ELIGIBLE RESIDENTIAL
BUILDINGS
ENGLAND & WALES
Low Carbon Buildings Criteria
under the Climate Bonds Standard
What are the Low Carbon
Buildings Criteria?
They are the technicalstandards that buildings(or a portfolio of buildings) must satisfy tobe eligible as nominated use of proceeds ina Certified Climate Bond. Any bond being
Certified must also meet the reporting andtransparency requirements of the overarching
Climate Bonds Standard.
This brochure outlines the Buildings Criteria
for residential buildings in England andWales. For full details on the methodology
and requirements, see the detailed Criteria
document
When is a residential building eligible forCertification?
It is eligible for certification if:•It meets the low carbon emissions
trajectory OR approved proxy

Option 1: Proxy
Residential buildings in England &Wales are eligible for Certification if their
Environmental Impact (EI) Rating(Figure 1), as reported on their
Environmental Performance Certificate(EPC), is either A or B.
This difference in permitted tenors recognisesthat residential buildings rated ‘A’ have astronger emissions profile (and therefore will
be compatible with the rapid decarbonisation
trajectories for longer) than ‘B’ rated buildings.
Buildings rated ‘C’ and below are not eligible
for Certification as they are not considered
to have an emissions profile consistent withthese rapid decarbonisation trajectories.

Low Carbon Building Criteria: England & Wales•

It has or will undergo an upgrade or
retrofit which reduces its emissions
intensity by 30-50% (depending on thetenor of the bond).

What do the low carbon emissions
trajectories represent?
Trajectories are expressed as an emission
intensity metric: kg CO2e/m2, based onlandlord - related emissions. They represent
rapid decarbonisation trajectories alignedwith the goals of the Paris Agreement to limit
global warming to no more than 2 degrees
above pre-industrial levels, and ideally nomore than 1.5 degrees.
How have they been established?
They have been established by taking theemissions intensity of the top 15% of buildingsin that location and drawing a line down tohit zero carbon by 2050. They are location
specific as it is recognised that emissions
intensity is affected by a number of factors
which vary significantly be region.

Where can issuers go to find more
information to check compliance?
A single low carbon trajectories have been
established for residential buildings inEngland and Wales
For other locations outside of thesecountry, residential buildings are eligible forcertification if they are consistent with therequirements of an appropriate proxy. Seehere for further information on appropriateproxies.
The proxy for England and Wales is illustrated
in the box below. The trajectory requirements
are illustrated on the reverse. The Emissions
Target Calculator gives precise data toestablish emission targets for any bond tenor.
Want more information?
Please contact cory.nestor@climatebonds.net

Figure 1. Proxy expiration dates and Example of Impact
Rating Certificate

AUntil
2040

BUntil2022
Note: Residential buildings in England & Wales have both an Energy Performance
Certificate (EPC) and an Environmental Impact Certificate (EI). Proxy certification isdependant on the EI portion on the certificate.

1

15.5

1092

50100
2017

2022

2040

Zero-Carbon Trajectory
Example Tenors

Environmental Impact (EI) Rating

152050EI Rating A
EI Rating B

Note: Examples have been included for three different bond tenors, 10 yr, 20 yr, and 30 yr
showing how the desired tenor of the issuer affects the emissions intensity target of the bond.

This database provides a wealth of
information about the construction andperformance of building assets in England& Wales. This includes both the proxy
indicator information and the directemissions performance. The proxy tag canbe found in the “EI_Rating_Current” field.

The direct emissions intensity used to alignwith the trajectory is provided as kgCO2/m2
and can be found in the ‘CO2_Emissions_Current” field.
For more information, contact
Cory.Nestor@climatebonds.net

Figure 3. Regional aggregation of the top 15th percentile
3530
25

50

North West England

10North East England

15Yorkshire & the Humber

20

Wales

While the dataset covered the whole ofEngland & Wales, the difference in top
performers in each region was minimal.
Therefore, for simplicity and ease of use,
all England & Wales residential buildings
are subject to the same zero carbon
emissions trajectory.

19.9

West Midlands

The Climate Bonds Initiative, incollaboration with our technical experts,
assessed the EPC and EI dataset forboth its robustness and reliability, andits market representativeness. Once thiswas determined, the performance spread(Figure 3) was modelled and the top
15% performance level was established.
From there, the net zero carbon
trajectory down to 2050 was derived.

20

East Midlands

How have these Criteria
been derived?

81

24.2

East of England

The Department for Communities and Local
Government (DCLG) has released a databaseof EPC ratings information for all EPCs forresidential buildings in England & Wales.

28.5

LondonWhere can issuers find the data needed todemonstrate compliance?

25South West EnglandFor example, for a 10-year bond issued in2017, the emissions intensity at the timeof issuance must be at or below 24.2kg/CO2e. The Emissions Target Calculator on
the Climate Bonds website can be used
to calculate specific hurdle rates for anytenor bond.

30

South East England

The trajectory chart (Figure 2) showsthe established net zero carbon buildings
trajectory for residential buildings inEngland & Wales. Any building is eligible if
it meets the emissions intensity target forthe mid-point of its bond.

Emissions Intensity (kgCO2e/m2)

Residential buildings in England &Wales are eligible for Certification if
their emissions intensity lies below theestablished hurdle rate.

Figure 2. Emissions Intensity Target Dependent on Tenor of BondEmissions Intensity (kg CO2 e/ m2)

Option 2: Trajectory

Disclaimer: The information contained in this communication does not constitute investment advice in any form and the Climate Bonds Initiative is not an investment adviser. Any reference to a financial organisation
or investment product is for information purposes only. Links to external websites are for information purposes only. The Climate Bonds Initiative accepts no responsibility for content on external websites. The Climate
Bonds Initiative is not endorsing, recommending or advising on the merits or otherwise of any investment or investment product and no information within this communication should be taken as such, nor should any
information in this communication be relied upon in making any investment decision. A decision to invest in anything is solely yours. The Climate Bonds Initiative accepts no liability of any kind, for any investment anindividual or organisation makes, nor for any investment made by third parties on behalf of an individual or organisation, based in whole or in part on any information contained within this, or any other Climate Bonds
Initiative public communication. © Climate Bonds Initiative, November 2017

Low Carbon Building Criteria: England & Wales2