Sustainable Debenture Program

Sustainable Debenture Framework

The City has developed an updated Sustainable Debenture Framework to issue three types of debentures:

• Green Debentures – proceeds will exclusively finance, in part or in full, new and/or existing green capital projects and which align with the four core components of this Framework.
• Social Debentures – proceeds will exclusively finance, in part or in full, new and/or existing social capital projects and which align with the four core components of this Framework.
• Sustainability Debentures – proceeds will exclusively finance, in part or in full, new and/or existing green capital projects and social capital projects and which are aligned with the four core components of this Framework.

Following the International Capital Market Association (ICMA) Green Bond Principles (2025), Social Bond Principles (2025) and Sustainability Bond Guidelines (2021), the Framework is based on four core components:

• Use of proceeds
• Process for evaluation and selection
• Management of proceeds
• Reporting

The Framework also describes how the City’s Green, Social and Sustainability Debentures support and contribute towards meeting the United Nations Sustainable Development Goals (SDGs). Upon issuance, additional details regarding the objective of the debenture and eligible projects may be disclosed.

Use of Proceeds: Green Categories

Renewable energy

Construction, development, acquisition, maintenance, connection, transmission and distribution of renewable energy generation sources such as:

• Wind
• Solar
• Geothermal with direct emissions less than 100gCO2e/kWh
• Wastewater energy transfer
• Waste biomass or biofuel with direct emissions less than 100g of CO2e/kWh

Energy efficiency

Construction, development, acquisition and maintenance of products and systems that increase energy efficiency and/or reduce energy consumption or mitigate greenhouse gas (GHG) emissions intensity by 30 per cent or more over the initial performance, including any of:

• Energy efficient heating and cooling systems, lighting, technologies and equipment including ground source heat pumps under Toronto’s Home Renovation Savings program.
• Energy management and reduction systems such as smart grids, demand response units and associated infrastructure that enables more efficient monitoring, transmission and distribution of energy, and facilitation of adding renewable electricity to the grid.
• Building energy retrofit projects and building control optimization projects that reduce energy consumption or increase energy efficiency. This may include residential, commercial or City-owned buildings, including private sector.

Pollution prevention and control

Construction, development, acquisition and maintenance of land, facilities, systems or equipment used for activities such as:

• Development and enhancement of waste management activities and infrastructure such as waste prevention, diversion, reduction, recycling and recovery.
• Collection, treatment/remediation, recycling or reuse of waste, hazardous waste, or contaminated soil.
• Collecting, transporting and processing of recyclables, composting and household hazardous waste for the public.

Clean transportation

Construction, development, acquisition and maintenance of low carbon transportation assets, including:

• Fully electric, hydrogen, or other zero-direct emissions transport including private vehicles, public transit such as public bus fleet, ferry boats and the light metro transit system, and their directly supporting infrastructure.
• Hybrid land vehicles (with CO2 emission threshold of < 50 grams of CO2/p-km).
• Cycling and walking infrastructure.
• Electric charging and hydrogen fueling infrastructure.

Climate change adaption

Construction, development, acquisition and maintenance of infrastructure for:

• Designing, retrofitting, installation and/or upgrading of buildings, berms, pumping stations, transit, transportation and other infrastructure to mitigate physical impacts of climate change and build resilience to extreme weather events such as high wind, flooding, extreme temperatures, ice storms or extended power outages.
• Climate risk information and communication systems such as climate observation and early warning systems, and related projects, including risk and preparedness assessment and monitoring, heat/air quality mapping, integrated water drainage modelling, and climate lens approach development.
• Community outreach and capacity building to support climate risk mitigation and preparedness.

Green buildings

Construction, development, operation, acquisition and maintenance of buildings that have received, or expect to receive based on their design, construction and operation plans, certification according to the following third party verified building standards:

• Leadership Energy and Environmental Design (LEED) Gold or Platinum
• Building Owners and Managers Association (BOMA) BEST Gold or Platinum
• ENERGY STAR (score > 85)
• BuiltGreen High Density Gold or Platinum
• NovoClimat Big-Multiple Unit Building
• Passive House Classic, Plus or Premium
• CaGBC Zero Carbon Building Standard (Flexible, Passive or Renewable)
• Buildings that align with Toronto Green Standard (Tier 2, 3 or 4).

