Big signal to investors: The White House gave the Climate Bonds Initiative’s efforts to promote sustainable water investment a double boost today with announcements recognising the Water Standard and upcoming Climate Bonds Certified Bond Issuance by the San Francisco Public Utilities Commission.
What’s It all About?
Today’s White House Water Summit held on World Water Day, aims to fortify commitments across the nation towards a sustainable and secure water future.
A series of water based announcements were made in ‘Commitments to Action on Building a Sustainable Water Future’ released to coincide with the Summit.
Tell Me More About the Water Standard?
In partnership with consortium members Ceres, the Alliance for Global Water Adaptation (AGWA), CDP, and the World Resources Institute (WRI), the Climate Bonds Initiative is launching a Water Standard that will operate as a sector specific module under the Climate Bonds Standard. It focuses on vulnerability assessment and climate mitigation and adaptation planning in the fixed income space.
How Does It Help Investors?
The Water Standard has been created to provide investors with verifiable, science-based criteria for evaluating bonds earmarked for financing sustainable water infrastructure projects. It will also help corporate, municipal and other bond issuers expand their green bond offerings into water-related projects.
This can be used to evaluate projects as diverse as energy or industrial water efficiency, reuse, catchment or watershed restoration and large-scale water supply infrastructure development.
What Does Climate Bonds Say?
CEO Sean Kidney:
“The critical lens of climate must be used to assess future water investments, for infrastructure projects, potable water supplies, energy, agriculture, and industrial processes. We need to shift investable capital in a short space of time. This positive acknowledgement by the White House of the Water Climate Bonds Standard role in evaluating blue/green investments will boost investor confidence.”
Tell us about the San Francisco Certified Water Bond?
The White House has also foreshadowed that the San Francisco Public Utilities Commission expects to be the first issuer to certify a forthcoming bond under the Climate Bonds Water Standard. The bond will finance sustainable stormwater management and wastewater projects.
Who’s Saying What?
Harlan Kelly, SFPUC General Manager:
“As utilities across the nation invest in our aging water, power and sewer systems much of that work is to directly address the protection of our environment and the growing impacts of climate change. San Francisco is proud to be prioritizing sustainable bond financing options to support our infrastructure work, and the water climate bond standard will help investors grow this market.”
Justine Leigh-Bell, Global Standards Manager, Climate Bonds:
“San Francisco PUC is showing leadership by example to the US municipal bond market with the forthcoming issuance of a certified water bond. They are to be congratulated.”
“San Francisco PUC is paving the way for other public authorities internationally to issue certified climate bonds for water infrastructure upgrades. It’s a vote of confidence that the Water Climate Bonds Standard is relevant and applicable for assessing water bonds.”
The Last Word:
In mid-2014 DC Water led the way with their 100 year ‘green century’ bond, with proceeds used to construct a tunnel to transport stormwater and sewage to a wastewater treatment plant and reduce sewage overflows to waterways.
This was the first green bond in the US market that had an independent review, or “second opinion”, on the green credentials of the bond, undertaken by Vigeo.
The San Francisco Public Utility Commission, in line to be the first certified under the Water Climate Bond Standard, will be be another landmark issuance.
For investors the Standard will certify water investments that have carried out climate vulnerability assessments considering past, present and future climate risks and environmental losses and created resulting adaptation and/or mitigation plans. The long operating life of many water assets leans to addressing such risks.
The White House push on water sustainability should give further impetus to both issuers and investors looking at the challenges of replacing aging water infrastructure and funding new projects.
DC Water and the San Francisco Public Utilities Commission are examples that should be replicated across the US.
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