Agriculture Produc.on Background Paper(Crop and Livestock)

Development of Eligibility Criteria
under the Climate Bonds Standard& Certification Scheme
Draft for public consultation
Revision
Rev 0.1

Date
08.07.2024

Summary of Changes
Issued for Public Consultation

Table of Contents
1

2Introduction

5

1.1

Overview

5

1.2

Funding the goals of the Paris Agreement

5

1.3

The role of bonds

5

1.4

Introduction to the CBS7

1.5

Agriculture Production (Crop and Livestock) Criteria update8

1.6

Existing Climate Bonds Agriculture Production Criteria

8

1.7

Motivation for updating the Agriculture Production Criteria

8

1.8Structure of this document

9

Sector Overview

10

2.1

What is agriculture production?

10

2.2

Agriculture production and climate change

10

2.3 Greenhouse gas emissions from agriculture production (crop and livestock, including LULUC and inputs production anduse) 113

2.3.1

Direct emissions from crop and livestock production: nitrous oxide (N2O) and methane (CH4)

11

2.3.2

LULUC: Emissions from land use and Land use change

11

2.3.3

Inputs: emissions from crop and livestock inputs, irrigation, and mechanisation

12

2.3.4

Emissions from livestock

12

2.4

Impacts on biodiversity from crop and livestock production

13

2.5

Social impacts: agriculture affects food security, employment, inequality and health

13

2.6

Investments in agriculture and potential for growth14

Principles and boundaries of the Criteria

3.1

4

Guiding principles and hallmarks for transition

16

16

3.1.1

Transition categories

17

3.1.2

Establishing a framework for credible transition by companies.

18

3.2

Scope of emissions for entities and activities covered by the Agriculture Production Criteria

20

3.3

Accounting of greenhouse gas emissions. Methodological notes.

21

Key considerations taken for Criteria development

4.1

Climate Mitigation Pathways to 1.5°C

22

22

4.1.1

IPCC Illustrative mitigation pathway – (Sustainable Development Pathway) IMP-SP (2022)

22

4.1.2

SBTi FLAG (2022)

26

4.1.3

Costa et al, (2022)

27

4.2

Climate mitigation options for agriculture production

29

4.2.1

Land use and land use change mitigation options

30

4.2.2

Mitigation options in crop and livestock production systems: reduce and sequester

32

4.2.3

Mitigation of indirect emissions from inputs

35

4.3

Setting the emission pathway: Climate Bonds emissions transition pathway for agriculture production

35

4.3.1

Scope of activities - rationale

35

4.3.2

Determining the pathway

36

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5

4.3.3

The chosen emissions pathway

37

4.3.4

Creating the pathway to 2050

40

4.3.5

Handling cases where a pathway does not exist for a commodity

40

4.3.6

Handling co-products

40

4.3.7

2.2.8 Removals at the entity level

40

Other environmental and social safeguards

5.1

An overview of the safeguard for adaptation & resilience

42

42

5.1.1

Key aspects to be assessed

42

5.1.2

Practical considerations for the Adaptation and Resilience safeguard: Leveraging existing tools

43

5.2

An overview of the safeguard for biodiversity

Importance of Biodiversity in agriculture
5.2.1
5.3

Practical considerations for the Biodiversity safeguard: Leveraging existing tools

An overview of the safeguard for water

Importance of Water in agriculture
5.3.1
5.4

Practical considerations for the water safeguard: Leveraging existing tools

An overview of the safeguard for social aspects

Importance of Social Issues in agriculture
5.4.1
5.5

Practical considerations for the social safeguard: Leveraging existing tools

An overview of the safeguard for animal welfare

47
47
47
51
51
52
58
58
58
58

Importance of Animal Welfare

58

Guidance for effective animal welfare considerations

59

5.5.1

Practical considerations for the animal welfare safeguard: Leveraging existing tools

60

Climate Bonds proposed animal welfare requirement

61

Acknowledgments

61

Definitions

62

List of acronyms

65

Bibliography

66

List of Figures
Figure 1. Criteria development process.
7
Figure 2. Food System emissions as described by Crippa et al 2021.
10
Figure 3. AFOLU global trends in agricultural GHG emissions and removals by type, 1990-2019. Source: IPCC, 2022.
12
Figure 4. Range of greenhouse gas intensities, kgCO2e per 100g protein, for various protein-rich foods.
13
Figure 5. Average mitigation investment flows (blue bars) and investment needs (grey bars – averaged until 2030), acrossdifferent sectors, types of economy and region. Source: IPCC (2022).
15
Figure 6: Transition categories for economic activities
18
Figure 7. The Hallmarks of a credibly transitioning company.
20
Figure 8. Process for creating illustrative mitigation pathways (IPCC, 2022)
23
Figure 9. Comparison of the different IMPs and breakdown of GHG emissions reductions and land use changes, 2020-2100.
Source: IPCC, (2022)
24
Figure 10: IPCC (IMP-SP) Illustrated Mitigation Pathway for CO2, CH4 and N20 from agriculture, GtCO2e between 2005-2100
25
Figure 11: Roadmap for agri-food systems net zero emissions by 2050.
28
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Figure 12. IPCC AR6 Synthesis Report (2023) summary of a) Land, Water and Food Mitigation and Adaptation options in thenear term and b) potential food demand-side mitigation options by 2050.
30
Figure 13. Regional mitigation potential in 2020-2050 from Agriculture, Forestry and BECCS.
32
Figure 14. Mitigation measures in Agriculture, mitigation potential based on theoretical, economic, and modelled estimates,(grey, light blue and dark blue respectively), for each mitigation measure.
33
Figure 15: The CBI’s principles for Resilience.
43
Figure 16. Expansion of the Five domains model with suggested guidance to comply with the model (Mellor, 2017).
59

List of Tables
Table 1. Key principles for the design of Climate Bond Standard sector Criteria.
16
Table 2: Five Transition Principles with associated agri-food interpretations and examples
17
Table 3: Five Hallmarks for a credibly transitioning company with associated agri-food interpretations and examples
18
Table 4: Annual reduction rate of GHGs based on IMP-SP database projected figures between 2020-2050, (IIASA, 2023)
26
Table 5: Summary of near-term FLAG pathways,
27
Table 6: Sample of Deforestation Cut off dates from existing standards and criteria.
31
Table 7. Certification schemes with some consideration of adaptation and resilience that were analysed to check alignment
with Climate Bonds approach. None of them seemed appropriate to be used as proxy in the context of these Criteria. 44
Table 8. Certification schemes with some consideration of biodiversity that were analysed to check alignment with Climate
Bonds approach. They might be used as Proxy pending evaluation by Approved Verifier and only when aligned with the
Biodiversity safeguard in these Criteria
48

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1 Introduction
1.1 Overview
This document serves as a reference to the Criteria document for Agriculture Production (Crop and Livestock). The purpose is toprovide an overview of the key considerations and issues that were raised during development of the Agriculture Production Criteria
and provide the rationale for why requirements were chosen and set.
The Criteria were developed through a consultative process with the Technical Working Group (TWG) and the Industrial Working
Group (IWG). The TWG comprised academic and research institutions, civil society organizations, multilateral banks and specialist
consultancies whereas IWG is represented by industry experts as well as potential bond issuers, verifiers and investors. A 45-day
period of public consultation offers the opportunity to any member of the public to comment on the Criteria. This document aims
to capture these various dialogues and inputs and substantiate the reasoning behind the Agriculture Production Criteria.
Supplementary information will be made available in addition to this document, including:
Information to support issuers and verifiers will be available at Agriculture Production Criteria - Climate Bonds Initiative as follows:
•
•
•
•
•

Agriculture Production Criteria document: the complete Criteria requirements;
Agriculture Production Criteria Brochure;
Agriculture Production Frequently Asked Questions;
Climate Bonds Standard: contains the requirements of the overarching CBS;The Climate Bonds Standard & Certification Scheme Brochure: provides an overview of the Climate Bonds Standard &Certification Scheme, of which these Criteria are a part.

For more information on Climate Bonds and the Climate Bonds Standard and Certification Scheme, see www.climatebonds.net.

1.2 Funding the goals of the Paris Agreement
The current trajectory of climate change, expected to lead to a global warming of 2.5-2.9-degree by 21001, poses an enormousthreat to the future of the world’s nations and economies. The aim of the Paris Agreement is to limit warming to a global averageof no more than 2°C higher than pre-industrial levels by the end of the century, and ideally no more than 1.5°C. The effects ofclimate change and the risks associated even with a 2°C rise is significant: rising sea levels, increased frequency and severity ofhurricanes, droughts, wildfires and typhoons, and changes in agricultural patterns and yields. Meeting the 1.5°C goal requires adramatic reduction in global greenhouse gas (GHG) emissions from all sectors in the global economy.
At the same time, human population continues to expand and with it the need to increase agriculture production for healthy andequitable nutrition.
To ensure sustainable development and avoid dangerous climate change, agriculture production will need to undergo a profoundtransformation towards agrifood systems that are low-carbon and resilient to physical climate impacts, without compromising the
economic growth and food production needed to improve the livelihoods and wellbeing of the world’s poorer citizens. Thistransformation needs considerable investments, with a dual focus on climate mitigation and climate adaptation.

1.3 The role of bonds
Traditional sources of capital for agrifood system transformation (governments and commercial banks) are insufficient to meetthese capital needs; institutional investors, particularly pension and sovereign wealth funds, are increasingly looked to as viable
actors to fill these financing gaps.
The Organisation for Economic Co-operation and Development (OECD) defines transition finance as the expenditure deployed bycorporates

1 According to Climate Tracker, under current policies we could expect 2.5 - 2.9°C: http://climateactiontracker.org/global.html

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to implement their net-zero transition, in line with the Paris Agreement goal to limit global warming, and based on a credible
corporate climate transition plan.2
Finance must flow to the farmers; rather than push them further into debt, it should help lift them out of poverty and pay themfor climate solutions they are implementing. Direct payments and sustainable supply chain finance, within the supply chain or
using local banks as intermediaries, must be scaled. Sustainable finance at farm level must first and foremost have a resilient,socio-economic, and environmental impact.
Capital markets enable issuers to tap into large pools of private capital from institutional investors. Bonds are appropriate
investment vehicles for these investors as they are low-risk investments with long-term maturities, making them a good fit withinstitutional investors’ liabilities (e.g., pensions to be paid out in several decades).
Bond financing works well for low-carbon and climate-resilient projects, as bonds are often used as refinancing instruments.
Labelled green bonds are bonds with proceeds used for green projects, mostly climate change mitigation and/or adaptation
projects, and labelled accordingly. The rapid growth of the labelled green bond market has shown in practice that the bond markets
can provide a promising channel to finance climate investments.
The green bond market can reward bond issuers and investors for sustainable investments that accelerate progress toward a lowcarbon and climate-resilient economy. Commonly used as long-term debt instruments, green bonds are issued by governments,
companies, municipalities, and commercial and development banks to finance or re-finance assets or activities with environmental
benefits. Green bonds are regular bonds with one distinguishing feature: proceeds are earmarked for projects with environmental
benefits. Green bonds are in high demand and can help issuers attract new types of investors.
A green label is a discovery mechanism for investors. It enables the identification of climate-aligned investments even with limited
resources for due diligence. By doing so, a green bond label reduces friction in the markets and facilitates growth in climate-aligned
investments.
Sustainable debt issuance as of end of year 2023 was on the order of USD5.5 tn (with 4.4 tn aligned) and continues on an upward
trajectory with ongoing diversification in the types of debt issued. To support this growth, standards, assurance, and certification
are essential to demonstrate credibility, which improves confidence and transparency.
Scaling is needed

In 2023, The International Fund for Agricultural Development (IFAD) estimated that USD400bn is needed annually until 2030 inrural development and across food systems. While substantial, the amount is not that material compared to the amount offinancing already going to the agri-food sector from both public and private sources. The challenge facing the transition of thesector is not primarily driven by a lack of available financing at global scale, but rather by a historical lack of efficient financial
mechanisms to channel national and international capital towards the millions of farmers and Small and Medium Enterprises(SMEs) that need the financing. The current figures suggest that much more needs to be done, particularly in Africa.3
Labelled bonds can support the transition

Three types of instruments emerge from the recent Climate Bonds market analysis4 which illustrate the potential to deliver impact
at scale:
1. Use of Proceed (UoP) debt, with its clear requirement for proceeds to be used for financing social or green activities, cansupport non-financial corporates and sovereigns in financing their shift towards sustainable production or procurement and asocially appropriate transition.

2
3
4

OECD Guidance on Transition finance, https://doi. org/10.1787/7c68a1ee-en

Climate Bonds Initiative, 2024. Agrifood transition in action. agri-food-transition-in-action-160524.pdf (climatebonds.net)
idem

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2. Green or sustainability deals priced by financial institutions are the most impactful instruments as they link the international
market to small stakeholders. These instruments include:•

Green loans to farmers or cooperatives and credit unions;•

Securitisation instruments, enabling the aggregation of loans or, although far less common, aggregation of illiquid assets
used for supply chain financing (Agribusiness Receivables Certificates are an example of these instruments used in Brazil).

3. Sustainability-linked debt, which is increasingly used by major agri-food companies to finance their operations. Whensustainability linked bonds (SLBs) or sustainability linked loans (SLLs) are issued by companies that demonstrate credible andambitious transition plans, they are excellent impact investing financing tools for both investors and corporates.
The market, however, finances many more instruments to facilitate international agrifood trade and supply chains. Climate Bonds
expects instruments linked to sustainability credentials to grow and rely on sustainable finance frameworks established initially forthe bond and loan markets. -rf

1.4 Introduction to the CBS
Activating the mainstream debt capital markets to finance and refinance climate friendly projects and assets is critical to achieving
international climate goals, and robust labelling of green bonds is a key requirement for that mainstream participation. Confidence
in the climate objectives and the use of funds intended to address climate change is fundamental to the credibility of the role thatgreen bonds play in a low carbon and climate resilient economy. Trust in the green label and transparency to the underlying assets
are essential for this market to reach scale but investor capacity to assess green credentials is limited. Therefore, Climate Bonds
created the Climate Bonds Standard & Certification Scheme, which aims to provide the green bond market with the trust andassurance to achieve the required scale.
The Climate Bonds Standard & Certification Scheme is an easy-to-use tool for investors and issuers to assist them in prioritising
investments that truly contribute to addressing climate change, both from a resilience and a mitigation point of view. It is made upof the overarching Climate Bonds Standard (CBS)5 detailing management and reporting processes, and a set of Sector Criteria
detailing the requirements assets must meet to be eligible for certification.
The Sector Criteria covers a range of sectors including solar energy, wind energy, marine renewable energy, geothermal power, lowcarbon buildings, low carbon transport (land and sea), bioenergy, forestry, agriculture, waste management and water infrastructure,hydropower, electricity grids and storage. In addition to steel, additional industry transition criteria currently available include
cement, basic chemicals and hydrogen production and delivery.
The Certification Scheme requires issuers to obtain independent verification, pre- and post-issuance, to ensure the bond meets therequirements of the CBS. The CBS has been developed based on public consultation, road testing, and review by the Assurance
Roundtable (a group of verifiers) and expert support from experienced green bond market participants.

Source: Climate Bonds Initiative.
Figure 1. Criteria development process.

The Standard is revisited and amended on an annual basis in response to the growing climate aligned finance market. sector specific
Criteria are developed by TWG made up of scientists, experts, and technical specialists. Draft Criteria are presented to IWG before

5

For the latest version of the Climate Bonds Standard please check www.climatebonds.net

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1.5 Agriculture Production (Crop and Livestock) Criteria update
The Climate Bonds Initiative is in the process of updating its existing CBI Crop and Livestock criteria (2021) to maintain its position
as a globally recognized standard for 1.5°C alignment in sustainable debt financing and entity transition planning. The update aims
to provide more detailed guidance and evidence for mitigation in transition planning, as well as sufficient safeguards forenvironmental and social issues. Additionally, the update will expand the certification applicability beyond use-of-proceeds (UoP)
to include other types of sustainable-linked debt and non-financial entity-level certification for proposed transition plans. The
update will follow the standard Climate Bonds criteria development process and is scheduled to be completed by May 2023.

1.6 Existing Climate Bonds Agriculture Production Criteria
The agriculture criteria, initially published in 2019 and updated in 2021, provided a roadmap for the necessary requirements toconsider agricultural investment credible and impact-driven for UoP bond investment. The boundary of scope of assessment was
set at farmgate-to-farmgate for the requirements in the criteria in Crop and Livestock Production.
However, the publication of the existing criteria since 2019 has not had the intended impact of influencing sustainable debt markets
to finance the existing agri-food system adequately. Additionally, despite being used as a public source of information on activities
and emissions reduction levels aligned with the 1.5°C target, the level of issuance and certification has been limited since its releasein 2019.
There are also growing concerns about the credibility of finance already issued in the agri-food sector, which has contributed tohesitancy in engaging with the sector and slowed down the necessary changes to meet the 1.5°C target.

1.7 Motivation for updating the Agriculture Production Criteria
The primary motivation for updating the agriculture criteria is to ensure that Climate Bonds remains aligned with the most up-todate climate science and the ambition required to meet its transition principles of enabling a 1.5°C future.
This involves adopting the latest developments from leading international consensus, particularly the recommendations from the
IPCC, to establish the necessary ambition level based on the latest climate science. Furthermore, the existing criteria would besignificantly strengthened by including developments related to mitigation pathways and conducting a deeper examination of theirapplicability in existing entity transition plans.
This update will make it clearer to stakeholders in the agri-food sector the GHG emissions reductions required by 2030 and 2050.
Currently, Climate Bonds is consolidating the most applicable available pathways presented in the latest IPCC AR6 WGIII report, the
1.5°C Illustrated Mitigation Pathway for Sustainable Development (IMP-SP); the SBTi FLAG pathways and the mitigation pathway
presented by Costa et al (2022) in their paper Roadmap for achieving net-zero emissions in global food systems by 2050. The analysisof these existing modelled mitigation pathways and greater discussion on the merits of taking a more detailed approach based on
identifying the different GHGs in agriculture: CO2, N20, CH4 and the requirement to focus on specific timelines to reduce each ofthese respective gases.
The updated criteria will also consider further and in greater detail the issue of land use and its role as a both a source of carbon
emissions through conversion but also the potential of it as a future carbon sink of CO2 which will be necessary to turn the overall
AFOLU sector towards net-zero by 2050 and beyond.
Lastly, with the recent launch of Standard 4.2, Climate Bonds has expanded the utility of its criteria beyond UoP bonds to include
forward-looking sustainable debt instruments such as sustainability-linked bonds and loans (SLB and SLL) markets and entity-level
certification. This expansion allows for greater usage of the criteria in the agri-food sector, where bond financing remains a small
share of total financing. Increasing the potential usage of the criteria by growing the potential applicability of the final productwhere there is an ambition to influence greater real-world impact.
This criteria update will expand the utility of its criteria beyond Use of Proceeds bonds (as in the existing criteria) to include
forward-looking sustainable debt instruments such as sustainability-linked bonds and loans (SLB and SLL) markets and entity-level
certification. This expansion allows for greater usage of the criteria in the agri-food sector, where bond financing remains a small
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share of total financing. Increasing the potential usage of the criteria by growing the potential applicability of the final productwhere there is an ambition to influence greater real-world impact.
The updated criteria will apply to entities active in (and any subsequent SLBs financing) one or both of:•Crop production - covering all perennial and non-perennial food crops, including, alfalfa, fruit trees, oil palm, coffee, tea,
cocoa, oil seeds, cereals and paddy rice6; and•Livestock production - including ruminant and monogastric livestock, grazed and stall-fed cattle, buffalo, sheep, goats,dairy, pigs and poultry and their waste (manure) and related grassland or pasture.

