CLIMATE BONDS
STANDARD

Globally recognised, Paris-aligned
Certification of debt instruments,
entities and assets using robust,science-based methodologies
Updated June 2024
Version 4.2

The Climate Bonds Standard
and Certification Scheme
The Climate Bonds Standard and Certification Scheme is a voluntary labelling scheme forinvestments – and now entities – that addresses the challenge of climate change and isconsistent with the goals of the Paris Agreement. The Scheme was launched in 2012 by the
Climate Bonds Initiative (Climate Bonds), a not-for-profit organisation working to mobilise
global capital for climate action.
The Standard was initially designed to support confidence in the climate change
credentials of green bonds and other debt instruments and to facilitate investment
decision making.
Certification under the Standard confirms that debt instruments, assets or entities meetassessment frameworks and criteria required by the Climate Bonds Standard (CBS).
Transparently developed scientific criteria underpin the Standard, and a network of Climate
Bonds approved verifiers provides independent assessment. An international, independent
Climate Bonds Standard Board (CBSB), comprised of institutional investor representatives
and appointed by Climate Bonds trustees, provides oversight of the Scheme.
This document details the requirements for Certification under the Climate Bonds Standard
version 4.2 (CBS v4.2) for all of the following:
A. Use of proceeds (UoP) debt instruments.
The proceeds of such instruments are allocated to specific projects, assets, activities, or
expenditures which align with Climate Bonds sector-specific Criteria.
B. Assets.
This involves Certification of the environmental credentials of specific projects, assets, or
activities, following Climate Bonds sector-specific Criteria.
C. Non-financial legal entities.
This Certification is available to legal entities that provide non-financial goods and services,or a segregated segment thereof. This Certification covers:
a. Entities that have ambitious CMPTs aligned with the Climate Bonds Sector Criteria
at the time of Certification, or that will align by 2030, and that meet transition plan anddisclosure requirements, as defined in this Standard; orb. General-purpose debt instruments issued by Certified entities that meet therequirements above.
D. Sustainability-linked debt instruments issued by non-financial legal entities.
These instruments are eligible for Certification if the CMPTs linked to them are aligned with
the Climate Bonds Sector Criteria and supported by a transition plan and disclosure thatmeet the requirements defined in this Standard.
In regard to debt instruments, Certification is applied to each instrument rather than to theissuer’s sustainable/green finance framework.
Sector-specific Criteria for eligible projects, assets or activities can be found on the Standards
page of the Climate Bonds website (https://www.climatebonds.net/standard/available)
Resources for Standard users: https://www.climatebonds.net/certification

Climate Bonds Standard Version 4.2

2

Certification applicants and approved verifiers must use the templates and documents(legal agreements, information forms, checklists) applicable at the time of Certification on
the Climate Bonds website.
Contact email for the Certification team: certification@climatebonds.net

Climate Bonds Initiative New Standard v4.2 Disclaimer
Disclaimer: The information contained in this document does not constitute investment advice in any form or any invitation or
inducement to engage in investment activity and the Climate Bonds Initiative is not an investment adviser. Any reference to afinancial organisation or debt instrument or investment product is for information purposes only. Links to external websites arefor information purposes only. The Climate Bonds Initiative accepts no responsibility for any content on any external website.
Certification under the Climate Bonds Standard relates exclusively to the conformity of one or more designated debt instruments,
designated assets and/or designated entities with the applicable Climate Bonds Standard at the time of Certification. Certification
under the Climate Bonds Standard carries no implication (and should not be understood as carrying any implication) as to any
other aspect of any debt instrument or investment product or any collection of debt instruments or investment products or any
asset or entity or group of assets or entities or as to continuing conformity at any time after the time of Certification. In particular,such Certification carries no implication (and should not be understood as carrying any implication) that any stated target has
been or will at any time be met or that any particular legal or regulatory requirement has been or will be satisfied.
The Climate Bonds Initiative is not endorsing, recommending or advising on the financial merits or (subject to the previous
paragraph) any other aspect of any debt instrument or investment product or any collection of debt instruments or investment
products or any asset or entity or group of assets or entities and no information within this document should be taken as such,nor should any information in this document 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
made by an individual or organisation, 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 document.

Climate Bonds Standard Version 4.2

3

Contents
1. Glossary 6
2. Eligibility requirements for Use ofProceeds and Asset Certifications 10
3. Overview of Entity and
SLD Certification 13
4. Approved verifiers 14
4.1. Professional qualifications
and competence 14
4.2. Special provisions relating toregulated entities 14
4.3. Verification report requirements 14
4.4. Disclosure only on authorisationof the receiver of the certification 15
PART A:USE OF PROCEEDS CERTIFICATION 16
A.1. Introduction 16
A.2. Issuance requirements 16
A.2.1. Utilisation of proceeds 16
A.2.2. Process for evaluation andselection of projects and assets 17
A.2.3. Management of proceeds 17
A.2.4. Pre-issuance reporting: green
finance framework and disclosure
documentation 17
A.3. Post-issuance requirements 19
A.3.1 Use of proceeds 19
A.3.2 Process for evaluation andselection of projects and assets 20
A.3.3 Management of proceeds 21
A.3.4 Post-issuance reporting 21
A.4. Certification process foruse of proceeds instruments 23
A.4.1 Process outline 23
A.4.2 Pre-issuance Certification 24
A.4.3 Post-issuance Certification 24
A.4.4 Programmatic Certification 25
A.4.5 Validity of Certification
label/mark 26
A.4.6 Maintaining Certification 27
A.4.7 Revocation of Certification 27
PART B.
ASSET CERTIFICATION 29
B.1. Eligibility requirements 29
B.2. Process outline 29
B.3. Static or dynamic
Asset Certification 29
B.4. Validity of Certification label/mark 30

Climate Bonds Standard Version 4.2

B.4.1. Initial Asset Certification 30
B.4.2. Renewal Asset Certification 30
B.5. Revoking Certification 30
PART C:ENTITY CERTIFICATION 31
C.1. Introduction 31
C.2. Eligibility and accounting rules 35
C.2.1. Applicant control over
the Certified entity 35
C.2.2. Boundary of the Certified entity 35
C.2.3. Obtaining Entity Certification 35
C.2.4. Maintaining Entity Certification 36
C.3. Transition plan forcompliant activities 38
C.3.1. Climate performance 38
C.3.1.1. Climate mitigation
performance targets 38
C.3.1.2. Climate adaptation& resilience performance 38
C.3.2. Delivery strategy 39
C.3.2.1. Board approval of thedelivery strategy 39
C.3.2.2. Foundations 39
C.3.2.3. Implementation plans 39
C.3.3. Governance 40
C.3.3.1. Board and senior executive
responsibility 40
C.3.3.2. (Re)setting and monitoring
the climate mitigation performancetargets and delivery strategy 41
C.3.3.3. Correction ofunderperformance 41
C.4. Commitments of theparent group 41
C.4.1. Exclusions 41
C.4.1.1. Expansion of fossil
fuel activities 41
C.4.1.2. Conversion ofhigh-carbon stock land 41
C.4.2. Net-zero commitment 41
C.4.3. Transition plans 42
C.5. Disclosure 42
C.5.1. Information to disclose 42
C.5.2. Format of disclosure 424C.6. Extending Entity Certification tolinked financial instruments 50
C.6.1. Extending Entity Certification tofinancial instruments linked to theclimate mitigation performancetargets and delivery strategy 50
C.6.2. Extending Entity Certification
to general purpose debt 50
C.6.3. Revocation of linked Certification 50
PART D:SUSTAINABILITY-LINKED DEBT 51
D.1. Introduction 51
D.2. Eligibility and accounting rules 55
D.2.1. Issuer control 55
D.2.2. Boundary of economic activities 55
D.2.3. Obtaining SLD Certification 55
D.2.4. Maintaining SLD Certification 56
D.3. Transition plan linked
to the SLD instrument 58
D.3.1. Climate performance 58
D.3.1.1. Climate mitigation
performance Targets 58
D.3.1.2. Climate adaptation &resilience performance 59
D.3.2. Delivery strategy 59
D.3.2.1. Board approval ofthe delivery strategy 59
D.3.2.2. Foundations 59
D.3.2.3. Implementation plans 59
D.3.3. Governance 60
D.3.3.1. Board and senior
executive responsibility 60
D.3.3.2. (Re)setting and monitoring
the climate mitigation
performance 61
D.3.3.3. Correction ofunderperformance 61
D.4. Commitments ofthe parent group 61
D.4.1. Exclusions 61
D.4.1.1. Expansion offossil fuel activities 61
D.4.1.2. Conversion ofhigh-carbon stock land 61
D.4.2. Net-zero commitment 62
D.4.3. Transition plans 62
D.5. Disclosure 62
D.5.1. Information to disclose 62
D.5.2. Format of disclosure 62

Climate Bonds Standard Version 4.2

PART E:ENTITY CERTIFICATION FOR AGRI-FOOD
DEFORESTATION- AND CONVERSIONFREE SOURCING 70
E.1. Introduction 70
E.2. Eligibility and accounting rules 70
E.2.1. Applicant control over the Certified
agri-food DCF entity 70
E.2.2. Boundary of the Certified entity 70
E.2.3. Obtaining agri-food DCF Entity
Certification 70
E.2.4. Maintaining agri-food DCF Entity
Certification 71
E.2.5. Revocation of agri-food DCF Entity
Certification 71
E.3. Compliance 72
E.3.1. Performance 72
E.3.2. Governance 72
E.4. Commitments of the parent group 73
E.4.1. Exclusions 73
E.5. Disclosure 73
E.5.1. Information to disclose 73
ANNEX 1 76
Types of use of proceeds instruments thatcan be Certified 76

5

1. Glossary
TermAcronymDefinitionagri-foodentityA legal entity with at least 50 percent of its revenues generated fromagri-food supply chains, which includes, but is not limited to, traders,processors, manufacturers, distributors, and retailers.

agri-food DCF
Certified entity

An agri-food entity that has been Certified under Section E of this Standard.

applicantA legal entity applying for Entity Certification or an issuer of a debt
instrument applying for Use of Proceeds (UoP) or Sustainability-Linked Debt
(SLD) Certification or an asset owner applying for Asset Certification, under
the Climate Bonds Standard.

approvedverifier

An independent third-party assurance or approved external review provider
approved by the Climate Bonds Standard Board and listed on the Climate
Bonds website as authorised to issue verification opinions in relation to a
Certification application in accordance with the Climate Bonds Standard.

Certificationagreement

The legal agreement executed by the applicant and submitted to the
CBSS as part of the Certification process, which is available from the
Climate Bonds website and includes terms and conditions for using theCertification mark.

Certification(Certified)

The process of granting the use the Certification Mark in relation to debt
instruments, entities or assets Certified under this Standard.

Certification
mark

The Certification logo designates a Certified Climate debt instrument,
entity or asset that issuers or Applicants may use once they haveobtained Certification from the Climate Bonds Standard Secretariat.
The use of the logo is specified within the terms and conditions of theCertification agreement.

Certification
schemeA scheme developed by Climate Bonds for awarding the Climate Bonds
Certification label/mark to finance instruments, assets, and entities. The
Scheme consists of the Climate Bonds Standard and the Sector Criteria.

Certificationthreshold

The minimum acceptable percentage of compliant activities for entity and
SLD Certification as defined in Clauses C.2.3 and D.2.3.

Certified debt
instrument

Any debt instrument Certified by the Climate Bonds Standard Secretariat
that meets the Climate Bonds Standard requirements. A Certified bond or
Certified loan may take the form of one or more tranches of a bond or loan
facility. The Certified tranche(s) must be clearly designated in such cases.

Certified entity

The entity or part thereof which is Certified under the Climate Bonds
Standard (Part C). Currently, Entity Certification is limited to non-financial
entities or segregated segments thereof.

Climate Bonds
informationform

A template document to be completed by the applicant and submitted
to the CBSS as part of the Certification process, available from the
Climate Bonds website. The form is used and updated throughout theCertification process.

Climate Bonds
Initiative(Climate Bonds)

Climate Bonds is a company limited by guarantee and a charity registeredin England. It is an independent not-for-profit organisation dedicated tomobilising global capital to deliver climate action.

Climate Bonds Standard Version 4.2

6

Term

AcronymDefinition

Climate Bonds
Standard

CBS

A robust framework based on international best practice in green financewhich defines the processes to be followed and Sector Criteria that must be
met to achieve Certification under the Climate Bonds Standard, the current
version of which is published on the Climate Bonds website.

Climate Bonds
Standard
Board

CBSB

An advisory committee set up to review the Standard, Sector Criteria, applications
for Certification under the Standard, applications by prospective verifiers, and to
make recommendations to Climate Bonds trustees and executive management.

Climate Bonds
Standard
Secretariat

CBSS

Consists of the Climate Bonds Certification team, who manage the dayto-day interaction with applicants, verifiers, and other stakeholders; andthe Climate Bonds Standards team, who drive the process for developing
and maintaining Sector Criteria. Enquiries can be sent via email tocertification@climatebonds.net.

climatemitigation
performancetargets

CMPTs

The performance targets that define the measurable climate mitigation
performance to be achieved.

deforestationor conversionfree sourcing

DCF
sourcing

The requirement that the supply chain of an agri-food entity only includes
commodities produced on land that has not been subject to deforestationor the conversion of other natural ecosystems after 31 December 2020.

debt
instrument

Any debt instrument being considered for Certification, whether a bond, aloan, or other type of debt instrument.

compliantactivities

The activities of an entity which contribute to the Certification threshold for
Certified entities and SLDs under Figures C1 and D1, respectively.

disclosure
documentation

Documentation associated with the issuance of a bond, loan or other debt
instrument prepared before it is issued or entered into, and is made available topotential investors. For debt instrument issuance, this documentation is usuallyrequired by the relevant financial regulatory body in the jurisdiction where
the bond, loan or other debt instrument is being offered and may include
items such as a prospectus, term sheet, offering memorandum, indenturecontract, official debt instrument statement, or legal documentation. In somejurisdictions, this also includes marketing materials for the transaction.

entityA legal entity, duly incorporated and legitimately existing in the jurisdiction in which
it operates, providing non-financial goods and services or a segregated segment
thereof. It may or may not include other controlled entities (subsidiaries).

Greenhouse
Gas Protocol

GHG
ProtocolThe GHG Protocol establishes standardised frameworks and guidance forcompanies and organisations preparing a corporate-level GHG emissions
inventory, which encompass the accounting and reporting of the sevengreenhouse gases covered by the Kyoto Protocol.

green financeframework

Information provided by the issuer that describes how its programme ofbonds, loans or other debt instruments will meet the requirements in the
Climate Bonds Standard.

investment
exposure

Actual amounts invested/to be invested in eligible projects or assets.

issuer

The organisation issuing the bond or other Certified debt instrument; or the
borrower and other obligors taking out the loan or other debt instrument.
Climate Bonds Standard Version 4.2

7

Term

AcronymDefinition

key performance KPI
indicator

External or internal measurement/value under management’s control andmaterial to an applicant’s business strategy.

market value

The price at which an asset would change hands between a willing buyer
and a willing seller, neither being under any compulsion to buy or tosell and both having reasonable knowledge of relevant facts. This term
is usually defined by convention within the relevant jurisdiction and issometimes called fair market value or fair value. Market Value may beassessed by an independent valuer or by using an internal valuation model.

materiality ofemissions

The Sector Criteria apply materiality thresholds for scope 1, 2 and 3 emissions
on a sectoral basis.

net proceeds

The amount equal to the gross proceeds of the bonds, loans, or other debt
instruments minus costs directly linked to the issuance, such as legal fees,
accountancy fees, and verification fees. In situations where the debt instrument isa debt facility with a limit (e.g., a revolving credit facility), the net proceeds in thecontext of a UoP Certification will be equal to the drawn amount of the facility.

net-zerotargets

Short-, medium-, and long-term targets set by an entity that aims to reduce
its scope 1, 2 and 3 net greenhouse gas emissions to zero by 2050.

nominated projects and assets

Eligible projects and assets associated with the bond, loan, or other debt
instrument, which may be existing, under construction or yet to be deployed.

non-assessedsegment

The part(s) of the parent group of the Certified entity which do not form partof the Certified entity and those that form part of the Certified entity but do
not contribute to it meeting the Certification threshold per Clause C.2.3.

parentcompany/group

A company is considered a parent company of another entity (asubsidiary) if it exercises control over the subsidiary. The terms ‘control’and ‘subsidiary’ have the meaning assigned to them under International
Financial Reporting Standard 10 (IFRS 10). A parent group consists of theparent company and all the companies that the parent company exercises
control over. Where the applicant does not belong to a group of companies,
the term parent company in this Standard applies to the applicant.

retroactive
Certification

Certification awarded for bonds, loans or other debt instruments which havealready been issued or closed.

safeguards

The exclusions and conditions that the parent company and the parent
group must meet in order for the Certified entity to be eligible for Certification.

Sector Criteria

Sector-specific criteria for the eligibility of specific projects, assets, activities
and/or entities under the Climate Bonds Standard described in the Sector
Criteria documents.

sustainability-linked debt

transition
finance

SLD

Any debt instrument for which the financial and structural characteristics
can vary depending on whether the issuer achieves predefinedsustainability/ESG objectives. Such objectives are measured throughpredefined KPIs and assessed against predefined performance targets.
Proceeds of SLD are intended to be used for general purposes.
Any form of financial support to high-carbon companies intended to finance the implementation of their short-, medium- and long-term plans toachieve net zero.

Climate Bonds Standard Version 4.2

8

Term

AcronymDefinitiontransition plan

The delivery strategy and governance implemented to achieve the decarbonisation targets represented by the CMPTs of the applicant.

unqualified
opinion

An unqualified assurance or external review opinion by an approved verifierindicates that the verification report has been issued with no reservations
regarding the adherence of the applicant (for UoP, Asset, SLD or Entity
Certification) with the requirements of the Climate Bonds Standard andSector Criteria.

update report

A document prepared by the issuer that confirms the ongoing conformance of
the issuer and the relevant debt instrument, or programme of debt instrumentswith the post-issuance requirements of the Climate Bonds Standard.

use ofproceeds debt
instruments

UoP
instruments

The proceeds of UoP instruments are allocated to specific projects or
purposes. For this Standard, UoP instruments finance environmentally
beneficial projects, assets, activities, or expenditures.

verification
engagement

The work conducted by an approved verifier commissioned by an applicant
for Certification to provide a mandatory verification report following the
Climate Bonds Standard.

verification
reportA report prepared by the approved verifier, addressed to the applicant, andprovided to the CBSS as part of the Certification process.

