If your platform collects money against an environmental promise, one question decides whether the product survives contact with a serious counterparty: where did the money go, and who checked. Embedded climate finance is usually built by people who can answer the first half and have never been asked the second.
There is a free, public, well-worn answer to both, and it comes from a market you are not in. Green bond issuers have been answering exactly this question for over a decade, and the framework they use translates almost line for line.
Why borrow a bond framework you are not bound by
The ICMA Green Bond Principles, in their June 2025 edition, are voluntary process guidelines for issuing green bonds. You are not issuing a bond. Nothing in them applies to you, and the document says so in terms: the Principles "do not create any rights in, or liability to, any person," and where they conflict with law, "the relevant local laws, statutes and regulations shall prevail."
That is exactly why they are worth borrowing. They are not a compliance burden competing with your regulator. They are the most mature public answer to a problem you already have, written by people whose investors would not accept a vaguer one.
The structure is four components, and an embedded product can be assessed against all four by anyone who reads them.
Where the money enters, and what each route commits you to
Before any of the four components, settle one thing: whose money is it. Four routes are common, and they are not interchangeable. Each one changes what you may later say, and most of the trouble in this category comes from a program that switched routes quietly and kept the old sentence.
Margin-funded. The platform allocates part of its own take on each transaction. The customer pays nothing extra and the funding is yours, so the claim is yours to make, subject to the certificate rules below. This is how Dyme is built. Its weakness is that the amount moves with your commercial performance, which you should say rather than imply a fixed commitment.
Customer-elected. An opt-in contribution at checkout. The money is the customer's, which means the environmental claim may belong to them rather than to you, and you are closer to an agent than a funder.
On anything sold with air transportation this route is also legally constrained. The customer has to affirmatively opt in, and a pre-ticked box is a rule violation rather than a growth tactic.
Committed pool. A fixed periodic commitment, set independently of booking volume. The cleanest to report against, because the number is knowable in advance and does not need reconciling to transactions. The trap is the marketing copy: once funding is decoupled from bookings, "every booking funds a solar project" stops being accurate and needs retiring.
Pass-through. The customer's money is collected explicitly for a named project and forwarded. The strongest position on tracking and the weakest on claiming, because almost nothing about the outcome is attributable to you.
Write down which one you are, in a sentence, before you write a framework around it. A surprising number of programs cannot answer this without a meeting.
Use of proceeds: decide before you collect
The GBP calls this "the cornerstone." Eligible projects should be described in the documentation, and all of them "should provide clear environmental benefits, which will be assessed and, where feasible, quantified by the issuer."
Renewable energy is the first category on the eligible list, which covers production, transmission, appliances and products.
The clause embedded products trip over is the refinancing one. Where proceeds go to refinancing rather than new build, the GBP recommends disclosing "an estimate of the share of financing vs. re-financing" and the expected look-back period. If your platform is funding projects that were already built and already financed, that is a legitimate thing to do and a dishonest thing to leave unsaid.
Evaluation and selection: who is allowed to say no
Three things get communicated: the environmental objectives, the process by which a project is judged to fit them, and, in the GBP's words, "processes by which the issuer identifies and manages perceived social and environmental risks associated with the relevant project(s)."
That third one is the one to write down first. A selection process with no rejection criteria is a purchasing process. If nothing in your framework can disqualify a project, the framework is describing an outcome rather than governing one.
Management of proceeds: the component everyone skips
This is where embedded programs diverge from bond issuers, and it is the difference that matters most.
The GBP expects net proceeds to be "credited to a sub-account, moved to a sub-portfolio or otherwise tracked by the issuer in an appropriate manner," attested through a formal internal process. The balance is adjusted periodically as allocations happen.
Then the requirement almost nobody volunteers: the issuer should "make known to investors the intended types of temporary placement for the balance of unallocated net proceeds."