Mixed farming and agroforestry will be represented as a combination of the relevant component within crop and livestock elements,
plus the impacts of any synergistic interactions (e.g., manure substituting for nitrogen fertiliser).
The existing CBI Crop and Livestock criteria (2021) established a set of minimum standards that must be achieved for
certification:
1.
2.
3.
4.

All issuances shall contribute to both climate change mitigation and adaptation & resilience of the asset.
All issuances shall reduce absolute emissions or increase carbon sequestration to contribute definitively to global
climate change mitigation.
Resilience shall be determined as the sustained value of the asset in the face of climate change over the period of theinvestment.
Practices that consistently and predictably lead to increased emissions are excluded, e.g., conversion of high carbon
landscapes.

From this starting point, the criteria update process will place emphasis on current science for climate mitigation transition
pathways. As with the existing criteria, the first principle is the no-deforestation and/or no-high carbon ecosystem loss, without
which it won’t be possible to apply for certification.

1.8 Structure of this document
This document supports the Agriculture Production Criteria. It captures the issues raised and discussed by the TWG, as well as thearguments and evidence in support of the Criteria. It is structured as follows:••••

Section 2: provides a brief overview of the sector: its status, trends and role in mitigating and adapting to climate change;
Section 3: outlines the objectives, principles, boundaries, and overarching considerations for setting the criteria andprovides an overview of the Criteria;
Section 4: describes the rationale behind the mitigation requirements;
Section 5: describes the rationale behind the adaptation and resilience, biodiversity, water, animal welfare (if applicable)
and social aspects requirements.

6 Protected agriculture (hydroponics, vertical farming, etc.) and Commodity Supply Chain Management will not be covered by these criteria but will be addressed inseparate sector criteria currently under development in 2023/2024.
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2 Sector Overview
2.1 What is agriculture production?
The food system is defined as the full value chain of food items, including all elements of production and consumption in it (seeFigure 5 below). Hence, food systems represent a larger system than the crop and livestock system scoped for this criteria process.
In terms of climate emissions, the crop and livestock production system represent the larger component of food system´s emissions,around 70% of the whole food supply chain system.
Agriculture contributes to nearly 90% of the annual global rate of deforestation and the resultant degradation of various scarce andimportant natural habitats such as peatlands and permanent grassland.i Agriculture uses an estimated 70% of the freshwater supply,
further stressing the system in water-scarce countries. Water pollution from agriculture has significant impacts on human healthand natural ecosystems.ii,iii
Agriculture has directly resulted in a steep decline in biodiversity variety and species groups. Global population growth and shifting
diets has resulted in the further expansion of crop and livestock further influencing soil, water and air pollution and habitat degrade
and loss.iv,v
In addition only 55% of the world’s agricultural production, in terms of calories, go towards feeding people directly; the rest are fed
to livestock (36%) or turned into biofuels and industrial products (9%).vi Of the food produced, as much as 31% is lost or wasted
along the supply chain: around 14% is lost from production before reaching the retail levelvii and a further 17% wasted in households,
catering and retail.viii
Of the nine planetary boundaries which defined a safe operating space for humanity on Earth (Steffen et al 2015, Campbell et al2017), six are greatly impacted by crop and livestock production. Four of these are already significantly transgressed, to a large
extent by food production: 1) land system change, 2) biodiversity loss, 3) biogeochemical loss (nitrogen and phosphorus pollution),4) climate change. The remaining two, 5) freshwater use and 6) novel entities (unknown impacts from new substances or life forms)
are or could be largely impacted by crop and livestock production.

Figure 2. Food System emissions as described by Crippa et al 2021.
Note:

In green colour, boundaries of emissions and elements ofthe cycle covered by these Criteria update.

2.2 Agriculture production and climate change
Food systems exert a very large impact on planetary systems, including natural resources, climate, and human systems (i.e., rural
poverty and hunger).

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Food systems are responsible for approximately 31% of global greenhouse gas (GHG) emissions when including the full supply chain
from production to consumption,ix with a contributing range of 13-21% specific to the AFOLU sector (emissions from managed
lands) according to IPCC (2022).
Climate Bonds Initiative focus on climate mitigation (transition pathways) and climate adaptation and resilience, with additionalsafeguards for the rest of conditions for planetary health plus sustainable development pathways including equity, food security
and socially appropriate transition. Below we start to summarise the latest science and consensus (i.e., IPCC) regarding impacts
arising from crop and livestock production (including inputs production and land use and land use change) on all these elements.

2.3 Greenhouse gas emissions from agriculture production (crop andlivestock, including LULUC and inputs production and use)
Roughly one-third of the global greenhouse gas emissions caused by human activities can be attributed to activities for producing,processing, transporting, and packaging food. This accounts for approximately 18 GtCO2e/year, according to the estimates by Crippa(et al 2021). The largest contribution to these emissions comes from crop and livestock production, which includes the use of inputs,
and accounts for 39% (7.1 GtCO2e) of food system emissions. Land use changes contribute 32% (5.7 GtCO2e) of food systememissions. Hence, crop and livestock production represent 71% of the total emissions of the food system (12.8 GtCO2e/year),including on-farm production, land use and land use change and inputs (with a boundary of emissions roughly like the one
established for these Criteria update work).
According to the latest assessment from the IPCC, the managed land sector (AFOLU, Agriculture Forestry Land Use), on average,
accounted for 21% of global total anthropogenic greenhouse gas (GHG) emissions (11.9 ± 4.4 GtCO2-eq yr–1) in the period 2010–2019 (IPCC WG3, 2022). This total includes land use and land use change in managed lands (including deforestation and carbon
sinks) plus direct emissions from crop and livestock production. These values from Crippa and IPCC (12.8 vs. 11.9 GtCO2e/year for
2010-2019) are roughly equivalent with some differences due to specific boundaries and methodologies.
For this Crop and Livestock Criteria process, we are including in the assessed boundary: 1) direct emissions from crop and livestock
production, 2) land use and land use change emissions related to agriculture production (including emissions and removals), 3)
emissions from inputs needed for farm activities (fertiliser and other substance inputs production, irrigation, mechanisation, etc).
We look at each of those in some detail below.

2.3.1 Direct emissions from crop and livestock production: nitrous oxide (N2O) and methane (CH4)
Agricultural nitrous oxide (N2O) emissions result from the application of nitrogen to land, both synthetic fertilisers and organic
manure. N2O emissions are estimated to average 6.6 ± 4.0 Mt N2O yr–1 or 1.8 ± 1.1 GtCO2-eq yr–1 (using IPCC AR6 GWP100 values)
between 2010 and 2019 (IPCC WG3, 2022), representing 15.1% of agriculture emissions. N2O emissions are increasing, notably
from manure application, nitrogen deposition, and nitrogen fertiliser use. These N2O emissions from agriculture represent 69% of
total anthropogenic emissions of this gas. N2O has a GWP of 273 compared to CO2 in 100 years.
Agricultural methane (CH4) result mostly from enteric fermentation of ruminant animals and, in smaller fractions, from anaerobic
decomposition of organic matter, occurring in rice paddies, manure or waste storage and biomass burning. CH4 emissions are
estimated to average 157 ± 47.1 MtCH4 yr–1 or 4.2 ± 1.3 GtCO2-eq yr–1 (using IPCC AR6 GWP100 values) between 2010 and 2019,representing 35.3% of agriculture emissions. CH4 emissions continue to increase, the main source of which is enteric fermentationfrom ruminant animals (mostly from beef and dairy production) (IPCC WG3, 2022). These CH4 emissions from agriculture represent
41% of total anthropogenic emissions of this gas. CH4 has a GWP of 27 compared to CO2 in 100 years.
Direct emissions of N2O and CH4 represent 50% of total agriculture emissions when including land use and land use change.

2.3.2 LULUC: Emissions from land use and Land use change
Land use change drives CO2 emissions from managed lands and accounts for about half of the total net agriculture and forestry
emissions, including CO2 losses due to land use change and CO2 sinks due to biomass growth in managed lands. Estimatedanthropogenic net CO2 emissions from AFOLU (based on book-keeping models) result in a net source of +5.9 ± 4.1 GtCO2 yr–1
between 2010 and 2019 with an unclear trend (IPCC WG3, Chap7), representing 49.6% of agriculture emissions. Deforestation intropical lands, mostly in developing countries, drives most CO2 losses. The rate of deforestation has generally declined, while global
tree cover and global forest growing stock levels are likely increasing (medium confidence). There are substantial regional

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differences, with losses of carbon generally observed in tropical regions and gains in temperate and boreal regions (IPCC WG3,
Chap7).

2.3.3 Inputs: emissions from crop and livestock inputs, irrigation, and mechanisation
Emissions from inputs utilised for crop and livestock production include emissions from chemical inputs (pesticides, medicines, cropamendments, nitrogen fertilisers, etc), mineral inputs (i.e. Phosphorus fertilisers), mechanisation (ie. tractors and other equipment),
irrigation (i.e.. energy used for water pumping and distribution) and the transport of these inputs from point of production to thefarm gate. In short, they include emissions from activities taking place upstream from the farm gate. They are included in thesecriteria update for Crop and Livestock as they represent a significant and growing share of emissions benefiting the production
process at the farm level. However, this share of emissions of this “input” component is much smaller than the production
component.
According to the latest available estimate from Crippa et al arising from the EDGAR model, these emissions will include mostly CO2emissions from energy used in industrial production of inputs, both from the chemical industry and transport. They will reachapproximately 1.0 Gt of CO2 yr-1 at this latest estimate, representing 8% of total agriculture emissions.

Figure 3. AFOLU global trends in agricultural GHG emissions and removals by type, 1990-2019. Source: IPCC, 2022.
Source:

IPCC, (2022)

2.3.4 Emissions from livestock
Overall, the production of animal-based food (including livestock feed) accounts for 57% of total food production emissions (29%with plant-based foods, and 14% with other uses) (Xu et al 2021). Rice and beef were identified as the largest contributors among
plant- and animal-based commodities, with 12% and 25% of emissions, respectively.
The large impact of livestock on climate derivatives from its large land use (75-80% of agricultural land is dedicated to growing
animal feed, including feed-crops and pastures), its intensity of direct emissions (methane and N2O) per protein produced and its
inefficiency in converting feed into food. As shown in Figure 6, the emissions intensity of animal-products is several orders ofmagnitude higher than that of most plant-based foods.
In addition, the expansion of livestock production is one of the main drivers of deforestation globally, particularly in the tropics andin the Amazon region.
Ruminant livestock (primarily cattle but include sheep and goats farming and other ruminants) make up two-thirds of all global
agricultural land surface area and consume one-third of all cereal crops. This equates to about 1,800gal/lb (by comparison, soybeansrequire 216 gallons and corn 108).x Livestock contributes roughly half of agriculture's production-related emissions (±300kg CO2e
per kg).xi Livestock production contributes only 20% of global calorific intake.xii Considering its extremely high environmental impact,
BAU livestock production will be required to significantly reduce its emissions profile to meet transition pathway targets.
As we will describe below under Mitigation Pathways, transitions towards a 1.5C world require considerable reductions in livestock
production and consumption, mostly due to implications of land use and land use change and direct GHG emissions, in particularmethane.

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Figure 4. Range of greenhouse gas intensities, kgCO2e per 100g protein, for various protein-rich foods.
Source:

IPCC Figure 12.6. (From Carbon Brief
https://www.carbonbrief.org/in-depth-qa-the-ipccs-sixthassessment-on-how-to-tackle-climate-change/)

2.4 Impacts on biodiversity from crop and livestock production
The main cause of deforestation worldwide is the expansion of agriculture, particularly the production of crops and livestock. Thisputs a lot of pressure on ecosystems because it leads to the destruction of habitats, such as forests, and the loss of biodiversity(IPBES 2019; Chatham House 2021).
Agricultural activities are responsible for 75-95% of deforestation globally (FAO and UNEP 2020). More than one third of the world’s
land surface and nearly 75% of freshwater resources are currently used for crop or livestock production (IPBES 2019).
Most deforestation (more than 90%) occurs in tropical regions, which are home to the highest levels of biodiversity (IPBES, 2019).
Cattle ranching in Latin America and plantations, especially for palm oil, in Southeast Asia have been major contributors to
deforestation. The destruction of natural ecosystems, including the conversion of peat swamp forests for agriculture, leads toincreased greenhouse gas emissions and further loss of biodiversity.
Surprisingly, many financial institutions that provide funding to companies involved in deforestation do not have policies in place toaddress this issue. These institutions provide a staggering amount of money, $2.5 trillion, to companies that have a high risk ofcontributing to deforestation. Companies that operate on degraded land are more likely to suffer financial losses during extreme
weather events, which can be a significant risk for investors who overlook these long-term risks. (Global Canopy 2022, UNEP 2023
Driving Finance).

2.5 Social impacts: agriculture affects food security, employment, inequality
and health
The functionality of the agriculture sector is key for food security, employment, and public health.
There are over 500 million smallholder farmers worldwide who produce food, feed, and fuel for 8 billion people. As the global
population is expected to reach nearly 10 billion by 2050, the demand for food, fuel, and feed will increase.

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The agriculture sector provides jobs for a significant portion of the population in developing countries, and this is likely to continue
in the future. However, many workers in the food system face challenges such as poverty, poor health, malnutrition, unsafe working
conditions, and a lack of labour rights and protection. They often experience workplace injuries, pesticide poisoning, andoccupational diseases. It is essential to prioritize the health and safety of agrifood workers, improve their protection and wages, tosafeguard public health, save lives, and contribute to food security and livelihoods (UNEP 2023, ILO 2020).
Food production have impacts on public health through dietary choices. Since 1961, the average amount of food calories consumed
by individuals worldwide has increased by about one third, while the consumption of vegetable oils and meat has more than doubled(IPCC 2019). Approximately 2.8 million people die every year due to being overweight or obese. While obesity used to be associatedmainly with high-income countries, it has now become prevalent in low- and middle-income countries as well (FAO et al. 2021). The
demand for natural resources and the availability of food depends largely on the choices we make in our diets. By reducing or
avoiding the consumption of animal-based products, we can save natural resources, reduce pressures on natural ecosystems andmake more food available for people (Shepon et al. 2016). Shifting towards healthier diets that include a variety of foods such as
fruits, fish, nuts, and vegetables can significantly decrease the risk of certain preventable diseases, which are responsible for 20%
of premature deaths worldwide (IPBES 2019).
Unfortunately, due to the high cost of healthy diets and persistently high levels of income inequality, around three billion people
were unable to afford a nutritious diet in 2019 (FAO et al. 2021). Some individuals struggle to obtain the minimum number ofcalories they need and face food insecurity. According to the Food Aid Foundation, 821 million people still go to bed hungry every
night. Even more alarming, one in three people suffer from some form of malnutrition (Food Aid Foundation 2020).

2.6 Investments in agriculture and potential for growth
The bond market for debt issuance in agri-food to date is typically characterised as large-scale investments, typically over USD100m,
and issued over long periods, usually 5-10 years.xiii For non-financial corporate issuers, including supply chain operators and retailers,bond financing could help support the formation of stable transition strategies to improve sustainability.xiv For investors, financing
labelled agri-food bonds signals a commitment to sustainable transition, diversifies portfolios and offers fixed returns, avoiding
traditional equity volatility.xv
Green bond issuance increased 14% from 2021-2022 suggesting overall growth in the green market. Despite this, there was adisproportionate increase in Use of Proceeds (UoP) towards agriculture, forestry and other land use (AFOLU) projects, seeing anominal 0.92% increase year on year.
Notable green issuance in the sector in 2022 included large issuance from the International Bank for Reconstruction andDevelopment (IBRD) domiciled in the USA, to the value of USD712.4m, of which USD156.7m earmarked to fund protection of
biodiversity and reduction of fertilizers’ use, collecting and re-using agricultural waste, and rehabilitating degraded land.
In Europe, Intesa Sanpaolo SpA raised USD992.8m of which 20% funded Forestry projects with FSC certification, sustainableagriculture agroforestry practices, sustainable agriculture organic agriculture (e.g., use of cover crop, implementation of minimum
tillage technologies), optimized feeding strategies for livestock (e.g. use of feed additives to limit the formation of methane gas in
the rumen) and improved livestock health management.
From Latin American there was Sovereign issuance to fund Silvo-pastoral and agroforestry systems, agroclimatic information andearly warning systems and sustainable agricultural production focused on protecting ecosystems, biodiversity, and water resources.
Total Social & Sustainability (S&S) bond issuance in 2022 totalled USD 28.2bn, a significant 36% reduction from 2021 issuance.
Funding for specific AFOLU projects saw a larger disproportionate decrease of 52% totalling just USD 7.5bn in 2022, an average of
only 28% of the total issue funding agricultural and land use projects. Sovereign issuance from Korea funded land and soil quality,
ensure sustainable food productions, resilient agriculture to maintain ecosystems and adaption for climate change. The Compass
group funded certified seafood and supply chain and hormone and antibiotic-free meat, FSC, zero food waste and transition toregenerative agriculture.
Total sustainability-linked bond (SLB) issuance in the food and beverages sector has fallen significantly in recent years. Climate Bonds
recorded 25 SLB issuances in 2021. In 2021 there was positive issuance from NFIs for ‘cattle monitoring’ however in 2022 no similar
SLBs were issued. 2022 saw a decline to just seven agri-food related SLB issues.
Raising finance for sustainable livestock production continues to create challenges for issuers. Many are cautious of the impact ofruminant livestock on the environment and many issue frameworks which explicitly exclude livestock from potential projects.
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Further clarity on financing potential measures to decarbonise livestock operations might help transition livestock to a net zeroaligned trajectory.
Despite the positive momentum, the sector remains heavily underfunded relative to other climate-focused sectors. Capital isflowing into food and agriculture sustainability transition, but not at the scale necessary to meet both the challenges andopportunities facing the sector. The need for investment will only continue to grow over time, as food system sustainability issues
achieve greater recognition. According to Net Zero Financing Roadmaps, investment of at least USD150bn per year is needed for
decarbonisation across agriculture, food and land use over the coming decades to reach net zero in the sector by 2050.
Generally, the climate credentials of many transition finance issuances in the agri-food sector to date appear unambitious and are
not yet aligning consistently with science-based pathways to net zero. Therefore, a robust framework is needed to support thesector’s alignment with 1.5°C climate targets and agri-food goals. This will in turn lead to greater market confidence, whilst also
providing issuers with clear and achievable guidance as to what ‘good’ looks like.
According to the latest IPCC analysis, financial flows into the Agriculture and Forestry sector need to multiply between 10-29 times
to reach needed investments until 2030 (IPCC WG3, Figure 14.5, 2022).

