CLIMATE BONDS STANDARD& CERTIFICATION Newsletter
JAN-SEPT 2016 ISSUE 1

Welcome to the first edition ofour Climate Bonds Standard& Certification Newsletter2016

has been a whirrof activity for theClimate Bonds
Standard & Certification Scheme. We’ve
had a flurry of Certified Bonds issued;
development of sector criteria has been
ramping up and the list of approved verifiersis growing, including our first China based
verifiers; SynTao, Lianhua EIA & ZhongCai.
All very promising signs for the market.
To keep you updated with our progress
we thought it was about time we started
a regular newsletter from the Standards &Certification team. We’ll be publishing one
every quarter to keep you up-to-date.
Read on for all the recent news on Certified
Climate Bonds as well as updates on thelatest developments on the Standard andSector Criteria.

Developments this year

Diversity on the rise
In the first three quarters of 2016 we’ve seen
Australian semi-sovereigns, Indian renewableenergy companies, German wind power
developers, the first ABS for small-scalesolar, and urban transportation authorities allbringing Certified Climate Bonds to market–
more details on the next page.

A green bond that has had its
environmental credentials certified
against the Climate Bonds Standard,allowing it to be approved by theClimate Bonds Standard Board.

We are also receiving increased interest fromverifiers in emerging economies wanting
to provide verification services in these
dynamic markets.

See page 5 for the full list of recently approved
verifiers or visit our website.

Green bond definitions and assessments
are being developed
In March 2016, Moody’s published
its Green Bonds Assessment (GBA)
methodology. It provides a framework toevaluate green bonds in terms of their useof proceeds and reporting and refers to theClimate Bonds Taxonomy.

A screening tool that identifies
infrastructure for a future low carbon
economy. Bond Issuers use it toconfidently show the climate change
credentials of their bonds. Investors use
it to prioritise bonds they can be sureare delivering climate change solutions.

EY and KPMG have been on our list for sometime, and PwC has just recently joined up.
We’re hoping to see the last of the Big Fouron board soon.

By the end of 2015 we had $1.8 billion ofCertified Climate Bonds issued.

Have you seen?

What is the Climate BondStandard?

What is a Certified
Climate Bond?

2016: Rapid growth in bond certification

On a wider scale, more than 10% of all
green bonds issued this year are Certified
Climate Bonds.

Sign up to our blog to get these
newsletters straight into your inbox:
www.climatebonds.net

Our list of Approved Verifiersis growing quickly

India-based EVI and BDO joining is anindication of the potential for verification
services in these markets.

At the close of Q3 2016 we’ve just tippedover the $7 billion mark. In other words,
Q1-Q3 2016 saw Certified Climate Bondissuance more than triple the 2015 total.

Subscribe

New Criteria released
Criteria for built water infrastructure havebeen approved by the Climate Bonds Standard
Board and released for use by issuers.
We’ve already seen a couple of certified
bonds making use of the new Water Criteria

In September, Standard & Poor’s released
its Green Bond Evaluation tool for publicconsultation.
China’s Green Finance Committee (GFC)
published the Green Bond Endorsed Project
Catalogue in Dec 2015, which sets thegreen definitions for the Chinese green
bond market. Climate Bonds is a special
member of the GFC, playing an advisoryrole in proceedings.

Verification can only be done by a
Climate Bonds Approved Verifier.
(details on page 2) and we’re expecting
others to come flooding in!
There’s more on water on our website.
Work begins on Hydropower Criteria: newTWG launched
June saw the launch of the Hydropower
Technical Working Group (TWG).
The TWG is working hard to develop Criteria
for run-of-river, storage (reservoir), pumpedstorage & the newer in-stream technologies.
More details on page 4.

The ICMA Green Bond Principles (GBPs)
were updated in June 2016, indicatingthat investors could refer to further
criteria or standards for eligible projects.
The Climate Bonds Standard remains
fully aligned with the updated GBPs,
building on the principles to establish averification scheme.

