Streamlined assessment tool for investors and intermediaries
Climate Bonds Initiative has released the Climate Bonds Standard V2.0, the next iteration of an overarching multi-sector standard that allows investors and intermediaries to easily assess the environmental integrity of bonds claiming to be green and funding the low carbon and climate resilient future.
Standard V2.0 has been built on consultation with market actors, incorporates the latest amended Green Bond Principles and is a key part of Climate Bonds’ work to mobilise debt capital markets and develop sound and sustainable international green bond frameworks.
What’s new in V2.0?
Climate Bonds Standard V2.0 provides a clear set of mandatory requirements that bond issuers need to meet for them to use the Certified Climate Bond quality mark. The Standard provides guidance for issuers on both pre-issuance and post issuance and offers a streamlined certification process to match the tempo of the mainstream debt capital markets.
Climate Bonds Standard V2.0 is a minimum standard to ensure the projects and assets being funded by a green bond are consistent with a 2°C future.
How does V2.0 fit with the sector standards?
Climate Bonds Standard V2.0 acts as the high level set of requirements while a number of Sector-Specific Standards spell out the criteria for investments in key sectors: Wind, Solar, Low Carbon Buildings, Geothermal, Bioenergy, Low Carbon Transport, Forests, Agriculture and Water.
How are the Sector Standards Developed?
The Climate Bonds Sector Standards are developed by Technical Working Groups of academics and experts relevant to the sector.
What’s their Current Status?
Standards for Bioenergy, Agriculture & Forestry and Geothermal are awaiting board approval having undergone public consultation. Standards for Low Carbon Transport and Water are currently under public consultation.
Comment from International Standards & Certification Manager, Justine Leigh-Bell:
“This is a substantive development for the green bond market. Market participants: issuers, investors and verifiers now have improved guidance to help judge green bonds on the key criteria of environmental integrity. Each has a role to play in the green bond market and the new Standard includes specific sections to directly assist participants.”
“Release of this Standard V2.0 builds on the momentum from COP21 where climate finance models, funding of INDC goals and institutional investor support for low carbon technologies and climate resilient infrastructure were constantly on the agenda.”
“Climate Bonds Standard V2.0 enables features that the market was calling for. Assurance frameworks needed to be very clear and consistent so that verification is efficient and low cost, the Standard V2.0 provides just this.”
“Additionally, as the market develops we are seeing green bond issuances of many different types, as with the May 2015 issuance by German bank BerlinHyp of the first green Pfandbrief or ‘covered bond’ so V2.0 is built to accommodate all sorts of different types of bonds.”
Comment from Wim Bartels, Global Head of Sustainability Reporting & Assurance at KPMG:
“Green bonds are an important instrument to involve the financial industry in the urgently needed journey towards a sustainable economy. For an enduring credibility of the growing market high-quality green criteria are of the essence.”
“We see the Climate Bonds Initiative as a key standard setter in the field, whose efforts we strongly support. The updated and improved Climate Bonds Standard, which now includes sector-specific standards, is highly welcomed by us.”
What’s Happening Next?
Supporting documentation for V2.0 is in the final stages of development. The following will be progressively released during January 2016. We’ll keep you posted!
- Guidance for verifiers
- Guidance for issuers
- Guidance for investors & analysts