Climate Bonds Standard Version 4.2

92. Eligibility requirements for Use ofProceeds and Asset Certifications
2.1. Eligibility conditions for assets and projects
2.1.1. Projects and assets are only eligible under the Standard if all of the below
conditions are satisfied:i. All applicable regulatory and environmental permits and licences have been obtained;
ii. All relevant legal requirements and obligations in the relevant jurisdiction havebeen satisfied;iii. They fall under any of the categories in Clauses 2.2.1 to 2.2.9.
2.1.2. For UoP Certifications under Part A, the net proceeds of the instrument must be
allocated to any of the following:i. Projects and assets that are fully eligible under the relevant Sector Criteria
applicable at the time of Certification and the requirements of Clause 2.2.
ii. Projects and assets, up to a maximum of 5% in accordance with Clause A.3.1.3,
which do not fully satisfy the Sector Criteria, but meet the conditions of Clause A.3.1.5.
2.1.3. Asset Certification under Part B applies to definable assets and projects that are
fully eligible under the relevant Sector Criteria applicable at the time of Certification andthe requirements of Clauses 2.2.1 to 2.2.6 Expenditures described in Clauses 2.2.7 to
2.2.9 below are not eligible for Asset Certification.
2.2. Eligible categories of assets and projects
Assets and projects in the following categories may be considered eligible for UoP or Asset
Certification under Parts A and B, respectively:
2.2.1. Existing physical assets or projects owned or controlled by an issuer or anentity which fully satisfy the Sector Criteria published on the Climate Bonds website.
Physical assets include existing and operational equipment, machinery, infrastructure,buildings, or land. Projects may include physical assets in construction, redevelopment(upgrades, expansion) and similar asset value creation or enhancement activity.
2.2.2. Planned physical assets or projects which are under development or to be
developed and satisfy all of the following conditions:i. The development plans are supported by detailed engineering and feasibility
reports signed by competent persons who have the relevant professional
qualifications and experience.
ii. The development plans, designs, and specifications are in sufficient detail todemonstrate that the completed asset or project will fully satisfy the Sector Criteria
by the time the asset or project becomes fully operational.
iii. All the relevant environmental impact reports, permits, and licences relevant tothe stage of completion of the assets have been obtained.
iv. There are signed legal agreements in place with any third parties involved in
the construction, which include agreed delivery timelines consistent with the plansand designs.
v. All relevant reporting requirements are complied with.

Climate Bonds Standard Version 4.2

10

2.2.3. Debt or other financing arrangements provided by a lending institution tofinance or facilitate the financing of eligible projects or physical assets, such as corporateloans, retail mortgages, project finance, bank guarantees or performance bonds.
2.2.4. Capital expenditure undertaken to increase the value and/or lifetime of thephysical assets or projects.
2.2.5. Acquisition costs/purchase price of a controlling interest in an entity whose
activities are fully aligned with the Sector Criteria, up to the investor’s share of themarket value of the eligible physical asset or projects holdings.
2.2.6. Leasing structures resulting in right-of-use assets and liabilities and long-termleaseholds on land (with duration greater than 12 months), buildings, and infrastructure.
2.2.7. Subsidies, tax and other incentives, credit schemes and grants, and othersimilar arrangements provided by public entities or agencies, including local andnational governments.
2.2.8. Eligible research and development expenditure
Eligibility requirements of research and development (R&D) expenditure for UoP Certification:a. Any early or later stage expenditure relating to the research, applied research, andexperimental development of solutions, processes, technologies, business models,and other products dedicated to the substantial reduction, avoidance or removal of
GHG emissions for which the ability to substantially reduce, remove or avoid GHG
emissions has been demonstrated in a relevant environment, corresponding to atleast Technology Readiness Level (TRL) 6.1
b. For the avoidance of doubt, this includes expenditure related to research, appliedresearch, and experimental development to bring the solution, process, technology,
business model or other product through TRLs 1-5. In addition, funds or subsidy
schemes incentivising early-stage R&D (TRL1 to TRL5) may be considered eligible if
aiming to bring the solution, product or technology to TRL6.
c. Substantial reduction, removal or avoidance of GHG emissions requires the R&D to:i. provide research, development or innovation for technologies, products orother solutions that enable an economic asset or activity to meet the respective
Sector Criteria under the Climate Bonds Standard; orii. aim to bring to market a solution that is expected to have a substantiallybetter performance in terms of life-cycle GHG emissions than best commerciallyavailable technologies based on public or market information or which
substantially improves their technological and economic feasibility in order tofacilitate their scaling up.
d. TRL6 or above must be demonstrated as follows:i. TRL6 requires that the technology is finely-tuned to a variety of operating
conditions, the process is reliable, the performance matches expectations,interoperability with other connected technologies is demonstrated, themanufacturing approach is clearly defined, and that all environmental,
regulatory and socio-economic issues are addressed.

1. In line with Annex G of the General Annexes of HORIZON 2020 WORK PROGRAMME 2016 2017, p.29
(version of 4.6.2021: https://ec.europa.eu/research/participants/data/ref/h2020/other/wp/2016-2017/annexes/h2020-wp1617-annex-ga_en.pdf).

Climate Bonds Standard Version 4.2

11

ii. Where the researched, developed or innovated technology, product or othersolution is at TRL6 or 7, life-cycle GHG emissions are evaluated in simplified
form by the entity carrying out the research. The entity demonstrates one of thefollowing, where applicable: (a) a patent not older than 10 years associated withthe technology, product or other solution, where information on its GHG emission
reduction potential has been provided; (b) a permit obtained from a competentauthority for operating the demonstration site associated with the innovativetechnology, product or other solution for the duration of the demonstration project,
where information on its GHG emission reduction potential has been provided.
iii. Where the researched, developed or innovated technology, product orother solution is at TRL8 or higher, life- cycle GHG emissions are calculatedusing Recommendation 2013/179/EU or, alternatively, using ISO 14067:2018 or
ISO 14064-1:2018 and are verified by an independent third party.
e. Where the R&D expenditure relates to products, solutions or activities forwhich Climate Bonds has not yet developed Sector Criteria, the eligibility will be
individually assessed on a case-by-case basis. In making such assessments, Climate
Bonds may rely on independent expert reports or opinions.
f. R&D expenditure must be continually assessed by the issuer to ensure that therelevant climate-related goals are being achieved. The results of the assessment
must be disclosed in the annual update report in accordance with Clause A.3.4.
g. All R&D expenditure must be independently verified by a Climate Bonds
approved verifier at least on an annual basis until the related technology reaches
TRL6 or higher.
2.2.9. Related and supporting expenditures for projects or physical assets where theprojects or physical assets meet the relevant Sector Criteria of the Climate Bonds Standard.
Such non-capitalised costs may include the following:a. Relevant installation and routine servicing costs required to ensure the proper
functioning of the asset.
b. Repair and maintenance costs, upgrades or renovations undertaken to maintain thevalue or extend the asset’s life.
c. Relevant performance-monitoring costs concerning tracking climate credentials(e.g., GHG emissions) and climate information services (e.g., satellite monitoring andemissions testing).
d. Any training and education costs directly related to activities a. to c. above.

Climate Bonds Standard Version 4.2

12

3. Overview of Entity and SLD Certification
The Standard provides transparent science-based climate mitigation Sector Criteria for
certifying non-financial corporate entities (and parts thereof) and SLD issued by them.
This includes corporates whose emissions are already near zero and those that are not but
undergoing an ambitious and credible transition.
The Certification rules for entities and SLD aim to address the concerns of issuers andinvestors on the burden of due diligence and reporting requirements, respectively,
while maintaining robustness and credibility. They build on existing frameworks andmethodologies. Additionally, they emphasise the need for ambitious CMPTs in line with
Paris-aligned climate mitigation goals, credible transition plans that provide confidence inthe entity’s ability to meet those targets, and disclosure and verification to enable oversightby investors and other stakeholders.
The Certification rules are based on the frameworks that have been developed by Climate
Bonds for assessing corporate transition plans. The five hallmarks of a credible company
transition aligned with the Paris goals are:i. Paris-aligned targets
ii. Robust plansiii. Implementation action
iv. Internal monitoringv. External reporting
The above hallmarks and these Certification rules move away from relative measures suchas best in class, sector benchmarking or improvements compared to a historic baseline
to more absolute measures tied to transition pathways, which are common to all sector
participants. They require material scope 1, 2, and 3 emissions to be addressed and short-,
medium-, and long-term targets to be set and supported by robust transition plans.

Climate Bonds Standard Version 4.2

13

4. Approved verifiers
4.1. Professional qualifications and competence
Approved verifiers are professional firms that follow best practice guidelines concerning
ethics, independence, management of conflicts of interest, competence, documentation, andquality controls. Members of the verification teams must have appropriate qualifications andprofessional experience to enable them to conduct their work to a high standard as well as
proven competencies in both financial and environmental/technical fields.
Approved verifiers must conduct the verification engagements in accordance with ISAE3000
or an equivalent international standard/assessment framework, and must adhere to allapplicable legal requirements. Verification engagements should also adhere to the ICMA
Guidelines for Green, Social, Sustainability, and Sustainability-Linked Bonds External Reviews(June 2022) and the LMA External Review Guidance for Green, Social and SustainabilityLinked Loans (March 2022).

4.2. Special provisions relating to regulated entities
Certain types of regulated entities, such as credit rating agencies or other regulatedorganisations which provide external review services, may apply to become approved
external review providers, on the condition that they are subject to publicly disclosed
regulatory frameworks and otherwise meet the professional competence requirements of
the Standard. Such firms may opt to issue external review reports in accordance with theirinternal processes and procedures which will have been assessed by the Climate Bonds
Standard Board as equivalent to internationally accepted assurance standards.
Firms applying for the approved external review provider status must submit sufficient
documentation on their internal processes and procedures to the Climate Bonds Standard
Board via the Climate Bonds Secretariat to enable this assessment to be made.
In the context of the Standard, the term approved verifier will be understood to include
approved external review provider and the term verification report will be understood toinclude an external review report issued by an external review provider.
Existing Climate Bonds approved verifiers who meet the relevant criteria may apply tochange their status to approved external review provider.

4.3. Verification report requirements
Verification reports must either include an assurance opinion or an external review opinion
regarding the compliance of the debt instrument/asset/entity with the provisions of
the Climate Bonds Standard. Assurance opinions must additionally specify the level ofassurance entailed in the report.
The applicant must provide all the necessary information about the eligible projects andassets, and the internal processes they have in place to the approved verifier to support
the assessment of conformance with the Climate Bonds Standard. For entity and SLB
Certifications, the applicant must provide the verifier with transition plans and othersupporting documents.
Approved verifiers conduct the verification engagement and prepare the verification
reports per the guidance for approved verifiers provided on the Climate Bonds website. The
subject matter considered by the approved verifiers must include a summary of how theissuer has conformed to the requirements set out in the Standard, including the relevant
Sector Criteria.

Climate Bonds Standard Version 4.2

14

4.4. Disclosure only on authorisation of the receiver of
the Certification
Verification reports submitted to the CBSS may be publicly disclosed only upon theauthorisation of the issuer unless the CBSS is required by law or national regulators tomake such disclosure. The CBSS must consult with the applicant and approved verifier on
the presentation of the information prior to any public release of any verification report.

Climate Bonds Standard Version 4.2

15

PART A: USE OF PROCEEDSCERTIFICATION

A

A.1. Introduction
The requirements for UoP Certification are separated into pre-issuance and post-issuancerequirements which apply before and after the instrument is issued. The Climate Bonds
Standard and Certification Scheme builds on the broad integrity principles contained in the
ICMA Green Bond Principles.
The pre-issuance requirements must be met by issuers seeking Certification prior
to issuance. Post-issuance requirements must be met by issuers seeking continued
Certification following issuance of the debt instrument. Issuers can also apply for
retroactive Certification at any time while the debt instrument is outstanding.
Programmatic Certification is available for frequent issuers of Certified debt instruments.
This option increases flexibility and reduces the verification burden for issuers with largescale or longer-term finance programmes.
Verification by an approved verifier is mandatory in the Certification process.

A.2. Pre-issuance requirements
This section sets out the requirements that apply to all Certified debt instruments before
issuing the bond or closing the loan. These requirements are designed to ensure that:i. the issuer has established appropriate internal processes and controls prior toissuance or closing of the bond, loan, or other debt instrument;
ii. these internal processes and controls are sufficient to enable conformance with the
Climate Bonds Standard after the bond, loan, or other debt instrument has been issued
or has closed and allocation of the proceeds is underway; andiii. the issuer has provided a green finance framework document which explains howeach of the stages involved in issuing a green debt instrument is satisfied (UoP, process
for project evaluation and selection, management of proceeds, reporting).
For issuers seeking pre-issuance Certification of their bond, loan or other debt instrument,
all requirements set out in this section must be met.

A.2.1. Utilisation of proceeds
A.2.1.1. The issuer must document the nominated projects and assets which are eligible
to be associated with the debt instrument. The issuer must compile a list of nominatedprojects and assets which must be kept up to date during the term of the bond.
A.2.1.2. The expected net proceeds of the debt instrument must be no greater than theissuer’s total investment exposure to the proposed nominated projects and assets or
the relevant proportion of the total market value of the proposed nominated projects
and assets owned or funded by the issuer.
A.2.1.3. Nominated projects and assets must not be nominated to other Certified debt
instruments, unless the issuer demonstrates that distinct portions of the nominatedprojects and assets are being funded by different Certified debt instruments or, the existing
Certified debt instrument is being refinanced via another Certified debt instrument.

Climate Bonds Standard Version 4.2 Part A

16

A.2.2. Process for evaluation and selection of projects and assets

A

A.2.2.1. The issuer must establish, document, and maintain a decision-making process
which it uses to determine the eligibility of the nominated projects and assets.
A.2.2.2. The decision-making process must include, without limitation:
i. A statement on the climate-related objectives of the debt instrument.
ii. How the climate-related objectives of the debt instrument are positioned within
the context of the issuer’s overarching objectives, strategy, policy and/or processes
relating to environmental sustainability.
iii. The issuer’s rationale for issuing the bond.
iv. A process to determine whether the nominated projects and assets meet theeligibility requirements of the Climate Bonds Standard.
v. Related Sector Criteria, including any exclusion criteria and any other processapplied to identify and manage potentially material environmental or governancerisks associated with the nominated projects and assets.
vi. Any green standards or certifications referenced in the selection of nominatedprojects and assets.

A.2.3. Management of proceeds
A.2.3.1. The issuer must document and disclose to the approved verifier the systems,
policies, and processes it will use to manage the net proceeds. These must include
arrangements for the following activities:
i. Tracking of proceeds. The net proceeds of the debt instrument can be credited toa sub-account, moved to a sub-portfolio, or otherwise tracked by the issuer in an
appropriate manner and documented.
ii. Managing unallocated proceeds. The balance of unallocated net proceeds can be
managed as per the requirements in Clause A.3.3.3.
iii. Earmarking funds to nominated projects and assets. An earmarking process canbe used to manage and account for funding to the nominated projects and assets
and enables estimation of the share of the net proceeds being used for financing andrefinancing.
A.2.3.2. Where the prospectus requires the proceeds to be ring-fenced, they must
be credited to designated bank accounts that can only fund the specified nominatedprojects and assets. The issuer must track and monitor all payments from thedesignated bank accounts.

A.2.4. Pre-issuance reporting: green finance framework anddisclosure documentation
A.2.4.1. The issuer must prepare a green finance framework and make it publicly
available prior to, or at the time of, issuance. The green finance framework must be
provided to the CBSS as one of the Certification documents.
A.2.4.2. The green finance framework must include all of the following:i. A statement of compliance with the Climate Bonds Standard and/or otherapplicable standards such as the Green Bond Principles or the United Nations
Sustainability Development Goals.
Climate Bonds Standard Version 4.2 Part A

17

A

ii. A summary of the expected UoP.
iii. A description of the decision-making process for project selection.
iv. A description of the issuer’s processes for managing the proceeds.
v. A description of the issuer’s processes for reporting and external review or verification.
A.2.4.3. The green finance framework should also include the following, without limitation:i. Information on the methodology and assumptions to be used for confirming thatthe characteristics or performance of the nominated projects and assets conform to
the relevant Sector Criteria, where required, and any other additional impact metrics
that the issuer will define.
ii. A summary of the approach to managing unallocated net proceeds in accordancewith Clause A.3.3.3.
iii. The intended approach to provide update reports to reaffirm conformance with
the Climate Bonds Standard while the debt instrument remains outstanding.
iv. The list of proposed nominated projects and assets associated with the debt
instruments and the investment areas into which the nominated projects andassets fall. Where there are limits on the detail that can be made publicly available
about specific nominated projects and assets, information disclosed must include
the investment areas into which the nominated projects and assets fall and an
explanation of why detail on nominated projects and assets is limited.
v. Where a proportion of the net proceeds is used for refinancing, information must
be provided regarding the respective shares of the net proceeds used for financing
and refinancing, and the relevant nominated projects and assets or investment areas
which may be refinanced. This may also include the expected look-back period forrefinanced nominated projects and assets.
A.2.4.4. While issuers are encouraged to disclose as much information as possible
with respect to nominated projects and assets, in many cases it is not possible forthe issuer to disclose detailed information about specific projects and assets prior to
the issuance of the bond. This limitation may be due to confidentiality arrangementswith owners of projects and assets, the dynamic nature of the project portfolio,
competitive considerations, or other legal provisions which limit the disclosure ofdetailed information.
A.2.4.5. The issuer must include the following in its disclosure documentation:
i. The investment areas into which the nominated projects and assets fall.
ii. The intended types of temporary investment instruments for the management of
unallocated net proceeds in accordance with Clause A.3.3.3.
iii. The approved verifier engaged by the issuer for the mandatory
verification engagements.
iv. The intended approach to provide update reports to reaffirm conformancewith the Climate Bonds Standard while the debt instrument remains outstanding,including the location of the published documents.
v. The Climate Bonds disclaimer provided in the Certification agreement.

