Climate Bonds Standard& Certification Newsletter
Q4 2017 ISSUE 6

Climate Bonds Certifies 14% of green bonds in 2017, that’s$21.3bn! And the top 10 are:$4.15bn$2.14bn2nd$1.67bn

4th

Bay Area
Rapid
Transit(BART)

$730m
$640m

$670m

10th

8th

6th

China
Development
Bank

1st

Metropolitan
Transportation
Industrial
AuthorityandCommercial
Bank ofChina

Barclays&
Queensland
TreasuryCorporation$1.93bn

3rd
SNCF
Réseau$1.48bn

5th
Bank ofChina

China Three
GorgesCorporation2017 Certified Issuer Leaderboard: MTA wins gold; ICBC silver and
SNCF Réseau bronze; a truly transnational trio

After the successes of 2017, we are now
looking on to 2018 and what it will bringfor the Standard & Certification Scheme.
This year, we expect Climate Bonds
Certification to take an even bigger share of
the market, we are shooting for 20-25%.

7th
ObvionWestpacBanking
Corporation

In 2017, Certified Climate Bonds made up
14% of the green bond market, up from
9% in 2016. Total Certified Climate Bonds
issuance now stands at $31.4bn, $21.3bn ofwhich was issued last year.

$670m

2017 was the year of Criteria development
and we worked hard with our Technical
Working Groups to produce green
definitions. 2018 will be a year of rollout.
Public consultations will be announced
regularly on the blog.
Plus this year, we’re going to dive into how
the Climate Bonds Standard can showwhat life will be like in a low carbon world.
Intrigued? More in next quarter’s newsletter.

$580m

9th

Read on for:Pg. 2 - Update to the Climate Bonds
Standard V3.0
Pg. 2 - Rollout of Buildings Criteria
Pg. 3 - Climate Bonds Annual Conference
Pg. 3 - 2017 Certified Climate Bonds dataround-up
Pg. 2 & 4 - The Climate Bonds Standard &Certification Scheme in 2018
Pg. 5 - The latest from our TWGs

Climate Bonds Initiative
Annual Conference
March 2018, London
Register Now
Q4 2017 ISSUE 6

PAGE 1

2018: Climate Bonds Standard Criteria rollout continues
For the Climate Bonds Standard &Certification Scheme, 2017 was a year of
Sector Criteria development. We worked
hard with our Technical Working Groups(TWGs) to develop, expand and improvegreen bond Criteria for 8 different sectors;
Water, Buildings, Marine Renewable Energy,
Hydropower, Bioenergy, Waste, Forestry and
Fisheries.
2018 will be a year of Criteria rollout as these
efforts come to fruition and Criteria arereleased for public consultation and become

available for Climate Bonds Certification.
This rollout has already started towards
the end of 2017 with Marine Renewable
Energy Criteria being formally approved andthe Water Criteria coming out for public
consultation – to be approved by the Climate
Bonds Standard Board imminently.
On page 4 you can see our timetable for Criteria
rollout for 2018 – a very busy year ahead!
Once Criteria are released, the TWG’s workis largely done. They will be reconvened
intermittently to revise the Criteria, but theregular meetings are concluded. The only
exception here is the Buildings TWG, which
has ongoing work to do - see the next story
for more details.
Releasing Sector Criteria also frees us up
to start new TWGs tackling sectors of theeconomy we’ve not got to yet – an ever moreurgent task as time marches on. Eventually
we aim to have Sector Criteria for every typeof infrastructure but the areas you’ll next
hear about are Agriculture, Shipping, Energy
Distribution Grids & Networks, Information
Communication Technology and Industry.

