THE FORESTRY CRITERIAClimate Bonds Standard
What are the Forestry
Criteria?
These Criteria lay out therequirements that forestry
assets and projects mustmeet to be eligible for Climate Bonds
Certification. The bond must also meet theoverarching Climate Bonds Standard toreceive Certification.
The Forestry Criteria covers plantations,sustainable managed forests, nontimber forest products, supply chain andconservation and restoration. This note is an
overview of the Criteria – for full details see
the Criteria document.
What underpins the Criteria?
The guiding principle is that certified assets
and projects must be in line with limiting
warming to 2°C and support climate
resilience of the asset and surrounding
environment.

Why certify a Forestry Bond with theClimate Bonds Standard?
Certification allows issuers to demonstrate
to the market that their bond meets
industry best practice for climate integrity,
management of proceeds and transparency.
Forestry has not yet made up a significant
share of the green bond market, and while
best practice standards do exist in the sector,
they do not necessarily focus on strong
climate measures. Therefore, certification
indicates to investors that proper climateand environmental due diligence has been
done on the assets they are investing in – arobust and credible way for this new asset
type to enter the green bond market.
Other benefits of issuing a Certified Climate
Bond include: investor diversification(forestry issuers should find they attract
new investors by certifying), greater
investor engagement, investor stickiness(investors buying Certified Climate Bonds
tend to buy and hold), strengthened

Will your project meet the Forestry Criteria? It’s as easy as 1
STEP1

Comply withthe overarching
Climate Bonds
StandardAny bond issuance seeking
Climate Bonds Certification mustmeet the requirements ofof the Climate Bonds Standard. Thisunderlines every Climate Bonds
Sector Criteria, including the Forestry
Criteria.
The Climate Bonds Standard contains
disclosure, management and reporting
requirements.

STEP

2

How will the Criteria assist in growing thegreen bond market?
The Forestry Criteria indicate to potential
issuers and the market what types of assets
and projects can be included in green bonds.
They define what low-carbon and climate
resilient forestry projects and infrastructure
are.
LAND CONSERVATION &RESTORATION CRITERIALand conservation and restoration is also
covered by these Criteria. See the Land
Conservation & Restoration summary
for more details.

2 3Comply withmitigation
component

The mitigation component applies toall types of forestry; plantation forestry,sustainable forest management,
non-timber forest products (NTFP),
smallholders, forest conservation &restoration and supply chain. However,
the requirements differ depending on
the type of forestry being practiced. Thisis explained in the table overleaf.
The mitigation component requirements
includes no natural land conversion,
being best practice certified, having amanagement plan, maintaining forest
cover or increasing forest cover.

Introduction to the Forestry Criteria Climate Bonds Standard November 2018

reputation (certifying shows commitment
to delivering low carbon infrastructure) anda freeing up of balance sheets.

STEP

3

Comply withadaptation& resilience
component

Complete checklist to show:
1. Climate change related risks to theasset are understood
2. There is a plan to mitigate, adapt andimprove resilience to the climate changerisks identified
3. Climate change risks and thecorresponding plan to mitigate, adapt
and improve resilience will be reevaluated periodically

For most issuers, proving compliancewith this checklist will be a matterof pointing to the adaptation plan,
Environmental Impact Assessment orcompliance with national regulations.

PAGE 1Plantation
forestry

Mitigation
Component

No natural landscape conversion

Resilience
Component

Impacts that climate change may
cause to the resilience of the forest,
land or surrounding ecosystem areunderstood and mitigatedSustainable
forestmanagement

Non-timber
forestproducts(NTFP)

Forestconservation& restoration

Conservation& restorationof other nonforested land

Supplychain
activities

Carbon stocks aremaintained
through good management
practices

General health of the forest
is maintained through goodmanagement practices
FPICComponent

Free, prior and informed consent
is applied

Requirement applies

Requirement does not apply

The Criteria apply to all forestry types andmost supporting infrastructure
A diverse range of forestry projects exist
covering anything from commercial
plantation forestry to conservation orrestoration forestry.
Whatever the type of forestry, clear climatemitigating and climate-resilience opportunities
exist in the forestry sector. This includes obvious
benefits such as carbon sequestration andreduced deforestation, as well as more indirect
benefits such as soil and water conservation.
This diverse array of projects means thecriteria must be flexible yet also cover allnecessary bases for promoting low-carbon

Requirement applies in some scenarios

forestry assets and projects. This means
including enabling supply chains, having
differing requirements for smallholder
forestry and promoting best-practicecertification.
Why the three components: Mitigation,
Adaptation & Resilience and FPIC?
For a project to satisfy the Forestry Criteria it
must comply with all three steps: the mitigation
component, adaptation & resilience component
and the FPIC component.
This gives investors confidence in the climate
credentials of the underlying assets they are
investing in.

Technical Working Group and Industry Working Group
members include:

Developed by leaders in the forestry sector
Climate Bonds Initiative convened twogroups, a Technical Working Group (TWG)
and an Industry Working Group (IWG), todevelop the Forestry Criteria.
We worked closely with the TWG to developthese Criteria based on their expertise.
The IWG provided feedback on the Criteria
proposed. Across the two groups there wasrepresentation from current market leadersin the academic, NGO, issuer, investor andverifier worlds – full membership details canbe found on our website.

Further information sources
Want to Certify, or just know more?
Take a look at these documents:
1. The Forestry Criteria Document full
requirements of the Criteria
2. The Forestry Background Paper
full details of the TWG and IWG
discussions
3. Climate Bonds Standard full
requirements of the Climate Bonds
Standard
For more information:
Go to www.climatebonds.net
Email katie@climatebonds.net

Full member list can be found on our website.
Disclaimer: The information contained in this communication does not constitute investment advice in any form and the Climate Bonds Initiative is not an investment adviser. Any reference to a financial organisation
or investment product is for information purposes only. Links to external websites are for information purposes only. The Climate Bonds Initiative accepts no responsibility for content on external websites. The Climate
Bonds Initiative is not endorsing, recommending or advising on the merits or otherwise of any investment or investment product and no information within this communication should be taken as such, nor should any
information in this communication be relied upon in making any investment decision. A decision to invest in anything is solely yours. The Climate Bonds Initiative accepts no liability of any kind, for any investment anindividual or organisation makes, nor for any investment made by third parties on behalf of an individual or organisation, based in whole or in part on any information contained within this, or any other Climate Bonds
Initiative public communication. © Climate Bonds Initiative 2018

Introduction to the Forestry Criteria Climate Bonds Standard November 2018PAGE 2