Climate Bonds Standard Version 4.2 Part A

18

A.3. Post-issuance requirements

A

This section sets out the requirements for all Certified debt Instruments after issuance orclosing which must be met by issuers seeking post-issuance or retroactive Certification.

A.3.1. Use of proceeds
A.3.1.1. The net proceeds of the debt instrument must be allocated to the nominatedprojects and assets.
A.3.1.2. All nominated projects and assets must meet the documented objectives ofthe debt instrument as set out in the issuer’s green finance framework.
A.3.1.3. Issuers must allocate at least 95% of the net proceeds of the debt instrument toprojects and assets that meet the Sector Criteria requirements of the Standard.
A.3.1.4. For any part of the net proceeds that finance projects and assets that do not
fully satisfy the Sector Criteria requirements (up to 5%), the issuer must provide detailed
disclosures in the green finance framework.
A.3.1.5. Any nominated projects and assets which do not fully satisfy the Sector Criteria
may be considered eligible if they meet all of the following conditions:i. They must relate to asset categories or activities or sectors for which Climate
Bonds has not yet developed Sector Criteria; andii. They must fall under any of the green project categories listed in the ICMA Green
Bond Principles or the ICMA Social Bond Principles; andiii. The verification report opinion must confirm their alignment with the ICMA
Green/Social Bond Principles; andiv. They must not relate to any of the following excluded activities:• The exploration, extraction or transportation of proven conventional or
unconventional fossil fuel reserves,• Natural gas production,• Refining crude oil to produce derivative products,• The supply and/or use of fossil fuels for power generation and heat,• Conversion or fragmentation of high-carbon stock (HCS) land or unsustainable
operations on HCS land leading to the loss of its status as HCS land.
A.3.1.6. The issuer must allocate the net proceeds to the nominated projects and assets
within 24 months of issuance of the debt instrument. This deadline can be extended by
the CBSS for up to five years (and exceptionally up to ten years if duly justified by thenature of the projects to be financed).
An extension will be granted at the discretion of the CBSS, provided the justification
for it can be substantiated by the issuer and confirmed by the approved verifier. At theend of the allocation period specified in the Certification, the issuer must provide a
post-issuance verification report by an approved verifier. The issuer may be requested
to provide annual post-issuance verification reports until the approved verifier confirmsthat 100% of the proceeds have been allocated.

Climate Bonds Standard Version 4.2 Part A

19

A.3.1.7. Net proceeds may be reallocated to other nominated projects and assets at
any time while the debt instrument remains outstanding, provided the approved verifier
has validated such assets.
A.3.1.8. Nominated projects and assets must not be designated to other Certified debt
instruments, unless the issuer demonstrates that different Certified climate bonds are
funding distinct portions of the nominated projects and assets, or the Certified debt
instrument is being refinanced via another Certified debt instrument.
A.3.1.9. Where a proportion of the net proceeds of the debt instrument is used forrefinancing, the respective shares of the net proceeds used for financing and refinancing
must be tracked and the nominated projects and assets eligible for refinancing mustbe identified. This may also include the expected look-back period for refinanced
nominated projects and assets which should reflect their functional lifetime fordelivering the stated climate mitigation/adaptation/resilience benefits. The remaining
functional lifetime of the financed physical projects or assets must be equal to or greaterthan the term of the instrument being Certified. The net proceeds may only be used forrefinancing operating expenditures that were incurred within three years prior to theissuance of the Certified debt instrument.
A.3.1.10. The issuer must track the net proceeds of the debt instrument following aformal internal process which is documented in accordance with Clause A.3.3.
A.3.1.11. The net proceeds of the debt instrument must be no greater than the issuer’s
total investment exposure or debt obligation to the nominated projects and assets or
the relevant proportion of the total market value of the nominated projects and assets
which are owned or financed by the issuer. When satisfying this clause, the issuer may
choose either (i) the investment exposure or debt obligation to the nominated projects
and assets, or (ii) their market value.
A.3.1.12. Additional nominated projects and assets may be added to, or used to
substitute or replenish, the portfolio of nominated projects and assets as long as they
are eligible under the Standard and are consistent with the debt instrument’s objectives.
Where additional nominated projects and assets are covered by Sector Criteria
which were not included in the scope of either the pre-issuance verification or the
post-issuance verification engagements, the issuer must engage an approved verifier
to provide a verification report covering at least the conformance of the additional
nominated projects and assets with the relevant Sector Criteria.

A.3.2. Process for evaluation and selection of projects and assets
A.3.2.1. The issuer must document and maintain a decision-making process todetermine the continued eligibility of the nominated projects and assets.
This includes all of the following, without limitation:
i. A statement on the climate-related objectives of the bond.
ii. How the climate-related objectives of the debt instrument are positioned within
the context of the issuer’s overarching goals, strategy, policy and/or processes
relating to environmental sustainability.
iii. The issuer’s rationale for issuing the debt instrument.
iv. A process to determine whether the nominated projects and assets meet thesector eligibility requirements specified of the Standard.
v. Other information provided by the issuer as described in Clause A.2.2.
Climate Bonds Standard Version 4.2 Part A

20AA.3.3 Management of proceeds

A

A.3.3.1. The net proceeds of the debt instrument must be credited to a sub-account,
moved to a sub-portfolio, or otherwise identified by the issuer in an appropriatemanner and documented.
A.3.3.2. The issuer of the debt instrument must either maintain an earmarking
process or ring-fence the proceeds per Clause A.2.3 to manage and account for the
allocation of net proceeds to the nominated projects and assets.
A.3.3.3. While the debt instrument remains outstanding, the balance of the tracked
net proceeds must be reduced by amounts allocated to nominated projects andassets. Pending such allocations to nominated projects and assets, the balance of
unallocated net proceeds must be:i. held in temporary investment instruments that are cash, money-market
instruments or other liquid, short-term cash equivalent instruments within a treasury
function; and/or
ii. held in temporary investment instruments that do not relate to greenhouse gas
intensive projects or any projects which are inconsistent with the delivery of a lowcarbon and climate resilient economy; and/oriii. applied to temporarily reduce the indebtedness of a revolving nature before being
redrawn for investments in or disbursements to nominated projects and assets.

A.3.4. Post-issuance reporting
A.3.4.1. Following the issuance of a Certified UoP instrument, to maintain theCertification all issuers must submit annual update reports within 12 to 24 months
from the date of issuance of the debt instrument until its maturity. Any post-issuance
verification report by an approved verifier in any year is deemed to satisfy the issuer’s
requirement to submit an update report for that year.
A.3.4.2. The issuer should also provide an update report on a timely basis in caseof material developments, which include, but are not limited to, early repayment,change of control or acquisition, change of name, changes to the eligibility of assets
and projects, and any material amendments to transaction documents, including any
winding-up process or enforcement.
A.3.4.3. Issuers are encouraged to provide their update reports through existing bondmarket reporting channels, such as the US municipality sector’s Electronic Municipal
Market Access (EMMA) website.
A.3.4.4. An update report must contain allocation and eligibility reporting, and, whererequired, impact reporting:i. Allocation reporting confirms the allocation of bond proceeds to eligible projects
and assets and is mandatory for all Certified debt instruments.
ii. Eligibility reporting confirms the characteristics or performance of projects andassets to demonstrate their eligibility under the relevant Sector Criteria and is
mandatory for all Certified debt instruments.
iii. Impact reporting discloses the metrics or indicators which reflect the expected or
actual impact of eligible projects and assets and is encouraged for all Certified debt
instruments. Impact reporting must at a minimum include any metrics required for
confirming compliance with specific Sector Criteria requirements.

Climate Bonds Standard Version 4.2 Part A

21

A.3.4.5. The three different types of reporting can be included in a single update report,
which must be provided to the CBSS and made publicly available or provided annuallyto the bondholders/lenders for as long as the debt instrument remains outstanding.
A.3.4.6. The timing of reporting under this clause can be aligned with the issuer’s
regular reporting schedule and does not need to follow the anniversary of theCertification or issuance of the bond.
A.3.4.7. The allocation reporting must include the following, without limitation:i. Confirmation that the bonds issued under the issuer’s green finance framework arealigned with the Climate Bonds Standard.
ii. A statement on the climate-related objectives of the bond.
iii. The list of nominated projects and assets to which net proceeds have been
allocated (or reallocated).
iv. The amounts allocated to the nominated projects and assets.
v. An estimate of the respective shares of the net proceeds used for financing andrefinancing and which nominated projects and assets have been refinanced. This may also
include the expected look-back period for refinancing nominated projects and assets.
vi. The geographical distribution of the nominated projects and assets.
A.3.4.8. The eligibility reporting must include the following, without limitation:i. Confirmation that the nominated projects and assets continue to meet the relevant
eligibility requirements applicable when obtaining the Certification.
ii. Information on the environmental characteristics or performance of nominatedprojects and assets, which is prescribed by the relevant Sector Criteria.
iii. The percentage of the UoP allocated to, and detailed description of, the nominatedprojects and assets which do not fully satisfy the Sector Criteria, where the issuer has
made use of the 5% flexibility pocket in accordance with Clause A.3.1.3.
A.3.4.9. Some bonds have a very stable allocation of proceeds and do not need to track
any performance indicators to maintain the eligibility of the projects and assets (such as
financing for a single large-scale solar facility). This means that the annual update report
can be concise and restate the information from previous reports.
A.3.4.10. Where there are limits on the detail that can be made available in the update
report about specific nominated projects and assets (as per Clause A.2.4.3), information
disclosed must include the investment areas into which the nominated projects andassets fall and an explanation of why detail on nominated projects and assets is limited.
A.3.4.11. The impact reporting shall, without limitation, provide the following information:
i. The expected or actual outcomes or impacts of the nominated projects and assets
concerning the climate-related objectives of the bond.
ii. State qualitative performance indicators and, where feasible, quantitative
performance measures of the outcomes or impacts of the nominated projects andassets for the climate-related objectives of the bond.
iii. The methods and the key underlying assumptions for the calculation of theperformance indicators and metrics.

Climate Bonds Standard Version 4.2 Part A

22AA.3.4.12. Examples of quantitative performance measures of the outcomes of
nominated projects and assets can include but are not limited to renewable energy
capacity installed, GHG emissions avoided, emissions intensity, energy performance ofbuildings, number of passengers carried by public transport, and volume of wastewater
treated. Impact metrics and indicators can include but are not limited to: GHG emissions
reduced/avoided, the number of households provided with access to clean power, adecrease in water use, and a reduction in the number of cars required.
A.3.4.13. Methods include, but are not limited to, the framework used and thecalculation methodology, including annualised metrics and/or lifetime calculations.
Both institutional and proprietary frameworks may be used: institutional frameworks
may be referenced by name, but proprietary and new frameworks should be describedin sufficient detail to allow assessment.
A.3.4.14. The issuer must make available to the public or to the bondholders any
verification reports or other relevant material which supports the update report.

A.4. Certification process for use-of-proceeds instruments
A.4.1. Process outline
A.4.1.1. The Certification process consists of three distinct phases that align with thestandard process for issuing and maintaining any debt instrument. This alignment
enables the use of the Certification mark during the pricing and marketing of the debt
instrument and during the negotiation of the loan or other debt instrument. Furthermore,
it guarantees that the integrity of the Certification mark is preserved even after the bondor loan has been issued or closed and the net proceeds have been allocated.
A.4.1.2. Pre-issuance Certification: This involves assessment and Certification of
the issuer’s internal processes, including its selection process for projects and assets;internal tracking of proceeds, and the allocation system for net proceeds. This phaseincludes the issuer preparing a green finance framework and a list of eligible projects
and assets; verification of the framework and the list by an approved verifier; productionof a verification report; and provision of Certification documents to the CBSS. Preissuance Certification of bonds, loans or other debt instruments is awarded via a formal
letter and a Certificate from the CBSS. The pre-issuance Certification covers the periodprior to the issuance or closing of the debt instrument and can assist with marketing thetransaction, provided this period does not exceed 12 months. Pre-issuance Certification
is valid until post-issuance Certification is awarded.
A.4.1.3. Post-issuance Certification: Assessment and Certification of the bond,loan, or other debt instrument after it has been issued or has closed. If the bond, loan
or other debt instrument has been awarded pre-issuance Certification, then the postissuance Certification must be undertaken within the specified allocation period as
specified in Clause A.3.1.3. This phase includes preparation of post-issuance updates,
verification of the information by an approved verifier, production of a verification
report, and provision of Certification documents to the CBSS. Post-issuance Certificationof individual debt instruments is confirmed via a formal letter from the CBSS.
A.4.1.4. Ongoing Certification: Maintenance of the Certification based on ongoing
conformance with the post-issuance requirements of the Climate Bonds Standard,
including meeting the annual reporting requirements specified in Clause A.3.4.
Maintenance requirements are detailed in Clause A.4.6. Non-conformance provisions
are described in Clause A.4.7.

Climate Bonds Standard Version 4.2 Part A

23

AA.4.1.5. Programmatic Certification is also available for issuers with large portfolios
of eligible projects, assets, and programmes of multiple Certified deals over several
years. Issuers using programmatic Certification have a reduced verification burden, forwhich annual verification by an approved verifier is mandatory. This option is describedin detail in Clause A.4.4.

A.4.2. Pre-issuance Certification
A.4.2.1. Preparation for Certification: Issuers seeking Certification and the use of theCertification mark for a debt instrument prior to issuance must fulfil the following:i. Prepare a green finance framework (or equivalent document) which describes howeach of the requirements in the Climate Bonds Standard will be met by the issuer forthe relevant debt instrument issuance or programme.
ii. Complete the Climate Bonds information form, which must be submitted to the
CBSS, identifying the confidential components of the information provided andthose for public disclosure on the Climate Bonds website once Certification has been
confirmed and issuance of the debt instrument has been completed. The issuer may
submit a preliminary Climate Bonds information form to the CBSS in the case wherecertain information on the debt instrument is unknown at the pre-issuance stage.
iii. Engage an approved verifier to undertake the verification engagement to assess
conformance with the pre-issuance requirements of the Climate Bonds Standard. The
approved verifier engaged by the issuer must issue a verification report expressing an
unqualified opinion as to whether the issuer and the proposed debt instrument haveconformed to the pre-issuance requirements of the Climate Bonds Standard.
A.4.2.2. Obtaining pre-issuance Certificationi. An issuer that has completed the pre-issuance preparatory steps in Clause
A.4.2.1 may apply to the CBSS to receive Certification of the debt instrument
under the Climate Bonds Standard by submitting the following documents: (i) acompleted Climate Bonds information form, (ii) a green finance framework (orequivalent summary), (iii) the pre-issuance verification report, and (iv) the executed
Certification agreement. These documents must be submitted to the CBSS via email(certification@climatebonds.net).
ii. If the CBSS is satisfied that the issuer and proposed debt instrument comply
with the pre-issuance requirements, then it shall provide a statement to the issuer
confirming the Certification of the debt instrument under the Climate Bonds
Standard. Thereafter, the issuer has the right (subject to the Certification agreement)
to use the Certification mark in association with the relevant debt instrument until
the post-issuance Certification is confirmed.

A.4.3. Post-issuance Certification
A.4.3.1. Preparation for post-issuance Certification: Issuers seeking Certificationand the use of the Certification mark after issuance of the debt instrument mustcomplete the following:i. If pre-issuance Certification has previously been confirmed for the bond, update
the green finance framework and Climate Bonds information form to reflect any
relevant changes or clarifications to this information after issuance of the bond.
ii. If pre-issuance Certification has not previously been obtained, prepare a green
finance framework and other documents as described in Clauses A.2.4 and A.4.2.1.
Climate Bonds Standard Version 4.2 Part A

24

A

A

iii. Prepare information and evidence to support the bond’s ongoing compliancewith the post-issuance requirements of the Climate Bonds Standard, including any
ongoing requirements in the relevant Sector Criteria.
iv. Engage an approved verifier to undertake a verification engagement after issuingthe debt instrument. If pre-issuance Certification has previously been confirmed,
then this verification must be completed within two years or the period agreed inaccordance with Clause A.3.1.6 of the issuance of the bond.
v. The issuer may engage the same approved verifier to undertake both the pre-issuanceand post-issuance activities under one commercial arrangement, but this is not mandatory.
A.4.3.2. Obtaining post-issuance Certification: If pre-issuance Certification has
previously been confirmed, the issuer must submit the following documents to the
CBSS:
i. An updated Climate Bonds information form.
ii. The green finance framework (or equivalent summary) as updated.
iii. The verification report from the post-issuance verification engagement.
iv. If pre-issuance Certification has not been obtained, the issuer must provide the
CBSS with the documents listed in Clause A.4.2.2.
A.4.3.3. If, at the time of issuance of the post-issuance verification report, the proceeds
have yet to be fully allocated to the nominated projects and assets, then the issuer
must provide the relevant explanations. In such an event, the post-issuance verification
process must be repeated at least annually until the proceeds have been fully allocated.
A.4.3.4. If the CBSS is satisfied that the issuer and the debt instrument comply withthe post-issuance requirements of the Climate Bonds Standard, then it shall provide astatement to the issuer confirming the Certification of the debt instrument. The issuer
has the right to continue using the Certification Mark in association with the relevant
debt instrument while the debt instrument remains outstanding.