Low Carbon Buildings Criteria: baselines, baselines, baselines
40% of today’s city’s
greenhouse gas emissions
come from buildings, making
the transition to low carbon
buildings one of the biggest
mitigation and adaptation opportunities. We
need to transition to climate-smart urban
centres that are ready for the population
increases we will see in the decades to come.
In the long run, green property bonds are
expected to make up to 40% of the green bondmarket, but first, investors need confidence andunderstanding that buildings are vital to thetransition to a sustainable future.
Low Carbon Buildings – the Criteria
The Low Carbon Buildings Criteria setsout what property assets are eligible for

Certification under the Climate Bonds
Standard. It covers property assets includingcommercial buildings, residential buildings
and upgrade projects that make genuine
progress towards zero emissions by 2050.
The Low Carbon Buildings Criteria areemission targets that comply with rapid
decarbonisation trajectories consistent withthe goals of the Paris Agreement.
The emission targets (in kgCO2e/m2) areestablished by taking the emissions intensity
performance of the top 15% of buildingsin the selected locations and deriving aperformance trajectory that achieves netzero carbon by 2050.
The emission targets are therefore location
specific, as it is recognised that emissions

intensity will be affected by a number offactors, which vary by region.
Low Carbon Buildings - local trajectories
The regional variation in the Low Carbon
Buildings Criteria requires ongoing work by
the TWG to analyse energy and emission
performance data available to the market. As
regional work is completed, we will release
additional trajectories online.
The latest to be released was a trajectoryfor England & Wales and we have alsorolled out trajectories for France, Germany,
Australia, and New Zealand, with continued
development in Asia, North America, SouthAmerica and Africa throughout 2018.
All will be available on our Buildings pages.

Updates to Climate Bonds Standard: V3.0 coming soon
The draft of the Climate Bonds Standard
V3.0, which will supersede the current V2.1,
has just closed public consultation. Public
consultation opened just before Christmas
and closed on 18th February 2018.
Comments were sought from green bondissuers, investors, verifiers and otherstakeholders.
How did we get here?
V2.0 was released in December 2015
providing investors in the aftermath of theParis COP21 with improved guidance forclimate based investment.
V2.1, released in January 2017, expanded
the range of debt instruments that could be
Certified and included the Programmatic
Certification option that streamlined theverification process for regular issuers.

Q4 2017 ISSUE 6

What’s new in the V3.0?
The Climate Bonds Standard V3.0 update
has been based on feedback from green
finance market stakeholders.
V3.0 builds on the collaboration andalignment with the Green Bond Principles(GBPs) to reinforce a consistent framework,
structure and terminology.
This update also includes smaller changes
to the actual requirements of the Standard
regarding characteristics of green bonds andassets to establish international consistency.
All changes have been marked up in the pdf
to make for easy reviewing.
What’s in the update?
• Increased requirements for disclosure, inline with GBP 2017.

• More clarity on reporting requirements,
before and after issuance of the bond.
• Further flexibility for issuers with staged
allocation of proceeds.
In addition, V3.0 has a clearer definitional
approach to the core elements of the Climate
Bonds Standard:• Pre-issuance requirements,• Post-issuance requirements,• Green definitions, and• Certification process.
V3.0 to be launched March 2018
The finalised Climate
Bonds Standard V3.0
will be launchedon the eve of the
Climate Bonds Annual
Conference in London,
20th March 2018.

PAGE 2

2017: Year ends with surge of Climate Bonds Certification
Total
to date$31.2bn

Certified Climate Bond Issuance
You’ll notice that in this newsletter the time
range of this graph has extended. In Q4 2017,
Contact Energy got its full programme of green
bonds certified, including getting post-issuance
Certification for a number of previously issued
bonds dating back to Q2 2013

$30bn
$20bn

Biggest quarter to date:$10.8bn
Q4 2017

$10bn
0
Q2
2013

Q3
2013

Q4
2013

Q1
2014

Q2
2014

Q3
2014

Q4
2014

Q1
2015

Q2
2015

Q3
2015

Q4
2015

Q1
2016

Q2
2016

Q3
2016

Q4
2016

Q1
2017

Q2
2017

Q3
2017

Q4
2017

The numbers speak for themselves;
Certification valued by green bond issuers

2017: new issuer types and new countries
join the ranks of Certified issuers

Climate Bonds annual conference: growing
the market from billions to trillions

At the end of 2017, total Certified Climate
Bond issuance stood at $31.2bn, with$21.3bn having been issued in 2017.
This means in 2017 we saw the Certified
Climate Bond market grow by 350% - anoutstanding rate of growth! If that ratecontinues in 2018 we’ll see Certified
Climate Bonds top $100bn this year.