Figure 5. Average mitigation investment flows (blue bars) and investment needs (grey bars – averaged until 2030), across different sectors, types of economy
and region. Source: IPCC (2022).

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3 Principles and boundaries of the Criteria
3.1 Guiding principles and hallmarks for transition
The objective of Climate Bonds updating the Agriculture Production Criteria is to maximise viable bond issuances with verifiable
environmental and social outcomes. This means the Criteria need to balance the following objectives:••

They form a set of scientifically robust, verifiable targets and metrics; and;
They are usable by the market, which means they must be understandable for non-scientific audiences, implementable atscale, and affordable in terms of assessment burden.

Subject to meeting the eligibility criteria, the following can be certified under these criteria and the update of the Overarching
Climate Bonds Standard:••

Entities and sustainability-linked debt (SLD) issued by those entities;
Assets and Use-of-proceed (UoP) bonds financing mitigation measures (e.g., carbon sequestration, reducing emissions).

Each subset of criteria may share common requirements, pathways or metrics but require different demonstrations of compliance.
Table 1. Key principles for the design of Climate Bond Standard sector Criteria.
Principle

Requirement for the Criteria

Ambitious

Compatible with meeting the objective of limiting global average warming to a 1.5degree temperature rise above pre-industrial levels set by the Paris Agreement.

Materiality

Criteria should address all material sources of emissions over the lifecycle. Scope 1, 2
and 3 emissions should be addressed directly.

No offsets

Offsets should not be counted towards emissions reduction performance.

ResilientTo ensure that the activities being financed are adapted to physical climate change anddo not harm the resilience of the system they are in.

Scientifically Robust

Based on science, not industry objectives.

Granular

Criteria should be sufficiently granular for the assessment of a specific project, asset, or
activity. Every asset or project to be financed must comply.

Globally consistent

Criteria should be globally applicable. National legislation or NDC’s are not sufficient.

AlignedLeverage existing robust tools, methodologies, standards.

Technology neutral

Criteria should describe the result to be achieved.

Avoid lock-in

Avoid supporting development that may result in long term commitments to highemission activities.
Source: Climate Bonds Initiative‘Good’ transition finance must be credible and ambitious. To help define this, in 2020 Climate Bonds established a set of fiveTransition Principles for economic activities, set out in Table 2 below. Importantly, any entity, activity or project meeting theseprinciples is substantially contributing to meeting the Paris Agreement goals and should therefore be eligible for capital investmentthat has a climate or environmental mandate. Whilst the Principles were initially designed to address GHG emissions reductions,they can also be adapted to other agri-food system goals. The full analysis and guide to adopting these principles is available in more
depth in Climate Bonds 2022 paper Agri-food transition principles.

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Table 2: Five Transition Principles with associated agri-food interpretations and examples

Agri-food interpretations

Principle••
1.

In line with 1.5-degree pathway••2.

Established by science
•
•
•
•
•

3.

Offsets not sufficient, pathways
should include scope 1, 2 and 3
emissions

•
•
•

•
4.

Technological viability trumps
economic competitiveness

•
•

5.

Action, not pledges•

Net-zero reached ahead of 2050 in AFOLU sector, including reaching
net zero for land use and land use change by 2030 (according to IPCC,
2023).
Carbon removals, i.e. sequestration in agriculture lands, will be key tomaintain global net zero beyond 2050, but cannot substitute for directemissions from crop and livestock (methane and nitrous oxide).
Direct emission reductions aligned with 1.5C from crop and livestock
will need significant transformation of food systems, particularly
within animal-protein production, food loss and food waste (demandside options).
Based on the latest IPCC mitigation and adaptation pathways
compatible with 1.5C global warming and including safeguards on
biodiversity, water, animal welfare and equitable transition (IPCC,
2023).
Follow GHG Protocol land sector and removals guidance.
Agriculture criteria excluded from EU Taxonomy.
No shifting responsibilities for emissions reductions from othersectors, by offsetting in AFOLU.
Agri-food entities should not purchase sequestration offsets fromother activities.
Carbon removals practices within entities can not substitute efforts to
reduce direct emissions from crop and livestock, neither indirectemissions from land use and land use change.
Entities must address all emissions within their value chain: scope 1, 2
and 3.
Particularly for food processing and distributing companies, emissions
from food production must be incorporated (scope 3).
For food producing companies, upstream emissions for inputs intocrop and livestock must be addressed, as well as emissions from land
use and land use change.
Ambitious, technically feasible pathways to maximise emission
reduction.
Incentivise innovation and emerging technologies; if costly, up-takecan be boosted by incentives.
Inconsistencies observed in decarbonisation efforts; offsetting
disguised in complex value chains, are not accepted.
Scrutiny needed to avoid ‘greenwashing’ or overstated actions

3.1.1 Transition categories
To support the implementation of these principles, Climate Bonds sets out four transition categories for economic activities, eachone reflecting the potential for alignment with a net zero economy: near zero, pathway to net zero, interim and stranded. See Figure
6, below, for further explanation.
The categorisation is based on: (1) the length of time a product or service delivered by the activity is needed, this depends on theavailability of low-carbon substitutes, and (2) the possibility of decarbonising the activity, so that it aligns with the Paris Agreement.

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Figure 6: Transition categories for economic activities

Crop production, for example, can be considered a ‘pathway to zero’ activity, in view of available decarbonisation measures suchas the adoption of regenerative farming practices, agroforestry, precision farming technology and the restoration of degraded land
to reverse land use change.
Intensive animal production in its current production and consumption practices may be an example of ‘interim’ activity, phasedout after 2050 due to its very high GHG-intensity relative to other food groups. While there is continuous innovation to decarbonise
production, limited pathways exist to 1.5-degree alignment, compared to moving to less GHG-intensive substitutes. It should be
noted, however, that there are trade-offs beyond just GHG emissions, as some foods can see large volumes of water usage or
require vast tracts of agriculture land to be cultivated. The challenges of decarbonising animal production have significant
ramifications downstream, through the value chain, as processors and retailers grapple with the task of reducing their scope 3
supplier footprint (see Principle 3). Meanwhile, it should be noted that animal production can be critical to livelihoods of groups
such as pastoralists and so a nuanced approach is required across regions. There is potential for animal production to move towardsa ‘pathway to zero’ as part of a mixed farming system, in combination with cropping and silvopasture, in view of the circularsynergies than can be achieved within the system.

3.1.2 Establishing a framework for credible transition by companies.
Climate Bonds has developed a framework dedicated to transition at the entity level, which offers a detailed examination of acompany’s climate-related ambitions and actions. It is aimed to support companies to develop transition plans that can deliver
rapid change and align with the global goal to nearly halve emissions by 2030 and reach net zero by 2050, in line with the Paris
Agreement. These Hallmarks for Credible Transition are described below (Table 3).xvi
Table 3: Five Hallmarks for a credibly transitioning company with associated agri-food interpretations and examples

Agri-food interpretations

Hallmarks•
1.

Paris aligned targets

•
•

2.

Robust plans3.

Implementation action••

KPI commitments should align with agri-food transition pathways,
near zero or pathway to net zero.
Entity transition strengthened by KPIs on wider environmental andsocial aspects.
Transition Plan and KPIs should have clear short-, medium- and longterm plans that define how they will decarbonise their activities overtime and in line with the sector pathway.
Agri-food firms need to consider natural resources and social impacts:
including land use change, biodiversity, water usage, soil health,equity, food security, animal welfare, etc.
Address lags between establishment and delivery of Transition Plans,raising and deploying investment.

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Agri-food interpretations

Hallmarks

4.

Internal monitoring•

Interim performance indicators help gauge progress and lead to early
action, e.g., traceability systems.

•

Pertinent to agri-food emerging tech investment, e.g., food distributor
re-evaluating low-carbon transport innovations.
Monitoring tools are needed, including but not limited to GHG
performance; feedback to Hallmarks 2 & 3.

•
•

5.

External reporting•

Agri-food firms should disclose KPIs, rationale, methodology,
monitoring tools, transition strategy; annual reporting (seasonality).
Disclosures with independent verification assurance report.
Source: Climate Bonds, (2022), recommended reading for all TWG members

The five Hallmarks enable an encompassing view of a company’s transition plan, taking into consideration:a) the level of ambition of the targets set (Hallmark 1 - which itself encompasses the 5 Transition Principles).
b) the willingness and ability to deliver on those targets (Hallmarks 2-4) andc) general reporting robustness and transparency, which is important for the market (Hallmark 5).
Climate Bonds’ focus to date has been UoP bonds but it is our intention to certify instruments beyond UoP, including corporate
SLBs and similar (e.g. Sustainability Linked Loans - SLLs). This will allow us to provide guidance to issuers and assurance to investors
around the credibility of those instruments, which can at present prove difficult to evaluate due to lack of consistency in approaches
and metrics used by each issuer. This will require assessment of both the company’s transition key performance indicators (KPIs),
and their ability to deliver on their targets. Such certification would follow the requirements set, namely a standardised, common
rule set, binary assessment, simplicity, transparency, and science-based criteria.
Nonetheless, the two subsets of criteria share many of the same guiding principles. The Climate Bonds Initiative sets out thefollowing as key principles for setting entity level criteria:
•
•
•
•
•

Science based;
Testable;
Relatively simple;
Not reinvent the wheel;
Consistent over time and companies.

Rather than the two components for green (mitigation and adaptation and resilience), the Climate Bonds Initiative has proposed
five hallmarks for transition that are relevant to entities, these are summarized in Figure 7.

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Source: Climate Bonds Initiative
Figure 7. The Hallmarks of a credibly transitioning company.

3.2 Scope of emissions for entities and activities covered by the Agriculture
Production Criteria
The food system value chain covers upstream, on-farm and post-farm emissions. The present Criteria covers upstream and on-farmemissions, including emissions from activities on-farm up to the farm gate, including emissions from land use, land use change andenergy and input production. This is to align with the Climate Bonds ‘Materiality’ principle of including scope 1, 2 and 3 emissions.

Source: FAO7

Figure 1: Simplified representation of the food system value chain covering upstream, on-farm and post-farm emissions. The

7

https://www.fao.org/3/cc9029en/cc9029en.pdf

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present Criteria covers upstream and on-farm emissions, as represented by the red dotted line.

3.3 Accounting of greenhouse gas emissions. Methodological notes.
There are several methods for accounting for GHG emissions. Having a defined methodology is essential to lead to consistentassessments and improve the climate reporting. The Agriculture Production Criteria follow the GHG Protocol methodologies. These
Criteria adopt the approach of the GHG Protocol Land Sector and Removals Guidance8 for GHG accounting guidance on the selection
and implementation of emissions estimation methodologies, data collection, documentation, and quality management. Other
specific requirements on these Criteria (e.g., eligible measures and activities) might differ from those in the GHG Protocol Land
Sector and Removals Guidance.

8

https://ghgprotocol.org/land-sector-and-removals-guidance#supporting-documents

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4 Key considerations taken for Criteria development
The Agriculture Production Criteria, in following the principles established by Climate Bonds, is based on the latest consensus scienceavailable at the time of the TWG deliberations. It has relied extensive on the latest findings from the United Nations
Intergovernmental Panel on Climate Change (IPCC) Sixth Assessement Report (AR6), particularly on the Report from the Working
Group III on Mitigation of Climate Change.
When assessing and selecting eligible measures and activities that can be Certified as “Green”, the TWG carefully reviewed thefindings and updates available in the latests consensus science, chosing those with clear material mitigation potential while
minimising uncertainty and undesirable impacts on other enviromental or social aspects.

4.1 Climate Mitigation Pathways to 1.5°C
The Paris Agreement’s goal of limiting the increase in global temperature to 1.5°C above pre-industrial levels requires rapid andambitious reductions in global greenhouse gas (GHG) emissions across the energy; industry; transport; buildings; and agriculture,and forestry sectors.xvii xviii Even if fossil fuel emissions stopped now, current trends in global agri-food systems would prevent theachievement of the 1.5°C target.xix xx Since global food production is estimated to increase by 15% in coming decades,xxi agri-foodsystem emissions might increase by up to 80% from 2010 to 2050.xxii In addition, there are still more than 800 million people
undernourished and living under severe food insecurity, who must be considered in agri-food system planning (Food Aid
Foundation, 2021).xxiii Therefore, the Paris Agreement and UN SDGs can only be achieved with significant contributions from agrifood system, including supply-side measures in agriculture production and demand-side measures related to diet changes andreduced food waste,xxiv while strengthening food security and safety.xxv
Transition pathways are crucial for guiding the agricultural sector towards net-zero emissions within the desired timeframe. Thesepathways involve a combination of emission reductions and removals over a given period. Transition pathways either present the
reduction over time from a given baseline, associated with either a percentage reduction figure in CO2e in absolute or intensity
terms, or by presenting practices they will adopt that are already assessed to be alignment with a 1.5°C future.
Transition to a net-zero, resilient, sustainable and fair agri-food system requires an evolving series of phase-out and phase-in of
measures (practices and technologies) towards a defined target. The diversity and fragmentation of the sector pose important
challenges in defining these targets and the aligned best practices and timelines. Embracing such a challenge, the goal of the new
Agriculture (Crops and Livestock) Criteria will be to select a set of science-based targets, alongside measures to be employed overtime to reach this goal. The selection of measures is expected to be conducted in reference to context-specific potential of GHG
emissions reduction. The set of transition pathways and the evolving implementation of measures must also refer to otherpredominant issues in the sector, particularly improving biodiversity and addressing water use and quality, food loss, equitabletransition (with social implications for food security, employment, inequality and public health).
Once transition pathways are established, they can be employed as a guideline for the certification of forward-looking transition
financial instruments, such as transition bonds, SLBs and SLLs as well as non-financial entities, in this case, for the whole
production unit. In addition, the guidelines would also be useful to investors wishing to identify and/or disclose credible
investments in the sector. In contrast with the current Climate Bonds’ Agriculture Criteria (published in 2021), this new set oftransition pathways will go beyond the certification of pure use of proceeds green instruments and set an ambitious direction for
agricultural production to pursue Paris Agreement targets and these other important agri-food system goals.
Various studies have proposed emissions targets and pathways for worldwide commoditised agricultural production. In thefollowing section, three selected pathways will be discussed, each of which has been identified as presenting credible pathwaysaligned with a 1.5°C target. It should be noted that these three pathways are not an exhaustive list, and new agri-food sectortransition pathways are expected to emerge in the coming years, beyond the scope of this analysis in May 2023. This highlights theneed for potential revisions and additions to Climate Bond's work. Additionally, it is important to consider that there may be otherrelevant transition pathways specific to individual entities in particular sectors, which should be consulted and attributed to
production activities and geographical context. Nonetheless, these pathways provide a strong basis for discussing transition
pathways and determining the annual percentage reduction figures for climate bonds to potentially adopt.

4.1.1 IPCC Illustrative mitigation pathway – (Sustainable Development Pathway) IMP-SP (2022)
The latest IPCC AR6 (2023) produced a series of different potential mitigation pathways based on a series of different assumptions.
These pathways represent the clearest alignment with the latest established scientific consensus on potential climate mitigation
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pathways, however the speed and composition of actions, routes and ambition along the pathway vary between the different
assumptions made. The range in assumptions and ambition is demonstrated in the Figure below:
Figure 8. Process for creating illustrative mitigation pathways (IPCC, 2022)

IMP Shifting Pathways (SP) (SusDev) (Soergel et al. 2021; 1.5°C with no or low overshoot) displays a future of generally low resourceand energy consumption (including healthy diets with low animal-calorie shares and low food waste) as well as significant but
sustainable agricultural intensification in combination with high levels of nature protection. This pathway shows a strong near-term
decrease of CO2 emissions from land-use change, mainly due to reduced deforestation, and in difference to all other IMPs describedin this chapter strongly decreasing N2O and CH4 emissions from agricultural production due to improved agricultural management
but also based on dietary shifts away from emissions-intensive livestock products as well as lower shares of food waste. In
consequence, comparably more limited amounts of land are needed for land-demanding mitigation activities such as BECCS andafforestation. In particular, the amount of agricultural land converted to bioenergy cropland is smaller compared to other mitigation
pathways (like IMP-Neg where demand for land will be very high). Forest area increases either by regrowth of secondary vegetation
following the abandonment of agricultural land or by afforestation/reforestation at the cost of agricultural land. The IMP-SP
mitigation pathway is displayed in the below Figure, alongside the other potential pathways.

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Figure 9. Comparison of the different IMPs and breakdown of GHG emissions reductions and land use changes, 2020-2100. Source: IPCC, (2022)

Source:Agriculture Production Background Paper (Crop and Livestock)- Climate Bonds Initiative

IPCC, (2022)

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Figure 10: IPCC (IMP-SP) Illustrated Mitigation Pathway for CO2, CH4 and N20 from agriculture, GtCO2e between 2005-2100

5
4
3
2
1
CO2 AFOLU

0

N2O Ag-1

CH4 Ag-2-3
2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 2055 2060 2070 2080 2090 2100
Note:

based on REMIND-MaAgpie 2.1-4.2 model (IIASA,
2022).xxvi

Source:Produced for this briefing with data from IPCC (IIASA,
2023)

IMP-SP SusDev specific transition pathway was selected as it was clearly established as 1.5°C aligned pathway with no or low
overshoot, which also takes into consideration safeguards to other environmental and social issues, including the restoration ofland and afforestation practices alongside the reduction in the land footprint of cropland and pasture lands leading to more positive
benefits for biodiversity and the sequestration potential of the AFOLU sector, plus further alignment with Sustainable Development
Goals. Further, as one of the more ambitious and front-loaded 1.5°C aligned mitigation pathways it aligns with our own CBI transition
hallmarks and principles that inform our approach for assessing credible transition finance, plans and strategies.
The IMP-SP SusDev mitigation pathway sees emissions from the AFOLU sector peak in 2020 at 10.9GtCO2e/yr and begin to see
rapid reduction in the emissions of AFOLU sector towards 2050 to around gross of ~1.7GtCO2e/yr being emitted in N20 andmethane sources but due to the expansion of sequestration potential being ~-1.4GtCO2e/yr, leading a near net-zero balance by
2050, but within alignment with 1.5°C scenario.xxvii Between a baseline of 2020 (10.9GtCO2e/yr) to 2030 (4.9GtCO2e/yr) this means
a combined emissions reduction rate of 5.5%/yr to be on a 1.5°C aligned pathway. From 2030 (4.9GtCO2e/yr) to 2050
(0.4GtCO2e/yr) a combined emissions reduction rate of 4.6%/yr to be on a 1.5°C aligned pathway.
To break this down further by the three predominant GHGs, shown in Figure requires individual efforts for actions associated withmethane, nitrous oxide and carbon dioxide emissions.

