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Climate Bonds Standards

How to get certified

Issuers must firstly link the bond to low-carbon project assets or activities.   These activities are listed in Part B of the Climate Bond Standard.  A prospective issuer of a Climate Bond will be required to secure a verification statement from a 3rd Party Verifier that the bond is in compliance with the Climate Bond Standard

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Standards

The Green Bonds / Climate Bonds market has been growing rapidly over the past year. Confidence in the green credentials of these bonds is fundamental to a sustainable market and transparency to the underlying asset is important to investor due diligence

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Download Climate Bonds Standard

Latest Public Consultation

The Green Property Working Group, published their proposed eligibility criteria for property investments to be certified under the Climate Bonds Standard on the 19th of June 2014. The aim is to provide clarity to investors as to the low carbon integrity of energy efficiency investments in green buildings

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Standards: FAQ

What's the urgency?

The mobilization of investment to address the challenge of climate change is a topic of international urgency.

The International Energy Authority has noted that approximately $1 trillion of investment is required each year until 2050 in clean energy and related climate mitigation efforts – above and beyond “business-as-usual” investment requirements (see “IEA Energy Technology Perspectives 2010”). Not only does this cost not include adaptation measures but also increases each year there is delay in the transition to a low-carbon economy.

Given constrained public finances, the scale of required investment can be achieved only by mobilizing private investment, in particular from the institutional investors who manage the bulk of the world’s private wealth.

The capital-intensive, low running cost and stable revenue features of many climate change mitigation investments make them a good match for the fixed income requirements of long-term investors.

Why is a Climate Bond Standard needed?

 Without broadly acceptable standards we will have a race to the bottom with environmental-themed bonds.

We already have seen a weakening of the idea of “carbon offsets” because of a lack of standards about acceptable (environmentally rigorous) schemes. In the current market poor quality offsets are, for most buyers, not readily distinguishable from high quality offsets. In such circumstances the poorer quality will come to dominate for price or availability reasons, sparking a race to the bottom, or an abandoning of the sector.

Early intervention is needed to avoid the negative effects of a lack of robust standards and a consequent undermining of the credibility of the thematic approach.

Won’t the market sort this out eventually?

Standards may emerge after a number of years; but we don’t have time to allow that to happen organically. We need to quickly channel funds where they need to go.

Markets don’t develop standards spontaneously. But standards imposed by appropriate agencies can promote the growth of markets.

How does it work?

Climate Bond-funded project would be required to secure a Certificate of Compliance as a “low-carbon” project for that particular project-type. That means it complies with adopted standards. Some projects, such as biomass energy generation plants, might require annual certificates of compliance (e.g. evaluating feedstocks utilized).

Prospective issuers of Climate Bonds will be referred to licensed third party verification bodies such as accountancy firms and technical auditing firms. These firms will verify that the projects and accounting practices for the use of Climate Bond funds correspond with the criteria set out in the published standard before reporting back to the Standards Board to recommend certification or not.

Standard approaches for dealing with non-compliance with environmental bond covenants as well as appeals in the event of an unsuccessful application are being developed as part of the Program’s architecture.

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