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JAN-SEPT 2016 ISSUE 1

Snapshot of Certified Climate Bonds
January – September 2016
Netherlands (2):Germany (2):Obvion, EUR 500m, residential buildings

DBK, EUR 500m, wind & solar

ABN AMRO, EUR 500m, commercial buildings

Nordex, EUR 550m, windPhilippines (1):AP Renewables
Inc, PHP 10.7bn,geothermal

Australia (3):Westpac, AUD
500m, buildings &wind

United States (3):San Francisco Public
Utilities Commission,
USD 500m, water
Metropolitan Transport
Authority, Issue 1: USD
787m, transport
Issue 2: USD 558m,
transport

Certified Climate Bonds 2016

As Climate Bond Certification grows
in popularity it is also expandingin geographic reach; 2016 YTD
has seen India, USA, Germany and thePhilippines issue for the first time.
Axis Bank, Hero Future Energies andNTPC have issued from India, mainly inthe renewable energy space. The US has
joined the ranks with issuance for public
infrastructure projects from San Francisco
Public Utilities Commission (water) and twobonds so far from New York’s Metropolitan
Transport Authority (public transport).

FlexiGroup, AUD
50m, solar ABS

India (3):Axis Bank, USD 500m, wind, solar, transport & buildings
Hero Future Energies, INR 3bn, wind
NTPC, INR 20bn, solar & wind

“Our city’s sewer system
was built to last ahundred years; it’s only
fitting we use, the latest,
most innovative financing
techniques.” Harlan Kelly
Jr, San Francisco Public
Utilities Commission
Updates to the Climate Bonds
Standard – V2.1 coming soon

TreasuryCorporation
Victoria, AUD
300m, transport,
buildings , wind,solar & watera programmatic approach to certification,
allowing them to certify a designated asset
pool and then issue multiple Certified Climate
Bonds against them over several years.
This approach will streamline issuancewhilst maintaining the confirmationof environmental integrity that ourStandard provides.
Including other debt instruments; not justgreen bonds
Standards V2.1 will move beyond the fourbond definitions included in the GBPs.
This will include expanding the range ofdifferent debt instruments that can be
Climate Bonds Certified.

Germany is the latest European country to see
the value of Certification with bonds for windand solar projects from DKB and Nordex. And
we have even had a Certified Climate Bondissued in the Philippines. AP Renewables issued
for geothermal power projects.

We are working with the Climate Bonds
Standard Board to add enhancements to
the Climate Bonds Standard. These come inresponse to green bond market developments.
Programmatic Climate Bonds Certification

We plan to welcome instruments such as
Yieldcos and Sukuk, and other types oftransferrable instruments to the climate
bonds family in the very near future.

Who will be next? Hopefully more toannounce next quarter!

Larger scale repeat issuers of Certified
Climate Bonds have indicated a desire to use

Stay tuned for the release of V2.1 – you’ll see
it on our blog first.

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JAN-SEPT 2016 ISSUE 1

The Numbers: Certified Climate Bond
Issuance is Growing: Total to Date

$253m

Issuance per financial quarter$1.05bn$500m$1.67bn$3.38bn$522m

Q42014Q22015Q42015

Q1
2016

Q22016

Q3
2016

Certified Climate Bonds
have been issued in all ourcriteria areas

105n00-$1b0m

$5-$0020$2-$00500mm00$10-$1

10m0$1Further information on all Certified ClimateBonds is available at www.climatebonds.net/
standards/certification

The majority of Certified
Climate Bonds are larger
than $200m-$N.B. these graphs look at total Certified
Climate Bond Issuance to date, unlike themap on page 2, which shows issuance fromJanuary to September 2016.

“We know that ournetwork of electrified rail
services is efficient…to berecognized for this by theinvestment community
reinforces the essentialityof having a large androbust transportation
infrastructure” Pat McCoy,
Director, Finance MTA$0W

ith Climate Bonds Certification
growing we took a look at
who is issuing them, what for,how big and in which currencies – see theresults below!

Total$7.4bn80% of certified bonds are larger than
$200m and 45% are larger than $500m.

Approx. half the certified
EUR and USD account forissuance came from corporates 74% of certified issuance

Water 3%

Wind
16%

Low carbon
buildings
16%

Mixed
Renewable
Energy14%Low carbon
transport18%

Mixed
29%

Sub-sovereign
10%

Bank
21%

Muni
22%

Corporate
47%

AUD
18%
USD
35%

EUR
39%

GBP <1%
INR 5%PHP 3%

Geothermal 3%
Solar 1%
We have had Certified Climate Bonds
issued for solar, wind, geothermal,buildings, transport and waterBanks, corporates, munis & sub- sovereigns
all see value in using Climate Bonds
Certification

Many bonds fund a mixture of a few ofthese categories and the sector criteria aredesigned to be used in conjunction with one
another.

