The Industry Working Group provides input to the development of structure, operation and framing of the Climate Bonds Standards & Certification Scheme. The objective of the Scheme is to provide a screening tool for investors that gives them confidence that funds are being used to deliver climate change solutions.
Members include representatives from ACTIAM (fund manager), Aviva Investors, Standard & Poor’s, PwC, KPMG, the IFC, Bureau Veritas, DNV-GL, TruCost, Shearman & Sterling, Lloyds Bank, Climate Strategy & Partners and the Institute for Responsible Investment.
The Group also reviews proposed eligibility criteria for green & climate bonds developed by the expert science committees to ensure practicability, ease-of-use and bond-market friendliness.
Topics discussed in the Groups meeting last week, the first for 2015:
- Revamp of Climate Bonds Standards text
The green bonds market is seeing rapid evolution with rapid growth (it tripled in size in 2014). The Group looked at how to update the Standard to ensure it meets both evolving best practice and requirements of the market.
On reporting aspects it was agreed the Standard should reference the useful work being done by the Green Bond Principles executive committee (draft revisions to the Principles are expected shortly).
A range of other clauses were reviewed, including:
- Should the role of public sector audit bodies in relation to use of proceeds reporting for public sector green bond issuance be formally recognised? Yes.
- How long a period can be allowed for deployment of funds? One year, two? A sliding scale tied to bond tenor was proposed.
- Verifiers’ eligibility criteria.
As the Standard moves to becoming a useful tool for the market, it was proposed that additional guidance will be needed for new verifiers, for example around the independence of verifiers from their issuer clients, alignment with the ISAE 3000 assurance standard, and transparency around the technical specialisation of different verifiers.
The Industry Working Group makes recommendations to the Climate Bond Standards Board, made up of representatives (representing $34 trillion of assets under mangement) from the International Cooperative Mutual Insurers’ Federation, the California State Teachers’ Retirement System (CalSTRS), the State Treasurer of California, the (US) Investor Network on Climate Risk, the Natural Resources Defense Council, the Carbon Disclosure Project, the (EU) Institutional Investor Group on Climate Change and the (Australian) Investor Group on Climate Change.
A draft revised text of the Climate Bonds Standard will be released for public comment in April 2015.