A.4.4. Programmatic Certification
A.4.4.1. Programmatic Certification allows an issuer with a portfolio of eligible
projects and assets to issue multiple Certified debt instruments under the overarching
Certification of the whole programme. Programmatic issuers must have internal
controls in place to ensure the eligibility of any new assets being financed through theCertified instruments. Multiple issuances relating to the same project/asset pool areassessed against the version of the Standard and Criteria applicable at the outset of the
programmatic process.
A.4.4.2. To start the Programmatic Certification process, the issuer must submit thefollowing to the CBSS:
i. A pre-issuance verification report on the eligible projects and assets, and thereadiness assessment of the issuer to comply with the requirements of the Standard.
ii. A signed Certification agreement.
iii. A copy of the green finance framework.
iv. The Climate Bonds information form.
A.4.4.3. The CBSS will provide the issuer with formal confirmation of Certification of thefirst issuance under the programme.
Climate Bonds Standard Version 4.2 Part A

25

A.4.4.4. For every subsequent debt instrument issued under the programme, the issuer
must ensure the following:i. A completed Climate Bonds information form for the specific debt instrument
issued is submitted to the CBSS, which will provide the issuer with formal
Certification of the specific instrument.
ii. Adoption of an annual verification reporting process per Clause A.3.4., typically
12–24 months after issuance of the first debt instrument under the programme.
The timing of the post-issuance reporting can be adjusted to align with the issuer’s
financial and sustainability reporting cycle.
iii. At the end of every subsequent reporting year, the issuer must provide the CBSS
with an updated report by an approved verifier to confirm the continuing eligibilityof the projects and assets, and the allocation of the proceeds for all the Certified
instruments under the programme.
iv. A new pre-issuance verification report by the approved verifier will be requiredin the event that new eligible assets are added to the pool of assets verified inaccordance with Clause A.4.4.2.
v. Annual update reports should include post-issuance verification reports whererequired until all the proceeds of all Certified bonds under the programme have been
fully allocated.
vi. Once the post-issuance Certification reporting of all of the Certified instrumentsin the programme has been completed, the issuer need only provide an annual
update report per Clause A.3.4.4. until any new instruments are issued under the
programme, or the programme is completed under Clause A.4.4.4.ix below.
vii. The subject matter considered by the approved verifier must include the post-issuancerequirements of the Climate Bonds Standard, including the reporting requirements
in Clause A.3.4. It must cover all the debt instruments under the programme.
viii. In the event of updates to the green finance framework during the programme, theissuer must promptly notify the CBSS of the changes.
ix. Any programmatic Certification programme is considered completed at the latest of:a. five years from the issuance of the first debt instrument under the programme; andb. two years from the most recent debt instrument issuance for which the post
issuance verification has been completed.
A.4.4.5. After completing the programmatic process, the issuer is no longer required
to engage the approved verifier annually to conduct verification of the debtinstrument programme. However, the issuer must conform with the update reporting
requirements per Clause A.3.4.

A.4.5. Validity of Certification label/markA.4.5.1. An issuer must stop using the Certification mark if any of the following applies:i. The issuer no longer wishes to continue with the Certification of the debt
instrument and provides a written statement to that effect to the CBSS.
ii. The issuance of the debt instrument is cancelled or suspended.

Climate Bonds Standard Version 4.2 Part A

26

A

A

iii. The debt instrument is issued more than 12 months after the pre-issuance
Certification is awarded in accordance with Clause A.4.1.2, other than in the context
of a programmatic Certification as described in Clause A.4.4, and no extension has
been granted by the CBSS.
iv. The CBSS becomes aware that the issuer and/or the debt instrument no longer
conform with the Climate Bonds Standard.
v. A verification engagement commissioned by the issuer, or the CBSS finds that theissuer and/or the debt instrument no longer conforms with the Climate Bonds Standard.
vi. Ongoing Certification is not met (see Clause A.4.1.4)
vii. Revocation of Certification occurs (see Clause A.4.7)

A.4.6. Maintaining Certification
A.4.6.1. To maintain the Certification status of the debt instrument, the issuer must
prepare and make available update reports at least annually, for as long as thedebt instrument remains outstanding per Clause A.3.4, which must be signed by anauthorised officer.
A.4.6.2. The issuer must supply the CBSS with links to update reports or share theirlocation on a public website (such as EMMA).
A.4.6.3. The issuer may engage an approved verifier to undertake further verification
engagements on a periodic basis, to confirm that the issuer has maintained
conformance with the post-issuance requirements of the Climate Bonds Standard.
A.4.6.4. Where nominated projects and assets are covered by Sector Criteria, which
require ongoing demonstration of eligibility, the update reports supplied by the issuer
must include confirmation that nominated projects and assets continue to meet therelevant Criteria, including any relevant metrics or thresholds.

A.4.7. Revocation of Certification
A.4.7.1. An issuer using the Certification mark must provide further information if
requested by the CBSS.
A.4.7.2. In case of an alleged breach of conformance with the Climate Bonds Standard,
the CBSS may request that a different approved verifier prepares a new verification
report as a condition for maintaining Certification under the Climate Bonds Standard:i. This verification report must be submitted to the CBSS for review within threemonths of the initial request.
ii. The CBSS may request no more than one verification report in any six-month
period following post-issuance Certification.
A.4.7.3. Where a Certified debt instrument no longer conforms to the Climate Bonds
Standard, then the issuer must disclose that fact to the CBSS within one month of
becoming aware of this:i. The CBSS may suggest corrective actions to restore conformance.
ii. If conformance is not restored to the satisfaction of the CBSS, the Certification ofthat debt instrument will be revoked.

Climate Bonds Standard Version 4.2 Part A

27

A.4.7.4. Once Certification of a debt instrument has been revoked by the CBSS, theissuer shall:i. not use the Certification mark in association with the debt instrument or imply that
the Certification is still in place, either directly or indirectly through third-party data
providers; andii. take all necessary steps to remove that debt instrument from relevant lists orindices which require Certification; andiii. inform the holders of the debt instrument, relevant exchanges, and othertransaction parties of the change in the Certification status.
A.4.7.5. An issuer of a debt instrument which has had its Certification revoked by the
CBSS may appeal the decision through the Climate Bonds Standard Complaints andAppeals Policy.

Climate Bonds Standard Version 4.2 Part A

28

PART B. ASSET CERTIFICATION

B

B.1. Eligibility requirements
B.1.1. The legal owner of any definable project, asset or portfolioof assets that satisfies the Sector Criteria may apply to Certify such assets. In an Asset
Certification process, the assessment involves only the eligibility of a project, asset, or
portfolio of assets under the Sector Criteria and is not related to the financing of theseassets. The project, asset, or portfolio to be Certified must be labelled and described in
sufficient detail to be clearly identifiable.

B.2. Process outline
B.2.1. Asset owners seeking Certification of their projects, assets or portfolio of assets
must complete the following:i. Disclose to the CBSS the type of assets, the sectors involved, description of the asset/
portfolio and the stage of development of any planned assets, ahead of applying for
Certification. A preliminary opinion on the description of the asset/portfolio will be
provided by the Secretariat.
ii. Engage an approved verifier to undertake the verification engagement to assess
conformance with the Climate Bonds Standard Sector Criteria. The approved verifier
engaged by the owner must issue a verification report expressing an opinion as to whether
the owner has conformed to the Climate Bonds Standard Asset Certification requirements.
iii. The approved verifier must confirm that the asset owner has the internal processes
to ensure that the specific asset/portfolio will remain eligible for the duration of theCertification period.
iv. Complete the Climate Bonds information form and submit to the CBSS, identifying
the confidential components of the information provided and those for public
disclosure on the Climate Bonds website once Certification has been confirmed.

B.2.2. An asset owner may apply to the CBSS to receive Certification of the project/asset/

portfolio of assets under the Climate Bonds Standard by submitting the following documents: (i)a completed Climate Bonds information form, (ii) an unqualified verification report, and (iii) an
executed Certification agreement. These documents must be submitted to the CBSS via email.

B.2.3. If the CBSS is satisfied that the proposed assets comply with the Asset Certification
requirements, then it shall provide a statement to the asset owner confirming theCertification under the Climate Bonds Standard.

B.3. Static or dynamic Asset Certification
B.3.1. Static Asset Certification refers to a project, asset or portfolio of assets, thecomposition of which does not change over the duration of the Certification period.

B.3.2. Dynamic Asset Certification refers to a pool of assets into which new assets may be

added over the duration of Certification, in which case the issuer must adopt a process bywhich they can evaluate and select the individual assets within the green project categories.
This process is similar to that adopted by green bond issuers for selecting eligible assets in a
UoP Certification, as described in Clause A.2.2. In a dynamic Certification process, the approved
verifier must additionally assess the asset owner’s asset selection controls and procedures.

Climate Bonds Standard Version 4.2 Part B

29

B.4. Validity of Certification label/markB

B.4.1. Initial Asset Certification
This Certification attaches to specific eligible projects, assets or portfolios of assets. In thecase of existing assets (per Clause 2.2.1.), Certification attaches to the project, asset or
portfolio of assets. In the case of planned assets (per Clause 2.2.2.), Certification attaches
to the plan for the project, asset or portfolio of assets. and is valid for a maximum of 12months from when the Certification is awarded unless:• Certification is of a planned asset (per Clause 2.2.2.) and the planned asset becomes fully
operational within 12 months of Certification. In which case, Certification lapses at thetime the asset becomes fully operational, and the asset owner may apply for a renewal of
Asset Certification (in accordance with Clause B.4.2.).
• Certification is revoked in accordance with Clause B.5.

B.4.2. Renewal of Asset Certification
Asset Certification may be renewed by the asset owner notifying the CBSS of this intention
at least one month before the existing Certification expires, and submitting a verification
report from an approved verifier to the CBSS at, or before, the expiry date.
This verification report must reconfirm alignment with the Sector Criteria. For an existing asset (asdefined in Clause 2.2.1.) the Sector Criteria are those applicable at the time of Asset Certification
renewal. For planned assets (as defined in Clause 2.2.2.) not yet fully operational at the time ofrenewal, the Sector Criteria are those applicable at the time of the initial Asset Certification and theapproved verifier must reconfirm that the planned asset will fully satisfy those criteria by the time
the asset or project becomes fully operational. For assets that were planned assets at the time ofinitial Certification, but fully operational at the time of renewal and hence now deemed existing
assets (as defined in Clause 2.2.1.), the Sector Criteria are those applicable at the time of renewal.
Where the Certification relates to a planned asset as defined in Clause 2.2.2., the approved
verifier must reconfirm that the climate mitigation components of the relevant Sector
Criteria applicable at the time of the initial certification of the Asset will be fully satisfied by
the time the asset or project becomes fully operational.

B.5. Revoking Certification
B.5.1. An asset owner using the Certification mark must provide further information if

requested by the CBSS.

B.5.2. In cases of a suspected breach of conformance with the Climate Bonds Standard,

the CBSS may request a new verification report be prepared by a different approved verifier
as a condition for maintaining Certification under the Climate Bonds Standard.

B.5.3. Where a Certified project, asset or portfolio of assets no longer conforms to
the Climate Bonds Standard, the asset owner must disclose that fact to the CBSS within
one month of becoming aware of this. The CBSS may suggest corrective actions to
restore conformance. If conformance is not restored to the satisfaction of the CBSS, theCertification of that project, asset or portfolio of assets will be revoked.
B.5.4. Once the Certification of an asset has been revoked by the CBSS, the owner must

not use the Certification mark nor imply that the Certification is still in place.

B.5.5. An asset owner that has had its Certification revoked by the CBSS may appeal

against the decision through the Climate Bonds Standard Complaints and Appeals Policy.
Climate Bonds Standard Version 4.2 Part B

30

PART C: ENTITY CERTIFICATION

C

C.1. Introduction
Currently, Entity Certification is limited to non-financial entities orsegregated segments thereof, for which Climate Bonds has Sector Criteria
for Entity Certification.
These entities, or segments thereof, may have emissions already at or near zero or
significantly above zero but with transitions plans aligned with 1.5°C pathways.
Certification is valid for five years from the date of Certification, subject to compliance withthe requirements laid out in Part C.
Figure C1 summarises the steps to Entity Certification. Figure C2 illustrates theCertification requirements for the compliant activities of the entity, or segregated segment
thereof, being Certified. Figure C3 illustrates additional Certification requirements relating
to the remainder of the legal entity not forming part of the Certified entity (in the caseof Certification of a segment of a legal entity) or to the wider parent group of which theCertified entity is a part (if the Certified entity is part of a parent group).
A checklist for Certification providing further clarification on the requirements to comply withthe criteria for Entity Certification is given in the accompanying Entity Certification checklist
document, which must be adhered to in conjunction with the requirements in Part C.

Climate Bonds Standard Version 4.2 Part C

31

Figure C1: Steps to Entity Certification*

C
Certifiable
entityClauseC.2.3.
All confirmed
by approved
verifier

ClauseC.4.,C.5.
Parent groupis compliant

ClauseC.2.3.

ClauseC.3.,C.5.

ClauseC.2.3.

ClauseC.2.2.

Economic
activities of
the Certified
entity are
disaggregatedEligibleboundary for
the Certified
entity is set

ClauseC.2.1.
Applicanthas control
over Certified
entityEach of thoseeconomic
activities isassessed forcompliance

Compliantactivities
represent
90% of theCertifiedentityFig. C.3.

Compliant parent groups
meet the climate safeguards
and have adequate
disclosure and verification

Compliant activities
have ambitious
performancetargets, supportingtransition plans andgovernance, andadequate disclosureand verification

Fig. C.2.

*These are the steps and requirements to obtain Certification. The steps and requirements for maintaining Certification are different.
See Clause C.2.4.

Climate Bonds Standard Version 4.2 Part C

32

Figure C2: Requirements for Certified entity compliant activities
Transition Plan

C

Transparency

Performancetargets

Foundation*

Implementationplans*

Governance

Disclosure

Climateperformancetargets to assess
and monitor
progress to 1.5°Calignment

Vision of future
activities, products,
services andtechnologies, andstrategic narrativeon levers and risks
to get there

Trackable transition
roadmap of actionplans, milestones,
and operating andfinancial metrics

Oversight,
monitoring, andmanagementof progress

Public information
for transparency
and credibility

C.3.1.
ClimatePerformance

C.3.2.2.
Foundation

C.3.2.3.
Implementation

C.3.3.
Governance

C.5.
Disclosure

C.3.1.1.
Climatemitigation

C.3.2.2.1.
VisionC.3.2.3.1.
Action Plan
scope 1 & 2

C.3.3.1.
Board & senior
executive
responsibility

C.5.1.
Information
to disclose

C.3.1.2.
Adaptation& Resilience

C.3.2.2.2.
Strategic
narrative

C.3.2.3.2.
Action Plan
scope 3C.3.2.2.3.
Environmental & social
goal alignment

C.3.2.3.3.
Finance Plan

C.3.2.3.4.
Internal policyalignment

C.3.3.2.
(Re)setting &monitoring
Targets &Plans
C.3.3.3.
Correctionof underperformance

C.3.2.3.5.
Sensitivity
analysis*Where required for that sector.

Climate Bonds Standard Version 4.2 Part C

33

Figure C3: Parent group requirements
Transition Goals

C
Transparency

Climate performance

Transition strategy

Disclosure

Commitments not toundertake excluded
activities and to achieve
net-zero emissions

Outlines of a transition
plan to achieve that netzero target

Information sharedpublicly for credibility

Climateperformance

Transition strategy

Disclosure

C.4.1.
Exclusions

C.4.3.
Transition plan

C.5.1.
Information todisclose

C.4.2.
Net-zerocommitment

Climate Bonds Standard Version 4.2 Part C34

C

C.2. Eligibility and accounting rules
C.2.1. Applicant control over the Certified entity
The applicant must either be the same legal entity as the Certified entity or haveoperational control over the Certified entity.

C.2.2. Boundary of the Certified entity
The Certified entity may be a group of legal entities within a parent group, a single legal
entity or a segregated segment thereof, at the applicant’s discretion, subject to thefollowing conditions:i. Certification of a parent company must include subsidiaries and other controlled
companies within its boundary. The sole exception is where no Sector Criteria are
available to assess the activities of any subsidiary or controlled company, in which casethose subsidiaries or controlled companies must be excluded from the boundary of theCertified entity.
ii. A segregated segment thereof means a sub-division of a legal entity. This can be
set as the Certified entity and Certified in its own right only if no Climate Bonds Sector
Criteria exist for the other sub-divisions of the legal entity.
iii. Where an economic activity of the Certified entity is carried out across multiple
sub-divisions or subsidiaries or companies controlled by the same legal entity, theapplicant must include all such sub-divisions and subsidiaries within the boundary of
the Certified entity.

C.2.3. Obtaining Entity Certification
The applicant receives a verification report from an approved verifier stating that:i. the proportion of the Certified entity’s economic activities counted as complying withthe climate performance, delivery strategy, governance and disclosure requirements
in Clauses C.3.1, C.3.2, C.3.3, and C.5, respectively, exceeds 90% of the Certified entity’s
total economic activities; andii. the parent group meets the climate safeguard and disclosure requirements inClauses C.4 and C.5, respectively.
Additionally, the applicant supplies to the Climate Bonds Standard Board, through the
CBSS, a copy of the verification report or shares its location on a public website, for the
purpose of publishing on the Climate Bonds website.
See Box C1 for the application process for obtaining Entity Certification.
A note on terminology: The 90% is defined as the Certification threshold, such that economic
activities which meet the climate performance, delivery strategy, governance, and disclosure
requirements per Clauses C.3.1, C.3.2, C.3.3, and C.5, respectively, forming part of this 90% are
the compliant activities.
To assess compliance with this threshold, the economic activities of the Certified entity
are disaggregated and weighted according to either their revenue share or share of GHG
emissions. Refer to the Entity Certification checklist document for the methodology todetermine compliance.

Climate Bonds Standard Version 4.2 Part C

35

C

Box C1: Application process for Entity Certification
Applicants seeking Entity Certification must apply by submitting the following
documents to the CBSS:
i. A completed Climate Bonds information form;
ii. The verification report from an approved verifier that meets the requirements inClause C.2.3; andiii. An executed Certification agreement.
If the Climate Bonds Standard Board is satisfied that the applicant complies with thepre-issuance requirements, then it will provide a statement confirming the Certificationof the entity.
The applicant must identify within the Climate Bonds information form the confidential
components of the information provided and those for public disclosure on the Climate
Bonds website once Certification is confirmed.

