Introduction to Certification
Bonds which are verified to conform with the Climate Bonds Standard are called Climate Bonds Certified Bonds. The Standard contains rigorous scientific criteria which are consistent with the 2 degrees Celsius warming limit as detailed in the 2015 Paris Agreement.
Therefore, Certified Climate Bonds have gone through a strict process to ensure that their assets and projects will contribute to a low carbon economy. In order to receive the Certified Climate Bonds stamp of approval a prospective issuer must appoint an Approved Verifier, who will supply an assurance report to say that the bond meets the Climate Bonds Standard’s requirements. The Climate Bonds Standard Board provides the final confirmation of all Climate Bond Certifications.
The Climate Bond Standard allows Certification of a bond prior to its issuance, enabling the issuer to use the Climate Bond Certification Mark in the bond marketing efforts and investor roadshows. After the bond has been issued and allocation of the bond proceeds has begun, the issuer must confirm the Certification by obtaining another assurance (the "post issuance") report and providing that to the Climate Bonds Standard Board.
What sectors are available for Certification
Certification under the Climate Bonds Standard is currently available for assets that are related to Solar Energy, Wind Energy, Geothermal Energy, Marine Renewable Energy, Water Infrastructure, Low Carbon Transport & Low Carbon Building. For more information about these sectors and other sectors that will be available in the coming months, visit our Sector Criteria page.
Sector criteria for other types of assets are being developed and will be published once they are approved by the Climate Bonds Standard Board.
Please contact Rob Fowler, Head of Certifications, at email@example.com for further information.
Benefits of Certification
1) More diverse investor base: certification signals the low-carbon integrity of the bond and is important for investors looking for climate related investments. Most issuers of Certified Climate Bonds find that the range of investors interested in their bond is much broader.
2) Easier-to-find: ceritification allows potential investors to quickly find a credible green / climate bond on Bloomberg and via other providers of market information.
3) Enhanced reputation: certification allows an issuer to associate its organisation with efforts to scale up financial flows for delivering the low-carbon economy and securing prosperity for future generations.
4) Lower cost: issuers pay less for certification than for a second opinion, and investors avoid the cost of environmental due diligence.
What is innovative about the standard is that it allows not only obvious project bonds for renewable energy generation or green portfolio bonds to be labelled as ‘climate bonds’, but it also allows corporate bonds to be linked with low-carbon activities, without compromising on the normal credit ratings of the issuer.
A robust and credible standard eases decision-making and focuses attention on credible climate change solution opportunities. The easier it is to use the faster the market will grow.
Investors can use the Climate Bond Standard as a screening tool to assure the low-carbon nature and integrity of their fixed-income investments.
While certification as conforming with the Climate Bond Standard does not provide any assurance regarding credit risks or returns, it does allow investors to save time and money in analysing low-carbon credentials of investments across sectors and asset classes.
A liquid market of certified Climate Bonds also allows investors to actively participate in the delivery of the Low-Carbon Economy in three key ways:
1) Proactively hedge against future climate risks by financing a low-carbon transition
2) Signal to the market their appetite for suitably risk-adjusted green deal-flow; and
3) Signal to governments their willingness to invest in the low-carbon transition subject to stable policy frameworks and risk-adjusted returns.
Investors interested in funding any component of the Climate Bond Standard & Certification Scheme please contact Rob Fowler, Head of Certifications, at firstname.lastname@example.org.
Who Can Issue Climate Bonds?
Climate Bonds can be issued by a variety of different organisations seeking to finance or re-finance low-carbon developments. The focus for Climate Bond Certification is the portfolio or Low Carbon projects & assets being financed by the Climate Bond, rather than the entity which is issuing it, such as:
- Project developers
- Equipment manufacturers
Further guidance for prospective issuers of Climate Bonds will be provided in the Guidance for Issuers document, soon to be released.
If you are interested in having a bond certified as a Climate Bond or would like more detail on the steps involved, please contact directly:
Head of Certification
Climate Bonds Initiative
Australia: +61 402 298 569
Climate Bonds Initiative