Second-Party Opinions When external reviews add value and when they don’t.

In the sustainable debt market, a second-party opinion (SPO) has become almost a default feature of green, social, and sustainability-linked bond issuance. These external reviews, provided by independent firms, assess whether an issuer’s framework aligns with recognized principles such as the ICMA Green Bond Principles or the Sustainability-Linked Bond Principles. In theory, SPOs enhance credibility by signaling to investors that a qualified third party has tested the bond’s design against accepted market norms. They often cover taxonomy alignment, project eligibility, management of proceeds, and reporting commitments. For sustainability-linked bonds, SPOs typically evaluate the ambition and materiality of KPIs and targets. This additional layer of scrutiny can reduce concerns about greenwashing and help issuers reach a broader pool of ESG-focused investors.

However, the value of an SPO is not uniform. In cases where issuers already have a strong track record of sustainability disclosure, robust internal governance, and external assurance of their emissions data, an SPO may add little beyond a rubber-stamp. Similarly, if the SPO provider applies only a checklist approach without sector-specific expertise, the review may fail to address the real risks of greenwashing—such as projects with marginal climate benefits or targets that are not aligned with net-zero pathways. Investors increasingly recognize these limitations, and some argue that an SPO alone should not be considered a substitute for thorough due diligence or assurance of reported impacts.

Where SPOs truly add value is in first-time issuance, in emerging markets, or in complex structures where credibility is not yet established. For issuers new to sustainable finance, an SPO provides an accessible way to benchmark against market standards and demonstrate transparency. For investors, it acts as a signal of minimum quality when internal ESG analysis resources are stretched. In such cases, the SPO can lower the cost of capital by opening access to dedicated green or sustainability-linked funds. On the other hand, for large, mature issuers with repeat issuance and established reporting systems, the marginal benefit of an SPO may be limited unless it provides sector-specific insights or covers innovative structures not yet standardized.

Ultimately, an SPO is only as strong as the rigor and independence of the provider. A high-quality opinion that challenges issuers on thresholds, methodologies, and reporting can materially increase market confidence. A weak one risks becoming a box-ticking exercise that allows questionable bonds to slip through with a “green” label. The lesson for issuers and investors is that SPOs should be treated as a complementary tool, not a guarantee of credibility. Their greatest value lies in contexts where transparency is limited, where market trust needs to be earned, and where an external perspective can shine a light on risks that internal teams might overlook.