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Table 4: Annual reduction rate of GHGs based on IMP-SP database projected figures between 2020-2050, (IIASA, 2023)

Between period

Annual reduction rate
(GtCO2e/yr)

2020 - 2030

2030 - 2050

Aggregate CO2e

5.5%

4.6%

CO2 AFOLU

9.1%

6.7%

CH4 Ag

3.7%

2.6%

N2O Ag2.8%

3.2%

To reach net zero by 2050 this requires an expansion in the sequestration potential of the AFOLU sector between ~2030 to 2050. It
will require CO2 to begin to be net zero between 2030-2035, and then to be a sink of emissions from that position going forward.
In addition, the IMP-SP pathway also compared to the other proposed mitigation pathways sees a steeper decline in both methane(CH4) and carbon dioxide (CO2) emissions in particular, compared to N2O emissions.

4.1.2 SBTi FLAG (2022)
The Science Based Targets Initiative (SBTi) has developed a forestry, land use and agriculture (FLAG) guidance on how to set sciencebased targets (SBTs) for sector-related emissions across different scopes and for different users. FLAG SBTs are science-basedtargets that apply to a company’s GHG emissions from AFOLU, including GHG emissions associated with land use change (LUC) (i.e.,biomass and soil carbon losses from deforestation, conversion of coastal wetlands, conversion/draining and burning of peatlands,
conversion of savannas and natural grasslands); emissions from land management (i.e., nitrous oxide and methane from entericfermentation, biomass burning, nutrient management, fertilizer use and manure management); and biogenic removals (i.e., forest
restoration, silvopasture, improved forest management, agroforestry and soil carbon sequestration).xxviii
The SBTi provides two approaches to FLAG target setting to enable companies to calculate GHG reduction targets in line with theParis Agreement:••

The FLAG sector pathway for companies with diversified FLAG emissions.
The FLAG commodity pathways, which include 11 pathways for specific commodities: beef, chicken, dairy, leather, maize,
palm oil, pork, rice, soy, wheat, and timber & wood fibre.
Companies may combine multiple commodity pathways and the sector pathway as appropriate for target setting.
End-users include agricultural commodity producers, including from animal sources, the pulp and paper industry, wood productproducers and retailers; food retailers, companies that use inputs derived from FLAG sectors (e.g., cosmetics, textile, leisure); andcompanies that generally have a large FLAG-related footprint (i.e., significant AFOLU emissions per unit of product). The SBTi FLAG
sector pathway is based on the review paper Roe et al, (2019), which aligns top-down integrated assessment models of net CO2,CH4 and N2O global emissions trajectories for AFOLU with bottom-up studies of the range of technical, economic and sustainable
mitigation potential of land-based activities to categorize mitigation into seven priority mitigation measures (wedges):
•
•
•
•
•
•
•

Reduce land use change (LUC).
Improve agriculture.
Shift diets.
Reduce food loss and waste.
Restore forests.
Improve sustainable forest management (SFM) and agroforestry.
Enhance agriculture soil carbon.xxix

The science-based rate of mitigation of emissions in the FLAG sector pathway is 3.03%/yr. This means that the reduction rate
corresponding to ten years (e.g., from base year 2020 to target year 2030) is a 30.3% reduction for a company using the FLAG sector
pathway rate. All potential mitigation wedges are summed, and the reduction rate is annualized over time to calculate 3.03%.
Compared to the IPCC IMP-SP, this FLAG pathway has two main differences:

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1) The target reduction rate of 3.03%/yr from 2020 to 2030 includes both emission reductions (CO2, N2O and CH4) andcarbon removals (CO2), which might imply significant offsetting within the entity (often named insetting).xxx This might
result in farm activities not resulting in absolute reduction of direct emissions of CO2, CH4 or N2O, but compensating for
those via carbon sequestration in land. This approach might limit the potential ambition of the mitigation pathway, while
not ensuring absolute emissions reductions in the long term if carbon sequestration in land might be reserved at somepoint.
2) The target reduction of from 2020 to 2030 is significantly higher than the IPCC modelled one of 5.5%/yr, implying that thesector as a whole will achieve a lower reduction perhaps relying in further reductions in other sectors to maintain a 1.5°C
budget.
In addition, the inclusion of intensity reduction pathways for specific commodity types, implies that while relative emissions might
decrease for a given amount of production, if the entity is increasing overall production quantity, emissions might increase and thus
exit the given emission reduction pathway with consequences for temperature targets.
Table 5: Summary of near-term FLAG pathways,

Note:

Commodity pathways and the sector pathways may be combined
for an aggregated FLAG target

Source:

SBTi FLAG, (2022)

4.1.3 Costa et al, (2022)
A further pathway was defined and produced by Costa et al (2022) paper ‘Roadmap for achieving net-zero emissions in global foodsystems by 2050’ presented pathway that could lead to the agri-food system reaching net-zero by 2050 without relying on offsets
by engaging with ~45% emissions reduction across agri-food systems. To reach net zero this translates to an annual emissions
reduction of 3.3% or ~700MtCO2e/yr between 2020 to 2050.xxxi
The research indicated that agri-food systems emit ~20 GtCO2e/yr (~35% of global greenhouse gas emissions). This level tends torise given the expected increases in food demands, which may threaten global climate targets. Through a rapid assessment,
evaluating 60+ scenarios based on existing low-emission and carbon sequestration practices, Costa et al (2022) estimated that
intensifying agri-food systems could reduce its emissions from 21.4 to −2.0 GtCO2e/yr and address increasing food demands without
relying on carbon offsets (e.g., related to afforestation and reforestation programs).
However, given historical trends and regional contexts, a more diverse portfolio of practices, including diet shifts and new-horizon
technologies, will be needed to increase the feasibility of achieving net-zero agri-food systems. One likely pathway consists ofAgriculture Production Background Paper (Crop and Livestock)- Climate Bonds Initiative

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implementing practices that shift food production to the 30th-percentile of least emission-intensive agri-food systems (~45%emissions reduction), sequester carbon at 50% of its potential (~5 GtCO2e/yr) and adopt diet shifts and new-horizon technologies(~6 GtCO2e/yr). For a successful transition to happen, the global agri-food system would, in the next decade (2020s), need to
implement cost-effective mitigation practices and technologies, supported by improvements in countries’ governance and technicalassistance, innovative financial mechanisms and research focused on making affordable technologies in the following two decades(2030–2050). This work provides options and a vision to guide global agri-food system to achieving net-zero by 2050.xxxii
The below figure represents the various activities associated with a decarbonisation of emissions associated with the agri-foodsystem allowing the sector to reach net-zero by 2050.
Figure 11: Roadmap for agri-food systems net zero emissions by 2050.

Source:Costa et al, (2022).

In the paper, the roadmap for net-zero 2050 agri-food sector encompasses:•••

Large-scale adoption of low-emission practices to shift the production to the 30th percentile of least emission-intensive systems(~45% emissions reduction across agri-food systems), which could mitigate 10.6 GtCO2e/yr, or ~50% of the mitigation neededby 2050 compared to the 2020 base year. This will mostly imply absolute reductions in CH4, N2O and likely also CO2 from land
use and land use change.
Realizing 50% of the carbon sequestration potential associated with low-emission practices (i.e., soil carbon, agroforestry andbiochar) could contribute another ~24% (5.2 GtCO2e/yr) emission reduction.
Reducing the remaining agri-food system emissions (5.6 GtCO2e/yr) by decreasing 2050 projected livestock production,
especially in high- and middle-income countries, in 25% (1.2GtCO2e/yr) and by deploying new-horizon technologies (4.4
GtCO2e/yr).

Major actions to implement this vision over the next three decades are summarised as:
By 2030, implement cost-effective actions to reduce CO2 emissions from land-use change (e.g., deforestation and other land
conversion) for food production along with using existing technologies to improve (i) beef, milk and rice production and (ii) nutrient
management (focusing on nitrogen fertilizer) across major grain production systems (e.g., maize and wheat). By 2040, low-emissions
agricultural practices should be implemented to harness the remaining cost-effective mitigation potential. Of this mitigation
potential, 55% to 87% could be achieved with practices costing up to 100 US$/tCO2.
Implement cost-effective technologies and practices to sequester 1.7, 3.5 and 5.2GtCO2 annually by 2030, 2040 and 2050,
respectively. This can be achieved by adopting agroforestry, applying biochar to soils and improving crop (e.g., tillage and cover

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crops) and pasture management (e.g., rotational grazing and fertilisation) practices. Close to 45% of the carbon sequestration
potential (4.8 GtCO2 yr−1) would cost up to 100 US$/ tCO2.
By 2040, scale the use of renewable energy (e.g., wind and solar), enhance fuel efficiency, expand the electric transportation feet,
improve fertilizer production, expand the circular economy and peri-urban agriculture, and promote diet shifts in high- and middleincome countries.
From 2040 to 2050, develop and produce affordable new-horizon technologies for negative emissions, with focus on livestock
production systems (e.g., methane capture, feed additives and new breeds), novel plants and perennials for carbon sequestrationand enhanced energy efficiency for storing, processing, transporting, packaging and retailing. Approximately 5.6 GtCO2e/yr (2.6
and 5.7 GtCO2e emissions reduction and carbon sequestration, respectively)— or ~25% of the mitigation needed for net-zero FS—
could be unleashed with the reduction of implementation costs (today above 100 US$/tCO2).
In summary, the transition pathway presented by Costa et al, 2022 presents a potential roadmap of credible actions and annual
emissions reductions for entities in the agri-food system to be aligned with a 1.5°C pathway through the implementation of major
mitigation actions for intensifying FSs based on existing low emission and carbon sequestration practices have the potential toreduce agri-food system emissions beyond net-zero by 2050 while increasing food production. The analysis also demonstrates thatan intensification strategy coupled with a more diverse portfolio of practices, most notably diet shifts and new-horizon technologies,
will be more effective for reaching net-zero emissions by 2050 without relying on carbon offsets (e.g., related to afforestation andreforestation).xxxiii

4.2 Climate mitigation options for agriculture production
Mitigation options for the agricultural sector encompass a range of practices and technologies that can significantly reduce
emissions. Emphasizing practices aligned with the 1.5°C target is crucial, as not all reduction measures may align with this goal.
Evaluating the reductions in potential theorical and economic absolute potential can help identify practices that are most effectivein achieving emissions reductions aligned with the 1.5°C target. We are starting an analysis of mitigation options aligned with 1.5°C
considering co-benefits for adaptation, biodiversity, food security and socially equitable transition, according to the latest
assessment from the IPCC AR6, 2023.
Mitigation in agriculture includes practices that reduce absolute emissions or emission intensity, defined as emission/unit yield
relative to a base year or business-as-usual baseline projection into the future.
Mitigation also includes practices that enhance the soil’s ability to store carbon, which is vital to achieve climate change mitigation
targets. The mitigation potential of soil and biomass carbon is complex and their attribution to management actions can bechallenging; equilibrium levels and saturation of carbon storage vary due to management practices and over time; stored carbon isalways vulnerable to future release to the atmosphere. Furthermore, GHG emissions and sequestration vary spatially and are highly
heterogeneous; measured data does not exist for many places, and so there is a high degree of uncertainty around emissions
estimates.
According to the latest science assessed in the recent IPCC AR6 (2023) reports, the main mitigation options in the AFOLU sector, indecreasing order are (see Figure 10 below):
1)
2)
3)
4)
5)
6)

Reduce conversion of natural ecosystems.
Carbon sequestration in agriculture
Ecosystem restoration, afforestation, reforestation. (this one will be out of scope for this criteria).
Shift to sustainable and healthy diets.
Reduce methane and N2O in agriculture.
Reduce food loss and food waste.

Besides ecosystem restoration, the other 5 options are very relevant for crop and livestock production and will be key options to
consider to incorporate into the criteria update.

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Figure 12. IPCC AR6 Synthesis Report (2023) summary of a) Land, Water and Food Mitigation and Adaptation options in the near term and b) potential fooddemand-side mitigation options by 2050.

4.2.1 Land use and land use change mitigation options
Reduce deforestation and degradation of ecosystems holds the highest mitigation potential in terms of GHG of the whole AFOLU
sector, albeit large variability among regions (Figures 13 and 14). Since crop and livestock production and its expansion is the major
driver of deforestation and ecosystem degradation, it is a key part of any transition pathway for agriculture, even if its effects areindirect.
Any crop and livestock production activity associated with the loss/conversion of forests (or other high carbon landscape) will not
be eligible for certification. Climate Bonds in the previous criteria focussed on the requirements of ‘No conversion of high carbon
stock lands’ and the current ‘Land Use Status’ to be fulfilled to ensure that any mitigation efforts in crop & livestock production
practices would not be undermined by potential LUC.
To fulfil both requirements meant subscribing to two cut-off dates. For the ‘No conversion of high carbon stock lands’ the production
unit should be on any land that had been converted from high carbon stock (HCS) lands spanning more than one hectare after Jan
1, 2010, or according to the cut-off date required in national law in the country of issuance or as defined by regional green financing
initiatives if this is prior to 2010. Therefore, it used the year 2010 as the effective deforestation cut-off date, in the previous criteria.
The ‘Land Use Status’ is a more geographically specific component that stated, “No clearing of woody vegetation over 3 metres inheight after 2020 on the production unit in question”. Which was designed to prevent clearing to increase the area of grazed ortilled land. It should not be applied to disqualify clearing as a necessary adjunct to the commercial operation of the enterprise. For
example, clearing is permissible to build farm infrastructure such as roads, dams or fences or to create a firebreak or around powerlines or to otherwise mitigate fire risk around farm infrastructure. Additionally, removal of commercial trees planted as part of anagroforestry system is allowed. If the use of proceeds refers to the Cerrado in Brazil, then the 3- metre rule does not apply for thevegetation. For the Cerrado, no native woody vegetation should be cleared after 2020 on the production unit in question.

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However, since the release of the criteria there has been significant market movement on the issue of deforestation cut-off dates
and a range of the cut-off dates provided in the market is shown in Table 6 below:
Table 6: Sample of Deforestation Cut off dates from existing standards and criteria.

EU taxonomy for sustainable activities
FMO (aligned with above)
ProTerra
Climate Bonds Initiative
FSC
RSPO
RTRS
NY Declaration on Forests
UN SDG
AFi Guidance
SBTi FLAGGHG Protocol
UK Soy Manifesto
French Soy Manifesto
British Retail Consortium
Forest Positive Coalition
Responsible Commodities Facility
EU DR

2008
2008
2008
2010
1994 (2020)2009/2015/2018/2020
2016
2020
2020
Jan-20Jan-20Jan-20Jan-20Jan-20Jan-20Jan-20Jan-20Dec-20In this criteria update there is a recognition that while Climate Bonds seeks to ensure the ambition remains high in terms of land
use issues there is a desire to align with existing market standards where possible to allow for positive progress and uptake of thecriteria to those seeking to transition, especially in the Latin American context where based on stakeholder feedback it was foundthat a 2010 cut-off date was very difficult to be adhered to in practice even amongst the most ambitious issuers wishing to certify
against the Climate Bonds agriculture criteria.
One proposed starting point for definition of deforestation criteria, subject to debate from our TWG members will be the definition
AFi, SBTi and GHG Protocol have jointly presented in that: “Commitments should include a cut-off date, specifying the date after
which deforestation or conversion renders materials non-compliant. The Accountability Framework states that cut-off dates shouldalign with existing sectoral cut-off dates where possible, and that for no-deforestation commitments they should not be later than2020.”xxxiv
In order, to ensure there is an alignment with the existing criteria to enable greater usability of the C&L criteria it is proposed that
Climate Bonds would raise the potential with the TWG to shift the existing 2010 deforestation cut-off date to be in alignment withthe other existing market standards, to a new cut-off date of 2020. However, it is clear such a move may risk a loss in ambition andcould incentivise further deforestation. As such, it will be a key topic for review through the TWG criteria development process.

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Figure 13. Regional mitigation potential in 2020-2050 from Agriculture, Forestry and BECCS.

Note:

Figure adapted from IPCC AR6, 2022.

4.2.2 Mitigation options in crop and livestock production systems: reduce and sequester
Within agriculture, in crop and livestock production systems, mitigation options relate to two main categories: 1) reduce methaneand nitrous oxide emissions, and 2) sequester carbon (Figure below from IPCC AR6 details mitigation potential based on theoretical,
economic, and modelled estimates, (grey, light blue and dark blue respectively), for each mitigation measure.
Main measures to reduce emissions include changes in enteric fermentation, manure management, crop nutrient management andimprove rice management. The highest potential of those refers to enteric fermentation, which could realise a mitigation of about
1 Gt CO2e yr-1 under modelled estimates.
Main measures to sequester carbon in agriculture soils include soil carbon management in croplands and grasslands, agroforestry
and biochar application. Theoretical potential mitigation of these measures is high but entail also high uncertainty and difficulties
in modelling approaches.
In addition, IPCC identifies a set of demand-side measures, indirectly related to the crop and livestock production system: reducefood loss and waste, and shift to sustainable healthy diets. Both are relevant to these criteria and will be incorporated into thecriteria discussions.
CBI proposal on these set of mitigation measures is to prioritise in a first step measures that reduce absolute emissions from cropand livestock production (including demand-side options like diets and food loss), and additionally incorporate carbon sequestration
practices as a second tier set of measures. Both are suitable and desirable, but to avoid “offsetting” within production unit, reduction
measures could be a prerequisite for carbon sequestration measures.

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Figure 14. Mitigation measures in Agriculture, mitigation potential based on theoretical, economic, and modelled estimates, (grey, light blue and dark blue
respectively), for each mitigation measure.

Note:

Adapted from IPCC AR6 WG3 Chapter 7.
Symbols refer to impacts and trade-offs.

Eligible measures to sequester carbon in agriculture lands
When considering the options for eligible measures and activities, guidance from IPCC (2022) and from the Technical Expert Groupin the EU Taxonomy were taken into account. Specific references to each of those eligible measures selected in the Criteria are
given in the following Table.
Table 7. Assets and UoP: Eligible measures for Carbon sequestration with information on intervention systems, eligible measures and requireddemonstration of compliance. All the eligible measures can be applied to the whole production unit(s) or as separated activities within production units.

Intervention systems

Demonstration of compliance(from highest to lowest Eligible measures
C sequestration
potential globally)
1. Restoration ofagricultural land.

9Land sparing forreforestation9 and/or
restoration, including:● peatland,● mangroves/wetlands,

Sources

Verified restoration plan including thefollowing:10

Roe et al, (2021) p.
6030
IPCC AR6 (2022), p. 797
1) Geolocation of land plots and
EU Taxonomy Technicaldemonstration of historical land use pre- Annex (2020), p. 52
issuance.

shifting from non-forest cover to forest cover at 30% tree cover threshold with a region-specific natural forest regrowth.

10Adapted from recommendations in “Greenhouse Gas Protocol Land Sector and Removal Guidance (September, 2022)”

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●overgrazed grasslands
with depleted soilorganic carbon.