C.2.4 Maintaining Entity Certification
The applicant receives an annual verification report from an approved verifier.
i.. In respect of the Certified entity it confirms all of the following:a. If at Certification the Certified entity followed the revenue-share basis forcompliance with the Certification threshold and subsequently increased the revenueof any its economic activities that did not previous contribute to the Certified
entity meeting the Certification threshold, then the applicant has reassessed its
compliance with the Certification threshold, which is still met by the Certified entity(per Clause C.2.3).
b. All interim CMPTs (per Clause C.3.1.1) and all interim milestones in the delivery
strategy (per Clauses C.3.2.3.1, C.3.2.3.2, and C.3.2.3.3) falling due since thelast verification engagement have been met. The only exception to this may
be where compensatory measures have been taken or are planned to address
underperformance and those measures collectively meet the requirements inClause C.3.3.
c. Any and all correction measures have been taken to address any anticipatedunderperformance in the delivery of the delivery strategy, and future interim CMPTs
meet the requirements in Clause C.3.3.
d. All disclosure requirements have been met (per Clause C.5).
ii. In respect of the parent group, it remains in compliance (per Clauses C.4 and C.5).
iii. The applicant is not subject to revocation of Certification due to any of the events
detailed in Box C2.
iv. The applicant supplies to the Climate Bonds Standard Board, through the CBSS, a
copy of the annual verification report or shares its location on a public website, for the
purpose of publishing on the Climate Bonds website.
See Box C3 for the process for maintaining Entity Certification:

Climate Bonds Standard Version 4.2 Part C

36

C

Box C2: Events leading to the revocation of Entity Certification
Entity Certification will also be rescinded at any time where:
1. the applicant becomes aware that the Certified entity and/or the parent group nolonger conforms to the Climate Bonds Standard and provides a written statement tothat effect to the CBSS; or
2. a verification engagement commissioned by the Climate Bonds Standard Board,
finds that the Certified entity and/ or the parent group no longer conforms with the
Climate Bonds Standard; or
3. the applicant has breached any contractual obligation towards the Climate
Bonds Initiative.
In addition, if the Certified entity has undertaken new economic activities in addition to
those previously taken into account when assessing compliance with the Certificationthreshold (per Clause C.2.3), the applicant must reapply for Certification within 12
months of the start of the new economic activity. This new application must consider
the new, expanded economic activities of the Certified entity. If the new application
is not submitted or is not compliant with PART C of the Standard, the existing Entity
Certification will be revoked.

Box C3: Maintaining Entity Certification
Applicants seeking to maintain Entity Certification must submit the following
documents to the CBSS on an annual basis:
i. A completed Climate Bonds information form.
ii. The annual verification report from an approved verifier which meets therequirements per Clause C.2.4.
If the Climate Bonds Standard Board is satisfied that the applicant complies with theongoing requirements, then it will provide a statement confirming the Certification
status of the entity.

Climate Bonds Standard Version 4.2 Part C37

C.3. Transition plan for compliant activities

C

For each of the economic activities of the Certified entity identified per Clause C.2.3, all of
the following requirements must be met for it to be deemed a complying activity.

C.3.1. Climate performance
C.3.1.1. Climate Mitigation Performance Targets
C.3.1.1.1. Time horizon
The CMPTs span the date of Certification to the date the activity is intended to reachnet-zero emissions, or 2050, whichever is sooner.
C.3.1.1.2. Interim CMPTs
The CMPTs include interim targets on a three-yearly basis for the nine years following
the date of Certification and a five-yearly basis thereafter over the full time horizon
described in Clause C.3.1.1.1.
C.3.1.1.3. Alignment with Climate Bonds Standard decarbonisation pathways
The interim CMPTs (per Clause C.3.1.1.2) are benchmarked against the climate
mitigation criteria in the Sector Criteria with which they align by 31 December 2030 at
the latest.
N.B. Different levels of Entity Certification are awarded depending on the date the CMPTsalign with the Sector Criteria (see Box C4).

Box C4: Two levels of Entity Certification
Two levels of Entity Certification are available, depending on when the CMPTs alignwith the Sector Criteria.
1. Level 1 – Aligned: The CMPTs align with the Sector Criteria at the time of
Certification and thereafter until the date these targets represent net-zeroemissions or 2050, whichever is sooner.
2. Level 2 – Transition: The CMPTs do not align with the Sector Criteria at the timeof Certification but align by 31st December 2030 and thereafter until the date thethese targets represent net-zero emissions or 2050, whichever is sooner.
In addition, for both levels, the delivery strategy and governance for achieving these
CMPTs must meet the requirements described in Clauses C.3.2 and C.3.3, respectively,
and the parent group complies with the requirements described in Clause C.4 and thedisclosure requirements of Clause C.5 are met.
C.3.1.1.4. Board approval
The board of the Certified entity has approved the CMPTs no earlier than one year
prior to the application for Certification.
C.3.1.2. Climate Adaptation & Resilience performance
The economic activity complies with any climate Adaptation & Resilience Criteria
specified in the relevant Sector Criteria.

Climate Bonds Standard Version 4.2 Part C38

C.3.2. Delivery strategy

C

C.3.2.1. Board approval of the delivery strategy
If a delivery strategy is required for the economic activity* that delivery strategy:• includes all the elements listed in Clauses C.3.2.2. to C.3.2.3.; and• has been approved by the board of the Certified entity no more than one year prior to
the application for Certification.
*See supplementary guidance for the list of activities that do/do not require
a delivery strategy.
C.3.2.2. Foundations
The delivery strategy includes the following foundational elements:
C.3.2.2.1. Vision
A vision outlining the strategic objectives and priorities of the transition, outlining
what the Certified entity will look like in terms of its future economic activities, physicalassets, and business model that align with the long-term CMPTs of Clause C.3.1.1.
C.3.2.2.2. Strategic narrative
A strategic narrative describing how each of the compliant activities of the Certified
entity will evolve from their current position to the vision of Clause C.3.2.2.1, taking
into account business context.
C.3.2.2.3. Broader social and environmental alignment
A position statement aligning the vision and strategic narrative of Clauses
C.3.2.2.1 and C.3.2.2.2 with the Certified entity’s broader environmental and social
objectives, strategies and/or policies, in particular demonstrating that effects on
biodiversity-sensitive areas, emissions to water, and hazardous waste have beentaken into account.
In addition, the Certified entity is not subject to a complaint to an OECD National
Contact Point regarding the responsible business conduct of multinational enterprises.1
C.3.2.3. Implementation plans
Implementation plans include the following:
C.3.2.3.1. Action plan for scope 1 and 2 emissions
A time-bound plan of the trackable actions the Certified entity will take or is taking
to implement its decarbonisation strategy as described in the vision and strategic
narrative and thereby deliver its CMPTs regarding scope 1 and 2 emissions.
This includes interim milestones and metrics annually for the Certification five-year
period; three-yearly for the subsequent nine years, and a five-yearly basis thereafter.

1. https://mneguidelines.oecd.org/ncps/what-are-ncps-for-rbc.htm

Climate Bonds Standard Version 4.2 Part C39

C

C.3.2.3.2. Action plan for Scope 3 emissions
A time-bound plan of the trackable actions the Certified entity will take or is taking
to implement its decarbonisation strategy as described in the vision and strategic
narrative and thereby deliver its CMPTs regarding scope 3 emissions.
This includes interim milestones and metrics annually for the Certification five-year
period; three-yearly for the subsequent nine years, and a five-yearly basis thereafter.
N.B. This is only required if the relevant Sector Criteria address scope 3 emissions.
C.3.2.3.3. Finance plan
A finance plan detailing the financial implications of the strategic narrative and actionplans, and the trackable actions being taken/ to be taken to deliver the finance plan.
This includes interim milestones and metrics annually for the Certification five-year
period; three-yearly for the subsequent nine years, and a five-yearly basis thereafter.
C.3.2.3.4. Internal policy alignment
Information on the key internal policies and conditions developed or to be
developed to enable the delivery of the CMPTs, strategic narrative, action plans, andfinance plan, explaining how each of these policies supports specific elements andmilestones in the strategic narrative, action plans, and finance plan.
C.3.2.3.5. Sensitivity analysis
Sensitivity analysis identifying the key sensitivities and risks to the vision, strategic
narrative, action plans, and finance plan that have the potential to decisively impact
the delivery of the CMPTs.

C.3.3. Governance
The following accountability mechanisms are in place to govern the delivery of the CMPTs
and any associated delivery strategy.
C.3.3.1. Board and senior executive responsibility
C.3.3.1.1. Board mandate
The board (or equivalent governance body) has a clear mandate to:• oversee the design of the CMPTs and delivery strategy; and• approve the CMPTs and delivery strategy; and• oversee the execution and monitor progress with the delivery strategy; and• approve and monitor any corrective actions required where interim CMPTs anddelivery strategy milestones are not being met.
C.3.3.1.2. Senior management responsibility
Senior management has responsibility for execution of the delivery strategy, and the
responsible parties have authority and access to resources to ensure execution.

Climate Bonds Standard Version 4.2 Part C40

C

C.3.3.2. (Re)setting and monitoring the CMPTs targets and delivery strategy
C.3.3.2.1. (Re)setting CMPTs and the delivery strategy
Tools and mechanisms are in place for the (re)setting of robust CMPTs and thedelivery strategy, including a full review and, if necessary, update of the CMPTs andthe delivery strategy at least every five years.
C.3.3.2.2. Tracking and monitoring delivery
Tools and mechanisms are in place for tracking and monitoring of delivery ofinterim CMPTs and the milestones and metrics identified in the action plans andfinance plan.
C.3.3.3. Correction of underperformance
In the event that interim CMPTs, milestones, and metrics due during the period of
Certification have not been met, corrective action must be taken to reverse that
under-performance so it is not unmet for a period longer than 12 months.

C.4. Commitments of the parent group
C.4.1. Exclusions
C.4.1.1. Expansion of fossil fuel activities
If any legal entity within the parent group is in the business of exploration or extraction offossil fuels, or is a utility company generating or supplying power or heat generated fromfossil fuels, the parent company has, within the last year, publicly (re)committed to no
expansion of any of the following activities across the parent group after 1 January 2023:
i. The exploration and extraction of proven conventional and unconventional fossil
fuel reserves;
ii. The exploration of new conventional and unconventional fossil fuel resources;iii. Natural gas production;
iv. Refining crude oil to produce derivative products;
v. The supply and/or use of fossil fuels for power generation and heat.
C.4.1.2. Conversion of high-carbon stock land
The parent company has, within the last year, publicly (re)committed that as of 1 January
2020, no entity within the parent group has or will convert, fragment, or unsustainably
intensify operations on HCS land leading to the loss of its status as HCS land.

C.4.2. Net-zero commitment
The parent company has approved and made public a net-zero emissions commitment
covering all material scope 1, 2 and 3 emissions of the entire parent group or alreadyhas net-zero emissions in line with the GHG Protocol, based on emission data that is
independently verified/audited and not more than two years old.

Climate Bonds Standard Version 4.2 Part C

41

C.4.3. Transition Plans

C

The parent company has approved and made public corresponding transition plans to
support the public net-zero targets for the parent group (per Clause C.4.2).

C.5. Disclosure
C.5.1. Information to disclose
The applicant publishes the information presented in Table C1 on their website andkeeps it accessible.

C.5.2. Format of disclosure
Disclosures have been and will be made according to the customary practices regarding
corporate disclosures, such as annual reporting, dedicated sustainability reporting,statutory filings, and investor presentations, at the discretion of the applicant.

Climate Bonds Standard Version 4.2 Part C

42

C

Table C1: Disclosure requirements for Entity Certification
Relevantclause

Pre-Certification disclosure

Annual disclosure
thereafter

C.2.1 Applicant
control of theCertified entity

The name of the applicant.

Any changes in therelationship between
the applicant and theCertified entity.

C.2.2. Boundaryof the Certified
entityAll activities of the applicant company, noting which areincluded within the boundary of the Certified entity andwhich are not, and the rationale for that.

The entity that is the Certified entity.
The relationship between the applicant and the Certified
entity (if different).

All legal entities of the applicant, noting which are and are
not included within the boundary of the Certified entity.
Any activities of the applicant which are not included in theboundary of the Certified entity and the rationale for that.
C.2.3. Obtaining
EntityCertification

The economic activities of the Certified entity that haveand have not been counted towards the 90% Certificationthreshold.

Any changes to activities
and/or legal entities of
the applicant, andhow this has or has notchanged the boundary/activities included within
the boundary of theCertified entity.
n/a

The method used to disaggregate and weight different
economic activities within the Certified entity to determine
compliance with the Certification threshold (revenue oremissions).
The legal entities forming part of the parent group, and theeconomic activities they practise.
The assurance or external review provider.
The level of assurance obtained (limited assurance orreasonable assurance) where appropriate.
The professional standard(s) against which the verification
engagement was performed.
The approved verifier’s pre-Certification verification report.
C.2.4
Maintaining
EntityCertification

n/a

The assurance/external
review provider.
The level of assurance
obtained where relevant.
The professional
standard(s) against which
the verification engagement
was performed.
The approved verifier’sannual verification report.
Any revocation of
Certification.

Climate Bonds Standard Version 4.2 Part C

43

Relevant clause

Pre-Certification disclosure

Annual disclosure
thereafter

C.3.1.1. CMPTs

The interim CMPTs over the full time horizon i.e., on athree-yearly basis for the nine years following Certification,
and a five-yearly basis thereafter (per Clauses C.3.1.1.1 andC.3.1.1.2).

Any changes in therelationship between
the applicant and theCertified entity.

The Sector Criteria that the CMPTs have been assessedagainst (per Clause C.3.1.1.3).
The date the CMPTs were approved by the board of theCertified entity.
Alignment of the CMPTs with the sector-specific Criteria at
the time of Certification. If not, the year by which they are
expected to align.
Related to that, whether Certification is Level 1 (Aligned) orLevel 2 (Transition) (per Clause C.3.1.1.3).

C.3.2.1. Approvalof the delivery
strategy

The activities of the Certified entity covered by thedelivery strategy.
In cases where some or all of the activities of the Certified
entity are not required to have a delivery strategy, if andwhen a delivery strategy will be adopted.

Whether alignment with
the Sector Criteria has
been achieved (per Clause
C.3.1.1.3).
Any changes to the
expected date the CMPTs
are expected to align with
the Sector Criteria (earlier
or later) and any relatedchange to the level ofCertification awarded (perClause C.3.1.1.3).
The date of board
approval of any changes
to the delivery strategy
reset since the previous
verification engagement.

The date of board approval of the delivery strategy.
C.3.2.2.1.
Foundationsof the delivery
strategy – vision

A description of the vision addressing the elements
described in Clause 3.2.2.1, and how this aligns with thedelivery of the CMPTs.

Any amendments to thevision since the previous
verification engagement.

The extent, role, and source of any carbon offsets, carbon
removals, and avoided emissions the Certified entity
anticipates employing to address any residual emissions
over and above those required to meet the Sector Criteria.

Climate Bonds Standard Version 4.2 Part C

44

CRelevant clause

Pre-Certification disclosure

Annual disclosure
thereafter

C.3.2.2.2.
Foundationsof the delivery
strategy –strategic
narrative

A description of the strategic narrative addressing
the following:

Any significant
amendments tothe strategic narrative
since the previous
verification engagement.

• Current GHG emissions, in absolute emission terms andany other metrics such as emission intensity detailed in
the Sector Criteria, including information on the current
sources and volume of GHG emissions and how and bywhom this has been calculated and verified.
• Key decarbonisation levers, their anticipated timing, andemission reduction impact.
• Assumed market trends, business growth, pricing anddemand underpinning the transition strategy as well as
regulatory and government policy assumptions.
• Significant challenges in delivering the strategy.
• Significant areas of uncertainty in estimation,
assumptions, or outcomes.
• How the Certified entity has embedded the strategy in its
wider business model, highlighting key implications for
products and services, resourcing, and operational andcapital expenditure, acquisitions or divestments.

C.3.2.2.3.
Foundationsof the delivery
strategy– broaderenvironmental
and socialalignment

A summary assessment of the negative environmental
or social externalities related to delivering the vision andstrategic narrative.
A summary description of the steps that the Certified entity
is taking, or planning to take, to mitigate those impacts.
A summary description of how, if at all, the decarbonisationtransition contributes to the just transition in the region inwhich the activities are carried out.

Climate Bonds Standard Version 4.2 Part C

An update on theassessment of thenegative environmental
or social externalities
related to main actions
supporting the delivery
strategy, and the steps
that the Certified entity is
taking, or planning to take,to mitigate those impacts.

45

CRelevant clause

Pre-Certification disclosure

Annual disclosure thereafter

C.3.2.3.1.
Implementationplans – action
plan for scope 1
and 2 emissions

The roadmap of the short-, medium-, andlong- term actions the Certified entity willtake to deliver the decarbonisation levers
relating to scope 1 and 2 emissions andhence the CMPTs.

Progress and track record against themilestones and business/operational
metrics identified in the action planfor scope 1 and 2 emissions.

The milestones and business/operations
metrics that will be used to track performance.
An overview of which actions, milestones,
and metrics are subject to external review
including the nature of the review.

C.3.2.3.2.
Implementationplans – action
plan for scope 3
emissions

A high-level description of the action
plan for scope 3 emissions describing theobjectives, scope of coverage, and actions
that will be taken to reduce value-chain
emissions necessary for delivery any related
decarbonisation lever identified in thestrategic narrative.
The interim milestones and metrics that will
enable assessment of progress in the delivery of
the action plan for scope 3 emissions.

Where any milestones or business oroperational targets falling due since theprevious verification engagement havebeen not been met, the corrective actions
being taken to address this within 12
months (in line with Clause C.3.3).
Any significant amendments to the action
plan for scope 1 and 2 emissions since
the previous verification engagement.
Progress and track record against
the interim milestones and metrics
identified in the action plan for scope
3 emissions.
Where any milestones or metrics
falling due since the previous
verification engagement have notbeen met, the corrective actions being
taken to address this within 12 months(in line with Clause C.3.3).
Any significant amendments to theaction plan for scope 3 emissions since
the previous verification engagement.

