The Climate Bonds Initiative uses specific criteria to certify green bonds, ensuring they align with the goals of the Paris Climate Agreement. Here are the key criteria:
- Sector Eligibility Criteria:
- The bonds must finance projects and assets that meet the Climate Bonds Sector Eligibility Criteria, which include sectors like Energy, Transport, Natural Capital, Buildings, Industry, and Waste.
- These criteria are developed to align with the Paris Agreement’s goal of limiting warming to 1.5°C above pre-industrial levels.
- Proceeds Allocation:
- A minimum of 95% of the net proceeds from certified bonds must be used to finance projects that comply with the Climate Bonds Sector Eligibility Criteria.
- Up to 5% of the proceeds can be used for projects not fully aligned with these criteria if they comply with the ICMA Green Bond Principles or ICMA Social Bond Principles.
- Independent Verification:
- The certification process is supported by an independent assessment from a network of Climate Bonds Approved Verifiers, ensuring the integrity and credibility of certified bonds.
- Alignment with Climate Goals:
- The certification process ensures that certified bonds contribute to achieving a net-zero transition, recognizing the role of scientific research and emerging technologies in this effort.
- Version Updates:
- The Climate Bonds Standard has evolved, with updates such as Version 3.0 and Version 4.1, which expand the scope of certification to include entities and transition financing.
These criteria aim to enhance confidence in the climate credentials of green bonds and support informed investment decisions.
Original article by NenPower, If reposted, please credit the source: https://nenpower.com/blog/what-criteria-does-the-climate-bonds-initiative-use-to-certify-green-bonds/