2. Agroforestry(incorporating woody
perennials into
agriculture production
units). 11●

agroforestry in croplands Verified management plan that ensures
Roe et al, (2021), p.
inc. perennial plantation conditions A or B for increased carbon input or 6033
crops (e.g. cocoa, coffee, carbon sequestration (Table 5).
IPCC AR6 (2022), p. 798
nuts),
And, if option B, this specific metric:
agroforestry in● At a minimum, estimated carbon
silvopastoral systems
sequestration potential must be above 0.6(grasslands and pasturetC ha-1 yr-1 of carbon aboveground.13
lands).12

3. Biochar in
agricultural lands.

Application of biochar
produced with biomass
residues sourced fromdeforestation andconversion-free (DCF)
agricultural land. 14

4. Improve soil carbon
management ingrasslands andpasturelands.

●

●

●

●

and
2) Verified management plan that ensuresconditions A or B for increased carbon
input or carbon sequestration (Table 5).

Verified management plan that ensures
Roe et al, (2021), p.
conditions A or B for increased carbon input or 6033
carbon sequestration (Table 5).
IPCC AR6 (2022), p. 797
And:
Verified farm management plan including:
1) information of the quantity and sourcingof biochar (from DCF residues),
2) application rate,3) edaphic conditions that secure biocharstability.

Vegetation
Verified management plan that ensures
Roe et al, (2021), p.
management: improved conditions A or B for increased carbon input or 6034
grass varieties/sward
carbon sequestration (Table 5).
IPCC AR6 (2022), p. 797
composition, deep
EU Taxonomy Technicalrooting grasses,
Annex (2020), p. 130,
increased productivity
421(without additional
fossil-fuel fertiliser
inputs).
Livestock management:
fitting stocking densities
to carrying capacity,
fodder banks, andfodder diversification.
Fire management:
improved use of fire,including fire prevention
and improved prescribedburning.15

11

Agroforestry is defined by the FAO as land use systems and technologies where woody perennials (trees, shrubs, palms, bamboo, etc) are deliberately used on
the same land management units as agricultural crops and/or animals, in some form of spatial arrangement or temporal sequence. See
www.fao.org/forestry/agroforestry/80338/en and see IPCC WGIII Chapter 7, Section 7.4.3.3 Agroforestry p. 790.
12
Silvopastoral systems are those that combine tree growing with the production of livestock. https://www.sciencedirect.com/topics/agricultural-andbiological-sciences/silvopastoral-systems.
13
The carbon sequestration potential of agroforestry (including both grasslands and croplands) has been found to range between 0.59 and 6.24 t ha–1 yr–1 ofcarbon above-ground. Below-ground carbon often constitutes 25% or more of the potential carbon gains in agroforestry systems (IPCC, AR6 WGIII, Chapter 7, p.
791).
14
According to IPCC AR6 WGIII Chapter 7: “Biochar is produced by heating organic matter in oxygen-limited environments (pyrolysis and gasification). Feedstocks
include forestry and sawmill residues, straw, manure and biosolids. When applied to soils, biochar is estimated to persist from decades to thousands of years,
depending on feedstock and production conditions.”
15
From IPCC, AR6 WGIII, Chapter 7, p.788. All these measures are recognised as Sustainable Soil Management Practices by FAO (Baritz et al. 2018).
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5. Improve soil carbon
management incroplands.

●

●

●

Crop management: e.g., Verified management plan that ensures
Roe et al, (2021), p.
improved crop varieties, conditions A or B for increased carbon input or 6034
crop rotation, use ofcarbon sequestration (Table 5).
IPCC AR6 (2022), p. 788
cover crops, shifting to
EU Taxonomy Technicalperennial cropping
In addition:
Annex (2020), p. 129,
systems (including● For nutrient management, the421
agroforestry), crop
requirement is for increases in NUE and/or
diversification.
not additional net N2O emissions.
Nutrient management:
fertilisation with organic • For reduced or no tillage, the requirement
amendments/green
is for at least 30% of crop residues left onmanures.
the soil surface permanently (this should
Reduced tillage withbe reflected in the farm management
residue retention.
plan).16

4.2.3 Mitigation of indirect emissions from inputs
Indirect emissions in the agricultural sector result from activities like the use of fossil fuel-powered machinery, production offertilizers, and other CO2-emitting processes. These emissions, often referred to as Scope 3 emissions for food production entities,
need to be addressed to achieve comprehensive reductions. Transition pathways should consider strategies to minimize theseemissions by promoting energy-efficient machinery, sustainable sourcing of inputs, reduced use of synthetic fertilizers, andexploring alternatives to energy-intensive activities in the sector's supply chain.
To complement emissions reductions, removals of carbon dioxide (CO2) from the atmosphere through enhanced carbon
sequestration in crop and livestock working lands can play a crucial role. Practices like agroforestry, cover cropping, rotationalgrazing, and improved soil management can enhance carbon storage and sequestration capacity. These removals can help
compensate for residual emissions and provide additional climate benefits, serving as an important element in the transition
pathways.

What follows is the list of safeguard elements that will be researched and incorporated into the criteria process as we advance,
once the mitigation elements outlined above have been developed:••••

Adaptation and Resilience
Biodiversity and Water
Social aspects
Animal Welfare

The mitigation requirements are based on a strategy leading to a net-zero energy system. The electricity sector can get very close
to net-zero emissions with technology that is currently available, by 2040.

4.3 Setting the emission pathway: Climate Bonds emissions transition pathway
for agriculture production
4.3.1 Scope of activities - rationale
These criteria are for farms and other businesses involved in the production of crops grown for human food and animal feed,
livestock, and aquaculture products (explained in Section 4.1.2 of the Criteria document).

16

https://iopscience.iop.org/article/10.1088/1748-9326/ab503b also: low till refers to the practices of no-till, reduced-till, strip tillage, mulch tillage, row tilland contour till https://iopscience.iop.org/article/10.1088/1748-9326/ad3f32
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Non-food products are currently excluded from these guidelines as the focus of Climate Bonds Agri-Food Transition Programme ison agri-food systems, aiming to cover the full food value chain with these and other criteria sets. Furthermore, non-food products
might have different environmental or social impacts and externalities that might need more extensive safeguards to cover
appropriately. In future Climate Bonds work, non-food crops might be covered.
All activities up to the farm gate are included, but carbon removals are accounted for at the entity level only rather than the productlevel. This is because allocating removals to specific products is fraught with complexity and potential problems. For example, howshould the emissions for land that is reforested on a farm be allocated to specific products produced on that farm? And what are
the implications of rewarding food products produced by farms with more land who can deliver greater sequestration? However,there is a clear benefit to rewarding organisations who choose to sequester carbon on their land, and the complexities of accounting
for carbon removals at the entity level are lower, and the TWG agreed that including removals at the entity level was appropriate.
These Criteria include emissions from farm activities (scope 1) and pre-farm activities (scope 1 and 3). This is to follow the ‘material’
principle for the design of Climate Bond Standard Sector Criteria: ‘Criteria should address all material sources of emissions over the
lifecycle. Scope 1, 2 and 3 emissions should be addressed directly.’ In addition, these are included in most farm carbon calculators.

4.3.2 Determining the pathway
Justification for using an absolute intensity pathway
We use an absolute pathway (i.e., measured in kg CO2eq) rather than a relative pathway (i.e., a percent reduction per year). The
pathway uses emissions intensity (i.e., kg CO2eq per kilogram of product) rather than total corporate emissions. The absoluteintensity pathway can be scaled up to a corporate level pathway by multiplying out the production of each product by the emissions
intensities for each product. We justify this choice in the following way.
Why we do not start with an entity-level pathway••

Entity level pathways discourage the expansion of more sustainable companies and make improvements possible throughcontraction of activity. FLAG get around this by asking the companies to forecast their future size, but this is unreliable.
Contraction may not be desirable in food, as we need to feed humanity.
Intensity-based pathways view food demand as exogenous – the focus is on making the food itself more sustainable, butthey do not explicitly consider the amount produced which is determined by human population, food waste, etc. We view
these exogenous factors as outside the scope of these criteria.

Why we do not use a relative reduction pathway

•
•
•
•

Relative (or % change reductions) only show you are reducing, not if you are low-emission today. High emitters could be
on a 1.5 degree path if they have a reduction target, but targets are often not met and don’t say enough about
performance.
Relative pathways don’t work when emissions go from positive to negative (e.g., 3kg CO2eq to -5 kg CO2eq between years).
This is expected to happen in agriculture.
Relative reductions must get larger each year, eventually reaching -100%, in order to reach zero, making them harder tooperationalise.
Relative reductions are also harder to operationalise if you start earlier or later than a reference.

Benefits of absolute intensity pathways• Absolute intensity pathways focus on achieving a certain amount of emissions per kilogram of food production. This means
they balance environmental impact with food production, and food production is vital.
• Absolute intensity-based pathways provide useful and simple references for industry to follow. E.g., “chicken meat needs
to get below a certain kg CO2eq/kg by a certain to be 1.5 aligned”.
• It is easier to update absolute values for changes in methods (e.g., when IPCC factors for converting mixed gases into
GWP100 change next).
• An absolute approach is fairer on companies that have taken mitigation action prior to the baseline year.

The Climate Bonds pathway will therefore provide an annual reference point for each commodity which can scale up to the farmlevel by multiplying out the amount of each commodity produced by the pathway intensities. Some farms may already perform
below this pathway today, while others will require substantial changes to get there. Equally, some farms are aligning their activities
with such a transition and those that are doing so with a clear plan could potentially achieve Climate Bonds certification.

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4.3.3 The chosen emissions pathway
In line with the principles that govern how criteria are developed, Climate Bonds sector criteria align with material already inexistence where it is consistent in approach and recognised by many stakeholders. One such area is to adopt transition pathways
already developed through a high degree of scrutiny from academia and industry experts such as such as that developed by theTransition Pathway Initiative (TPI) or the International Energy Agency (IEA).
Evaluating existing material for adoption as criteria requires that the chosen pathway and underlying methodology meets certain
requirements. For example, where possible it should:• Be based on an emissions intensity of production metric;• Disaggregate the pathway by gas and emission source;• Be based on a robust methodology and stakeholder engagement;• Be aligned with an ambition level of limiting global warming to 1.5°C;• Be globally applicable, not based on regional data or standards;• Represent a level playing field for all stakeholders and geographies;• Provide a pathway out to 2050 at least, with intermediate points;• Considered other sustainability objectives beyond climate (e.g. biodiversity conservation, equitable access to resources).
The chosen pathway for entity 1.5°C alignment – REMIND-MAgPIE 2.1-4.2, "SusDev_SDP-PkBudg1000" scenario, known as the“SusDev” scenario from the IPCC AR6 database (2023) developed by Soergel et al in 2021. It is a global scenario that limits warming
to 1.5°C with no or low overshoot, with an explicit focus on achieving the SDGs. It builds on the SSP1 socio-economic set-up, while
it envisages further changes to help achieve the SDGs: a global shift to healthy and sustainable diets, which reduces pressure onland and enables zero malnutrition to be achieved by 2050, plus further reductions in energy demand in high-income countries
while rapid growth in energy demand in lower-income countries to enable decent living standards for all. The SusDev scenario
demonstrates particularly large cuts in non-CO2 emissions, as the shift to sufficient, healthy and sustainable diets leads to reduced
CH4 and N2O emissions. As a result, the scenario cuts CO2 emissions at a slightly slower pace than other scenarios17.
As there are no commodity specific pathways to cover the wide range of commodities, we focus on each gas and each emission
source. The SusDev pathway serves to create the trajectory for each emission source, expressed in kg GHG gas/kg food startingfrom the baseline year, and then we created specific commodity pathways from this. For example, for beef, the pathway will havea combination of trajectories that each relevant emissions source must follow to aligned with the 1.5°C pathway (e.g. kg CH4 fromenteric fermentation/kg beef, plus any other emission sources that are relevant for the specific commodity).
SusDev pathways are available for:
•
•
•
•
•
•

Emissions|CO2|Energy
Emissions|CH4|AFOLU|Agriculture|Livestock|Enteric Fermentation
Emissions|CH4|AFOLU|Agriculture|Livestock|Manure Management
Emissions|CH4|AFOLU|Agriculture|Rice
Emissions|N2O|AFOLU|Agriculture|Livestock|Manure Management
Emissions|N2O|AFOLU|Agriculture|Managed Soils

The Science Based Targets Initiative (SBTi) pathway

SBTi FLAG provide a sector wide pathway and pathways for eleven key commodities.
The sector wide pathway is based on mitigation potential in the sector from the article by Roe et al, which assimilated many different
pathways from different integrated assessment models.
The commodity specific pathways are based on Smith et al (2016). They are percentage change reductions but can be converted
into intensity targets using the data from the report. However, the baseline intensities represent averages only and not ‘best

17 Soergel B, Kriegler E, Weindl I, Rauner S, Dirnaichner A, Ruhe C, Hofmann M, Bauer N, Bertram C, Bodirsky B L, Leimbach M, Leininger J, Levesque A, Luderer G,

Pehl M, Wingens C, Baumstark L, Beier F, Dietrich J P, Humpenöder F, von Jeetze P, Klein D, Koch J, Pietzcker R, Strefler J, LotzeCampen H and Popp A. 2021 .A
sustainable development pathway for climate action within the UN 2030 Agenda Nature Climate Change 11 656 Online: http://dx.doi.org/10.1038/s41558- 02101098-3

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performance’ so these intensities could not be used for the purposes of Climate Bonds Criteria. Further, they are limited to elevencommodities only which represent approximately 40% of global agricultural production.
SBTi FLAG commodity specific pathways are said to account for system wide change, such as diet change, but details on how this isdone are not provided. For example, it is not clear if the pathways require lower mitigation by high emission products, such as beef
and palm, on the basis that system changes will occur.
For all these considerations, it was concluded that the best approach was to develop a Climate Bonds Agriculture Production
Transition Pathway based on real data on ‘best performing’ farms for a wider number of commodities, while integrating systemchange.
Other pathways evaluated

The article by Costa et al. (2022) estimates current and future food systems emissions and design strategies to achieve net-zeroemissions by 2050. It evaluated emission data for 19 major crop and livestock (food) value chains by multiplying their respective
global domestic production projections under business-as-usual by a range of value-chain emissions intensities (10th, 20th, 30th,
40th pctl of least emission-intensive systems and average, based on data from Poore and Nemecek (2018)).
This pathway was crucial for incorporating key mitigation strategies into the framework for these Criteria, however, it was deemednecessary to develop a specific Climate Bonds pathway based on a larger number of food commodities. In addition, the approachin Costa et al. (2022) included emissions for the food value chain beyond the farm gate (e.g., processing, packaging, retail, andtransport impacts) and thus it expanded the scope of the Criteria.
Justification for setting global commodity specific pathways that account for system change
Absolute intensity pathways (i.e., kg CO2eq / kg food) could be set at different levels. Here we discuss some of the different options
and their pros and cons, and justify our chosen approach.
It is well established the different food products have different environmental impacts. Further, different types of food commodity
have different mitigation potentials: there is substantial potential for some, but more limited potential for others (Poore & Nemecek,2018). It is also widely agreed that we need to both improve the sustainability of each food product, as well as shifting to different
commodities that are more sustainable (e.g., substitution of meat for vegetable protein) (SBTi FLAG, 2023). The options below havedifferent implications for how much focus is put on practice change by farmers compared to the types of commodity they produce
and the types of commodity that are easier to certify as 1.5°C Aligned.
Option 1: A single pathway for the whole of food (e.g., 5kg CO2eq/1000kcal by 2030).
- Used by: “State of Climate Action”18 report as a KPI.
- Pros: Simple.
- Cons: Fails to account for the diversity of agricultural products and their functions. Targets are unachievable for many
commodities and trivial to achieve for others.
Option 2: A pathway for each major food category (e.g., proteins, starch rich foods etc.).
- Pros: Differentiates the pathway by the function in the overall diet, rather than by the specific commodity. This places astrong emphasis on changes between different commodities within a category rather than on practice change.
- Cons: Could encourage farmers to produce a small set of products within each category with the lowest emissions. This
could lead to the homogenisation of agriculture which comes with additional risks. It does little to incentivise practicechange. It could also lead to some commodities being uncertifiable.
Option 3: A pathway for each major food commodity.
- Used by: SBTi FLAG (when a commodity represents more than 20% of the overall portfolio).
- Pros: Recognises differences in commodities. Incentivises practice change.
- Cons: Some commodities are equivalent in dietary function and substitutable by farmers, yet this approach does little toincentivise changes between commodity (e.g., diets).
Option 4: A pathway for each major food commodity for each region.
- Used by: SBTi FLAG (when a commodity represents more than 20% of the overall portfolio).

18

https://www.wri.org/research/state-climate-action-2023

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P a g e | 38-Pros: Mitigation differs by soils/climate, and this partly recognises that (although region is generally a poor proxy forclimate/soil).
Cons: Fails to incentivise demand and systems change (e.g., global crop distribution). There is very limited data to create
these pathways.

Option 5: A pathway for each commodity that is weighted 50:50 by the food category and food commodity.
- Pros: Differentiates by function and by commodity, incentivising change in both practices and the system. The 50:50 split
reflects that about half of the emissions reduction has to come from system change (e.g., diets, waste) and half frompractice change. An equal burden on consumers and producers and aligned with much evidence on what is feasible.
Category fallback helps with data gaps.
- Cons: 50:50 spit is arbitrary, although it is based on the need for roughly equal contributions between practices and systemchanges. Further, the 100:0 or 0:100 split implied in the other options is also arbitrary, and not justified by the evidenceon mitigation levers required.

The TWG agreed that Option 5 was suitable in this case and provided a balanced and realistic option that was supported by available
data.
We can specifically justify the 50:50 split choice in the following way:
- The SBTi FLAG pathway is primarily based on Roe et al (2019). It represents a consensus pathway between many different
models. It includes what appears to be relatively small demand side measures (in particular, diet change is just 0.9 Gt
CO2eq of the total mitigation potential).
- However, the land use change, restore forests, and SFM/agroforestry mitigation areas in Roe et al (2019) all depend on
land demand decreasing, which is in a large part made possible through diet change.
- IPCC (2022) clarify that the effects of diet change are much higher when accounting for land use effects. Considering boththe emissions reduction and land use effects, demand side measures represent about half of the mitigation potential inthis sector, at 6.5 Gt CO2eq, or around half of the total mitigation.
- Springmann et al (2018) amongst other studies are more pessimistic about the technological and supply side potential,
and put a much larger emphasis on diets: around 70% of the mitigation potential.
2.2.4 Choice of starting point
The starting point for the pathway should represent an ambitious level of emissions performance, ensuring that those on thepathway are within the top performers, but that the pathway is achievable.
The EU Taxonomy on Sustainable Finance define such a point as the 10th percentile GHG emissions (or average emissions ofcompanies operating below the 10th percentile) for sectors like cement. This starting point is used by other Climate Bonds criteria(e.g., the Cement Criteria) and is used here.
The database of Poore & Nemecek (2018) contains distributions of environmental impacts across ~40,000 farms globally for 43 key
commodities which cover ~90% of global food. We use these data as the percentiles are based on real-world data rather thansimulated data. This means the percentiles better represent what producers can achieve. The system boundary of this study alsoaligns closely with the SBTi FLAG and GHG Protocol Land Sector and Removals boundary, and therefore supports the alignment ofthese guidelines with other guidelines.
This database is being update via the HESTIA project (https://hestia.earth) which will provide country and product specific impacts
for multiple date periods based on a much large sample of farm and food processors. HESTIA can therefore act as a technical asset
supporting these Criteria into the future.
How the starting point is constructedStarting Point = 50% * 10th percentile emissions for the commodity + 50% * 10th percentile emissions for the category.
The categories are those defined in Poore & Nemecek (2018) which are based on key food groups. We limit the starting point sothat the minimum possible value is the 5th percentile for that commodity and the maximum possible value is the median value forthat commodity. This ensures that the starting points are both achievable and sufficiently ambitious for every commodity. This isbecause it can go below the lowest possible value observed for a product if there is no limit. This will mean it will not be achievable
today, and the intention is not to exclude any producers.