We’ve had the most certified issuance fromCorporates but it’s also from Corporates thatwe’ve seen the most green bond issuance sothis is to be expected.

Certified Climate bonds have been issued ina variety of currencies
This year is the first time we have seencertified issuance in INR and PHP. EUR andUSD make up the majority of the issuance;
responsible for 39% and 35% respectively.

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JAN-SEPT 2016 ISSUE 1

What’s happening with our sector criteria
Hydropower

Water

Buildings

Status: TWG
developing criteria

Phase I Status: Criteria
Approved

Hydropower can be acontroversial technology. However, get it
right and it can be an important contributor
to the mix of clean renewable energy,
particularly by providing base load power.

Phase II Status: TWG
developing criteria

Status: Phase I Criteria
approved – now being
expandedWe’ve launched a new Technical Working
Group (TWG) to examine what mitigation
and adaptation & resilience criteria should
be set to make sure that hydropower issocially and environmentally responsible.
We’re looking into how we can leverage
existing tools such as the CDM
methodology, IHA G-res tool, the Climate
Bonds Geothermal Criteria and the WorldBank’s guidance on GHG accounting.
On the agenda for future calls are
adaptation & resilience issues and broader
environmental and social impacts.

March marked the first meeting of theTWG this year, which has reconvened
with new building specialists from BRE
Group, Better Buildings Partnership,
EDF’s Investor Confidence Project,
Geophy and UNEP Finance Initiative.

The Water Criteria focus on both
mitigation and adaptation & resilienceof water infrastructure assets, and theirimpact on the resilience of the system inwhich they are part.

This year we’ve seen great uptake ofthe Buildings Criteria, with five Certified
Climate Bonds funding buildings.

We’re rolling out the criteria in phases,
covering engineered (Phase 1) andnature-based and hybrid (Phase 2) water
infrastructure for the purposes of watercollection, storage, treatment, distribution,or flood and drought defences.

The reconvened TWG will focus onrefining and expanding the buildings
criteria to meet the demand we’reseeing from issuers across Europe,including Germany, Spain, Sweden,and the UK.

In partnership with a consortium (Ceres,AGWA, CDP & WRI), we’ve just released
Criteria for built water infrastructure.

Emission performance trajectories are
now available for green commercial
property bonds in Australia, Singapore
and seven major US cities. We’ve also
got an ambitious engagement program
to expand the list in Europe.

MarineBioenergy

Status: TWG
developing criteria

Status: post public
consultation

What’s a low carbon
fishery? Is all marine renewable energy
green enough for green bonds?

When we put our firstdraft of the Bioenergy Criteria out forpublic consultation we had a fantastic
amount of engagement and feedback.

Land Use
Phase I Status: post
public consultation

These are the sorts of questions we’retackling with our Marine TWG now.

We’ve recently reconvened the original
TWG to address these comments.
The crucial issue that public consultation
highlighted was the possibility of usinga principles-based approach rather thanrequiring each bioenergy project to becertified under a specified list of current
standards. Feedback was that this would
be fairer and we’re all for making thisas inclusive as possible – if it remainsenvironmentally robust of course.

Phase II Status: TWG
developing criteria

We launched the Marine TWG in April
2016 and they’re currently developing
screening Criteria for marine greenbonds.

Land Use criteria are being developed in
two phases; mitigation, and adaptation& resilience.

The Marine Criteria straddle several
sectors, including marine renewableenergy, fisheries and coastal
infrastructure.

Phase 1 Criteria are currently beingrefined and we aim to approve andrelease them shortly.
The Phase 2 TWG was launched in April
2016 and we expect to release criteria
for public consultation in early 2017.

Waterborne transport will be tackledwith a separate TWG, which we aim toset up before the end of this year.