C.3.2.3.3.
Implementationplans – financeplan

A description of the financial implications of
the planned changes to the entity’s businessstrategy, resource allocation, and products
and services arising from its transition
plan, including relevant financial plans andinvestment where possible.
An explanation of how the above impacts
have been integrated into general purpose
financial reporting.
The financial metrics and targets that will be
used to assess progress in the delivery of thefinance plan and the current value of thosemetrics, and the methodologies by whichthose metrics will be calculated.

Progress and track record against theinterim financial milestones
and metrics.
Where any milestones or metrics
falling due since the previous
verification engagement have notbeen met, the corrective actions
being taken to address this within 12
months (in line with Clause C.3.3).
Any significant amendments tothe finance plan since the previous
verification engagement.

Metrics that have significant estimation
uncertainty, noting the sources and nature of
the estimation uncertainties and the factors
affecting the uncertainties.

Climate Bonds Standard Version 4.2 Part C

46

CRelevant clause

Pre-Certification disclosure

Annual disclosure thereafter

C.3.2.3.4.
Implementationplans – internal
policy alignment

The key internal policies that need to be
developed to deliver the CMPTs and thedelivery strategy, and a schedule for theirdevelopment and implementation.

Progress against the schedule for thedevelopment and implementationof the identified internal policies key
to the delivery of the CMPTs and thedelivery strategy.

C.3.2.3.5.
Implementationplans –
sensitivity
analysis

Key sensitivities and risks around the delivery
strategy and achievement of the CMPTs.

Any significant changes to the resultsof the sensitivity analysis since theprevious verification engagement.

The threshold or methodology for determining
which sensitivities and risks have been
identified as key, taking into account themateriality of cumulative or aggregateduncertainties or challenges.

How these changes have beenaddressed in the vision, strategic
narrative, action plans and/or financeplan as appropriate.

Quantification of the potential impact in termsof the likelihood, timing and cost of delivery of
the CMPTs.
How these impacts are reflected in the strategic
narrative, action plans, and finance plan.
C.3.3.1.
Governance– board andsenior executive
responsibility

The named individual, committee or board
responsible for the transition plan.
The management structure in place for
executing the transition plan.
How frequently the board reviews thetransition plan, and how frequently the board
will monitor and receive reports on progressagainst the CMPTs and milestones.
How the Certified entity ensures adequate
climate expertise (e.g., management expertise,provided resources, trainings, skill acquisition).

Any changes to the named individual,
committee, or board responsible forthe transition plan.
Any changes or additions to climate
and/or transition-related KPIs
tied to board, CEO or other senior
compensation plans.
Performance against thedisclosed responsibility-related
metrics and targets.

Any KPIs tied to board, CEO or other senior
executive compensation plans that are alignedwith the organisation’s climate goals, as
described in the transition plan.
Any responsibility related targets and progressagainst those targets.

Climate Bonds Standard Version 4.2 Part C

47

CRelevant clause

Pre-Certification disclosure

Annual disclosure thereafter

C.3.3.2.
Governance (re)setting andmonitoring

Information on internal controls that are in place toscrutinise the transition plan and progress against theplan, by relevant internal assurance functions such as
internal audit.

Any changes to the controls,
tools, and mechanisms
disclosed in the previous
verification engagement.

the CMPTs anddelivery strategy

Stakeholder communication and feedback
mechanisms, including whether the transition planis scrutinised by shareholders (such as through anadvisory vote at the entity’s annual general meeting,or resolution subject to shareholder approval).

If the scheduled review
falls due after the previous
verification engagement, all
CMPTs and delivery strategy
disclosure requirements
detailed under Clauses C.3.1
and C.3.2 are reset.

Information on the process and internal controls
for monitoring and tracking performance regarding
the interim CMPTs and milestones/targets identified
in the action plans and finance plan. This includes
information on any tracking and estimation tools,
including but not limited to GHG performance tools,
and any equivalents for CMPTs that are not expressedin terms of GHG emissions.

Any changes to the date of thenext scheduled review.

Information on the process for regularly reviews of
the transition plan to ensure material updates areincorporated and challenges are addressed.
Commitment by the applicant to review the transition
plan at least every five years.
Date of the last and the next scheduled review.
C.3.3.3.
Governance –correction of underperformancen/a

Any corrective actions
planned to address any
underperformance, with an
explanation of this will be
addressed.

C.4.1. Parent
group
commitments –exclusions

Commitment by the parent company on behalf of theparent group to zero future expansion of any of theactivities detailed in Clause C.4.1.1.

Statement from the parent
company on behalf of the parent
group that no entity within theparent group has expanded
any of the activities detailed in
Clause C.4.1.1 since the previous
verification engagement.

Statement by the parent company on behalf of theparent group that no entity within the parent grouphas expanded any of the activities detailed in Clause
C.4.1.1 since 1 January 2023.
Commitment by the parent company on behalf of theparent group that no entity within the Parent Groupwill or is planning to convert HCS land as detailed in
Clause C.4.1.2.
Statement by the parent company on behalf of theparent group that no entity within the parent grouphas converted HCS land (as detailed in Clause C.4.1.2)
since 1 January 2020.

Climate Bonds Standard Version 4.2 Part C

Statement by the parent
company on behalf of theparent group that no entity
within the parent grouphas converted HCS land(as detailed in Clause C.4.1.2)
since the previous
verification engagement.

48

CRelevant clause

Pre-Certification disclosure

Annual disclosure thereafter

C.4.2. Parent
group
commitments– net zeroCommitment by the parent company to net-zeroemissions and the expected date for net zero,
covering the entire parent group (per Clause C.4.2).

Any changes to the net-zerocommitment for the parent
group (per Clause C.4.2).

C.4.3. Parent
Group Commitments – Transition planA description of the transition plan outlining how
the parent group will achieve net-zero emissions(per Clause C.4.3).

Any updates to the transition
plan for the parent group (perClause C.4.3).

C.6.1. Extending
EntityCertification– to financial
instruments
linked to the
CMPTs andtransition plans

Details of any financial instrument to which
Entity Certification was linked at the timeof Entity Certification.

Details of any financial
instrument to which Entity
Certification has been
extended since the lastverification engagement.

C.6.2. Extending
EntityCertification - togeneral purpose
debt

Details of any financial instrument to which
Entity Certification was linked at the timeof Entity Certification.

Details of any financial
instrument to which Entity
Certification has been
extended since the lastverification engagement.

C.6.3. Extended
EntityCertification– revocationof linked
Certifications

n/aDetails of revocation of
any instrument to which
Entity Certification waspreviously extended.

If any part of the parent grouppractises any of the activities
described under Clause C.4.1.1,
the expected timing to fullycease those activities.

Climate Bonds Standard Version 4.2 Part C

49

C

C

C.6. Extending Entity Certification to linked financial
instruments
C.6.1. Extending Entity Certification to financial instruments
linked to the CMPTs and delivery strategy
The applicant may use Entity Certification as a stepping-stone to Certification of financial
instruments linked to the CMPTs and delivery strategy of the Certified entity as assessed per
Clause C.3, such as a sustainability-linked bond or loan, or a compatible UoP bond.
Certification is not automatically extended to these financial instruments. It requires anapproved verifier to corroborate the link between the Entity Certification and sustainabilitylinked debt (SLD)/ UoP Certification under Part D/Part A of the Standard and meet anyother SLD/UoP criteria as described in this document.

C.6.2. Extending Entity certification to general purpose debt
A Certified entity may also apply for Certification of any general-purpose debt issued
by the same Certified entity, such as commercial paper, revolving credit facilities or a
general-purpose bond.
A company wishing to certify its general-purpose debt must complete and submit the
Climate Bonds information form to the CBSS, which will award the Certification without
needing a verification report by an approved verifier.

C.6.3. Revocation of linked certification
Should Certification of the Certified entity lapse or be revoked for any reason inaccordance with Box C2, Certification of any linked instrument still outstanding will
also be publicly revoked.

Climate Bonds Standard Version 4.2 Part C

50

PART D: SUSTAINABILITYLINKED DEBT

DD.1. Introduction
The requirements for Sustainability-linked debt (SLD) Certification closely mirror
those for Entity Certification. Additional disclosure elements have, however, been
added to the requirements for SLD Certification concerning the structural characteristics
of SLD instruments.
Currently, SLD Certification is only available to SLD instruments issued by legal entities,
or segments thereof, providing non-financial goods and services for which Climate Bonds
has Sector Criteria for SLD Certification.
Certified SLD instruments may be linked to economic activities that either haveemissions already at or near zero or significantly above zero but with transition plansaligned with 1.5°C degree pathways. Certification is focused only on the climate
mitigation aspects of any performance targets linked to the SLD instrument. Where
the performance targets linked to Certified SLD instruments relate to social or otherenvironmental goals, Certification confers no assurance over those performance targets
or any associated (elements of a) transition plan.
SLD Certification is valid for the full term of the SLD instrument, subject to compliance withthe requirements laid out in PART D.
Figure D1 summarises the steps to SLD Certification. Figure D2 illustrates the Certification
requirements for the economic activities represented by the CMPTs linked to the SLD
instrument. Figure D3 illustrates additional Certification requirements relating to wider
activities of the issuer (if any) and the parent group to which it belongs (if any).
A checklist for Certification providing further clarification on the requirements to comply
with the criteria for SLD Certification is given in the accompanying SLD Certification
checklist document. That checklist must be adhered to in conjunction with therequirements in Part D.

Climate Bonds Standard Version 4.2 Part D

51

Figure D1: Steps to SLD Certification*

D
Certified
SLD

ClauseD.2.3.
All confirmed
by approved
verifier

ClauseD.4.,D.5.
Parent groupis compliant

ClauseD.2.3.

ClauseD.3.,D.5.

ClauseD.2.3.

ClauseD.2.2.

Economic
activities are
disaggregatedEligibleboundaryfor economic
activities
is setClauseD.2.1.
Applicant hascontrol overeconomic
activities

Compliantactivities
represent 90%
of economic
activities

Each of thoseeconomic
activities isassessed forcompliance

Fig. D.3.

Compliant parent groups
meet the climate safeguards
and have adequate
disclosure and verification

Compliant activities
have ambitious
performancetargets, supportingtransition plans andgovernance, andadequate disclosureand verification

Fig. D.2.

*These are the steps and requirements to obtain Certification. The steps and requirements for maintaining Certification are different.
See Clause D.2.4.

Climate Bonds Standard Version 4.2 Part D

52

Figure D2: Requirements for compliant activities

D

Transition Plan

Transparency

Performancetargets

Foundation*

Implementationplans*

Governance

Disclosure

Climateperformancetargets to assess
and monitor
progress to 1.5°C
degree alignment

Vision of future
activities, products,
services andtechnologies, andstrategic narrativeon levers and risks
to get there

Trackable transition
roadmap of actionplans, milestones,
and operating andfinancial metrics

Oversight,
monitoring, andmanagement ofprogress

Public information
for transparency
and credibility

D.3.1.
ClimatePerformance

D.3.2.2.
Foundation

D.3.2.3.
Implementation

D.3.3.
Governance

D.5.
Disclosure

D.3.1.1.
Climatemitigation

D.3.2.2.1.
VisionD.3.2.3.1.
Action plan
scope 1 and 2

D.3.3.1.
Board andsenior executive
responsibility

D.5.1.
Information
to disclose

D.3.1.2.
Adaptation& Resilience

D.3.2.2.2.
Strategic
narrative

D.3.2.3.2.
Action plan
scope 3D.3.2.2.3.
Environmental and social
goal alignment

D.3.2.3.3.
Finance plan

D.3.2.3.4.
Internal policyalignment

D.3.3.2.
(Re)setting &monitoring
Targets &Plans
D.3.3.3.
Correctionof underperformance

D.3.2.3.5.
Sensitivity
analysis*Where required for that sector.

Climate Bonds Standard Version 4.2 Part D

53

Figure D3: Requirements on the parent group
Transition Goals

D

Transparency

Climate performance

Transition strategy

Disclosure

Commitments not toundertake excluded
activities and to achieve
net-zero emissions

Outlines of a transition
plan to achieve that netzero target

Information sharedpublicly for credibility

Climateperformance

Transition strategy

Disclosure

D.4.1.
Exclusions

D.4.3.
Transition plan

D.5.1.
Information todisclose

D.4.2.
Net-zerocommitment

Climate Bonds Standard Version 4.2 Part D54

D.2. Eligibility and accounting rules

D

D.2.1. Issuer control
The issuer has operational control over the economic activities represented by the CMPTs
linked to the SLD instrument.

D.2.2. Boundary of economic activities
The issuer may set the boundary of the economic activities represented by the CMPTs
linked to the SLD instrument at their discretion, subject to the following condition:i. Where the same economic activity is carried out across multiple sub-divisions or
subsidiaries or companies controlled by the same legal entity, the CMPTs must address all
instances of that activity across all sub-divisions and companies controlled by the issuer.

D.2.3. Obtaining SLD Certification
The issuer receives a verification report from an approved verifier confirming the following:i. At least 90% of economic activities represented by the CMPTs linked to the SLD
instrument comply with the climate performance, delivery strategy, governance, anddisclosure requirements in Clauses D.3.1, D.3.2, D.3.3, and D.5, respectively; andii. The remaining percentage of the economic activities represented by the CMPTs
linked to the SLD instrument comply with the climate performance, delivery strategy,
governance and disclosure requirements in Clauses D.3.1.1.1, D.3.1.2.2, D.3.1.2, D.3.2,
D.3.3, and D.5, respectively; andiii. The parent group complies with the climate safeguard and disclosure requirements
in Clauses D.4 and D.5, respectively; andiv. The SLD instrument will not mature or become callable before the date of the firstinterim performance target to which the instrument is linked.
And
The issuer supplies the Climate Bonds Standard Board, through the CBSS, with a copyof the verification report or shares its location on a public website, for the purpose of
publishing on the Climate Bonds website.
And
If the SLD instrument has UoP elements (i.e., it is a hybrid), it meets the requirements for
UoP bonds described in PART A of this document.
See Box D1 for the application process for obtaining SLD Certification.
A note on terminology: The 90% is defined as the Certification threshold; such that economic
activities which meet the CMPTs, delivery strategy, governance, and disclosure requirements
per Clauses D.3.1, D.3.2, D.3.3, and D.5, respectively, which form part of this 90% are thecompliant activities.
To assess compliance with this threshold, the economic activities represented by the CMPTs
linked to the SLD instrument are disaggregated and weighted according to either theirrevenue share or share of GHG emissions. See the SLD Certification checklist document for the
methodology to determine compliance.

Climate Bonds Standard Version 4.2 Part D

55

D

Box D1: The application process for SLD Certification
Single SLD Certification
Issuers seeking SLD Certification shall apply by submitting the following documents to
the CBSS:
1. A completed (as appropriate) Climate Bonds information form; and2. The Verification Report satisfying the requirements in Clause D.2.3; and3. An executed Certification Agreement.
If the Climate Bonds Standard Board is satisfied that the issuer complies with thepre-issuance requirements, then it will provide a statement confirming the Certificationof the SLD.
The issuer will identify within the Climate Bonds information form the confidential
components of the information provided and those for public disclosure on the Climate
Bonds website once Certification has been confirmed.
Programmatic SLD Certification
Programmatic Certification allows an issuer that meets the requirements of Clauses D.2,
D.3, D.4, and D.5 above to Certify a number of SLD instruments which share common
transition plans.
For the first SLD instrument under the programme, the issuer follows the standard
process for Climate Bond Certification as per single SLD Certification. For subsequent
SLD instruments under the programme, the issuer must apply to the Climate Bonds
Standard Board to receive Certification of each subsequent instrument’s compliancewith the Climate Bonds Standard, as follows:i. Prior to issuance, the issuer must supply the CBSS with a completed Climate Bonds
information form for the specific SLD instrument to be considered for Certification. The
CBSS will promptly provide the issuer with formal confirmation of Certification of thespecific SLD instrument.
ii. Following the issuance of every debt instrument, the issuer must supply the
CBSS with an updated Climate Bonds information form.
iii. The annual verification reports described in Clause D.2.4 must cover all the SLD
instruments issued under the programme.

D.2.4. Maintaining SLD Certification
The issuer receives an annual verification report from an approved verifier.
i. In respect of the activities represented by the CMPTs linked to the SLD instrument theannual verification report confirms all of the following:a. If since the last verification engagement, the revenue share of any existing part ofthe issuer’s activities represented by the CMPTs that did not previously contribute tomeeting the Certification threshold increases, the issuer has reassessed compliancewith the Certification threshold, which is still met by the Certified SLD instrument (per Clause D.2.1).

Climate Bonds Standard Version 4.2 Part D56

Db. All interim CMPTs (per Clause D.3.1.1) and all interim milestones in the delivery
strategy (per Clauses D.3.2) falling due since the last verification engagement havebeen met. The only exception to this may be where compensatory measures havebeen taken or are planned to address underperformance and those measurescollectively meet the requirements in Clause D.3.3.
c. Any and all correction measures have been taken to address any anticipatedunderperformance in the delivery of the delivery strategy and future interim CMPTs(per Clause D.3.3).
d. All disclosure requirements have been met (per Clause D.5).
ii. The annual verification report confirms the parent group remains in compliance (perClauses D.4. and D.5).
iii. The annual verification report confirms the issuer is not subject to revocation of
Certification due to any of the events detailed in Box D2.
iv. The issuer supplies the Climate Bonds Standard Board, through the CBSS, with acopy of the annual verification report or shares its location on a public website, for the
purpose of publishing on the Climate Bonds website.
See Box D3 for the process for maintaining SLD Certification.

Box D2: Events leading to the revocation of SLD Certification
SLD Certification will be rescinded at any time where any of the following
conditions are met:
1. The issuer becomes aware that the Certified SLD instrument and/or the parent groupno longer conforms to the Climate Bonds Standard and provides a written statement tothat effect to the CBSS.
2. A verification engagement commissioned by the Climate Bonds Standard Board
finds that the Certified SLD instrument and/or the parent group no longer conforms
with the Climate Bonds Standard.
3. The CMPTs to which the SLD instrument is linked are reset at a level lower than thosein place at the time of Certification.
4. The issuer has breached any contractual obligation towards Climate Bonds.

