Climate Bonds Standard& Certification Newsletter
SEPT-DEC 2016 ISSUE 2

In 2016 we gathered momentum$7.2bnCertified Climate Bonds
issued, representing 9% ofall 2016 green bonds issued

This included

Our three largest Certified A host of Certified Climate Significant market reach,
Climate Bonds to date:
Bond firsts:
particularly in:
EUR 900m

1st Indian offshore
INR green bond
NTPC (INR 20bn)
1st green bond from Morocco
Masen (MAD 1.15bn)

USD 782m

1st green bond fromPhilippines
AP Renewables Inc(PHP 10.7bn)

EUR 550m

1st green schuldscheinNordex (EUR 550m)

Australia
100%of green bonds
issued in 2016 were Climate Bonds Certified

India
60%of green bonds
issued in 2016 were Climate Bonds Certified

Standard going from strength to strength
Climate Bonds Standard
V2.1 and new sector criteria
Version 2.1 expands the range of debt
instruments that can be Certified &streamlines the Certification process for
programmatic issuances
Sector Criteria released in 2016:• Transport• Water• Geothermal

New sector criteria comingin 2017

New Technical Working Groups
coming in 2017

• Land Use• Hydropower• Expanded Buildings• Bioenergy• Marine• Expanded Water• Waste Management (Jan 2017)• Industrial Energy Efficiency• Information, Communication & Technology• Water Transport

PAGE 1

Year end summary of Certified Climate Bonds
Issuance to date & 2016 developments
Certified Climate Bonds Issuance
Biggest quarterto date

$10bn

Total
to date$9bn$7.5bn$5bn$1.67bn$3.4bnCertified
Climate Bonds
Issued

$2.5bn0
Q4 2014I

Q1 2015

Q2 2015n 2016 we saw USD 7.2bn of Certified
Climate Bonds issued. With USD 1.8bn
issued previously, 2016 has multiplied
Certified Climate Bonds by a factor of 5.
That’s serious momentum for the schemeand totals Certified Climate Bonds issued at
USD 9bn.
Q2 2016 boasted record Certified Climate
Bond issuance with $3.4bn going to market
in that quarter alone.

And there’s more ready andwaiting to be issued
We’ve also certified another USD 2bn that’s
now in the pipeline for issuance. Generally,issuers apply for certification just before theyissue, but some have been obtaining Climate
Bonds Certification for bonds that will
not be issued immediately. They can then
go to market with a Certified Bond whenconditions are most favourable.

Q3 2015

Q4 2015

Q1 2016

As we’ve now launched V2.1 of theClimate Bonds Standard, which allows‘programmatic’ Certification, we expect tosee more bonds in the pipeline in 2017.

Mixed
Renewable
Energy12%

Key markets for 2016 Climate Bonds Certification•100%% Certified Climate Bonds

Low carbon
transport
26%•% Labelled Green bonds
100%

80%
60%
59.6%

40%
20%
12.5%

16.8%

20.0%
France25.8%
GermanyIndia

Australia

Corporates continue to makeup the majority of issuers ofCertified Climate Bonds

We’ve now seen Certified
Climate Bonds issued in 10
different countries

Sub-sovereign
8%

Great Britain 0.3%

Low carbon
buildings
13%

Wind13%Q4 2016

In 2016, all of Australia’s green bond market
was entirely Climate Bonds Certified. The
majority of India’s green bonds were also
Climate Bonds Certified, and the Standard isgaining recognition in several other markets,including Germany and France.

Another exciting development we’ve seen thisyear is that while we’ve certified just under
10% of all 2016 green bond issuances globally,

United States Netherlands

Geothermal 2%Solar 3%

Q3 2016

the figures for particular markets show
Climate Bonds Certification dominating.

Climate Bonds Certification
takes hold in Australia and India

0%

Low Carbon Transport takes
the largest share of the total
Certified Climate Bond market

Q2 2016

Bank17%
Muni
23%

United States
21%

Australia
17%

Philippines 3%
Netherlands 21%

France11%
Germany
12%

Mixed
25%

Water 6%

SEPT-DEC 2016 ISSUE 2

Corporate
52%

India
10%
Mexico 6%
Morocco 1%

PAGE 2Snapshot of Certified Climate Bonds
Q4: September - December 2016
MoroccoFranceMasen, MAD 1.15bn, Solar

SNCF Reseau, EUR 900m, Low Carbon Transport

United States
New York State Housing
Finance Agency,
USD 45.1m, Residential
Buildings
San Francisco Public
Utilities Commission,
USD 259m, Water

Water, water everywhere –and now it can be ClimateBonds Certified

India
ReNew Power, INR 5bn, Wind

Standard V2.1 streamlined for
frequent issuers and includes
more debt instruments

