Empowering climate investment: the 2024 Green Bond Dataset Methodology update

The Power of the Methodology

In a world grappling with climate change, the need for credible and robust frameworks to guide climate investment is crucial.

As part of Climate Bonds Market Intelligence Data Products, the Green Bond Database (GBD) Methodology stands as a beacon, inspiring investors to support the transition to a low-carbon and resilient future.

The GBDB Methodology is used to measure whether labelled issuanced is aligned with international climate targets, the results of which are published in Climate Bonds' market reports. This is pivotal in regulating the green use of proceeds (UoP) debt market and bolstering investor confidence and shaping policies to encourage climate investment.

Our data serves as a trusted benchmark for assessing the credibility of green UoP bonds, enabling investors to make informed decisions, and fostering trust in sustainable financial markets. But our influence extends beyond finance, driving policies that support investment in climate and environmental projects.

Foundational principles underpinning the Methodology.

The GBDB Methodology is rooted in foundational principles that guide our assessment framework.

(1) Green credentials based on mitigation and environmental impact: UoP should contribute to significant reduced emissions or demonstrate a positive impact on the environment.

(2) Science-based: Data-driven insights and scientific research are used to validate the contribution to climate change mitigation or positive environmental benefits of the UoP. The methodology is informed by existing taxonomies, labels, and criteria, ensuring credibility and alignment with industry standards.

(3) Flexibility and practicality: Balancing scientific rigour with market usability, our methodology accommodates changes in technology, scientific understanding, and evolving mitigation and environmental priorities.

(4) Minimum climate and environmental safeguards: In the absence of sectoral guidance on eligible UoP, minimum climate safeguards are used to prevent unfavourable outcomes on emissions mitigation and the environment. These minimum safeguards ensure that activities with potential for adverse impact are screened out.

Highlights of the 2024 update

Our 2024 update reflects our commitment to enhancing market usability.

What’s new?

  • Inclusive green credentials: We have broadened the definition of green credentials to include transitional activities vital for the post-2050 low-carbon transition.
  • Expanded sector coverage: Sectoral coverage now includes the Blue Economy & Marine resources, with a screening approach rooted in minimum climate and environmental safeguards.
  • Flexibility in the UoP: A 10% margin of flexibility is introduced to accommodate sectors lacking readily available metrics or requiring further assessment against a benchmark or proxy.

The 2024 updates to the GBD Methodology represent a significant stride towards a low-carbon and resilient future. With a sharper assessment framework and a push for transparency and inclusivity, we are handing investors the reins to steer change and spark investments that make a real difference in mitigation and environmental progress.

The Last Word: Market Data on its Way.

Climate Bonds is to release its Global State of the Market Report in the coming weeks. The flagship report assesses global labelled debt issuance against Climate Bonds Datasets, compiling the most rigorous climate finance data into one report.

The Global State of the Market Report breaks down the Green, Social, Sustainability, Sustainability-Linked and Transition Bonds (GSS+) market with data up to the end of 2023. Stay tuned for all the analysis.

'Til Next Time, 
Climate Bonds