Environmentally sustainable management of living natural resources and land use

Construction, development, acquisition and maintenance of infrastructure for:

• Conservation, restoration and enhancement for the management of the urban forest, wetlands, watercourses (stream bank stabilization or naturalization) and other natural habitats and landscapes, including to trees, islands, wetlands/ponds, woodlands, ravines, beaches/bluffs and conservation areas.
• Projects that support, protect or restore biological diversity in urban areas including parks, ravines, and other green spaces, natural environment trails and green roofs.

Use of Proceeds: Social Categories

Affordable basic infrastructure

Facilities, services, systems or equipment that enhance the affordability of basic municipal infrastructure such as transportation, water and energy.

Safe, public and universal accessibility improvements to transportation infrastructure, such as pedestrian crossovers, sidewalks, audible traffic and crosswalk signals and public transportation.

Access to essential services

Publicly available, not-for-profit, free or subsidized essential services, including:

• Education (including training centres and education and training programs and services to vulnerable population groups).
• Health care (including public hospitals, clinics, health counselling, medical equipment, dental programs, mental health and addiction facilities and programs, health promotion, homes or health facilities for the general public).
• Care Centres (including childcare centres, recreation and community centres, long term care centers, seniors’ centres and support for organizations that provide similar services to target populations such as newcomers, homeless, victim of human trafficking or domestic violence, asylum claim status, Indigenous).
• Residential Care program that provides financial support for housing to adults who cannot live on their own and need help with daily living activities.

Affordable housing

Construction, development, purchase and maintenance of new or existing buildings that provide social and/or affordable housing, including:

• Housing for households or individuals whose income is 120 per cent of the area median income (AMI) and where housing for households or individuals whose rents are less than 30 per cent median income.
• No-cost housing solutions such as homeless shelters and transition housing for homeless families and individuals.
• Delivery of federal, provincial and municipal affordable housing programs and the provision of rent supplement to increase the supply of affordable housing for low-income households and vulnerable groups.
• Provision of the City’s Rent Supplement or Housing Allowance programs for low-income individuals and families, such as Rent-Geared-to-Income, Toronto Rent Bank and the Housing Stabilization Fund (HSF).
• Renovation, maintenance and improvements of shelters and social and affordable housing  such as capital projects to enhance accessibility.

Socioeconomic advancement and empowerment

Assets in support of publicly available, free or subsidized services that promote socioeconomic advancement and empowerment, including:

• Providing employment and social supports to youth, new immigrants, social assistance recipients, low-income individuals and other underserved populations.
• Ensuring safe, affordable and universal accessibility to the public transportation for disadvantaged targeted populations such as children, people with disabilities, low-income people and seniors.
• Supporting older adults and/or people with disabilities such as care homes, day centres, rehabilitation and specialized assistance that maximizes the development of their capacities and social integration.
• Providing free and equitable access to public library services.
• Shelter homes and counselling for survivors of human trafficking or domestic violence.

Project Evaluation and Selection

The selection of eligible green and social capital projects is the responsibility of the City Capital Markets division in consultation with internal and external expert stakeholders.

Capital Markets will select the eligible capital project(s) that meet the guidelines for use of proceeds as described in the framework. Projects must also comply with all applicable laws and regulations, and policies of the City, including assessments of the social and environmental risks. The suitability and eligibility of projects will be verified in collaboration with the division heads (or designates) of the preliminary selected projects. The list of selected eligible green and social capital projects will be dynamic and change over time. The lookback period to allocate debenture proceeds to eligible projects is three years from the time of project completion. In accordance with the City of Toronto Act, debenture proceeds must be fully allocated to specific capital projects at the time of issuance and included in the certified debenture by-law.

The City will follow its current debt issuance procedure in accordance with the City of Toronto’s Financing of Capital Works Policy and Goals. The Mayor or the Mayor’s Alternate and the CFO are authorized to issue debt within the annual limit approved by Council. The internal or external legal representative(s) will draft a debenture by-law outlining the use of proceeds, amongst other items, that includes a schedule to the by-law listing the capital projects to be financed by the debenture, and the list of capital projects will be shared on the City’s website. The debenture by-law will be passed by the City’s Debenture Committee.

Management of Proceeds

The funding sources – including debt financing –of capital projects are approved by Council. For each debenture issue, a debenture by-law is enacted at the time of debenture issuance which lists the dollar allocation of debenture proceeds to specific projects.