Say what that means for a travel platform. Money collected in March and spent on a solar installation in November was somewhere for eight months. Whose balance sheet, earning what, and at whose risk if the platform fails in between. A program that has never answered that is not tracking proceeds. It is funding projects out of general revenue and reporting on them afterwards, which is a different product and should be described as one.
The GBP also allows either a per-instrument or a portfolio approach to tracking, so an aggregated pool is legitimate. What is not optional is knowing the balance.
Reporting: annually, with the method attached
Information on use of proceeds should be kept current and "renewed annually until full allocation," plus promptly on material developments. The annual report carries a list of projects, a brief description of each, "the amounts allocated, and their expected impact."
Where confidentiality or sheer project count makes that impractical, the GBP permits aggregation, for example the percentage allocated to each category. That is a real relief valve and it is not a license to report only a headline.
The sentence to design your reporting around: the GBP recommends quantitative performance measures alongside "disclosure of the key underlying methodology and/or assumptions used in the quantitative determination." A megawatt-hour figure with no method behind it is not checkable, and unchecked numbers are what the whole framework exists to prevent.
On external review, the recommendation runs both ways. A pre-issuance review of the framework, then an external auditor verifying the internal tracking and allocation after the fact. Reviews should be published on the issuer's own website rather than produced on request.
What you may claim: the FTC Green Guides test
Structuring the funding well does not by itself entitle anyone to a claim. Under the FTC Green Guides at 16 CFR 260.15, if a marketer generates renewable electricity but "sells renewable energy certificates for all of that electricity, it would be deceptive" to represent that it uses renewable energy.
The full test a buyer will run on your program is set out in how employers evaluate transaction-funded climate-impact benefits, and the accounting boundary that decides whether your number can enter their disclosure is in how to evaluate climate-impact reporting from a travel-benefit provider. Reading both from the buyer's side is the cheapest preparation available before your first serious procurement review.
Our own instrument and how we report it are described in why Dyme invests in community solar. If you are designing something similar and want to compare notes on the tracking question, Dyme for Business is where to start.
FAQ: structuring an embedded climate finance product
Do the Green Bond Principles apply to a travel platform funding solar?＋
No. They are voluntary process guidelines for issuing green bonds, and the document states they "do not create any rights in, or liability to, any person." If you are not issuing a bond, nothing in them binds you. That is the reason to use them. They are a free, public, well-tested answer to the question your counterparties will ask, and being assessable against a recognized framework is worth more than a bespoke one nobody knows how to read.
What is the difference between tracking proceeds and funding projects from revenue?＋
Tracking means the money is credited to a sub-account, moved to a sub-portfolio or otherwise identifiable, with the balance adjusted as allocations are made. Funding from revenue means projects are paid for out of the general pot and reported on afterwards. Both can be honest. They are different products, and only the first can answer where the unallocated balance was in the meantime. The GBP asks issuers to disclose the intended temporary placement of unallocated proceeds, which is the question that separates them.
Can we report impact in aggregate rather than project by project?＋
Yes, and the GBP says so explicitly. Where confidentiality agreements, competitive considerations or many underlying projects limit the detail available, information may be presented in generic terms or on an aggregated portfolio basis, such as the percentage allocated to each category. What aggregation does not excuse is the method. The GBP asks for disclosure of the key underlying methodology and assumptions behind any quantitative figure, and that applies to an aggregate number as much as a project-level one.
How often do we have to report?＋
The GBP expects information on use of proceeds to be kept readily available and renewed annually until full allocation, plus updated on a timely basis if something material changes. The annual report should carry a list of the projects funded, a brief description of each, the amounts allocated and their expected impact. Annual is the floor rather than the ambition.
Does funding renewable energy let us say our service is powered by renewables?＋
Those are separate questions and conflating them is the most common failure. Under the FTC Green Guides at 16 CFR 260.15, a marketer that generates renewable electricity but sells the renewable energy certificates for all of it cannot represent that it uses renewable energy. Who holds and retires the certificate decides what you may claim, not who paid for the hardware. Our piece on transaction-funded climate impact runs the full test a buyer will apply.