Box D3: Maintaining SLD Certification
Applicants seeking to maintain Entity Certification must submit the following
documents to the CBSS on an annual basis:
i. A completed Climate Bonds information form.
ii. The annual verification report prepared by an approved verifier which meets therequirements of Clause D.2.4.
If the Climate Bonds Standard Board is satisfied that the applicant complies with theongoing requirements, it will provide a statement confirming the certified status of the
SLD instrument.

Climate Bonds Standard Version 4.2 Part D57

D.3. Transition plan linked to the SLD instrument

DD.3.1. Climate performance
D.3.1.1. Climate Mitigation Performance Targets
The CMPTs to which the SLD instrument is linked meet the following requirements.
D.3.1.1.1. Time horizon
The CMPTs cover the time from the date of Certification to the date the activity isintended to hit net-zero emissions, or 2050, whichever is sooner.
D.3.1.1.2. Interim CMPTs
The CMPTs include interim targets on a three-yearly basis for the term of the SLD
instrument and a five-yearly basis thereafter over the full-time horizon described in
Clause D.3.1.1.1.
D.3.1.1.3. Alignment with the Climate Bonds Standard
decarbonisation pathways
All interim CMPTs (per Clause D.3.1.1.2) representing economic activities that
contribute to meeting the compliance threshold (see Clause D.2.3) are benchmarked
against the climate mitigation criteria in the Sector Criteria and align with thosecriteria by 31 December 2030 at the latest.
N.B. Different levels of SLD Certification are awarded depending on the date the CMPTsalign with the Sector Criteria (see Box D4)..
D.3.1.1.4. Board approval
The board of the issuer has approved the CMPTs no earlier than one year prior toapplication for Certification.

Box D4: Two levels of SLD Certification
Two levels of SLD Certification levels are available, depending on when the CMPTs alignwith the Sector Criteria.
1. Level 1 – Aligned: The CMPTs align with the Sector Criteria at the time of
Certification and thereafter until the date that they represent net-zero emissions or
2050, whichever is sooner.
2. Level 2 – Transition: The CMPTs do not align with the Sector Criteria at the timeof Certification but align by 31st December and thereafter until the date that they
represent net-zero emissions or 2050, whichever is sooner.
In addition, for both levels, the delivery strategy and governance for the achieving the
CMPTs meet the requirements described in Clauses D.3.2 and D.3.3, respectively, andthe parent group complies with the requirements described in Clause D.4 and thedisclosure requirements of Clause D.5 are met.

Climate Bonds Standard Version 4.2 Part D58

D

D.3.1.2. Climate Adaptation & Resilience performance
The economic activities of the issuer represented by the CMPTs linked to the SLD
instrument also meet any climate adaptation and resilience requirements in therelevant Sector Criteria.

D.3.2. Delivery strategy
D.3.2.1. Board approval of the delivery strategy
If a delivery strategy is required* for the economic activities represented by the CMPTs
per Clause D.3.1.1, that strategy must satisfy both of the following conditions:
1. It includes all the elements listed in Clauses D.3.2.2 and D.3.2.3.
2. It has been approved by the board of the issuer no more than one year prior to theapplication for Certification.
*See supplementary guidance for the list of economic activities that do/do not require adelivery strategy.
D.3.2.2. Foundations
The delivery strategy includes the following foundational elements.
D.3.2.2.1. Vision
A vision outlining the long-term strategic objectives and priorities for the economic
activities of the issuer represented by the CMPTs of Clause D.3.1.1, including the longterm vision for its physical assets and operating model.
D.3.2.2.2. Strategic narrative
A strategic narrative describing how each of the economic activities of the issuer
represented by the CMPTs will evolve from their current position to the vision of Clause
D.3.2.2.1 taking into account the business context.
D.3.2.2.3. Broader social and environmental alignment
A position statement aligning the vision and strategic narrative of Clauses D.3.2.2.1
and D.3.2.2.2 with the issuer’s broader environmental and social objectives, strategies
and/or policies; in particular demonstrating that effects on biodiversity sensitive areas,
emissions to water, and hazardous waste have been taken into account.
In addition, the issuer is not subject to a complaint to an OECD National Contact
Point regarding the responsible business conduct of multinational enterprises.
D.3.2.3. Implementation plans
Implementation plans include the following.
D.3.2.3.1. Action plan for scope 1 and 2 emissions
A time-bound plan of the trackable actions the issuer will take or is taking to
implement its decarbonisation strategy as described in the vision and strategic
narrative and thereby deliver its CMPTs regarding scope 1 and 2 emissions.
This includes interim milestones and metrics annually for the first five years of
Certification, three-yearly for the subsequent nine years, and a five-yearly basis thereafter.

Climate Bonds Standard Version 4.2 Part D59

D

D.3.2.3.2. Action plan for scope 3 emissions
A time-bound plan of the trackable actions the issuer will take or is taking to
implement its decarbonisation strategy as described in the vision and strategic
narrative and thereby deliver its CMPTs regarding scope 3 emissions.
This includes interim milestones and metrics annually for the first five years of
Certification, three-yearly for the subsequent nine years and a five-yearly basis thereafter.
N.B. This is only required if the relevant Sector Criteria address scope 3 emissions.
D.3.2.3.3. Finance plan
A finance plan detailing the financial implications of the strategic narrative andaction plans, and the trackable actions being taken/to be taken to deliver thisfinance plan.
This includes interim milestones and metrics annually for the first five years of
Certification, three-yearly for the subsequent nine years and five-yearly basis thereafter.
D.3.2.3.4. Internal policy alignment
Information on the key internal policies and conditions developed or to be
developed to enable the delivery of the CMPTs, strategic narrative, action plans, andfinance plan, explaining how each of these policies supports specific elements andmilestones in the strategic narrative, action plans, and finance plan.
D.3.2.3.5. Sensitivity analysis
Sensitivity analysis identifying the key sensitivities and risks to the vision, strategic
narrative, action plans, and finance plan that have the potential to decisively impact
the delivery of the CMPTs.

D.3.3. Governance
The following accountability mechanisms are in place to govern the delivery of the CMPTs(per Clause D.3.1.1) and the associated delivery strategy (per Clause D.3.2).
D.3.3.1. Board and senior executive responsibility
D.3.3.1.1. Board mandate
The board (or equivalent governance body) has a clear mandate to:• oversee the design of the CMPTs and delivery strategy; and• approve the CMPTs and delivery strategy; and• oversee the execution and monitor progress with the delivery strategy; and• approve and monitor any corrective actions required where interim CMPTs anddelivery strategy milestones are not being met.
D.3.3.1.2. Senior management responsibility
Senior management has responsibility for execution of the delivery strategy, and the
responsible parties have authority and access to resources to ensure execution.

Climate Bonds Standard Version 4.2 Part D60

D

D.3.3.2. (Re)setting and monitoring the CMPTs and delivery strategy
D.3.3.2.1. (Re)setting CMPTs and the delivery strategy
Tools and mechanisms are in place for the (re)setting of robust CMPTs and thedelivery strategy, including a full review and, if necessary, update of the CMPTs andthe delivery strategy at least every five years.
D.3.3.2.2. Tracking and monitoring delivery
Tools and mechanisms are in place for tracking and monitoring of delivery of interim
CMPTs and the milestones and metrics identified in the action plans and the financeplan.
D.3.3.3. Correction of underperformance
In the event that interim CMPTs and milestones and metrics due during the period of
Certification have not been met, corrective action must be taken to reverse that no such
under-performance is unmet for a period longer than 12 months, or by the maturity of
the SLD instrument, whichever is earlier.

D.4. Parent group commitments
D.4.1. Exclusions
D.4.1.1. Expansion of fossil fuel activities
If any legal entity within the parent group is in the business of the exploration of
extraction of fossil fuels, or is a utility company generating or supplying power or heatgenerated from fossil fuels, then the parent company has, within the last year, publicly(re)committed to no expansion of any of the following activities across the parent group
after 1 January 2023:
i. The exploration and extraction of proven conventional and unconventional fossil
fuel reserves.
ii. The exploration of new conventional and unconventional fossil fuel resources.
iii. Natural gas production.
iv. Refining crude oil to produce derivative products.
v. The supply and/or use of fossil fuels for power generation and heat.
D.4.1.2. Conversion of high-carbon stock land
The parent company has, within the last year, publicly (re)committed that as of 1 Jan
2020, no entity within the parent group has or will convert, fragment, or unsustainably
intensify operations on HCS land leading to the loss of its status as HCS land.

Climate Bonds Standard Version 4.2 Part D61

D.4.2. Net-zero commitment

D

The parent company has approved and made public net-zero emissions commitments
covering all material scope 1, 2 and 3 emissions of the entire parent group or already has
net-zero emissions as determined in line with the GHG Protocol and based on emission
data that is independently verified/audited and not more than two years old.

D.4.3. Transition plans
The parent company has approved and made public corresponding transition plans to
support net-zero targets for the parent group (per Clause D.4.2).

D.5. Disclosure
D.5.1. Information to disclose
The issuer publishes and keeps accessible on their website the information presented
in Table D1.

D.5.2. Format of disclosure
Disclosures must be made according to the customary practices regarding corporate
disclosures, such as via annual reporting, dedicated sustainability reporting, statutory
filings, and investor presentations, but this is at the discretion of the issuer.

Climate Bonds Standard Version 4.2 Part D

62

D

Table D1: Disclosure requirements for SLD Certification
Relevantclause

Pre-Certification disclosure

D.2.1 Issuer
control

The name of the issuer.

D.2.2. Boundaryof the economic
activities

All economic activities of the issuer, noting which
are included within the boundary of the CMPTs linked
to the SLD instrument and which are not, with therationale for that.

D.2.3. Obtaining
SLD Certification

The economic activities of the issuer which have and havenot been counted towards the 90% Certification threshold.

Annual disclosure
thereaftern/a

The method used to disaggregate and weight the different
economic activities within the portfolio of activities of theissuer (revenue or emissions) to determine compliancewith the Certification threshold.
Which legal entities form part of the parent group, and theeconomic activities they practise.
The assurance/external review provider.
The level of assurance obtained (limited assurance orreasonable assurance) where relevant.
The professional standard(s) against which the verification
engagement was performed.
The approved verifier’s pre-Certification verification report.
D.2.4
Maintaining SLD
Certification

n/a

The assurance provider.
The level of assurance
obtained where relevant.
The professional
standard(s) against
which the verification
engagement was
performed.
The approved verifier’sannual verification report.
Any revocation of
Certification.

Climate Bonds Standard Version 4.2 Part D

63Relevant clause

Pre-Certification disclosure

Annual disclosure thereafter

D.3.1.1. CMPTs

The interim CMPTs over the full time horizoni.e., on a three-yearly basis for the nine years
following Certification, and a five-yearlybasis thereafter until the activity reaches
net-zero emissions or 2050, whichever issooner (per Clauses D.3.1.1.1 and D.3.1.1.2).

Whether any interim CMPTs falling
due since the previous verification
engagement have been met (per Clause
D.3.1.1.2).

The Sector Criteria that the CMPTs havebeen assessed against (per Clause D.3.1.1.3).
The date the CMPTs were approved by theboard of the issuer.

If interim CMPTs falling due since theprevious verification engagement havenot been met, the corrective actions thatwill ensure compliance within 12 months
or by the maturity of the SLD instrument,
whichever is earlier (per Clause D.3.3.3).
Any resetting of future interim CMPTs(per Clause D.3.3.2).
The date any CMPTs reset since the lastverification engagement were approvedby the board of the issuer.

Whether the alignment of the CMPTs alignwith the sector-specific Criteria at the timeof Certification. If not, the year by which
they are expected to align.
Related to that, whether Certification is
Level 1 (Aligned) or Level 2 (Transition)(per Clause D.3.1.1.3).

D.3.2.1. Approvalof the delivery
strategy

The economic activities represented by the
CMPTs to which the SLD instrument is linked
that are covered by a delivery strategy.

Whether alignment with the Sector
Criteria has been achieved (per Clause
D.3.1.1.3).
Any changes to the expected date
the CMPTs are expected to align with
the Sector Criteria (earlier or later)
and any related change to the Levelof Certification awarded (per Clause
D.3.1.1.3).
The date of board approval of any changes
to the delivery strategy reset since theprevious verification engagement.

In cases where some or all of the economic
activities represented by the CMPTs towhich the SLD instrument is linked are notrequired to have a delivery strategy, if andwhen a delivery strategy will be adopted.
The date of board approval of thedelivery strategy.

Climate Bonds Standard Version 4.2 Part D

64DRelevant clause

Pre-Certification disclosure

Annual disclosure
thereafter

D.3.2.2.1.
Foundationsof the delivery
strategy – vision

A description of the vision addressing the elements
described in Clause D.3.2.2.1, and how this aligns with thedelivery of the CMPTs.

Any amendments to thevision since the previous
verification engagement.

D.3.2.2.2.
Foundationsof the delivery
strategy –strategic
narrative

A description of the strategic narrative addressing
the following:

The extent, role, and source of any carbon offsets, carbon
removals, and avoided emissions the issuer anticipates
employing to address any residual emissions over andabove those required to meet the Sector Criteria.

• Current GHG emissions, in absolute emissions terms andany other metrics such as emissions intensity detailed in
the Sector Criteria, including information on the current
sources and volume of GHG emissions and how and bywhom this has been calculated and verified.

Any significant
amendments to thestrategic narrative since
the previous verification
engagement.

• Key decarbonisation levers, their anticipated timing, andemissions reduction impact.
• Assumed market trends, business growth, pricing, anddemand underpinning the transition strategy as well as
regulatory and government policy assumptions.
• Significant challenges in delivering the strategy.
• Significant areas of uncertainty in estimation,
assumptions, or outcomes.
• How the issuer has embedded the strategy in its wider
business model, highlighting key implications for
products and services, resourcing, and operational andcapital expenditure, acquisitions, or divestments.
D.3.2.2.3.
Foundationsof the delivery
strategy– broaderenvironmental
and socialalignment

A summary assessment of the negative environmental
or social externalities related to delivering the vision andstrategic narrative.
A summary description of the steps that the issuer is taking,or planning to take, to mitigate those impacts.
A summary description of if and how the decarbonisationtransition contributes to the just transition in the region inwhich the activities are carried out.

Climate Bonds Standard Version 4.2 Part D

An update on theassessment of thenegative environmental
or social externalities
related to main actions
supporting the delivery
strategy, and the steps
that the issuer is taking,or planning to take, tomitigate those impacts.

65

DRelevant clause

Pre-Certification disclosure

Annual disclosure thereafter

D.3.2.3.1.
Implementationplans – action
plan for scope 1
and 2 emissions

A high-level description of the action plan for
scope 3 emissions describing the objectives,
scope of coverage, and actions that will be taken
to reduce value chain emissions necessary
for delivery any related decarbonisation leveridentified in the strategic narrative.

Progress and track record against
the interim milestones and metrics
identified in the action plan for
scope 3 emissions.

The interim milestones and metrics that will
enable assessment of progress in the delivery of
the action plan for scope 3 emissions.

Where any milestones or metrics
falling due since the previous
verification engagement have notbeen met, the corrective actions
being taken to address this within 12
months (in line with Clause D.3.3).
Any significant amendments tothe action plan for scope 3
emissions since the previous
verification engagement.

D.3.2.3.3.
Implementationplans – financeplan

A description of the financial implications of
the planned changes to the issuer’s businessstrategy, resource allocation, and products
and services arising from its climate mitigationtransition, including relevant financial plans andinvestment where possible.
An explanation of how the above impacts
have been integrated into general purpose
financial reporting.
The financial metrics and targets that will be
used to assess progress in the delivery of thefinance plan and the current value of thosemetrics, and the methodologies by which thosemetrics will be calculated.

Progress and track record against
the interim financial milestones
and metrics.
Where any milestones or metrics
falling due since the previous
verification engagement have been
not been met, the corrective actions
being taken to address this within 12
months (in line with Clause D.3.3).
Any significant amendments tothe finance plan since the previous
verification engagement.

Metrics that have significant estimation
uncertainty, noting the sources and nature of
the estimation uncertainties and the factors
affecting the uncertainties.
D.3.2.3.4.
Implementationplans – internal
policy alignment

The key internal policies that need to be
developed to execute the delivery strategy andachieve the CMPTs, and a schedule for theirdevelopment and implementation.

Climate Bonds Standard Version 4.2 Part D

Progress against the schedule fordeveloping and implementing theidentified internal policies key to the
execution of the delivery strategy
and achievement of the CMPTs.

66

DRelevant clause

Pre-Certification disclosure

Annual disclosure
thereafter

D.3.2.3.5.
Implementationplans –
sensitivity
analysis

Key sensitivities and risks around the delivery strategy
and the achievement of the CMPTs.

Any significant changes tothe results of the sensitivity
analysis since the previous
verification engagement.

The threshold or methodology for determining which
sensitivities and risks have been identified as key, taking
into account the materiality of cumulative or aggregateduncertainties or challenges.
Quantification of the potential impact in terms of thelikelihood, timing, and cost of delivery of the CMPTs.
How these impacts are reflected in the strategic narrative,
action plans, and finance plan.

D.3.3.1.
Governance– board andsenior executive
responsibility

The named individual, committee, or board responsible
for the transition plan.
The management structure in place for executing thetransition plan.
How frequently the board reviews and monitors thetransition plan, and how frequently it receives reports on
progress against the CMPTs and delivery strategy.
How the issuer ensures adequate climate expertise (e.g.,management expertise, provided resources, training, andskill acquisition).
Any KPIs tied to board, CEO or other senior executive
compensation plans that are aligned with the organisation’s
climate goals, as described in the transition plan.

How these changes havebeen addressed in thevision, strategic narrative,
action plans and/or financeplan as appropriate.

Any changes to the named
individual, committee, orboard responsible for thetransition plan.
Any changes or additions
to climate and/ortransition-related KPIs tied
to board, CEOor other senior
compensation plans.
Performance against thedisclosed responsibilityrelated metrics and targets.

Any responsibility-related targets and progress against
those targets.

