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Climate Bond Standard for Low Carbon Buildings

You can now certify your green property bond under
the Climate Bonds Standard for Low Carbon Buildings

The eligibility criteria for low carbon buildings investments to be certified under the Climate Bonds Standard have been approved by the Climate Bond Standards Board.

Climate Bonds Standard sets criteria for three asset pools:
(click on the image to find out more)

 
 

Download the complete overview of the Climate Bonds Green Property Standards

The criteria were developed by The Low Carbon Property Working Group of 17 international experts - see who was involved

Benefits of certification:

The Green Bond market is developing rapidly and in advance of widely accepted standards for use of proceeds, project evaluation and ongoing reporting. The lack of clarity on what qualifies as a green investment can lead to missed opportunities for both issuers and investors. It runs the risk of key asset classes being under-represented or mis-represented in green bond issuance. Offering investors quality green investment product will require the right information and tools to deliver this.

The Climate Bond Standards and Certification Scheme for Low Carbon Buildings provides issuers with a unique opportunity to offer investors credible green product that delivers real impacts.

Three key drivers that make certified green property bonds so attractive to investors:


The energy efficiency market is maturing and scaling, meaning the investment opportunities in the space are becoming large enough to be attractive to bond investors and  offer liquidity.
 

Energy efficient investments can provide attractive risk-adjusted returns - it has been estimated that potential energy savings in buildings could reach between 20 and 40%.
 

EE investments offer an opportunity for investors to achieve positive climate change impacts with their investments. This is an attractive bonus feature for an increasing share of investors. Globally, buildings account for 30% to 40% of total final energy demand and over 30% of all energy-related CO2 emissions.

 

Background

Any investments directed towards energy efficiency improvements in buildings is important and should be supported, but the urgency for roll-out is driven by the need to reduce greenhouse gas emissions generated through the built environment. This will require substantial improvements of the whole building rather than just achieving any impact with modest improvements. For example, if all buildings achieve a 20% efficiency  upgrade but a 40% increase is required to avoid 2 degrees, then 20% is clearly not enough. The risk is to “lock in” weak levels of performance until the next investment period which may not occur for another decade or more.

It will also require large volumes of qualifying assets. To date, energy efficiency projects have been too small to  be commercially attractive to institutional investors. The average retrofit for the average commercial building is in the range of $1-10m. Therefore, aggregating energy efficiency projects into large scale opportunities will be needed. This has the benefit of not only rewarding new builds but also existing assets that exemplify best in  practice.
 

Technical Working group members included:

Drafting sub-committee

Committee members

 
sponsored development of the Climate Bonds Standard for Low Carbon Buildings