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For example, the below figure shows two protein-rich food commodities, “beans & pulses” and “lamb & mutton”. In the case ofbeans and pulses, the starting point is towards the median value. In the case of lamb and mutton, the starting point is towards the
5th percentile.

4.3.4 Creating the pathway to 2050
For each commodity, we disaggregated the emissions into the following groups:- CO2eq from animal feed
- CO2 from inputs, fuel burning, lime, urea
- CO2 and N2O from cultivation of organic soils- CH4 from enteric fermentation- CH4 from excreta- CH4 from paddy rice
- N2O from excreta- N2O from fertilizer and crop residue decomposition
We then used the data from the SusDev emissions pathway to roll forward these values from 2020 to 2050. The Poore & Nemecek
data has a starting point of 2010, and we assume a 0% annual change in the emissions intensity between 2010 and 2019 to accountfor this.

4.3.5 Handling cases where a pathway does not exist for a commodity
The data available are limited to 43 commodities. In the case that the entity seeking certification produces commodities notavailable here, a suitable proxy should be chosen for the pathway. E.g., the wheat pathway could proxy for triticale, or the lamb
pathway could proxy for goat.

4.3.6 Handling co-products
In the case a co-product is produced, economic allocation should be used to apportion environmental impacts to the co-product.
For example, straw might be a co-product of wheat.

4.3.7 2.2.8 Removals at the entity level
Removals should be accounted for at the entity (farm) level rather than the commodity level. This is because there are currently noestablished protocols for allocating removals to each commodity. We apply this rule to all removals (whereas SBTi appear to allow
soil carbon accumulation to be allocated to a specific commodity).

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The applicant entity (or entity associated with the debt for SLDs) must maximise C removal and maintenance with a requirement toreach net zero in 2050 or sooner of the absolute emissions of the entity. (Pro: will take care of emission intensity not reaching net
zero of company growth, direct absolute emissions will be required to decrease and will automatically take care of the problem of
increasing net emissions due to the emission intensity method. Cons: might not be feasible in all contexts and will need toincorporate flexibility of “net zero end goal”, plus will need to account for C maintenance not only sequestration. The entity willneed to calculate and implement the C removal pathway relative to the cumulative direct emissions trajectory over the years until
net zero).
An issue is those farms that either: cannot sequester carbon due to climatic or other conditions, or those that have already highcarbon storage. How to treat those regarding net zero 2050?

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5 Other environmental and social safeguards
5.1 An overview of the safeguard for adaptation & resilience
Agriculture producers will need to adapt and increase their resilience to changing future climatic conditions to ensure stable foodproduction. Climate is a major determinant of agricultural productivity, with climate variability accounting for one-third of yield
variability on average globally, which in some areas of global breadbaskets, it can reach more than 60% of yield. With rapid growthin the frequency and severity of extreme weather events, crop and livestock yields will decline in many places.19
Agriculture producers aiming to adapt to climate change can eligible measures and activities summarised in Error! Reference
source not found.. These measures and activities are updated with the latest consensus on climate science (IPCC WGII, 2022) while
they are largely based on Climate Bonds Crops and Livestock Criteria 2021.
Of particular importance are climate-induced changes in the global hydrological cycle that are already impacting agriculture throughfloods, droughts and increased rainfall variability. Irrigation, which is often one of the most effective adaptive strategies against
water-induced stress, is also projected to be affected by a reduction of the amount of water available for irrigation in some parts of
the world that are already water-stressed or due to groundwater depletion. Overall, future droughts and floods will pose a majorrisk to food security, and agriculture and impacts will be more severe on countries and communities that are already food insecure.
Hence, it is important that the climate adaptation interventions described in Table 6 also ensure the Adaptation and Resiliencesafeguard, to identify and avoid any risks to the resilience of the production unit or those in the interdependent system in the short,medium and long-term (Adaptation and Resilience safeguard in Section 5.1). For these reasons, for water infrastructure, proof ofno maladaptation for irrigation practices is required as eligibility criteria.
The IPCC defines adaptation as: “The process of adjustment to actual or expected climate and its effects. In human systems,
adaptation seeks to moderate or avoid harm or exploit beneficial opportunities. In some natural systems, human intervention may
facilitate adjustment to expected climate and its effects”.20
The IPCC defines resilience as: “The capacity of social, economic and environmental systems to cope with a hazardous event or
trend or disturbance, responding or reorganizing in ways that maintain their essential function, identity and structure, while also
maintaining the capacity for adaptation, learning and transformation.” Capacity for adaptation and for resilience will depend on
available assets and their distribution within a population as well as institutional infrastructure.
The Climate Resilience Principles further offers the below definition to inspire investors and issuer engagement: Climate resilience
investments improve the ability of assets and systems to persist, adapt and/or transform in a timely, efficient, and fair manner that
reduces risk, avoids maladaptation, unlocks development and creates benefits, including for the public good, against the increasing
prevalence and severity of climate-related stresses and shocks.

5.1.1 Key aspects to be assessed
Climate adaptation and resilience (A&R) safeguard is designed to ensure that a project itself is resilient to climate change and thatit does not affect the resilience of other sectors. The development of the requirements for the A&R component was based on CBI’s“Climate resilience principles” document.21 Figure 15 gives an overview of the six principles for resilience. From the perspective ofan entity, the Climate Adaptation and Resilience safeguard aim to assure that the entity will be able to provide its commodity taking
into account the hazard risks associated with climate change without harming the resilience of other sectors or subsectors
eventually connected within the boundaries of the entity.

19

IPCC AR6 WGII, (2022), IPCC_AR6_WGII_FullReport.pdf

20 Summary for policymakers. In: Climate Change 2014: Impacts, Adaptation, and Vulnerability.Part A: Global and Sectoral Aspects. Contribution of Working GroupII to the Fifth Assessment Report of the Intergovernmental Panel on Climate Change [Field CB et al. (eds.)]. Cambridge University Press, Cambridge, United
Kingdom and New York, NY, USA, pp. 1-32. www.ipcc.ch/pdf/assessment-report/ar5/wg2/ar5_wgII_spm_en.pdf
21 CBI (2019). Climate Resilience Principles. A framework for assessing climate resilience investments. www.climatebonds.net/climate-resilience-principles

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Source: Climate Bonds Initiative
Figure 15: The CBI’s principles for Resilience.

Although the principles provide a framework and serve as guidance for general aspects to consider, it is also recognised thechallenges and limitations to assess the adaptation and resilience aspects in general. Such limitations include the lack of awarenessof climate resilience benefits and a common language, robust data on climate risks and common methodologies for climate risk
assessment, lack of capacity and interdependencies with other assets or actors in the supply chains. It is also acknowledged that
A&R has inherent complexities which makes it harder to quantify and it can be very context specific, depending not only on location
but also on the type of asset, the type of risk looked at, the level of severity and frequency of the risk, and so on. The frequency andmagnitude of the impacts are commonly underestimated by companies.
In the case of an entity owning and operating several assets, spread geographically an Adaptation and Resilience assessment ofeach asset may involve additional difficulties to assess the Criteria for each plant and for the whole entity as the addition of all theindividual assets.
Adaptation and Resilience Criteria for entity’s certification will ask the entity to hold and assessment considering the climate hazards
to which will be exposed and vulnerable over its operating life including the measures identified and the plan to implement themto manage and mitigate the risks identified. The Criteria also requires ongoing monitoring and evaluation of the relevance of therisks and resilience measures and related projects adjustments as needed.

5.1.2 Practical considerations for the Adaptation and Resilience safeguard: Leveraging existing tools
The A&R Component will require consideration of a highly complex and varied set of issues across the environmental and social
spectrum for which data, methodologies and metrics may not be available. Qualitative methods based on verification lists orquestionnaires have been proposed which can however be leveraged. It is not appropriate for Climate Bonds to commit resources
to address these issues, and the guiding principle of simplicity shall be applied at this time. More robust criteria can be developed
over time as more information is generated and integrated in the subsequent revisions of the Criteria.
However, it should be noted that existing methods do not always fully or explicitly cover the additional, often interrelated impacts
connected to climate adaptation and resilience. Many of the risk assessments and management processes specified by existing
guidelines will be a prerequisite for identifying A&R risks, but more may be needed to fully address them given that this is an
emerging topic.
We have considered in the Criteria the most appropriate proxies that could be used to comply with this safeguard, however, noneof the available certification schemes in the market provides sufficient scope and/or evidence of compliance with the Adaptation
and Resilience safeguard to be able to use it as proxy. The analysis done in this regard is shown in the Table below.

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Table 8. Certification schemes with some consideration of adaptation and resilience that were analysed to check alignment with Climate Bonds approach.
None of them seemed appropriate to be used as proxy in the context of these Criteria.

Certification

Relevant aspects

GLOBALG.A.P. Integrated Farm Assurance

The requirements for the Fruit and Vegetables GLOBALG.A.P.
Protocol version 6-SMART related to assurance of complianceand resilience are listed below. Note that the requirement for
an “Improvement Plan ID2” is mandatory and the requirements
related to “Climate change ID24” are recommended: they haveno influence on the certification process. They are intended toprepare for the subsequent version.

The FV6 Smart version has been used here as the last
updatedprotocolandispublishedonwww.globalgap.org.
Sections have been partially
reproduced (on italic) in order to approach the potentiallysubstitutable aspects for Adaptation and Resilience
Check List: FV-SMART 2 CONTINUOUS IMPROVEMENT PLAN
Safeguard.
Requirement Level Major Must

The producer shall evaluate the farming operation and identify
improvements to be undertaken as assessed by the standard.
These improvements shall be included in a longer-term plan
covering up to three years.
The continuous improvement plan shall consist of relevant selfdefined targets and describe how progress toward each target will
be monitored. The plan may include:- Description of improvement objective- Current status, with date of initial target establishment- Planned activity- Target outcome with estimated date of achievement
Check List: FV-Smart 24 GREENHOUSE GASES AND CLIMATECHANGE
Requirement Level Recommended· FV-Smart 24.01 The farm contributes to reducing GHG*
emissions and removing them from the atmosphere.
· FV-Smart 24.02 The farm enables the formation of organiccarbon in soils and in biomass.
· FV-Smart 24.03 The farm’s contribution to reducing andremoving greenhouse gases (GHGs) from the atmosphere is
supported with metrics.
Metrics Guide: Purpose Monitoring the climate change impact

To record the greenhouse gas metrics, the producer shall record
the following data:• Carbon dioxide equivalents (CO2e) of the total energy use• Site where the energy consumption resulting in the emission has
occurred• Date of the energy use that resulted in the emission (if a specificdate cannot be given, the date can be the last date of the month)

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Certification

Relevant aspects

An individual historical report, a report with data of a single
producer showing trends in greenhouse gas emissions: A
benchmarking or comparison report between peer producers,
comparing areas of land under protection, restoration, or
agriculturaluse.
Within a peer group, the indicator provides a notion of the range
of
distribution of greenhouse gas emissions under similar
circumstances.
Peer producers are anonymized.
Linking Environment and Farming

The LEAF Protocol version 17 requirements for assurance ofcompliance and resilience are listed below. Note that
requirements GGE ID5.1 to ID5.3 are core - all certified
companies must comply with these control points; however
GGE ID 5.4 on carbon footprinting is optional.

The LEAF v17 has been used here as the last updated
protocol and is published on www.leaf.eco Sections havebeen partially reproduced (on italic) in order to approach the 5.1.1 There is an internal Energy Assessment.
potentially substitutable aspects for Adaptation andResilience Safeguard.
5.1.2 There is an Energy and Greenhouse Gas (GHG) Emissions
Management Plan.
5.2 Non-renewable and renewable energy consumption ismonitored.
5.3 On farm Greenhouse Gas (GHG) emissions are recorded.
5.4 (OPTIONAL) A carbon footprinting tool is used.
Organic Production Certificate

Organic production shall pursue the following generalobjectives.
This list is non-exhaustivea) contribute to environmental and climate protectionb) maintain long-term soil fertilityc) contribute to a high level of biodiversityd) contribute significantly to a non-toxic environment
Note that Documented measures for resilience or adaptation
to climate change are not required as part of an organic
certification process.

Integrated Management

Documented measures for resilience or adaptation to climatechange are not required as part of an Integrated CropManagement Certification process.

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Retrospective application
Finance raised in this sector may be for new production units, or they may be a straight refinancing of an existing production units.
Therefore, any proposal and associated approved assessment tool under this component needs to be usable for both new andexisting facilities.
This is not a straightforward issue; as in the case of refinancing, the facility may have been operating for a number of years. It may
have been compliant with best practices in place at the time of its implementation but may not meet current best practicerequirements. The selected methodology and tool will therefore need to be able to address and resolve any ‘legacy issues’ that may
be identified.
Timeframes
Appropriate time horizons for climate resilience assessments need to be set for the assets and activities in scope. The criteria tobase the time horizon for the assessments are set based on the typical lifecycle in the sector which is 30 years on average.
Disclosure
As part of the monitoring and evaluation principle, there are requirements for reporting and disclosing risks assessments. Currently
there are a number of issues seen:•••a lack of alignment or harmonisation as reporting is often undertaken on a voluntary basis.
the level of completeness can be low which leads to accusations of greenwashing.
the frequency for reporting and updating the assessment varies (recognising that the time horizons for revisiting theassessments will likely depend on the level of risk of a facility: low risk facilities can have long time horizons, and high-risk
facilities short time horizons). Depending on the severity of the risk the time horizon can be set.

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5.2 An overview of the safeguard for biodiversity
This is one of the safeguards that are considered only after the satisfaction of the primary requirements related to land use,
mitigation and A&R. It is important to highlight this safeguard does not intend to be a template for best practice in biodiversity but
rather to provide a starting point for applicants for certification to consider and take steps to consider and mitigate biodiversityrelated issues.
In the criteria there is an intention to leverage existing market guidance so as not to ‘reinvent the wheel’ but rather highlightpotential sources of guidance to consider how to structure effective strategies to enable biodiversity safeguards to be consideredwhen meeting their environmental objectives associated with the Climate Bonds Certification.
The ambition for the safeguard is to provide a minimum biodiversity safeguard to ensure no significant harm by considering a setof critical independencies for biodiversity. Further, the criteria would include suggested supplementary information on biodiversity
to provide guidance for effective strategies, objectives or policies.

Importance of Biodiversity in agriculture
The global food system is critical for the prosperity of people around the world, whether they are producers or consumers of food.
At the same time, agriculture has historically driven 70% of losses in terrestrial biodiversity and been the single biggest contributor
to the deforestation of natural habitats.22 The agricultural sector is entirely dependent on natural ecosystems for its productivity
and economic viability.23
Fertile soils, pollination services, water supply and agrobiodiversity are critical for the long-term productivity of agricultural land,
yet the volume and quality of ecosystem services, and the resilience of the environmental assets that agriculture relies on, are under
threat around the world. 75% of global food crops depend on animal pollination,24 and diverse wild pollinator species are necessary
for crop growth even when managed bees are present in high numbers. 37% of European bee species are in a state of decline. Soil
fertility is foundational for agricultural production and soil erosion can lead to a 50% decline in crop production per unit area of
farmed land. 33% of global soils are already degraded.25
The close coupling of nature and agriculture not only means that the agricultural sector is a driver of negative ecosystem impacts,
but that it also holds the key to the transition to nature-positive outcomes. For example, farmers are key managers of the world’s
soils, which contain 2.3 times more carbon than the atmosphere and 3.5 times more carbon than all living terrestrial plants.26
Agricultural practices play an important role in increasing soil carbon storage capabilities.
Therefore, due to agriculture’s disproportionate impact on biodiversity impact then through there is a clear rationale for inclusionof a form of biodiversity safeguard in the crop & livestock criteria and through effective consideration of biodiversity issues and halt
the trend of biodiversity losses there is significant potential to provide benefits to nature globally.

5.2.1 Practical considerations for the Biodiversity safeguard: Leveraging existing tools
The Criteria process considered the most appropriate proxies that could be used to comply with this safeguard. The analysis donein this regard is shown in the Table below.

22

WWF (2021) Farming with biodiversity – Towards nature positive production at scale; FAO (2021) Agricultural expansion drives
almost 90 percent of global deforestation.
23
TNFD (2023) Draft sector guidance - Food and agriculture – TNFD
24
IPBES, (2016), Pollinators vital to our food supply under threat.
25
FAO, (2015), Status of the world’s soil resources
26
Dondini, M. et al., (2023), Global assessments of soil carbon in grasslands: From current stock estimates to sequestration potential
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Table 9. Certification schemes with some consideration of biodiversity that were analysed to check alignment with Climate Bonds approach. They might beused as Proxy pending evaluation by Approved Verifier and only when aligned with the Biodiversity safeguard in these Criteria

Certification

Relevant aspects

GLOBALG.A.P. Integrated Farm Assurance

The requirements for the Fruit and Vegetables GLOBALG.A.P.
Protocol version 6-SMART related to Biodiversity are listed
below. Note that the requirement for an “Improvement Plan
The FV6 Smart version has been used here as the last ID2” is mandatory and the requirements related to “Biodiversity
updatedprotocolandispublishedon ID22” are mayor-must (mandatory), minor (95% minor
www.globalgap.org. Sections have been partially requirements must be in compliance) or recommended
reproduced (on italic) in order to approach the potentially (optional) as shown below:
substitutable aspects for Biodiversity safeguard
Check List: FV-Smart 22 BIODIVERSITY AND HABITATS
Requirement Level Major Must:· FV-Smart 22.03.01 On the farm (within the farm boundaries), noareas with legally recognized conservation value (or effectively
protected by other means) have been converted into agriculturalareas or into other uses since 1 January 2014.
· FV-Smart 22.03.02 On the farm (within the farm boundaries),
areas with legally recognized conservation value (or effectively
protected by other means) which had been converted into
agricultural areas or into other uses between 1 January 2008 and 1
January 2014 are already restored, under restoration, or will enterbinding restoration.
Requirement Level Minor

FV-Smart 22.01.01 Biodiversity is managed to enable its protectionand enhancement.
FV-Smart 22.01.02 Biodiversity is protected.
FV-Smart 22.01.03 Biodiversity is enhanced.
Requirement Level Recommended· FV-Smart 22.02 Ecological upgrading of unproductive sites· FV-Smart 22.03.03 Management of biodiversity is supported withmetrics.
Metrics Guide:

Metric Biodiversity-related land use at the producer’s site
Definition This indicator describes the land use affecting
biodiversity.
Purpose Monitoring land use and its possible impacts on biodiversity
at and around the producer’s site
Information to be recorded
To record the biodiversity metrics, the producer shall record land use
with the following data:

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Certification

Relevant aspects• Total extension of natural or semi-natural ecosystems andhabitats, or legally recognized protected areas (or areas effectively
protected via other means) on 1 January of the Certification body
audit year
• Extension of areas converted to agricultural use or to other uses
between 1 January 2008 and 1 January 2014
• Extension of area that has already been restored on 1 January of
the Certification Body audit year
• Extension of area that is under restoration on 1 January of theCertification Body audit year
• Extension of area that is planned for binding restoration on 1
January of the Certification Body audit year
Each metric shall be indicated by an area unit and per site.
GLOBALG.A.P. Add-ON: BioDiversity

GLOBALGAP's voluntary Biodiversity Module, which has
generally had little impact on producers, but which reviews
aspects of a comprehensive Biodiversity Plan with expert advice
The 1.2-Feb22 version has been used here as the last as a mandatory requirement. Identify some of the actions
updatedprotocolandispublishedon needed below:
www.globalgap.org. Sections have been partially
Requirement Level Major Must:
reproduced (on italic) in order to approach the potentiallysubstitutable aspects for Biodiversity safeguard
7.1.1- Areas dedicated to biodiversity represent at least 3% of thetotal agricultural business area.

