Main Criteria for Certification
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Alignment with Climate Goals
All certified investments must align with the objectives of the Paris Agreement, specifically the aim to limit global warming to 1.5 degrees Celsius. This alignment ensures that the financed projects contribute to climate mitigation and sustainability efforts. -
Use of Proceeds
A minimum of 95% of the net proceeds from the certified bond must finance projects that meet the Climate Bonds Sector Eligibility Criteria. Only up to 5% of the proceeds can be allocated to assets or projects that do not fully align with these criteria, but must comply with recognized green or social bond principles. -
Sector-Specific Criteria
The Climate Bonds Standard includes detailed sector-specific eligibility criteria developed through multi-stakeholder engagement. These criteria set benchmarks for climate integrity within various sectors, ensuring that only projects contributing positively to climate change mitigation or adaptation are certified. -
Internal Procedures and Reporting
Issuers are required to have internal processes in place that facilitate the selection, tracking, and reporting of eligible projects and assets. This includes pre-issuance checks assessing the issuer’s readiness and the eligibility of projects, as well as post-issuance assurance to confirm that proceeds are used as intended. -
Independent Verification
The certification process involves an independent assessment by Climate Bonds Approved Verifiers. These verifiers ensure that the issuer meets all certification requirements during both the pre-issuance and post-issuance phases, providing credibility to the bond’s environmental claims. -
Development of Criteria
The eligibility criteria for sectors are periodically revised based on public consultation and feedback from Technical and Industry Working Groups. This adaptive approach helps maintain the relevance and effectiveness of the certification standards aimed at addressing evolving climate challenges.
In summary, green bonds seeking certification under the Climate Bonds Standard must demonstrate substantial environmental benefits aligned with international climate goals, adhere strictly to specified eligibility requirements, and undergo thorough independent verification processes.
Original article by NenPower, If reposted, please credit the source: https://nenpower.com/blog/what-are-the-main-criteria-for-green-bonds-to-be-certified-under-the-climate-bonds-standard/
