, human health, or emission reduction are not compromised, depending on the type of activity. That is, it is not enough to generate a main environmental benefit; collateral negative impacts must be avoided.

For this step, the issuer must review the technical sheet corresponding to the activity within the Taxonomy and demonstrate, with verifiable evidence, compliance with all applicable DNSH criteria. This may include environmental impact assessments, design technical specifications, regulatory certificates, or operational documentation supporting the adequate management of potential environmental risks.

Step 7: Verify compliance with minimum social safeguards (SSM)

In addition to complying with technical and environmental criteria, any activity aligned with the Taxonomy must respect a set of minimum social safeguards, which ensure the protection of fundamental human, labor, and social rights. This step is essential to guarantee that the environmental benefits of an activity are not achieved at the expense of negative impacts on people, communities, or vulnerable groups.

This implies adjusting to current national regulations and having an implemented social management system that allows preventing, mitigating, and managing potential social impacts throughout the project's lifecycle. As a technical reference, the Taxonomy establishes that issuers must demonstrate compliance with a minimum set of safeguards, in accordance with the Performance Standards of the International Finance Corporation (IFC):

• Performance Standard 1: Assessment and Management of Environmental and Social Risks and Impacts
• Performance Standard 2: Labor and Working Conditions
• Performance Standard 4: Community Health and Safety
• Performance Standard 5: Land Acquisition and Involuntary Resettlement
• Performance Standard 8: Cultural Heritage

For this step, the issuer must document how the executing entity or project guarantees compliance with these safeguards, whether through institutional policies, social audits, certifications, internal monitoring mechanisms, or social impact assessments. This evidence must be incorporated as part of the value framework and kept available for review throughout the life of the instrument.

4. Summary of steps for alignment with the Dominican Republic Taxonomy

The following table summarizes the steps described above along with the key information that issuers must consider or prepare to comply with each one. This summary seeks

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to facilitate the practical application of the procedure and guide the collection of necessary documentation for structuring the security.

Steps	Necessary Information
1. Identify the environmental objective	- Technical and environmental description of the project.<br>- Justification of the expected environmental impact.<br>- Relationship with one of the taxonomy objectives: mitigation, adaptation, or water and coastal-marine resources.<br>- Geographic location, if applicable to adaptation objectives
2. Identify the economic sector	- Classification of the project according to the taxonomy's sectoral structure.<br>- Applicable ISIC or NACE code.<br>- Main activity and possible complementary activities.
3. Verify the corresponding activity or asset	- Review of eligible activities in the taxonomy according to the identified sector and environmental objective.<br>- Codes, descriptions, and technical conditions established in the sectors.<br>- In case of non-inclusion, analysis of the possibility of using complementary international frameworks.
4. Demonstrate compliance with substantial contribution criteria	- Technical criteria defined in the activity.<br>- Technical sheets of the asset or activity.<br>- Engineering studies, technical or environmental studies.<br>- Calculations of avoided emissions, energy efficiency, water consumption, etc.<br>- Technical certifications, calculation methodologies, or operational evidence.
5. Ensure compliance with general requirements	- Applicable national regulations.<br>- Evidence of the existence of an environmental management system.<br>- Documentation on: project location, regulatory compliance, biodiversity monitoring, water risk analysis, circular economy, etc.<br>- Environmental licenses and valid authorizations, if applicable.
6. Verify compliance with DNSH criteria	- Review of specific DNSH criteria established by activity.

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Steps	Necessary Information
	- National and international regulations required related to the asset or activity.<br>- Environmental management plans.<br>- Environmental and social impact assessments.<br>- Technical documentation demonstrating the absence of significant impacts on other environmental objectives.
7. Verify compliance with minimum social safeguards (SSM)	- Documentation of the project's or issuing entity's social management system.<br>- Institutional policies on social and labor matters.<br>- Evidence of compliance with IFC Performance Standards.<br>- Social impact assessments, stakeholder participation, social audits, complaint mechanisms.

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VIII. Annex

1. Useful Links

• Inter-American Development Bank (https://www.iadb.org/es)
• Climate Bonds Initiative (www.climatebonds.net/)
• List of independent verification entities approved by CBI (https://www.climatebonds.net/certification/approved-verifiers)
• Dominican Republic's Nationally Determined Contribution (https://www4.unfccc.int/sites/ndcstaging/PublishedDocuments/Dominican%20Republic%20First/INDC-RD%20Agosto%202015%20(espa%C3%B1ol).pdf)
• Law No. 249-17 of the Securities Market, promulgated on the nineteenth (19) of December of the year two thousand seventeen (2017) (https://simv.gob.do/leyes/)
• Law No. 1-12 National Development Strategy 2030, dated twenty-five (25) of January of the year two thousand twelve (2012) (http://www.siteal.iipe.unesco.org/sites/default/files/sit_accion_files/siteal_republica_dominicana_0341.pdf)
• International Capital Markets Association (https://www.icmagroup.org)
• Green Bond Principles (latest version updated in June 2018, also available in Spanish): https://www.icmagroup.org/assets/documents/Regulatory/Green-Bonds/June-2018/Green-Bond-Principles---June-2018-140618-WEB.pdf
• Social Bond Principles (latest version updated in June 2018, also available in Spanish): https://www.icmagroup.org/assets/documents/Regulatory/Green-Bonds/June-2018/Social-Bond-Principles---June-2018-140618-WEB.pdf
• Sustainability Bond Guidelines (latest version updated in June 2018, also available in Spanish): https://www.icmagroup.org/assets/documents/Regulatory/Green-Bonds/June-2018/Sustainability-Bond-Guidelines---June-2018-140618-WEB.pdf
• ICMA Green, Social and Sustainability Bonds Database (https://www.icmagroup.org/green-social-and-sustainability-bonds/green-social-and-sustainability-bonds-database#HomeContent)
• UN Sustainable Stock Exchanges Initiative (https://sseinitiative.org/)
• IOSCO (https://www.iosco.org/)