In 2017, Asset Backed Securities (ABS),
loans, development banks and sovereigns
received Climate Bonds Certification for the
first time, while corporates, both financial
and non-financial, and local governments/
municipalities continued to issue themajority of Certified Climate Bonds.

We are holding our annual green bondconference in London from 19th - 22nd
March. This will be three days packed full of
everything you need to know about growing
the green bond market from billions totrillions, most specifically to $1trn perannum by 2020.

Certified issuance also came for the first timefrom issuers in China, Canada, New Zealand,
Nigeria, Brazil, Singapore, Luxembourg andSouth Africa. It is great to see uptake of Climate
Bonds Certification on an international scale.
We’re especially pleased to see emerging market
issuers using it as a tool to give extra confidence
in the green credentials of their bonds.

International market actors, leaders andpolicymakers will be gathering in London to
discuss and debate how to scale the global
green bond market.

Q4 clinched the title of record breaking
quarter with $10.8bn issued in that quarter
alone. Q1 2017 had previously been the
biggest quarter with $4.4bn issued.
It’s great to see Certification growing so rapidly
and being used by so many different issuers
across so many sectors. This is irrefutableevidence that there’s value in having this thirdparty verification done. More and more it is
becoming expected in the green bond market.

In 2017, transport ups its shareof Certified Bonds from 2016

In 2018 we expect to see even greater
diversity and volumes across all sectors,
countries and issuer types.

2017 saw new issuer types
seeing value in Certifying Bonds
ABS
4%

Water 3%

Mixed
30%

Mixed
Engery19%

Find the full agenda & register here.

Certified Climate Bonds issued
in 18 different countries
BrazilLuxembou
MoroccoNigeria
Philippines
Singapore3%

Buildings
10%

Transport
35%

Solar 3%
Wind 4%
Geothermal 3%

Q4 2017 ISSUE 6

Come and participate, network and hear
about the market opportunities. There will
be sessions on investor expectations, what
the public sector needs, green definitions
and predictions for the coming year.

Financial
Corporate
30%

Local
Government
29%

UnitedStates26%

Australia
13%
Netherlands 8%

China
19%

Germany
4%
Non-Financial
Corporate
24%
Sovereign & Loan 1%
Govt agencies & statebacked entities 6%
Development Bank 7%

S. Africa
BrazilIndia
11%France9%

Canada 1%
Mexico 2%
New Zealand 2%
UK 2%

PAGE 32018: Standard maintains momentum with Criteria rollout
Development

Public Consultation

Approval for Certification

JAN - MARAPR - JUN

Available for Certification

JUL - AUG

OCT - DEC

Water

Forestry

Bioenergy

Hydropower

Waste

Buildings

Fisheries
The calendar above shows the ambitious
schedule we’ve got planned for Sector
Criteria rollout for the first half of 2018. Thisis the plan for releasing the Criteria that are
already in development.
As Criteria are released, we will be starting
development of new Sector Criteria. Criteria
for Shipping, Distribution Grids & Networks,

Agriculture, and Information Communication
Technology are next on the agenda - but there’s
only so much we could fit onto one diagram.
All Criteria go through a phase of Technical
Working Group (TWG) development, Industry
Working Group (IWG) review and public
consultation. During public consultation wewill run webinars and encourage all interested

parties to join and give their feedback.
Webinars, consultation launches and Criteria
releases are always announced via our blog.
On page 5 there is also a brief update on thecurrent discussions and debates the live TWGs
are having now.