In December 2016 the Climate Bonds
October 2016 also saw the second of two
Standard Board approved Version 2.1
Certified Climate Bonds under our newof the Climate Bonds
Water Criteria,
Standard. The updated
both issued by San“Climate Bonds
version includes aFrancisco PublicCertification for ourcouple of enhancements;
Utilities Commission
wastewater bonds,(i) streamlining the(SFPUC).
certification processes for
a US and global
large scale frequent issuers;
We hope thefirst,
isanimportantand (ii) expanding thedevelopment of
evolutionary step forvariety of debt instruments
these Criteria will bewhich can be certified.
a significant boost
green infrastructure
for investment infinancing”
V2.1 is fully backwards
sustainable water
Harlan Kelly Jr
compatible with theinfrastructure,
General Manager SFPUCprevious V2.0 of thethat both meets
Climate Bonds Standard,community
so all certifications awarded, or in process,needs and takes account of the two-way
are fully compliant with the updated version.
relationship between such infrastructure andclimate change.
The update simply adds new certification
options to support expansion of the Certified
We look forward to seeing a flood of
Climate Bond market in 2017.
certifications in this sector in 2017.

SEPT-DEC 2016 ISSUE 2

Australia
Monash University, AUD 218m,
Commercial Buildings & Solar

Streamlining the certification process forfrequent issuers
V2.1 allows ‘programmatic’ Climate Bonds
Certification. In practice this meansorganisations who aspire to be frequentissuers of Certified Climate Bonds cannow bring a large pool of eligible assets
to the Climate Bonds Standard Board for
certification. If approved they can issue
multiple certified bonds from that poolwith streamlined pre and post issuancereporting processes, while maintaining theenvironmental integrity that the ClimateBonds Standard provides.
More debt instruments certifiable under
the Climate Bonds Standard
Version 2.1 of the Climate Bonds Standard allows
the certification of a broader range of debt
instruments beyond the four bond definitions
included in the Green Bond Principles.
For example, we can now certify convertible
bonds or notes, loan facilities, syndicated loansand sukuk. A full list of the debt instruments
now certifiable is available on our website.

PAGE 3

What’s happening with ourTechnical Working Groups (TWGs)?
Water

MarineBuildings

Status: Phase I
Criteria Approved

Status: TWG
developing criteria

Phase II Status: TWG
developing criteria

As TWG talks progress
it has become clear that Marine is alarge sector to address. A single set ofCriteria and requirements for a green
bond funding fisheries is likely to bevery different to requirements for agreen bond funding tidal power.

Status: Phase I Criteria
approved – now being
expandedPhase II of the Water Criteria, covering
nature based water infrastructure, isprogressing well and will be released for
public consultation imminently. Oncereleased, we will welcome all commentson the proposed Criteria.
The Phase II Criteria will integrate fully
with the Phase I Criteria by developing
additional scorecard questions specificto nature based water infrastructure.
You can find the complete Phase I
Criteria here.

NEW Waste
Management
Status: launching inJanuary 2017

With the guidance of the TWG, we willproduce a suite of Criteria documents,
covering separately marine renewableenergies, fisheries, aquaculture andcoastal infrastructure.
We aim to have the first of these out for
public consultation in Q1 2017.

development. We have members
signed up from 16 institutions – see ourwebsite for full details.

The Buildings TWG has continued tomeet in order to expand the Criteria. Akey area they are currently working on
is additional criteria for manufacturers
and distributors of energy efficiency
components, such as LED lights,
heating and cooling systems. Climate
adaptation & resilience considerations
are also on the agenda with the TWG.
We also expect to release emissions
performance trajectories for offices inmajor UK cities in the near future, withsupport from Better Buildings Partnership.

include refurbishment andremanufacture, recycling, anaerobic
digestion, composting, and energy
recovery from waste.

The TWG will be considering the types
of waste and the technologies that will
be in scope and the priorities for criteria

Waste types under consideration
include municipal solid waste,commercial & industrial waste, andconstruction & demolition waste.
Technologies under consideration

Bioenergy

Hydropower

Land Use

Status: post public
consultation

Status: TWG
developing criteria

Phase I Status: post
public consultation

Recent discussions
have included where the boundary
between Land Use and Bioenergy sits.
It’s a bit of a conundrum, but we mustdraw lines somewhere and so havedecided to base decisions dependingon the nature of the asset base – specificguidance will be released soon.

During Q4, theHydropower TWG concentrated on
climate change mitigation requirements
for hydropower, focusing on topics
such as lifecycle GHG emissions
assessments, GHG thresholds
that correspond with a low carbon
future and ideas for GHG allocation
methodologies for mixed use reservoirs.
The results of these discussions arebeing carefully incorporated into TWG
considerations.

