Reach of Climate Bonds Standard expands: Branches into Forestry and Land Conservation
Consultation period open from Friday 1st June 2018. Get involved and send us your feedback!
What’s it all about?
At a global level, forests mitigate climate change through carbon sequestration and contribute to climate resilience, balancing oxygen, carbon dioxide and humidity in the air and protecting biodiversity. Forests also have a significant role in reducing the risk of natural disasters, including floods, droughts, landslides and other extreme events.
But, deforestation, clearing land for plantation forestry and forest degradation cause significant global GHG emissions, accounting to 20% of anthropogenic CO2 emissions.
Net reduction of GHG emissions in the forestry and land use sectors is an essential part of the global response to climate change, and is vital to meeting the Paris targets and assisting meet UN Sustainable Development Goal (SDG) 15 – Life on land.
Investing in forestry and land conservation and restoration represent an investment in people and their livelihoods (around 1.6 billion worldwide depend on forests and other natural landscape to survive). These Criteria give the requirements that must be adhered to help ensure forestry and land conservation and restoration investment is sustainable and supports low carbon and climate resilient outcomes.
SDG15 ‘Life on land‘ & Green Bonds
Currently we’re seeing more bond issuances linked to forestry assets and projects. The Tropical Landcapes Finance Facility (TLFF) launched a USD95m sustainability bond earlier this year, Landshypotek Bank has priced the first green covered bond from a Swedish issuer which is the largest ever green bond in Swedish krona (SEK5.25 billion), partly for sustainable forestry, and Sveaskog has issued two green bonds, one in 2016 and one in 2017, for FSC Certified forestry assets.
Green bonds have also funded land conservation and restoration. Poland’s 2016 sovereign green bond notably included conservation and restoration of natural habitat and national parks. In 2015, the State of Hawaii issued a USD35m green bond to purchase land in Kahuku Koolauloa, Oahu, solely for conservation purposes.
Increasing best practice green bond investment in forestry and land conservation projects not only has a direct climate benefit, but will improve biodiversity and will bolster many of the targets set out in SDG 15.
The Criteria
The Forestry Criteria and the Land Conservation & Restoration Criteria aim to provide a clear, robust and science-based screening process to identify low carbon and climate resilient forestry and land conservation and restoration investments that are aligned with a 2°C target. The development of a widely-recognised set of Criteria will reduce transaction costs and improve transparency, ultimately encouraging more investment in this sector.
These Criteria outline the requirements that forestry and land conservation and restoration related green bonds must meet to be eligible for Climate Bonds Certification.
Our Forestry Technical Working Group (TWG) and Industry Working Group (IWG) have both worked extremely hard, lending us their expertise and substantial sector experience to develop these Criteria.
Types of Projects
The Forestry Criteria cover projects and activities including, for example, plantation forestry; forest conservation and restoration; and forest supply chains.
The Land Conservation & Restoration Criteria cover projects and activities which either conserve or restore landscapes such as, for example, grasslands.
Both sets of Criteria aim to:
- Certify relevant assets and projects that are compatible with a 2°C trajectory;
- Ensure these assets and the surrounding ecosystem are adaptive and resilient to a changing climate;
- Raise the level of transparency in green bonds.
How long is the consultation period open for?
Public Consultation will close on the 20th July 2018. Please send your comments to Katie House.
What can I review?
Review the requirements of the Forestry Criteria and the Land Conservation & Restoration Criteria in these documents:
- Forestry Criteria and Land Conservation & Restoration Criteria summaries - 2-page summaries of the requirements
- Criteria Document – full requirements of the Criteria
- Background Paper - background information and full detail of the TWG and IWG discussions and the rationale for the developed Criteria.
Learn more!
Two Webinars will introduce the Criteria and answer your questions – get your diaries!
Webinar 1:
Date: Monday 18th June 2018
Time: 4pm (UK time)
Webinar 2:
Date: Monday 9th July 2018
Time: 10am (UK time)
What will follow the consultation period?
The TWG will review the Criteria once public consultation is complete, taking into consideration the feedback received, to then submit a final proposal to the Climate Bonds Standard Board for final approval.
Who’s saying what?
Christine Negra, Versant Vision and TWG lead
"These Criteria are the product of hard work by a diverse group of technical and industry experts dedicated to ensuring that certified projects are low-carbon and climate change resilient. Our original approach was for a single Criteria to cover all types of land use including arable farming, livestock, forestry, land conservation, and land restoration."
"We went up a steep learning curve as we attempted to develop rigorous criteria that fit these many different land uses. In the end, Climate Bonds has taken a sub-sectoral approach and the Forestry Criteria and Land Conservation and Restoration Criteria are the first to be released. It will be exciting to see the first issuers using them for Climate Bonds Certification."
Lars Mac Key, Head of DCM Sustainable Bonds, Danske Bank and IWG member
“Sustainable and resilient forestry is such an important part of the survival of this planet. It not only sequesters CO2 producing fresh air as a by-product, but a sustainably managed forest also gives us the material to build a sustainable future. There is a huge potential in forestry green bonds, these Criteria are essential in facilitating for such growth.”
Sean Kidney, CEO, Climate Bonds Initiative
“There has been a demand in the green bond market for forestry and land use opportunities for a long time – both from investors and issuers alike there has been a quest for guidance on what's really best practice in these sectors. The TWG and IWG development work has been firmly rooted in the climate science and produced a robust Criteria that we are now excited to open for public consultation."
"These Criteria will ultimately help issuers better understand what a climate compatible forestry project is and will inform investors and the market around best practice in forestry and land conservation projects. The consultation and feedback process gives all stakeholders their first exposure to the work of the TWG and the shape of what will be coming to market."
The Last Word
Forestry and Land Conservation & Restoration are two further big steps for diversification of green investments. The resulting Criteria push for the transformational changes needed to limit global warming to 2-degrees and support climate mitigation and resilience.
Do contribute with your expertise and send us your feedback. Please send your submissions and comments to Katie House, Senior Research Analyst (katie@climatebonds.net).
Last but not least…
We would like to extend our gratitude and sincerely thank all TWG and IWG members and their constituent organisations for their invaluable support and guidance in developing the Forestry Criteria and the Land Conservation & Restoration Criteria. You can put a face to a Group here.
Special thanks also goes to The Rockefeller Foundation for its support of the development of these Criteria.
‘Till next time,
Climate Bonds
