FOR ISSUERS
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.
FOR INVESTORS
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 certification@climatebonds.net