FAQ: How are Climate Bonds Sector Criteria set?
TWG established

Research & Development Phase
TWG meetings to discuss andadvise on criteria

Draft criteria released
for public consultation
Review Phase

Climate Bonds Standard
Board reviews
Approval

TWG revisit criteria inlight of public comment

Climate Bonds
Certifications
Market UseCriteria approved bythe Board and released

Regular TWG
review of criteria

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JAN-SEPT 2016 ISSUE 1

In other news…
Approved Verifiers

Climate Bonds eventsT

his year we’ve had many new
approved verifiers from around theworld joining the current ranks. We’ve
welcomed SynTao Green Finance, Vigeo,
BDO India, ZhongCai Green Financing,
Carbon Trust, Emergent Ventures India,
Lianhe EIA and PwC.
Verifiers are approved based on geographic
scope (where they can verify) and technicalscope (what they can verify). Check out ourfull list for all the details.
We’ve got others in the pipeline too, so lookout for new names in next quarter’s newsletter!

Building China’s green bondmarketWe’ve been doing a lot of work in China
over this year to help build its green bondmarket. This includes advising China’s GreenFinance Committee, publishing our Roadmapfor China reports (helpfully in English andChinese) and we’ve worked with CCDC
and CECEP to build the ChinaBond China
Climate-Aligned Bond Index.
For the rest of this year and into next we willcontinue our efforts to help China build a robust
green bond market. Visit the Chinese version(in Chinese) of our website to find out moreabout our activities in China. And look out for
our China newsletter - coming out very soon.

Upcoming – watch out for
further info in the nextnewsletter
Look out for our next quarterly newsletterfor the latest news on our sector criteria,
certified bonds, and other initiatives.

The Green Infrastructure Investment
Coalition (GIIC) rolls out

State of the Market reports androadshow goes global
We launched our annual report, Bonds andClimate Change: State of the Market 2016,in London this June. This was followed by aseries of launches and country editions of thereport – more than ever before! We’ve now
released editions for Brazil, China, France,
Canada and Mexico. India will be next!
Join us at our launch of the India edition
on 24 Oct in Mumbai and 27 Oct in Delhi.

Dedicated to reducing investment
barriers to green infrastructure, theGIIC is an exciting new initiative we’rerunning in partnership with ICMIF, LTIA,
PRI and UNEP Inquiry.
The GIIC launched in June with an event
bringing together Indian issuers andinvestors at the London Stock Exchange.
It will next hold a similar event focusedon Brazil in the week of 8 Dec.
Webinar series up and runningFirst Green Securities
Exchange: The Luxembourg
Green Exchange
The Luxembourg Stock Exchange
introduced the world’s first exchange
trading in only green securities at theend of September; the Luxembourg
Green Exchange or LGX.

We’ve recently held webinars on theGreen Bond market, Solar, Wind andTransport criteria that included guest
presentations from certified issuers
Deutsche Kreditbank, Hero Futures
Energy and Nacional Financiera.
Webinars on the Buildings Criteria arecoming up in November.
If you’ve missed out on these webinars,you can visit our webinars page tocheck out the recordings. Our next
webinars will be announced via theClimate Bonds blog.

To list on the LGX issuers must provide
a full set of documentation for theirbonds to try and combat ambiguity andscepticism over green credentials; thesame things we’re tackling with ourStandard & Certification Scheme.

Stay tuned!

Sean Kidney, CEO, spoke at the launch:“Congratulations on the launch today of
the Luxembourg Green Exchange. Thisis an international step forward by theExchange; taking a green, global lead”.

Check out our Climate Bonds Blog for
updates on all our events and latest
news on the green bond market.
Check in regularly or subscribe toreceive updates straight to your inbox.

Follow Climate Bonds Initiative

Next time we’ll be diving into the Water
Criteria, Phase 1 and Phase 2. Sign up toour blog to be sure not to miss out!

www.climatebonds.net

Meet the Climate Bonds Standard & Certification teamAnna Creed
Standard Manager

Rob Fowler
Head of Certification

Su-Ching Lee
Research Analyst
Buildings & Waste

Katie House
Research Analyst
Marine & Land Use

Lily Dai
Research Analyst
Bioenergy, Water &Hydropower

Disclaimer: The information contained in this communication does not constitute investment advice and the Climate Bonds Initiative is not an investment adviser. 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 advising on the merits or otherwise of any investment. A decision to invest in anything is solely yours. The Climate Bonds Initiative accepts no liability of any kind for investments anyindividual or organization makes, nor for investments made by third parties on behalf of an individual or organization.

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