8.1.4- Primary and natural ecosystems and habitats, and protectedareas with legally recognized value (or areas protected via othereffective means) which have been converted into agricultural land
or into other farm uses after 1 January 2008, are already restored,
are under restoration, or will enter binding restoration.
Requirement Level Minor

7.1.2 - By 2030, the areas dedicated to biodiversity represent atleast 10% of the total agricultural business area.
Linking Environment and Farming

The LEAF Protocol version 17 requirements for assurance ofBiodiversity are listed below.

Requirements level: core - all certified companies must comply
The LEAF v17 has been used here as the last updatedwith these control points
protocol and is published on www.leaf.eco Sections havebeen partially reproduced (on italic) in order to approach 7.1.1 There is an internal Landscape and Biodiversity assessment.
the potentially substitutable aspects for Biodiversity
7.1.2 There is a Landscape and Biodiversity map.
safeguard

7.1.3 There is a Landscape and Biodiversity Plan.
7.3.1 Where land is rented for less than three years, information issought about landlord’s landscape and biodiversity management
practices.

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Certification

Relevant aspects

7.4 Protected and High Conservation Value areas are managed
appropriately.
7.6.1 Conversion of natural forests and ecosystems isavoided.(Natural forests and ecosystems have not been converted
into agricultural use since 1st January 2020, nor does the businesshave any plans to do so.)
7.6.2 Where conversion of natural ecosystems occurs, the businessavoids negative environmental impact.
7.7.1 Degradation of peatland is avoided.
7.8.1 In-field trees, and trees in boundaries, are retained.
7.9 Deep cultivation under the canopy of in-field trees is avoided.
7.10 Permission is required for any removal of trees (if removal isrequired and appropriate).
7.11 Timing and frequency of watercourse management isrestricted.
7.12.1 5% or more of the farm/site's land is managed as a habitatarea.
7.14 Measures are taken to support protected species.
7.15 Native and locally appropriate species are used in field margins
and other habitats.
7.16 Field margins and site boundaries are managed to avoid
negative impacts on biodiversity and habitats.
7.18 At least two species are monitored on farm.
Requirements level: optional

7.2 Staff are involved in planning and implementing improvement
to habitats and landscape features.
7.3.2 Where land is rented, the business collaborates with thelandlord to enhance habitats and biodiversity on farm.
7.7.2 Measures are taken to improve or restore degraded peatland.
7.8.2 The business integrates additional trees or shrub/scrub.
7.12.2 10% or more of the farm/site's land is managed as a habitatarea.
7.13 Measures are taken to improve the connectivity of habitats.
7.17 Measures are taken to monitor and manage invasive species.
7.19 At least one habitat is monitored on farm.
Organic Production Certificate

Organic production shall pursue the following generalobjectives.

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Certification

Relevant aspects
This list is non-exhaustivea) contribute to environmental and climate protectionb) maintain long-term soil fertilityc) contribute to a high level of biodiversityd) contribute significantly to a non-toxic environment
Note that Documented measures for Biodiversity are notrequired as part of an organic certification process.
Integrated Management

With the exception of the monitoring of natural pest predators,
no biodiversity plan is required for the Integrated Management
certification process.

5.3 An overview of the safeguard for water
The ambition for the safeguard is to provide a minimum safeguard for water to ensure no significant harm by considering a set ofcritical independencies for water. Further, the criteria would include suggested supplementary information on agricultural water
management to provide guidance for effective strategies, objectives or policies.

Importance of Water in agriculture
The global food system is critical for the prosperity of people around the world, whether they are producers or consumers of food.
The agricultural sector is entirely dependent on natural ecosystems for its productivity and economic viability.27 Crop & livestock
production is also highly dependent on predictable rainfall patterns and the resilience of water sheds and river systems.28 Farms
account for 70% of total global water consumption, of which 40% is lost to the environment due to poor irrigation and poor water
management.29
Climate-induced changes in the global hydrological cycle are already impacting agriculture through floods, droughts and increased
rainfall variability. For example, loss in yields has been reported for major crops such as maize (by 4.1%), soybeans (by 4.5%), rice(by 1.8%) and wheat (by 1.8%) due to changes in precipitation between 1981 and 2010. In addition, drought has affected both thearea under cultivation and the yields of major crops. According to one estimate, globally, there has been a loss of 9–10% of total
cereal production due to droughts and other weather extremes. Similarly, floods are one of the significant reasons for crop losses
worldwide.30
Projected impacts on agriculture due to changes in water availability are also severe. For example, yields of rain-fed crops such asmaize are projected to decline by one fifth to one third by the end of the century. In contrast, many areas which currently support
multiple crops may become unsuitable for rain-fed farming or support only one crop in a year. Irrigation, which is often one of themost effective adaptive strategies against water-induced stress, is also projected to be affected by a reduction of the amount ofwater available for irrigation in some parts of the world that are already water-stressed or as a result of groundwater depletion in

27

TNFD (2023) Draft sector guidance - Food and agriculture – TNFD
TNFD (2023) Draft sector guidance - Food and agriculture – TNFD
29
World Bank (2022), https://www.worldbank.org/en/topic/water-in-agriculture
30
IPCC, (2022), IPCC_AR6_WGII_FullReport.pdf , p. 664
28

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places such as India, North China and the northwestern USA. Overall, future droughts and floods will pose a major risk to foodsecurity, and agriculture and impacts will be more severe on countries and communities that are already food insecure.31
Irrigation in particular remains a critical issue for effective water management in agriculture. Irrigation has consistently been used
as a crop protection and yield enhancement strategy and has become even more critical in a warming world. Approximately 40% of
global yields come from irrigated agriculture, with a doubling of irrigated areas over the last 50 years and now constituting around
20% of the total harvested area. Thus, irrigation is one of the most frequently applied adaptation responses in agriculture andfeatures centrally in projections of adaptation at all scales. Expansions of irrigated areas over the coming century are projected,
leading to shifts from rain-fed to irrigated agriculture in response to climate change. However, there are regional limitations to thisexpansion due to renewable water resource limitations, including water quality issues. Different irrigation techniques are associatedwith significant differences in irrigation water productivity, and replacing inefficient systems can reduce average non-beneficial
water consumption by up to 76% while maintaining stable crop yields. Several adjustments can improve water use efficiency,
including extending irrigation intervals, shortening the time of watering crops or reducing the size of the plot being irrigated. Deficit
irrigation is an important mechanism for improving water productivity and increasing regional crop production under drying
conditions. Consequently, In light of the volume of irrigated agriculture globally, and the projected increase in water requirements
for food production, increasing water productivity and thus improving the ratio of water used per unit of agricultural output isnecessary globally to meet agricultural water demand.
While Climate Bonds will not mandate to users of the criteria specific water management practices due to the regional diversity ofwater supply and agricultural production practices there is an intention to provide guidance on the issues to consider and ourrecommended sources of guidance to consult on effective consideration of water-related issues for crop & livestock producers.
Therefore, due to agriculture’s disproportionate impact on water then through there is a clear rationale for inclusion of a form ofwater safeguard in the crop & livestock criteria and through effective consideration of water-related issues.

5.3.1 Practical considerations for the water safeguard: Leveraging existing tools
The Criteria process considered the most appropriate proxies that could be used to comply with this safeguard. The analysis donein this regard is shown in the Table below.
Certification

Relevant aspects

GLOBALG.A.P. Integrated Farm Assurance

The requirements for the Fruit and Vegetables GLOBALG.A.P.
Protocol version 6-SMART related to Water Management are listed
below. Note that the requirement for an “Improvement Plan ID2”
is mandatory and the requirements related to “Water Management
ID30” are mayor-must (mandatory), minor (95% minor
requirements must be in compliance) or recommended (optional)
as shown below:

The FV6 Smart version has been used here as the last
updatedprotocolandispublishedonwww.globalgap.org. Sections have been partially
reproduced (on italic) in order to approach thepotentially substitutable aspects for Water safeguard

Check List: FV-Smart 30 WATER MANAGEMENT
Requirement Level Major Must:· FV-Smart 30.01.01 There is a risk assessment to assess food safety
risks for pre- and postharvest water used.
- Identification of water sources by means of maps,
photographs, drawings (hand drawings are acceptable), or otherdepictions to identify the location of water source(s), permanent
fixtures, and the flow of the water system (including holding systems,
reservoirs, or any water captured for reuse), the depiction shall belinked with site maps and an on-farm reference system

31

Ibid., p. 664.

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Certification

Relevant aspects- Historical analysis results, where applicable- The timing of water use (crop growth stage or postharvest) - The riskof physical, chemical, and microbial contamination - Methods toaddress risk associated with water delivery mechanisms, mitigating
the risk of cross contamination - The contact of water with the crop
- The characteristics of the crop and the growth stage or handling - The
quality of the water used for fertilizer, plant protection product, or
postharvest applications- Measures taken to mitigate contamination risk, whereappropriate (e.g., preventing human and livestock intrusion withfencing) - Acceptable thresholds for water quality- Impact on food safety and fit-for-purpose- A minimum requirement of one analysis per season or
certification cycle for water used in postharvest activities that comesin contact with the product, the sample to be taken as near the pointof application as possible (minimum of one analysis required
even when using municipal water sources).
The risk assessment shall be reviewed annually and wheneverrisks change due to operational changes.
· FV-Smart 30.01.02 A risk assessment has been undertaken
to evaluate environmental issues for water management on the farm(pre- and postharvest).
There shall be a documented risk assessment for water used for indoor
and outdoor production and postharvest activities. At minimum, theassessment shall identify environmental impacts on and of:- Water sources- Distribution systems- Irrigation methods- Significant water uses for other activities on the farm - Impact of own
farming activities on off-farm environments
The risk assessment shall be reviewed annually or whenever changes
to risks occur.
FV-Smart 30.01.03 A water management plan is available.
A documented water management plan shall:- Be reviewed at least annually, based on the reviewed
risk assessments- Assess the need for maintenance of irrigation and otherwater delivery equipment- Identify worker training required to support maintenanceand repairs

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Certification

Relevant aspects- Be either an individual or a regional plan if participation in
a community irrigation system is documented- Include reference to water analysis- Include corrective actions taken related to water quality
FV-Smart 30.02.01 Water use at farm level has valid permits/licenses
where legally required.
FV-Smart 30.02.02 Restrictions indicated in water permits/licenses arecomplied with.
FV-Smart 30.04.02 Storage of water does not pose any food safety
risks.
FV-Smart 30.05.01 Water is analyzed for food safety, in accordancewith the risk assessment.
FV-Smart 30.05.02 Corrective actions are taken based on results fromthe risk assessment and results of the water analysis.
FV-Smart 30.05.03 The use of treated sewage water does not pose afood safety risk.
FV-Smart 30.05.04 Water that comes into contact withproducts during harvest and postharvest meets the microbial
standard for drinking water.
FV-Smart
30.05.05
Recirculated
water
used
duringproduction, harvest, and postharvest is changed or replenished at an
appropriate frequency.
FV-Smart 30.05.06 Treated water used during harvest or postharvest
is monitored appropriately.
FV-Smart 30.06.02 Measures are taken to understand the amount ofwater used and actions identified for how to increase water use
efficiency.
Requirement Level Minor

FV-Smart 30.03.01 Where feasible, measures have been implemented
to collect water and, where appropriate, to recycle.
FV-Smart 30.06.01 Tools are routinely used to calculate and optimize
crop irrigation.
Requirement Level Recommended· FV-Smart 30.01.04 Actions are taken to complement on-farm water
management with off-farm activities (while recognizing that the legal
scope of the producer is on the farm).
· FV-Smart 30.04.01 Water storage facilities are present andwell maintained to take advantage of periods of maximum water
availability.

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Certification

Relevant aspects· FV-Smart 30.06.03 Management of water is supported with metrics.
Metrics Guide:To record the water metrics, the producer shall record water
abstraction and use with the following data:• Water abstractiono Volume of water abstracted, also indicating the source from where
the water was abstracted o Date of water abstraction (if a specific datecannot be given, the date can be the last date of the month)o Indication for which site the water was abstracted• Total water used
o Volume of total water usedo Date by which total water was used (if a specific date cannot begiven, the date can be the last date of the month)o Indication at which site the water was used
• Irrigation1o Volume of water used for irrigationo Date of irrigation (if a specific date cannot be given, thedate can be the last date of the month)o Indication at which site the irrigation took place
An individual historical report, a report with data of a single producer
showing trends in use over time:• Volume of water abstracted per source per ha• Volume of water used in agricultural production per ha• Volume of water used in agricultural production per kg of
product• Volume of water used for irrigation in agricultural production perha• Volume of water used for irrigation in agricultural production per
kg of productA benchmarking or comparison report between peer producers,
comparing amounts of water abstracted and used by different
producers near the producer’s location. Comparison on a monthly levelwith peer producers’ average consumption and the producer’s water
abstraction and use intensity in terms of percentile.

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Certification

Relevant aspects

Within a peer group, the indicator provides a notion of the range ofdistribution of water abstraction and use under similar circumstances.
Peer producers are anonymized.
GLOBALG.A.P. Add-ON:
SPRING (SUSTAINABLE PROGRAM FOR IRRIGATIONAND GROUNDWATER USE)

The 2-Sep23 version has been used here as the last
updatedprotocolandispublishedonwww.globalgap.org. Sections have been partially
reproduced (on italic) in order to approach thepotentially substitutable aspects for Water safeguard

GLOBALGAP's voluntary SUSTAINABLE PROGRAM FOR IRRIGATIONAND GROUNDWATER USE Module, The voluntary module on
irrigation water management has had a significant impact inprotected areas, especially when required by European
supermarket chains. Identify some of the actions needed below:
Requirement Level Major Must:

1.5 The objectives based on the risk assessment are documented in awater management plan or program.
2.2 There are documents that prove that production sites are intended
for agricultural use.
2.3 There is an official document or permit that defines the flow rates
and/or at least the maximum quantity of water that can be used (e.g.,
in relation to the irrigated area).
2.4 There are documents that prove the legality of buildings andinfrastructure
2.5 The water sources and areas mentioned in the official document
correspond to the actual circumstances.
3.5 No fossil water sources are used.
3.9 The irrigation installations are in good condition and are regularly
inspected.
Requirement Level Minor

1.4 There is a documented identification of water stakeholders in thewatershed anddocumentation of their risks and challenges.
3.6 There are records of the water use in cubic meters, and an efficientmeasurement system for producing the records.
3.7 There are documents that prove the proactive contribution of the
producer to the sustainable governance of the watershed.
3.8 The irrigation cycles are short to avoid water wastage by
percolation-filtration.
3.10 The irrigation installations are regularly inspected to prevent
leakages.
3.12 There is a crop irrigation plan.
3.13 Deviations from the irrigation plan are justified and documented.

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Certification

Relevant aspects

Linking Environment and Farming

The LEAF Protocol version 17 requirements for assurance of Water
manegement are listed below.

Requirements level: core - all certified companies must comply with
The LEAF v17 has been used here as the last updated these control points
protocol and is published on www.leaf.eco Sections
have been partially reproduced (on italic) in order to 6.1 There is a Water Management Plan.
approach the potentially substitutable aspects for
6.2 There is a descriptive water map.
Water safeguard

6.3 Water sources used are justified by the business.
6.5 Water is stored securely in appropriate storage facilities.
6.6 Measures are taken to mitigate flooding risks and impacts.
6.7 Water irrigation efficiency is measured and analysed to plan
improvements.
6.8 Water outlets are monitored to prevent or reduce water loss.
6.10 The quality of water on the farm is monitored.
6.11 Actions are taken to actively improve and protect water quality
and the health of water bodies on and adjacent to the farm.
Requirements level: optional

6.4 Water is harvested and reused.
6.9 Quantity of water used across the business is monitored to improve
efficiency.
Organic Production Certificate

Organic production shall pursue the following general objectives.
This list is non-exhaustivea) contribute to environmental and climate protectionb) maintain long-term soil fertilityc) contribute to a high level of biodiversityd) contribute significantly to a non-toxic environment
Note that Documented measures for Water use or
management are not required as part of an organic certification
process.
Integrated Management

With the exception of the physical chemical analysis, no specificwater management plan is required for the Integrated
Management certification process.

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5.4 An overview of the safeguard for social aspects
Due to social issues varying based on the numerous different contexts involved in agriculture production there is a hesitancy on
being too prescriptive over which social considerations should be prioritised. However, in the criteria there is an intention tohighlight potential sources of guidance to consider how to structure effective strategies to enact a social safeguard when meeting
their environmental objectives associated with the Climate Bonds Certification. The intention to leverage existing guidance alreadyavailable in the market.

Importance of Social Issues in agriculture
As agriculture employed 27% of the global workforce in 2019, a large proportion of which are women, and with the percentage
being much higher in developing nations there is a need to see consideration of social issues associated with the agri-food transition
and adherence to relevant international safeguards for labour standards within agri-food value chains.
The International Labour Organization’s (ILO)32 Just Transition Guidelines (2015) state “A just transition for all towards anenvironmentally sustainable economy…needs to be well managed and contribute to the goals of decent work for all, social inclusion
and the eradication of poverty.”
While strategies to employ the Just Transition in the agri-food sector are still at an emerging stage the importance will continue togrow in the coming years as the social implications become increasingly prevalent to stakeholders, especially when considering theEnvironmental, Social and Governance (ESG) considerations of vast amounts of capital currently and in the future.33

5.4.1 Practical considerations for the social safeguard: Leveraging existing tools
The analysis completed on third-party frameworks for social safeguard is included as Appendix in the Criteria document.

5.5 An overview of the safeguard for animal welfare
There is no significant changes from the previous requirements put on issuers looking to comply with this requirement rather there
is an update on the level of guidance provided for how to comply with the latest in animal welfare standards for livestock production.

