LONDON – The Institutional Investor Group on Climate Change (IIGCC), which represents more than 85 of Europe’s largest investors with total funds under management of approximately EUR7.5 trillion, has today joined the International Climate Bond Standards Board. The Standards Board is supervising a program to provide investors and governments an easy way to assess the integrity of environmental claims for green bonds. Eric Borremans, IIGCC Vice Chairman and sustainability expert at Pictet Asset Management, will represent the IIGCC on the Climate Bond Standards Board.
IIGCC Chief Executive Stephanie Pfeifer said: "Transitioning to a low-carbon economy requires a wide range of financial instruments which stimulate investment in energy infrastructure, and climate bonds can play an important role in delivering the necessary investment. Investors however require assurance that low-carbon bonds have the qualities they expect of a product described in this way.
“By putting certification standards in place for green bonds and climate bonds, the Climate Bonds Standard helps investors identify low-carbon bond investments and provide reassurance that their capital is being allocated to projects which have clear low-carbon credentials.”
Sean Kidney, CEO of the Climate Bonds Initiative, which is leading the Standards program, said: “According to the International Energy Authority we need up to a trillion dollars a year to be flowing into low-carbon industries if we’re to avert catastrophic climate change. That money will come largely from bond markets.”
Kidney noted that "the challenge of redirecting just 1 percent per year of funds under management into building the low carbon economy is eminently achievable."
“But we need to ensure it’s invested properly to support a transition to a low carbon and climate resilient economy. Standards will provide an international tool for investors and governments to assess the integrity of green investments and to preference them. It will support liquidity with green portfolios, essential for investors today.”
According to HSBC and the Climate Bonds Initiative, in 2013 there were $346 billion of bonds outstanding that were tied to investments related to climate change solutions; 89% were investment grade. Of those, $18 billion were development bank or corporate bonds labelled as green or climate bonds. Growing this “green debt” market will provide institutional investors with opportunities to switch from carbon intensive to low-carbon investments – and fuel the growth of the low-carbon economy.
The IIGCC is a forum for collaboration on climate change for investors representing EUR7.5 trillion of assets.
The IIGCC joins their equivalent associations in the US - Ceres Investor Network on Climate Risk - and Australasia – the Investor Group on Climate Change on the Board. The three associations represent members with $22 trillion of funds under management. Other Board members are the California State Teachers Retirement System, California State Treasurer Bill Lockyer, the Carbon Disclosure Project and the Natural Resources Defense Council.
A Climate Bonds certification is issued to bonds that are backed by qualifying green assets. That means wind farms, solar energy plants, energy efficiency investments, low-carbon transport and much more. Approved third party verifiers review proposed bonds to confirm they comply with the Standard.