Proceeds of a debenture are usually used to provide permanent financing to capital projects, as per funding source allocation approved by Council, that have been paid by the City’s working capital temporarily. In these common instances, the proceeds from the debenture will be applied directly to the project to repay the City’s temporary funding for the project. Where substantial completion has not been met on an eligible project, the funds will be invested and held in an account of the City to be managed in accordance with the City’s normal liquidity management practices, with an exclusion on assets that are carbon-intensive.

In the rare case when substantial completion has been achieved and excess funds exist, the funds will be applied to other projects classified as eligible projects under the framework and amendment to the debenture by-law is required to be passed by the Debenture Committee.

Accounting Services division will keep track of funding status and funding sources of each capital project.

Reporting

Allocation Reporting

The City will provide information on allocation of the net proceeds of its green, social or sustainability debenture issuances on its website annually until full allocation, and on a timely basis in case of material developments. The following information will be disclosed when feasible:

• Funds raised from each green, social or sustainability debentures.
• Overview of allocated funds to each of the eligible project categories.
• Updates with respect to distribution of unspent debenture proceeds.
• A summary of the City’s green, social or sustainability debenture developments including existing and future projects.
• Project updates and status reports for eligible projects, when possible.

Impact Reporting

The City will report on relevant environmental and social impact metrics, when feasible. Examples of metrics that may be reported are found in the table below. The report will be made available on the City’s website annually, when feasible, and will include information on the assumptions and methodologies used.

ICMA Category	Impact Reporting Metrics
Renewable energy	Installed renewable energy generation and added capacity (MW) GHG emissions that were avoided/reduced (tonnes of CO2 equivalent)
Energy efficiency	Energy savings (MWh/GWh) GHG emissions reduced/avoided (tonnes of CO2 equivalent)
Pollution prevention and control	Total GHG emissions (megatonnes CO2 equivalent) Corporate GHG emissions (tonnes CO2)
Clean transportation	Annual GHG emissions reduced/avoided by public transit vehicle type (tonnes of CO2 equivalent) Total in kilometres of new and renewed bikeways City fleet transitioned to zero-emissions vehicles (per cent) Annual GHG emissions reduced (tonnes of CO2 equivalent) Annual public EV charging implementation
Climate change adaption	Count of completed projects by type Number of residents who receive early warnings through municipal systems Number of assets assessed using a climate risk tool or climate lens tool Number of local projects supported Number and diversity of participants engaged (e.g., age, income, neighborhood) Number of community organizations trained or partnered with
Green buildings	Number of green building certifications
Environmentally sustainable management of living natural resources and land use	Number of trees/seedlings/shrubs planted Hectares of natural area managed Metres of natural surface trails built or restored Hectares of natural surface trail footprint
Affordable basic infrastructure	Number of new household water connections Usage of accessible transit (e.g. WheelTrans)
Access to essential services	Number of target population individuals accessing training/education programs Number of health facilities, hospitals, clinics, health centres, health research centres, built or upgraded
Affordable housing	Number of individuals accessing shelter beds Number of individuals / families accessing subsidized housing
Socioeconomic advancement and empowerment	Number of target population individuals accessing training/education programs Youth unemployment rate

Compliance Review

Prior to the first anniversary of a green, social or sustainability debenture issuance, the City will review the lending financed by its green, social or sustainability debentures to assess if the use of proceeds of the issued debentures are in compliance with the framework. A compliance letter will be posted on the City’s website.

The issuance of debentures pursuant to this framework will be implemented in accordance with the City of Toronto Act and directives issued by City Council as applicable.

External Review

Second-Party Opinion

The City has retained Moody’s Ratings to provide a Second Party Opinion (SPO) on its sustainable bond framework, to confirm alignment with the Green Bond Principles (2025), Social Bond Principles (2025), and Sustainability Bond Guidelines (2021).

Moody’s Ratings has assigned an SQS1 sustainability quality score (excellent) to the City’s sustainable debenture framework dated February 2026 saying “The city has established a use-of-proceeds framework with the aim of financing projects across seven eligible green categories and four eligible social categories. The framework is aligned with the four core components of the International Capital Market Association’s (ICMA) Green Bond Principles (GBP) 2025, Social Bond Principles (SBP) 2025 and Sustainability Bond Guidelines (SBG) 2021, and the city has also incorporated Moody’s identified best practices for all four components. The framework demonstrates a high contribution to sustainability.”