EU HLEG: sustainability taxonomy and green definitions
The EU High-Level Expert Group on
Sustainable Finance (HLEG) has just released
its final report ‘Financing a Sustainable
European Economy’.
This report contains the final
recommendations from the Expert Group,
which form the basis for the Commission’s
upcoming Action Plan on Sustainable
Finance. Our CEO, Sean Kidney, is one of themembers of the Expert Group.
Recommendations are grouped into priority
actions, cross-cutting actions and actions
specific to financial institutions and othersectors of the financial system.
Priority actions for the Commission are to:• Introduce a common sustainable financetaxonomy, starting with climate change;

Q4 2017 ISSUE 6• Clarify investor duties to extend the time
horizons of investment and bring greater
focus on ESG factors;• Upgrade disclosure rules to make sustainability
opportunities and risks fully transparent;• Empower and connect citizens withsustainable finance opportunities;• Develop official European sustainablefinance standards, starting with green
bonds;• Establish a ‘Sustainable Infrastructure
Europe’ to expand the size and quality of
the EU pipeline of sustainable assets;• Reform governance and leadership ofcompanies to build sustainable financecompetencies;• Enlarge the role and capabilities of theEuropean Supervisory Authorities to promotesustainable finance as part of their mandates.

The first priority, the Sustainable FinanceTaxonomy, is where the Climate Bonds
Standard & Certification Scheme comes in.
The Taxonomy is set to include assets that
address climate change, environmental andsocial sustainability. While there’s morework to do, this report already proposessome screening criteria for climate change
assets. Wherever possible, the mitigation
requirements of our Sector Criteria havebeen worked into this EU Taxonomy.
The Sustainable Finance Taxonomy will beapplicable to all types of assets and capital
allocation including project finance, bondsand equity. It will serve to guide both issuers
and investors around green, social andsustainable investments. Stay tuned for morediscussion on this at our March conference.

PAGE 4

What’s happening with our TWGs?
Water

MarineForestry

Phase I: publishedFisheries,
Aquaculture & Coastal
Infrastructure: TWG
developing Criteria

Status: public
consultation
imminent

Phase II: Criteria to bereleased imminently
Public consultation of Phase II of
the Water Criteria, covering naturebased and hybrid infrastructure forwater capture, storage, treatment,
flood/drought defences, stormwater management, and ecologicalrestoration, closed in Dec 2017.
The Criteria address mitigation andclimate adaptation and resilience. The
mitigation component requires GHG
emissions of equal, or less, than BAU.
The adaptation & resilience component
requires infrastructure to be resilient toand able to adapt to climate change andclimate risks. See the full details here.

The main remaining challenge for the
Fisheries Criteria is how best to set-up
the mitigation component. Low carbon
fishing, and how to define it, has notbeen well explored so this is a newquestion we’re asking of our TWG
members.
Once we have finalised Criteria for
Fisheries we will discuss how we canapply these to Aquaculture assets andprojects, and whether any additional
requirements will be necessary for thesetypes of assets and projects.
Consultation should start next quarter.

The Forestry Criteria are very close tobeing ready for public consultation. The
TWG have worked diligently with us andwe will soon be sharing them with an
Industry Working Group for review before
they are released for consultation.
Wherever possible we leverage other bestpractice standards, such as FSC and PEFC,
that forestry practitioners will alreadybe using - we don’t want to reinvent thewheel.
Two critical areas these Criteria address
are land conversion away from naturallandscapes and forestry management full details when consultation opens.

The TWG has been busy reviewing
the emission performance of a rangeof municipal solid waste management
scenarios including recycling, energy
from waste, gasification and landfill andhas made a substantial step towards
developing metrics and thresholds.

We will soon convene an Industry
Working Group to review the draft
criteria. IWG reviewers provide crucial
industry perspective feedback.

Bioenergy

Hydropower

Buildings

Status: public
consultation imminent

Status: public
consultation imminent

TWG discussion isnearing completion. These Criteria
cover bioenergy for electricity, heating& cooling, and transport and has threecomponents: disclosure, mitigation, andadaptation & resilience.

During Q4, the TWG
has been discussing the requirements
to address adaptation & resilience, andother environmental & social impacts
in the hydropower sector. Where
possible existing standards and tools,
such as the Hydropower Sustainability
Assessment Protocol (HSAP), will be
leveraged. Mitigation requirements forpumped storage facilities are also being
discussed.

