The Climate Bonds Initiative has now secured funding for a project to develop an international standards and certification scheme for Climate Bonds.
One of the issues the Climate Bonds Initiative has canvassed in the past has been the need for standards around the labeling of "green" debt.
The aim of the certification project is to develop a means to give assurance for investors and NGOs about whether funds are being invested in credible manner. This will support liquidity, so that investors can buy and sell climate bonds knowing that if they stick to certified bonds they can be assured different bonds will have the same level of environmentally credibility.
A broadly-supported and credible, standards-based labeling scheme is needed to support a wide universe of tradable green debt. It will help investors to identify genuinely effective climate change mitigation and adaptation investments.
The project will bring together a broad coalition of NGOs, international banks, multi-lateral institutions (for example the World Bank), professional bodies, governments and industry bodies in North and South countries to supervise the labeling scheme and to guide its development.
The project is part of larger efforts to encourage investment of $1 trillion each year until 2030 in clean energy and climate mitigation.
Standards will be an environmental, not financial; they will provide information about whether an investment is relevant to a transition to a low-carbon economy.
The project will bring together a coalition of pension funds, not-for-profits and industry bodies in Northern and Southern countries, to supervise the scheme and to guide its development.
Working committees made up of industry, academic and environmental organisation representatives will look at:
- The technical aspect of standards, working with options papers from relevant academic institutions.
- The over-arching framework for a transition to a low-carbon economy that will define asset types to be included.
- Structuring a workable industry model that will lead to rapid industry, government and investor take-up.
The first standard, for wind energy-linked bonds, is expected to be available by the end of March. An energy efficiency related standard will follow, along with standards for investments related to a range of other asset types.
You can read more about the project on our web site.
Of course there are quite a range of issues involved in the development of standards. If you'd be interested in commenting on draft standards please let us know.
