Green bonds & forestry
Climate Bonds Initiative

The Climate Bonds Initiative
Mobilising debt capital markets for climate change solutions

Market data& analysis

Standardsetting

Policy &market
development

ClimateBondsCertification

Green bonds
250ABS

2018
Target$250bnFinancial corporate200

Non-financial corporate

Development bank
150

Local government
Government-backed entity

100

New projects or re-financing

Sovereign

USD Billions

LoanIssuers• Investor diversification• Market positioning• Pricing5002014

1. Proceeds go to greenprojects
2. Often an external review
3. Annual reporting required20152016

2017

2018
July 2018

Investors• Addressing climate risk
• Secondary market value

The key figures:
USD161bn total green bond issuance in 2017; Over 1500 green bond issues; 85% growthon 201638 countries from all continents; 253 different issuers; 160 new issuers
USD10.7bn – largest single green bond

Green bonds
Use of green bond proceeds - 2018

5 Bn 4 Bn
6 Bn 3% 3%
4%

4% 2%

4%
9%

17%

35%

2018
USD82bn

29%

Use of green bond proceeds - 2017

Buildings
Transport21 Bn
13%

25 Bn
15%

Energy54 Bn
33%

2017
USD161b

Water

Waste
Land UseIndustry

47 Bn
29%

ICTAdaptation•

Renewable energy has diversified from solar and wind to include power grids, geothermal, offshorewind•

Property related issuance is growing with covered bonds, green MBS and funding deals byEuropean banks•

Transport is on the rise, mainly due to public rail transport investments•

Land use deals now include a forestry covered bond and a sustainable plantation with afforestation

Forestry related green bonds
Issuer Name

Landshypotek Bank

Date ofIssuanceMay 2018Country

SwedenValue ofbond

Use of proceeds

SEK5.2bn(USD605m)

Mixed bond for sustainable forestry, renewable energy andgreen buildings. The inaugural issue is backed by forestry loans
on FSC or PEFC certified forestry assets

Sveaskog

Sep 2017

SwedenSEK1bn(USD126m)

Proceeds will finance FSC certified forests and forestry related
investments, projects and assets to promote low carbon andclimate resilience growth through sustainable forestry and its
related operations

Sveaskog

Mar 2016

SwedenSEK1bn(USD116m)

General corporate purposes given it is a pure-play forestry
company with all assets being FSC certified forests

BrazilUSD200m

Proceeds will be invested by Suzano in projects that feature
positive environmental attributes and foster sustainable
development

Brazil

BRL1bn(USD295m)

Proceeds will be invested by Suzano in projects that feature
positive environmental attributes and foster sustainable
development

Suzano Papel e Celulose

Suzano Papel e Celulose

Sep 2017

Nov 2016

KlabinOct 2017

Brazil

USD500m

Mixed bond for FSC certified new planting and replanting
activities, restoration of native forests, renewable energy, cleantransport, energy efficiency, waste management, watermanagement, circular economy products and adaptation

Martha’s Vineyard Land BankMar 2017

USA

USD20mPreservation of woodland for biodiversity

Martha’s Vineyard Land Bank

Nov 2014

USAUSD35m

Land acquisitions to protect biodiversity and woodland

Why are Forestry Criteria needed?
•Forestry projects can be net emitters or net sinks of GHG emissions•Forestry projects may not be resilient to predicted climate change•Criteria are needed to ensure green finance is only going to projects that aresequestering carbon and climate change resilient•Issuers and investors need guidanceForestry Criteria: development process
Publicconsultation

CBI
preparation

Backgroundresearch
Recruitment ofTWG
members

TWG
meetings

Monthly meetings todiscuss issues anddraft scientificallyrobust eligibility
Criteria for forestry
assets and projects

IWG
meetings

Provide feedback onapproach and draft
Criteria: Are theyfeasible and practicalfor issuers andverifiers?

Board
approval

Finalrefinements
to Criteria if
neededReleaseto themarket

There is a full list of all Forestry and Land Use TWG and IWG members on the CBI website.
.

Scope of the Forestry Criteria•

Plantation forestry•Sustainable forest management•

Harvest of Non-Timber Forest Products•

Forest conservation & restoration•

Other land conservation & restoration•

Supporting infrastructure & supply chain

Forestry Criteria’s overarching principles

Forestry Criteria: management plan
Requirements of the management plan
1. Soil health: a soil management plan is developed and implemented with a focus on soil carbon,
2.

3.

productivity, retention of soil, retention of soil biomass and soil structure
Water management: there has been an assessment done of the water requirements of theforests, impacts on and water needs of downstream users (both human and natural) and discharges
into watercourses. A water management plan is in place that addresses relevant risks and includes
measures to protect ground water and local water bodies
Fire management: measures have been developed and are implemented for the managementof forest fires
Riparian areas protection: provision has been made to protect riparian areas

4.
5. Biodiversity management: the management plan includes provisions for managing andmaintaining biodiversity

6. Species selection: selection of species that are suitable for the project type (e.g. conservation,7.

8.

restoration or sustainable forest management), will not disrupt genetic diversity or that are suitablefor current or projected future ecological conditions
Chemical use: no use of treatments that are on the WHO list of Critically Important
Antimicrobials for Human Medicine, that are listed in the Stockholm Convention, the Rotterdam
Convention or that are listed as classification I in the WHO recommended Classification ofPesticides by Hazard. Chemical use is minimised and they are applied in a targeted way
Forest protection: protection and monitoring measures are in place to prevent and monitor forillegal logging and illegal land conversion

Forestry Criteria: resilience checklist
Requirements of the resilience checklist
1. Future climate change related risks and vulnerabilities have been evaluated
2. A plan has been designed and implemented to mitigate and adapt to theclimate risks and vulnerabilities identified and to improve the resilience of theassets
3. There is a plan to annually re-evaluate the risks climate change posesForestry Criteria: Free, Prior & Informed ConsentFree, Prior & Informed Consent (FPIC)• FPIC from indigenous peoples or local communities must be sought out when:• Property rights are potentially affected, FPIC must be obtained fromproperty rights holders; or• Project activities may lead to the removal or relocation of habitation oractivities important to their culture and livelihood.
• FPIC must be carried out in accordance with one of the following:• ILO 169
• FSC
• Climate, community and biodiversity standard• PEFC• UN Declaration of the Rights of Indigenous Peoples• FAO’s FPIC Manual for Practitioners• High Carbon Stock Approach / HCV-HCSA• It is the issuers responsibility to provide information about which FPIC
guidance has been followed and evidence that the guidelines have been
adhered to.