Green buildings are central to a shift to a low-carbon economy; the International Energy Agency(IEA) tells us that deep cuts in building emissions are needed to head off catastrophic climate change.
In June the Climate Bonds Green Property Working Group published, industry comment over Summer, draft rules as to what buildings can be used to issue Certified Climate Bonds. The Working Group is made up of experts from 17 organizations around the world. The public consultation period has now been extended until 30 September.
The proposed rules will help investors better understand the low carbon integrity of green building investments. They are part of the Climate Bonds Standard, FairTrade-like labelling scheme for bonds. The rules require buildings for Climate Bonds to be in the top 15% of performers when it comes to emissions, or to achieve deep cuts in emissions when energy efficiency investments are made. Click for more details.
The consultation period kicked off with a series of introductory webinars hosted by Hermes Real Estate, Arup, the Principles for Responsible Investment (PRI), UNEP and the Institutional Investors Group on Climate Change (IIGCC). Since then, comments have continued to come in via the Climate Bonds Standard website and standards@climatebonds.net
Response to date has been positive. For example, Jones Lang Lasalle, a global real estate investment firm, said, "We support the concept of this Standard given the increasing allocation of investment into Green and Climate Bonds. We also support the principle of transparency required by the property asset owners."
We've also seen Global Real Estate Sustainability Benchmark (GRESB) join the Working Group; they will also help with data for market baselines and assist in reporting measures. The first set of market baselines have been established, for New York City, Washington D.C., Sydney and Melbourne.
The Green Property criteria cover three different types of assets:
- Commercial buildings: Bonds can be issued against the whole value of a commercial building, or a portfolio of commercial buildings. The buildings must be in the top 15% in any one market, in terms of relative emissions performance. The “hurdle rate” ratchets down until 2050, when buildings are expected to be net zero carbon. Property portfolio owners planning to upgrade can also get certification as long as they report on improvements each year.
- Residential buildings: Good building codes can be used as proxys for the 15% hurdle rate. Home mortgages for buildings in the higher levels of current rating systems, such as the “Code for Sustainable Homes Level 6 in the UK”, Energy Commission Title 24 Building code in California and the BASIX tool in Australia, will qualify.
- Upgrade finance: Building improvements that achieve emission reductions of 30- 50% from a baseline would comply, for example LED lighting schemes.
Get your comments in before the extension period expires on September 30th!