Importance of Animal Welfare
Animal welfare is an essential sustainability consideration and should be included among the core requirements of a sustainable
food system.
In general, there is a direct link between GHG emission intensities and animal production efficiency: the more productive or efficientan animal is (at producing milk, meat or eggs), the lower its GHG emissions. However, efficient production typically takes place inintensive systems (largely indoor) and is often associated with concerns around animal welfare issues. Extensive animal production
systems (largely outdoor) are generally seen as better from an animal welfare perspective but can have higher GHG emissions
rates.xxxv This said, well-managed pasture-based systems can in some cases store carbon so helping mitigate climate change. It’s
also important to not confuse the reduction of relative impacts through efficiency gains with absolute impacts; overall GHG
emissions may increase if there is a growth in livestock production even if there is a decrease per kg of meat produced.
Additionally, while intensive systems may, in some cases, have lower GHG emissions per unit of meat or milk produced, this is not
the case for other environmental impacts, such as water pollution, biodiversity loss and soil degradation, where the production of
feed (cereals and soy) for intensively farmed animals generally results in intensive systems having much higher environmental
impacts than extensive systems.
Key animal welfare issues include:•

confining animals in cages or in crates that provide insufficient width for them to turn around or take more than a few steps,
or housing them at very high-stocking densities;

32

ILO
https://www.ilo.org/global/standards/introduction-to-international-labour-standards/conventions-andrecommendations/lang--en/index.htm
33
Muller, S. and Robins, N., (2022), Just Nature: How finance can support a just transition at the interface of action on climate andbiodiversity - Grantham Research Institute on climate change and the environment (lse.ac.uk)
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•
•
•
•
•

keeping animals in systems that do not enable them to engage in their core species-specific natural behaviour as identified byscientific research, including housing them in barren, low-stimulus environments;
breeding that focuses on the optimization of production (for example, fast growth, high yields, or large litters), often resulting
in compromised welfare including pain, leg disorders, bone fractures, and premature mortality;
painful and mutilating interventions (castration, docking tails, beak trimming, dehorning);risk of injury, stress, and exhaustion—long transport times and poor transport conditions;slaughter with inconsistent or ineffective stunning.

Guidance for effective animal welfare considerations
Mellor and Reid (1994) proposed a new model as a means of systematically identifying and grading the severity of different forms
of welfare compromise by reformulating the Five Freedoms as ‘Five Domains’ of nutrition, environment, health, behaviour andmental state/experiences. This approach allowed a distinction to be made between the physical and functional factors that affectan animal’s welfare and the overall mental state of the animal arising from these factors. Over the past 20 years this paradigm has
been widely adopted as a tool for assessing the welfare impacts of research procedures, pest animal control methods and otherinterventions in animals’ lives. the Five Domains explore the mental state of an animal in more detail and acknowledge that forevery physical aspect that is affected, there may be an accompanying emotion or subjective experience that may also affect welfare.
This is useful in terms of reinforcing the message that emotional needs are equally important as physical needs for animals.

Figure 16. Expansion of the Five domains model with suggested guidance to comply with the model (Mellor, 2017).

One of the most important strengths of the Five Domains is the clarity it provides that merely minimising or resolving negative
physical or mental states does not necessarily result in positive welfare, but may only provide, at best, a neutral state. To have good
welfare, animals need more than this. To help ensure animals have a ‘a good life’ they must have the opportunity to have positive
experiences, such as anticipation, satisfaction and satiation. To enable this, those responsible for the care of animals need to provide
them with environments that not only allow, but encourage animals to express behaviours that are rewarding. This shift inunderstanding is the basis for the Five Domains model incorporating positive welfare states. Thus, the Five Domains provide a means

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of evaluating the welfare of an individual or group of animals in a particular situation, with a strong focus on mental well-being andpositive experiences.xxxvi
Poor animal welfare standards can result in material risk and return considerations for companies, and the financial institutions that
support them. There is the potential for animal welfare concerns to be a materially significant component of an investment. A
complete understanding of the risks and trade-offs is required where they may significantly alter the investment rationale. There
may also be an obligation for investors to require those corporations and entities in which they invest to meet a high standard of
conduct and strive towards strong animal welfare practices in both production and procurement.
Animal production systems should meet good practice expectations to safeguard animal welfare. Overall guidance is provided in
the IFC Good Practice Note.xxxvii It argues that animal welfare presents both risks and opportunities for companies, and that goodanimal welfare is good for business. Reduced exposure to stress and disease for animals increases productivity. Consumers are
increasingly want to know that animals are treated humanely. Additionally, companies around the world are making public
commitments to source higher welfare products. Demonstrating best practices in animal welfare can improve market access - anissue which is often crucial for the growth of emerging market businesses.xxxviii The IFC’s Good Practice Note highlights growing
evidence to show that improvements to animal welfare can also lead to improved productivity, with potentially positive impacts on
the bottom-line.xxxix For example, research indicates that improved stock handling practices can save the industry millions every
year by improving the quality of processed meat. Other research has shown that improving the attitudes and behaviours of people
handling dairy cows can lead to a four to five percent increase in milk production on dairy farms. Aggressive or poor handling of pigs
for just a few minutes a week can reduce growth by 11% and reduce pregnancy rates by as much as 62%.xl Further, research fromthe World Organisation for Animal Health estimates that animal diseases cause the loss of at least 20% of global livestock production
each year with a cost of approximately US$300bn.xli Another key consideration is that in many countries regulations are introducing
strengthened animal welfare requirements, which will undoubtedly shape global markets, and potentially lead to stranded assets
for companies that refuse to transition to higher welfare systems and practices.

5.5.1 Practical considerations for the animal welfare safeguard: Leveraging existing tools
The importance of animal welfare is being increasingly recognised. The Global Reporting Initiative’s (GRI) Agriculture, Aquaculture
and Fishing sector standard (2022) standardxlii states: “Animal health management focuses on controlling potenƒal impacts on
health and prevenƒng disease. This can include the use of anƒbioƒcs, anƒ-inﬂammatory, and hormone treatments. Overuse or
misuse of anƒbioƒcs can contribute to anƒmicrobial resistance. Undesired residues of chemical substances in animal products cannegaƒvely impact food safety, creaƒng public health risks. Inadequate animal health and welfare pracƒces can also increase thespread of zoonoƒc diseases, such as salmonellosis, swine ﬂu, and bird ﬂu, which can occur through the movement and trade ofterrestrial and aquaƒc animals and animal products without proper biosecurity controls. The condiƒons that animals are kept in cancause negaƒve impacts on animal health and welfare. For example, terrestrial animals can be conﬁned to small spaces, cages, or
crates, prevenƒng their movement and inhibiƒng normal behaviour. Highly conﬁned spaces can also lead animals to be le†untreated for disease or injuries. On-farm husbandry pracƒces such as dehorning, hot-iron branding, castraƒon, tail docking, anddebeaking are associated with pain and distress. Geneƒc modiﬁcaƒon performed on terrestrial and aquaƒc animals to increase
growth and producƒvity may also be a source of negaƒve impacts on animal health and welfare.” The GRI standards set out detailed
disclosure requirements on a range of topics including animal housing and conﬁnement, animal health and use of anƒbioƒcs.
The 2018 Sustainability Accounting Standards Board’s (“SASB’s) sector standard on Meat, Poultry and Dairyxliii recommends
disclosure of the percentage of:• pork produced without the use of gestaƒon crates• cage-free shell egg sales• producƒon cerƒﬁed to a third-party animal welfare standard• producƒon that received (i) medically important anƒbioƒcs and (ii) non medically important anƒbioƒcs, by animal type.
Further, the OECD in their revised Guidelines for mulƒnaƒonal enterprises on responsible business conduct (2023) expressed theimportance and necessity that enterprises should respect animal welfare standards. This included the physical and mental state ofanimals: “An animal experiences good welfare if the animal is healthy, comfortable, well nourished, safe, is not suﬀering from
unpleasant states such as pain, fear and distress, and is able to express behaviours that are important for its physical and mental
state. Good animal welfare requires disease prevenƒon and appropriate veterinary care, shelter, management and nutriƒon, asƒmulaƒng and safe environment, humane handling and humane slaughter or killing. In addiƒon, enterprises should adhere to
guidance for the transport of live animals developed by relevant internaƒonal organisaƒons.” The suggesƒon was enterprises should
respect animal welfare standards aligned with the World Organisaƒon for Animal Health (WOAH) terrestrial code.xliv
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Climate Bonds proposed animal welfare requirement
Issuers are required to obtain certification to schemes that require high standards. The following schemes have been selected as
suitable for this purpose:
•
•
•
•
•

Humane Farm Animal Care Certified Humane https://certifiedhumane.org
RSPCA Assured www.rspcaassured.org.uk/farm-animal-welfare/rspca-welfare-standards
Animal Welfare Approved by A Greener World https://agreenerworld.org/certifications/animal-welfareapproved
Beter Leven levels 2&3 https://beterleven.dierenbescherming.nl
G.A.P levels 4&5 https://globalanimalpartnership.org

If the issuer demonstrates that none of these schemes certify in the country where the operations are located, then assessment
should be undertaken using the requirements (principles and the relevant species-specific mitigation criteria) detailed in the FARMS
Initiative Responsible Minimum Standards (RMS), except those criteria relating to transportation and slaughter as these are out of
the scope of this Agriculture criteria. These are available at farmsinitiative.org.
There is no burden of proof required for extensive agricultural systems to demonstrate animal welfare standards as this is not thearea where animal welfare issues are typically seen. However, it is expected that welfare standards would still apply e.g., nodehorning.

Acknowledgments
Climate Bonds would like to thank the contribution of the Farms Initiative for their guidance and input for the animal welfare
requirements in this criteria update. Specifically, Peter Stevenson OBE, Jackie Groberski and Emily Randall for their contribution andfeedback on this proposed animal welfare requirements.

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Definitions
Adaptation and Resilience Criteria: Rules or principles for evaluating and preventing physical climate risk, as well as assessing
and reducing the vulnerability of an asset or entities to the effects of climate changes. These rules generally guarantee thatthe activities do not do any significant harm to other assets within their system boundaries covering the area affected by theactivity.
Applicant: The term or name for any potential bond issuer, or non-financial corporate entity that might seek Certification underthe Agriculture Production Criteria.
Certified entity: The entity or part thereof which is being certified under the Climate Bonds Standard. Currently, entity
Certification is limited to non-financial entities or segregated segments thereof, for which the Climate Bonds has Climate
Bonds Standard Sector Criteria for entity Certification.
Climate Bond Certification: allows the applicant to use the Climate Bond Certification mark in relation to that bond. Climate Bond
Certification is provided once the independent CBSB is satisfied the bond complies with the CBS.
Climate Bonds Initiative (Climate Bonds): An investor-focused not-for-profit organisation, promoting large-scale investmentsthat will deliver a global low-carbon and climate resilient economy. Climate Bonds seeks to develop mechanisms to betteralign the interests of investors, industry, and government to catalyse investments at a speed and scale sufficient to avoid
dangerous climate change.
Climate Bonds Standard (CBS): A screening tool for investors and governments that allows them to identify green bonds, theproceeds of which are being used to deliver climate change solutions. This may be through climate mitigation impact and/or
climate adaptation or resilience. The CBS is made up of two parts: the parent standard (CBS v4.2) and a suite of sectorspecific eligibility Criteria. The parent standard covers the Certification process and pre-and post-issuance requirements for
all Certified bonds, regardless of the nature of the capital projects. The Sector Criteria detail specific requirements for assets
identified as falling under that specific sector. The latest version of the CBS is published on the Climate Bonds website.
Climate Bonds Standard Board (CBSB): A board of independent members that collectively represents $34 trillion of assets undermanagement. The CBSB is responsible for authorising (i) revisions to the CBS, including the adoption of additional Sector
Criteria; (ii) approved verifiers; and (iii) applications for Certification of a bond under the CBS. The CBSB is constituted,
appointed, and supported in line with the governance arrangements and processes as published on the Climate Bonds
website.
Climate change: A change in global or regional climate patterns attributed to the increased levels of CO2 in the atmosphere,
produced mainly by the combustion of fossil fuels.
Climate goals: Objectives that aim to reduce GHG emissions to limit the global temperature increase to 1.5°C above pre-industrial
levels.
Climate mitigation performance targets: The performance targets that define the measurable climate mitigation performance tobe achieved.
Climate adaptation and resilience: Measures or assessments related to protecting communities or ecosystems from the effects
of climate change. Adaptation refers to protection, while resilience is the ability to adapt and recover from the impacts ofclimate change.
Climate targets: Limits established by scientists and policymakers in plans to combat climate change.
CO2 equivalent: A unit to measure the effect of all greenhouse gases according to their global warming potential that expresses
the warming effect of each greenhouse gas over a set period of time (usually 100 years) in comparison to CO2. Thus, anamount of a GHG can be expressed by the quantity of CO2 that will have the equivalent warming effect over 100 years.
Critical interdependencies: The asset or activity’s boundaries and interdependencies with surrounding infrastructure systems.
Interdependencies are specific to local context but are often connected to wider systems through complex relationships that
depend on factors ‘outside the asset fence’ that could cause cascading failures or contribute to collateral system benefits.

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Decarbonisation pathways: Transformation processes, strategies, or indications to be implemented in the energy sector aiming
to reduce emissions and the use of fossil fuels. They involve measures such as shifting the energy mix, increasing energy
efficiency, utilising the circular economy, or managing demand for energy.
Decarbonise: Move away from energy systems that produce carbon dioxide and other greenhouse gas emissions and remove theamount of carbon gaseous compounds in the atmosphere.
Emerging economies: All other countries not included in the advanced economies regional grouping.
Emission intensity: Volume of emissions per unit of a representative factor in the assessed sector, which in the agriculture
production sector is kg of production or equivalent functional unit, so the emissions intensity is the grams of CO2 eq per kg offood generated: gCO2/kg.
Emissions target: Limits that scientists set for the quantity of emissions to be aligned with the Paris Climate Agreement.
Green bond: A bond where the proceeds are allocated to environmental projects or expenditures. The term generally refers tobonds that have been marketed as green. In theory, green bonds proceeds could be used for a wide variety of environmental
projects or expenditures, but in practice they have generally been earmarked for climate change projects.
Industry Working Group (IWG): A group of key organisations that are potential applicants, verifiers and investors convened by
Climate Bonds. The IWG provides feedback on the draft Sector Criteria developed by the Technical Working Group (TWG)
before they are released for public consultation.
Investment period: The interval between the bond’s issuance and its maturity date; otherwise known as the bond tenor.
IPCC: The Intergovernmental Panel on Climate Change (IPCC) is the United Nations body for assessing the science related toclimate change.
Life-cycle emissions analysis: A methodology for assessing or accounting for environmental emissions associated with all thestages of the life cycle of a product or process, from the initial design phase to disposal or recycling.
Low-carbon technologies: Technologies referred to as innovative technical solutions that are characterised by a low-emission
intensity, compared to state-of-the-art alternatives. Considered best-in-class technologies with a focus on environmental
impact, examples of electricity utility low-carbon technologies would be solar, wind, marine, bioenergy, hydropower,
geothermal, and nuclear.
Mitigation Criteria: Rules and principles containing thresholds, benchmarks, and milestones for sector activities whose objectiveis the reduction of the harmful effects of greenhouse gases emissions.
Mitigation technologies: Actions within technological processes implemented to reduce and curb greenhouse gas emissions.
Negative emissions: Processes in which more CO2 is removed and stored from the atmosphere than added to it, so the final GHG
emissions balance is negative. It can be achieved by natural processes or a variety of technological solutions. Negativeemissions are necessary to meet the Paris Agreement.
Net-zero emissions scenario (NZE): A science-based scenario designed to show what is needed across the main sectors by
various actors, and by when, for the world to achieve net-zero energy-related and industrial process CO2 emissions by 2050.
It also aims to minimise methane emissions for the energy sector.
Net-zero emissions: A situation where global greenhouse gas emissions from human activity are in balance with emissions
reductions. To achieve this situation, human-caused emissions should be reduced as close to zero as possible.
Net-zero targets: Global policy instruments for international GHG reductions to achieve net-zero emissions.
Offsetting: A climate action that enables organisations to compensate for the emissions they put into the atmosphere, by
supporting projects that reduce emissions in other regions of the world.
Parent company/group: A company is considered a parent company of another entity (a subsidiary) if it exercises control overthe subsidiary. The terms control and subsidiary have the meaning assigned to them under International Financial ReportingStandard 10 (IFRS 10). A parent group consists of the parent 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 applies tothe applicant.
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Paris Agreement: A legally binding international treaty on climate change adopted by 196 parties. Its overarching goal is to holdthe increase in the global average temperature to well below 2°C above pre-industrial levels and pursue efforts to limit thetemperature increase to 1.5°C above pre-industrial levels.
Pathways: Science-based trajectories for different sectors indicating the way to achieve targets related to relevant indicators. In
the electricity sector, these trajectories generally refer to the emission intensity.
Scenarios: Science-based plausible descriptions of how the future may unfold based on several assumptions (economic, social,
behavioural, technological), which generally form part of a set of alternative pathways. Examples are the IEA net-zeroemissions scenario and the NDC scenario.
Scope of emissions: Scope 1, 2 and 3 are terms devised by the GHG Protocol to categorise the different sources of carbon
emissions an organisation creates in its own operations, and in its wider value chain.
Standards Criteria: Established principles to evaluate processes, assets, or entities aiming to achieve benchmarks, targets, orgoals.
Sustainability-linked debt (SLD): Any debt instrument for which the financial and structural characteristics can vary depending onwhether the issuer achieves predefined sustainability/ESG objectives. Such objectives are measured through predefined key
performance indicators (KPIs) and assessed against predefined performance targets. Proceeds of SLD are intended to be
used for general purposes.
Technical Working Group (TWG): A group of recognised experts from academia, international agencies, industry, and NGOs
convened by Climate Bonds. The TWG develops the Sector Criteria, which are detailed technical criteria for the eligibility of
projects and assets as well as guidance on the tracking of eligibility status during the term of the bond. Their draft
recommendations are refined through engagement with finance industry experts in convened Industry Working Groups(IWG) and through public consultation. Final approval of Sector Criteria is given by the CBSB.
Transition targets: Thresholds, benchmarks, and milestones based on key assumptions and dependencies used by scientists andpolicymakers to develop a plan to achieve climate targets.

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List of acronyms
CAPEX Capital expenditures
CBS

Climate Bonds Standard

CBSB

Climate Bonds Standard Board

CO2

Carbon dioxide

EU

European Union

GHG

Greenhouse gases

IFC

International Finance Corporation

IPPCIntergovernmental Panel on Climate Change

IWG

Industry Working GroupKPI

Key performance indicator

LCA

Life Cycle Assessment

RTRS

Round Table of Responsible Soy Association

SBTi

Science Based Targets initiative

SLB

Sustainability-linked bond

SLD

Sustainability-linked debt

TWG

Technical Working GroupUoP

Use of Proceeds

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