R&D Definition Enhanced for Greater Impact:
The updated CBS v4.1 now includes a more inclusive definition of R&D, recognising the critical role of scientific research and emerging technologies in achieving a net-zero transition. This revision allows for the inclusion of earlier-stage R&D investments which have been demonstrated to contribute to substantial GHG emission reduction, removal or avoidance. This ensures that funds channelled towards innovative climate solutions are consistent with the broader goals of climate change mitigation.
In a strategic move to support new technologies in sectors not yet covered by Climate Bonds criteria, the Standard will permits a measured flexibility for R&D investments. R&D involving sectors for which Climate Bonds has not yet developed eligibility criteria, will be individually assessed on a case by case basis. The eligibility of R&D expenditure must be continually assessed to ensure that the relevant climate-related goals are being achieved.
R&D expenditures eligible under the Climate Bonds Standard v4.0 are aimed at solutions expected to have substantially lower life-cycle GHG emissions than best commercially available technologies or which substantially improve their technological and economic feasibility. Eligibility of later stage R&D can be demonstrated through patents, permits, or third-party verified life-cycle assessments following established standards.
Flexibility pocket of 5% in CBS v4.1 as related to Use-of-Proceeds:
This revision is consistent with the flexibility pocket included in the recently enacted EU Green Bond Standard while maintaining the rigour and best practice characteristics of the Climate Bonds Standard.
Under CBS v4.1, a minimum of 95% of net proceeds must finance projects that meet the Climate Bonds Sector Eligibility Criteria. A maximum of 5% of the proceeds of a certified debt instrument may go towards financing projects or assets not fully aligned with the eligibility criteria, provided such projects/assets comply with the ICMA Green Bond Principles or the ICMA Social Bond Principles. Additional requirements that apply to this flexibility pocket are the exclusion of fossil fuel and deforestation activities as well as full disclosure of the nature of these finance activities.
Expanding the network of independent external reviewers:
Certain types of regulated entities, such as Credit Rating Agencies, which are subject to publicly disclosed regulatory frameworks and otherwise meet the strict professional competence requirements of the Standard, may apply for the status of Approved External Review Providers, where their internal processes and procedures are deemed to be at least equivalent to internationally accepted assurance standards
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