2/2: Climate Bond Standards Board welcomes launch by 13 international banks of new Green Bond Principles. Important step towards standards-based market, esp. for corp green bonds

NEW YORK – The International Climate Bond Standards Board today welcomed the release yesterday of the Green Bond Principles by a consortium of international banks led by Citi, JP Morgan, Bank of America Merrill Lynch and Credit Agricole.

Board representative Sean Kidney, CEO and the investor-led Climate Bonds Initiative, said “The banks behind the Principles should be applauded for working together to ensure standard practices in the issuance of green bonds, in particular around transparency for investors and reporting on the use of proceeds.”

“Common standards are essential for growing bond markets and preventing greenwashing scandals that would damage the reputation of bond issuers and investors alike. The easier it is for investors to compare apples with apples, the faster this market will grow. This is especially the case with corporate green bonds, which will be the big growth area.”

“One important aspect of the Principles is that they clearly establish that green bonds are about the greenness of the asset, not the company, and that transparency is essential to providing assurance about the green credentials of those assets. As the Principles say ‘The cornerstone of a Green Bond is the utilization of the proceeds of the bond.‘”

“But there's more to be done”, added Kidney. “We now need clarity about what really is green - what's important to environmental protection and addressing climate change. In particular we need clarity on the investments need to achieve a rapid transition to a low-carbon and climate change resilient world.”

“Clear criteria will be important to helping investors compare apples with apples. Those criteria will be best driven by investors and NGOs, based on evidence from environmental scientists. And in the corporate green bonds market third party verification of green claims will be essential to provide investors with independent assurance on the environmental credentials.”

'This will turbo-charge the growth of investment-grade  climate bonds and green bonds."

“Then, given a choice between two bonds with the same yield and rating, one ordinary and one helping address climate change, many investors would choose the latter.”

The Climate Bond Standards Board is working to make available globally accepted criteria for investments important to addressing climate change, and a verification system to provide independent assurance for investors about green claims.

The Members of the Climate Bond Standards Board are:

The Climate Bond Standards Board is supervising a program to provide investors and governments an easy way to assess the integrity of environmental claims for green bonds.