Climate Bonds Standard Version 4.2 Part D

67DRelevant clause

Pre-Certification disclosure

Annual disclosure
thereafter

D.3.3.2.
Governance (re)setting andmonitoring
the CMPTs andtransition plan

Information on internal controls that are in place toscrutinise the transition plan including any relevantinternal assurance functions such as internal audit.

Any changes to thecontrols, tools, andmechanisms disclosed in
the previous verification
engagement.

Stakeholder communication and feedback mechanisms,
including whether the transition plan is examined byshareholders (such as through an advisory vote at theentity’s annual general meeting, or resolution subject toshareholder approval).
Information on the process and internal controls formonitoring and tracking performance regarding theinterim CMPTs/milestones and targets identified in theaction plans and finance plan. This includes information
on any tracking and estimation tools, including but notlimited to GHG performance tools, and any equivalents for
CMPTs that are not expressed in terms of GHG emissions.

If the scheduled review
falls due after the previous
verification engagement,
all CMPTs and delivery
strategy disclosure
requirements detailed
under Clauses D.3.1 andD.3.2 are reset.
Any changes to the date of
the next scheduled review.

Information on the process for regularly reviewing
the transition plan to ensure material updates areincorporated and challenges are addressed.
Commitment by the issuer to review the transition plan atleast every five years.
Date of the last and the next scheduled review.
D.3.3.3.
Governance– correctionof underperformancen/a

Any corrective actions
planned to address any
underperformance, withan explanation of how itwill be addressed.

D.4.1. Parent
group
commitments –exclusions

Commitment by the parent company on behalf of theparent group to zero future expansion of any of theactivities detailed in Clause D.4.1.1.

Statement from the parent
company on behalf of theparent group that no entity
within the parent grouphas expanded any of theactivities detailed in Clause
D.4.1.1 since the previous
verification engagement.

Statement by the parent company on behalf of the parent
group that no entity within the parent group has expanded
any of the activities detailed in Clause D.4.1.1 since 1
January 2023.
Commitment by the parent company on behalf of theparent group that no entity within the parent groupwill or is planning to convert HCS land as detailed in
Clause D.4.1.2.
Statement by the parent company on behalf of theparent group that no entity within the parent group has
converted HCS land (as detailed in Clause D.4.1.2) since
1 January 2020.

Climate Bonds Standard Version 4.2 Part D

Statement by the parent
company on behalf ofthe parent group that noentity within the parent
group has converted HCS
land (as detailed in Clause
D.4.1.2) since the previous
verification engagement.

68

DRelevant clause

Pre-Certification disclosure

Annual disclosure thereafter

4.2. Parent group
commitments– net-zerocommitment

Commitment by the parent company to
net-zero emissions and the expected date
for net zero, covering the entire parent group(per Clause D.4.2).

Any changes to the net-zerocommitment for the parent group(per Clause D.4.2).

4.3. Parent group A description of the transition plan outlining
commitments – how the parent group will achieve net-zerotransition planemissions (per Clause D.4.3).

Any updates to the transition
plan for the parent group(per Clause D.4.3).
If any part of the parent grouppractises any of the activities
described under Clause D.4.1.1,
the expected timing to fully cease
those activities.

INDEPENDENT OF ANY CLAUSES ABOVE
SLD instrument– financial
and structuralcharacteristics

Potential change of the instrument’s financial
and/or structural characteristics and the trigger
events leading to such a change.
Potential extreme/exceptional events suchas M&A that could subsequently impact therestatement of a CMPT.

Climate Bonds Standard Version 4.2 Part D

Potential change of the instrument’s
financial and/or structuralcharacteristics and the trigger events
leading to such a change.
Potential extreme/exceptional
events such as M&A that could
subsequently impact therestatement of a CMPT.

69

DPART E: ENTITY CERTIFICATION FOR
AGRI-FOOD DEFORESTATION- AND
CONVERSION-FREE SOURCING

E

E.1. Introduction
Entity Certification under the Climate Bonds Standard for agri-food deforestation- andconversion-free sourcing (agri-food DCF) is available to non-financial entities in the agri-foodsector compliant with the Climate Bonds Standard for Entity Certification under the Agri-Food
Deforestation- and Conversion-Free (DCF) Sourcing Criteria (Agri-Food DCF Criteria).

E.2. Eligibility and accounting rules
E.2.1. Applicant control over the Certified agri-food DCF entity
The applicant must either be the same legal entity as the Certified agri-food DCF entity or
have operational control over it.

E.2.2. Boundary of the Certified entity
The agri-food DCF entity may be a group of legal entities within a parent group or a single
legal entity, at the applicant’s discretion. Certification of a parent company must include all
subsidiaries and other controlled companies that fall within the scope of agri-food entities,
as defined in the Agri-Food DCF Criteria.

E.2.3. Obtaining agri-food DCF Entity Certification
Before applying for agri-food DCF Entity Certification under PART E, the applicant receives averification report from an approved verifier that confirms the following:i. The Certified entity meets the Agri-Food DCF Criteria performance requirements inClause E3.1 and the governance requirements in Clause E.3.2.
ii. The parent group meets the climate safeguard requirements in Clause E.4.1.
iii. The Certified entity and parent group meet the disclosure requirements in Clause E.5.
Applicants seeking agri-food DCF Entity Certification must apply by submitting thefollowing documents to the CBSS:
i. A completed Climate Bonds information form.
ii. The verification report from an approved verifier that meets the requirements of PART E.
iii. An executed Certification agreement.
If Climate Bonds is satisfied that the applicant complies with the pre-Certification
requirements, then it will provide a statement confirming the Certification of the agri-food
DCF Certified entity. The applicant must identify within the Climate Bonds information
form which information is confidential and which can be publicly disclosed on the Climate
Bonds website once Certification is confirmed.
Certification is valid for five years from the date of Certification, subject to compliance withthe requirements laid out in Clause E2.4.

Climate Bonds Standard Version 4.2 Part E

70E.2.4. Maintaining agri-food DCF Entity Certification

E

The applicant receives an annual verification report from an approved verifier.
i. In respect of the agri-food DCF sourcing Certified entity the annual verification
report confirms:
a. The continued compliance of the Certified entity with the Agri-Food DCF
Sourcing Criteria.
b. Communication of any changes in clauses E3.1 and E3.2 (Agri-Food DCF Sourcing
Criteria requirements and governance) and provides verification of compliance ofany changes.
c. All disclosure requirements have been met (per Clause E.6).
ii. The annual verification report confirms the parent group remains in compliance (perClauses E.4 and E.5).
iii. The annual verification report confirms the applicant is not subject to revocation of
Certification as per Clause E.2.5.
iv. The annual verification report confirms the applicant supplies a copy of the annual
verification report to the CBSS.
Applicants seeking to maintain Entity Certification must submit the following documents to
the CBSS on an annual basis:
i. A completed Climate Bonds information form.
ii. The annual verification report from an approved verifier which meets therequirements of Clause E.2.4.
If the CBSS is satisfied that the applicant complies with the ongoing requirements, then it
will provide a statement confirming the Certified status of the Certified entity.

E.2.5. Revocation of agri-food DCF Entity Certification
Entity Certification will be rescinded at any time where any of the following apply:
i. The applicant becomes aware that the agri-food DCF Certified entity and/or theparent group no longer conforms to the Climate Bonds Standard and provides a written
statement to that effect to the CBSS.
ii. A verification engagement commissioned by the Climate Bonds Standard Board findsthat the Certified entity and/or the parent group no longer conforms to the Climate
Bonds Standard.
iii. The applicant has breached any contractual obligation towards Climate Bonds.

Climate Bonds Standard Version 4.2 Part E71E.3. Compliance

E

Regarding the agri-food DCF Certified entity, all of the following requirements must be met:

E.3.1. Performance
E.3.1.1. Agri-Food DCF Sourcing Criteria
The entity must meet all the requirements set out in the Agri-Food DCF Sourcing Criteria
on an annual basis for the duration of the Certification (5 years).
E.3.1.2. Board approval
The board of the agri-food DCF Certified entity has approved the agri-food DCF sourcing
commitment no earlier than one year prior to the application for Certification. The
agri-food DCF sourcing commitment states that the agri-food DCF Certified entity willcontinue to comply with agri-food DCF sourcing until 2050.

E.3.2. Governance
The following accountability mechanisms are in place to govern the delivery of the agrifood DCF sourcing performance.
E.3.2.1. Board and senior executive responsibility
E.3.2.1.1. Board mandate
The board (or equivalent governance body) has a clear mandate to fulfil all of thefollowing:i. Oversee the design of the agri-food DCF sourcing strategy.
ii. Approve the agri-food DCF sourcing strategy.
iii. Oversee the execution and monitor progress of the agri-food DCF
sourcing strategy.
iv. Approve and monitor any corrective actions required.
E.3.2.1.2. Senior management responsibility
Senior management has responsibility for execution of the agri-food DCF sourcing
performance, and the responsible parties have authority and access to resources toensure execution.

Climate Bonds Standard Version 4.2 Part E72E

E.4. Commitments of the parent group
E.4.1. Exclusions
E.4.1.1. Expansion of fossil fuel activities
If any legal entity within the parent group is in the business of exploration or
extraction of fossil fuels, or is a utility company generating or supplying power or heatgenerated from fossil fuels, the parent company has, within the last year, publicly (re)committed to no expansion of any of the following activities across the parent group
after 1 January 2023:
i. The exploration and extraction of proven conventional and unconventional fossil
fuel reserves.
ii. The exploration of new conventional and unconventional fossil fuel resources.
iii. Natural gas production.
iv. Refining crude oil to produce derivative products.
v. The supply and/or use of fossil fuels for power generation and heat.
E.4.1.2. Deforestation and conversion of natural ecosystems
The parent company has, within the last year, publicly (re)committed that as of 31 Dec
2020, no entity within the parent group has or will engage in deforestation or conversionof other natural ecosystems.

E.5. Disclosure
E.5.1. Information to disclose
The applicant publishes and keeps accessible on their website the information
presented in Table E1.
Disclosures have been and will be made according to the customary practices regarding
corporate disclosures, such as annual reporting, dedicated sustainability reporting,statutory filings, and investor presentations, at the discretion of the applicant.

Climate Bonds Standard Version 4.2 Part E73

Table E1: Disclosure requirements for agri-food DCF Entity Certification
Relevantclause

Pre-Certification disclosure

Annual disclosure
thereafterE.2.1. Applicant
control of theagri-food DCF
Certified entity

The name of the applicant.

Any changes in therelationship between theapplicant and the agrifood DCF Certified entity.

E.2.2. Boundaryof the agri-food
DCF Certified
entityAll legal entities of the applicant, noting which are included
within the boundary of the agri-food DCF Certified entity
and which are not.

Any changes to theboundary of the agri-food
DCF Certified entity.

E.2.3. Obtaining
agri-food
DCF Entity
Certification

Which legal entities form part of the parent group, and theeconomic activities they practise.

n/a

The entity that is the agri-food DCF Certified entity.
The relationship between the applicant and the agri-food
DCF Certified entity (if different).

The assurance provider.
The level of assurance obtained (limited assurance orreasonable assurance).
The professional standard(s) against which the verification
engagement was performed.
The approved verifier’s pre-Certification verification report.

E.2.4.
Maintaining
EntityCertification

n/a

The assurance provider.
The level of assurance
obtained (limited
assurance orreasonable assurance).
The professional
standard(s) against
which the verification
engagement was
performed.
The approved verifier’sannual verification report.
Any revocation of
Certification.

E.3.1. Agri-food
DCF sourcing
performance

The agri-food DCF sourcing performance (per Clauses
E.3.1.1 (Agri-Food DCF Sourcing Criteria) and E.3.1.2(board approval).
The date the agri-food DCF sourcing performance wasapproved by the board of the agri-food DCF Certified
entity (E.3.1.2).

Climate Bonds Standard Version 4.2 Part E

Whether agri-food DCF
sourcing performance
has changed (per Clause
E.3.1), including any
changes in materiality (anyagri-food commodity withprocurement spend > 1%).

74

E

Relevant clause

Pre-Certification disclosure

Annual disclosure thereafterE.3.2.
Governance– board andsenior executive
responsibility

The named individual, committee orboard responsible for the agri-food DCF
sourcing performance.

Any changes to the named individual,
committee, or board responsible.

E.4. Parent
group
commitments –exclusions

Commitment by the parent company onbehalf of the parent group to zero future
expansion of any of the activities detailed in
Clause E.4.1.1.

The management structure in placefor executing the agri-food DCF
sourcing performance.

Statement by the parent company on behalfof the parent group that no entity within
the parent group has expanded any of theactivities detailed in Clause E.4.1.1 since
1 January 2023.
Commitment by the parent company onbehalf of the parent group that no entity
within the parent group will or is planningto deforest or convert other natural
ecosystems as detailed in Clause E.4.1.2.
Statement by the parent company onbehalf of the parent group that no entity
within the parent group has engaged in
deforestation or the conversion of othernatural ecosystems (Clause E.4.1.2) since
31 December 2020.

Climate Bonds Standard Version 4.2 Part E

Statement from the parent company
on behalf of the parent group thatno entity within the parent group has
expanded any of the activities detailedin Clause E.4.1 since the previous
verification engagement.

Statement by the parent company
on behalf of the parent group thatno entity within the parent group has
engaged in the deforestation or theconversion of other natural ecosystems(Clause E.4.1.2) since the previous
verification engagement.

75

E

ANNEX 1 - Types of use of proceeds
instruments that can be Certified
There are various types of green financial instruments eligible for Certification under
the Climate Bonds Standard. Use of proceeds debt instruments that may be eligible for
Certification include the following:
Bilateral loan: A contract between a corporate or institutional borrower and a single
lender (commercial, multilateral or development bank) for a loan or credit line to financespecific green projects with set criteria and reporting requirements. The loans may or
may not be public, and the terms vary considerably.
Agribusiness receivables certificate (CRA): A fixed-income security backed byagribusiness credit claims, created by the Brazilian government to encourage financingof the agricultural sector production chain. Companies assign their receivables to asecuritisation vehicle which issues CRAs that are sold to investors in the capital markets.
Commercial paper (CP): Unsecured, short-term debt issued by companies or financial
institutions to finance short-term liabilities. The proceeds mainly contribute to working
capital finance.
Convertible bonds or notes: A debt instrument, for which the bondholder has the rightbut not the obligation to convert into a specified number of ordinary shares (or othersecurities) under specified terms and conditions. If the bond or note was Certified when
it was issued and then later converted to equity, its status as a Certified debt instrument
would end at the conversion point unless the issuer is a Certified entity.
Covered bond (Pfandbrief): A dual recourse bond which relies primarily on repayment
from the issuer but also has access to a pool of assets (the cover pool), which often
comprises mortgages, although other assets can also be used as collateral.
Debt instruments issued by a green bond fund: The debt instruments are issued
based on a set of criteria which may include that the underlying projects and assets meetthe relevant Sector Criteria of the Climate Bonds Standard.
Export financing in Brazil: Provides advances on export exchange contracts (ACC) thatenable finance for export pre-shipment or advances on export shipment documents(ACE), post-shipment finance designed to allow the exporter to offer better terms tocustomers abroad.
Export letter of credit: Issued by banks, guaranteeing future payment (upon receipt ofgoods) to the exporter. These instruments are used in trade with developing countries and/or importers of relatively weak credit quality. Certification requires the approved verifier toconfirm that the UoP of the importer is aligned with the Climate Bonds Sector Criteria.
Floating rate notes (FRNs): A debt instrument with a fixed maturity of several years
which pays interest tied to a variable short-term money market reference rate.
Green deposits: Client funds held by a financial institution which are clearly identified
and allocated to a portfolio of projects and assets which meet the relevant Climate
Bonds Standard Sector Criteria. Green depositors are often institutional investors andusually place funds for up to one year. Non-banks (e.g., securitisation vehicles) may issue
green units or notes.
Lease: A bilateral contract whereby the owner of the asset (the lessor) grants to anotherparty (the lessee) the exclusive right to use the asset for an agreed period, for an agreed
amount payable on a periodical basis (lease rentals) over the specified lease period.

Climate Bonds Standard Version 4.2

76Loan Facility: A credit line made available to borrowers to finance projects and assets
which meet the relevant Sector Criteria of the Climate Bonds Standard. Loans can be
secured or unsecured, with or without recourse to the debtor.
Project bond: A bond issued to finance a project(s) for which the investor will be paidback exclusively by the flows generated by the project and has direct exposure to the riskof the project(s) without potential recourse to the issuer.
Repurchase agreement (Repo): A repo is the simultaneous sale and forward
agreement to repurchase securities at a specific price and future date in return for cash.
Ownership of the security does not change hands in a repo transaction so they are
typically short-term collateralised loans.
Revenue bond: a non-recourse-to-the-issuer debt obligation, either listed or unlisted,in which the credit exposure is to the pledged cash flows of the revenue streams, fees,
taxes etc.
Revolving credit facility: A credit line which may be drawn by the borrower and repaid
on an ongoing basis with a short- or medium-term maturity.
Schuldschein: A traditional German floating- or fixed-debt instrument with somefeatures similar to those of loans, while others are more similar to bonds.
Securitised bond: A bond, either listed or unlisted, collateralised by specific projects
or assets, including lease, loan, and other revenue receivables, such as asset-backed
securities, mortgage-backed securities, and other securitisation structures.
Standard use of proceeds bond: a standard recourse-to-the-issuer debt obligation
which is either listed or unlisted.
Sukuk: Various types of quasi-debt securities developed to meet the strictures of Islamic
finance, one of the core principles of which is avoiding the payment or collection ofinterest, so that investors share in profit distributions.
Syndicated loan: A loan from a number of different lenders acting together to forma syndicate, which the borrower borrows from. Usually structured by one of several
commercial banks or investment banks, it can also include non-bank lenders such as
debt funds, insurance companies, hedge funds or pension funds.
Trade finance/receivables financing/factoring: The sale of unpaid invoices (accounts
receivable) by a trader/exporter to a third-party lender, which are used as collateral fora loan. The main consideration for Certification is whether the receivables, creditors, or
stock relate to green assets.

Climate Bonds Standard Version 4.2

77