Status: Criteria
published, now
being expanded

Waste
Management
Status: TWG
developing Criteria

The disclosure component will increasetransparency. The mitigation component
requires a GHG threshold, set at a levelthat indicates the energy produced isaligned with 2 degree C warming, is met.
The adaptation & resilience component
checks that issuers have identified andaddressed climate risks.
Issues such as food security and indirect
land use impacts are also covered.
Two IWG calls have been held during Q4,
providing feedback on the practicality of
the Criteria.

Q4 2017 ISSUE 6

IWG discussions have been held,
providing feedback on the practicality ofthe mitigation requirements including
the GHG emission threshold, scope andboundary of emissions assessment,
emissions allocation methodology andthreshold for predictive screening.

If you’re interested in participating in
the IWG, please contact Cory.

Several new developments are underwaywith the Buildings Criteria as continued
demand for Climate Bonds Certification
has driven expansion in baselining andproxy work.
Revisions to country specific requirements
for England & Wales, France, Germany
New Zealand and Australia have been
completed.
Development of guidance for China, India,
Norway, Mexico, São Paulo, Tokyo, South
Korea and Canada are underway.
In addition, Low Carbon Building
certification guidance for Emerging
Markets is under development withrelease planned for March.

Public consultation to begin in March.

PAGE 5

Snapshot of Certified Climate Bonds
Q4: July - October 2017
UK

FranceLuxembourg

Germany

Barclays, EUR500m,
low carbon buildings

Bank of China, USD500m,
transport and wind

ICBC, EUR1.1bn, USD850m,
solar, wind and transport

Obvion, EUR667m,
buildings

CanadaManulife
Financial,
SGD500m, solar
and wind

USA
City and County of San
Francisco, USD171m, lowcarbon buildings
Los Angeles County MTA,USD471m, transport
New York MTA, USD2bn,
transport
New York State Housing
Finance Agency, USD115m,
low carbon buildings
San Francisco Bay Area
Rapid Transit (BART),
USD185m, transport
San Francisco Public
Utilities Commission,
USD506m, water

Hong Kong

Nigeria

China Development
Bank, USD500m,
transport, wind andwater

Federal Government of
Nigeria, NGN11bn, solar
and forestry

New ZealandContact Energy, NZD75m, NZD50m*,
USD240m*, NZD222m*, NZD150m*,
NZD100m*, USD100m*, NZD525m**,
NZD250.5m**, geothermal

India
Indian Railway Finance Corp, USD500m, transport
Power Finance Corporation, USD400m, solar and wind
IREDA, INR19.5bn, solar and wind

*Bond was Certified post-issuance: post-issuance certification isavailable for already issued debt that’s nominated assets comply
with the Climate Bonds Standard. Issuers get post-issuance
Certification for reputational benefits and portfolio consistency.

Australia
Westpac Banking Corp, EUR500m,
transport, buildings, wind and solar**Issuance is a loan rather than a bond: a variety of debt
instruments may be Climate Bonds Certified. ** indicates this is a
Climate Bonds Certified loan rather than a Climate Bonds Certiedbond.

Meet the Climate Bonds Standard & Certification teamAnna Creed
Head of Standards

Lily Dai
Research Analyst Bioenergy,
Water & Hydropower

Cory Nestor
Research Analyst
Buildings & Waste

Katie House
Research Analyst
Marine & Land Use

Ujala Qadir
Climate Standards
Manager

Rob Fowler
Head of Certification

Matteo Bigoni
Certification
Manager

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 debt instrument 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 financial merits or otherwise of any debt instrument 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. Certification under the Climate Bond Standard only reflects the climate attributes of the use ofproceeds of a designated debt instrument. It does not reflect the credit worthiness of the designated debt instrument, nor its compliance with national or international laws. A decision to invest in anything is solely yours.
The Climate Bonds Initiative accepts no liability of any kind, for any investment an individual 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. Published February 2018. Designed by Godfrey Design.

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Q4 2017 ISSUE 6

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