Phase II Status: TWG
developing criteria

The TWG is now looking closely atmitigation criteria for bioenergy, including
the scope of life cycle assessment of GHG
emissions, GHG emission thresholds thatfollow a low carbon trajectory for variousbioenergy uses, including electricity,heating and transport.
We will then move on to developing
criteria for other environmental and social
factors, leveraging existing international
best practice and standards.

SEPT-DEC 2016 ISSUE 2

In addition, the TWG continue todiscuss the scope, objectives andapproaches to developing criteria
relating to climate change
adaptation and resilience,encompassing a range of social,
and broader environmental criteria.

We look forward to kicking off
discussions and delving into theintricacies of climate friendly wastemanagement.

Land Use Phase I Criteria, focusing
on mitigation and broader socialand environmental aspects of Land
Use assets and investments arefast approaching final release. Final
documents will be submitted tothe Climate Bonds Standard Board
imminently and public release should
follow shortly after.
Land Use Phase II, focusing on
complimentary Adaptation & Resilience
Criteria, are progressing well with theTWG. Throughout Q1 we will be holding
focused TWG meetings to tease out
specific Criteria whilst testing theseagainst bond issue case studies.

PAGE 4

In other news…
European Commission reportbacks Climate Bonds Standard

Widening adoption of theClimate Bonds Taxonomy

In December 2016, the European
Commission published its ‘Study on
the Potential of Green Bond Finance for
Resource-Efficient Investments’,a comprehensive green bond report.

Underpinning the Climate Bonds Standard is
the Climate Bonds Taxonomy. This provides
broad guidance for prospective green bondissuers and investors about what can be
included in green bonds. It was developed
under the guidance of the Climate Science
Advisory Panel to ensure it is firmly rooted in
the latest climate science.

We were particularly excited to see therecommendation to develop an official
European Green Bond Standard. Especiallywhen the report proposes using existing
standards as the foundation for the official
one, and explicitly highlights the potential
to use the Climate Bonds Standard and theGreen Bond Principles (GBPs) as the basis
for the European Green Bonds Standard.
We have long argued the benefits of acommon green bond standard in the EU tohelp create an environmentally robust green
bond market with common definitions andminimal transaction costs.

“Currently, the Green Bonds
Principles and the ClimateBonds Standard are the main
frameworks for labelling greenbonds. There is broad consensus
in the market that policymakers
should build on these frameworks
when further refining definitions
and standards.”
European Commission, Study on
the potential of green bond financefor resource-efficient investments,
November 2016

It is great to see this report recommending
a clear standard, including criteria detailingwhich projects qualify as green, alongsideconditions for the issuance process.

The aim of the Taxonomy is to determine
ambitious and consistent climateclassifications across all sectors of a climate
compatible economy. Widespread adoption ofthis Taxonomy will enable common definitions
and consistency across global markets.

We’re already seeing strong indications thatit’s a useful tool. Out Taxonomy has been
integrated into the French Governments
formal TEEC definitions for green bonds andis the basis for green bond index providers
including MSCI and S&P.
Additionally, organisations in China havefound our Taxonomy quite helpful; including
the ChinaBond China Climate Aligned BondIndex. It has also served as reference for theGreen Finance Committee of China Society ofFinance and Banking’s ‘Green Bond Endorsed
Project Catalogue’ definitions.

Climate Bonds events

AnnualConference& Green BondAwards 2017
To make a real difference to theenvironmental challenges we face, wewill need to see a trillion dollar a year
green bond market by 2020.
Will we get there? What’s the role ofgovernment? What to expect for 2017?

On 6 March, at the 2017 Climate Bonds
Annual Conference in London, we’ll betackling these topics. And following
with the 2017 Green Bond Awards thatevening.
ICMA’s Green Bond Principles andthe City of London’s Green FinanceCommittee will be our partners inhosting this event.
We would love it if you could join us.

Register hereWebinar series continues

Stay tuned - Follow Climate Bonds!

We’ve recently held webinars on thegreen bond market, Solar, Wind andTransport Criteria and there will be more
to come in 2017 on Low Carbon Buildings,
Land Use & Water. If you’ve missed out onthese webinars, you can visit our webinars
page to check out the recordings.

Upcoming webinars, updates on all ourevents and the latest news on the green
bond market will be announced via theClimate Bonds Blog and:Subscribe - Sign up here to our blog and receive our newsletters in your inbox.

www.climatebonds.net

Meet the Climate Bonds Standard & Certification teams

Anna Creed
Head of Standards

Lily Dai
Research Analyst Bioenergy,
Water & Hydropower

Su-Ching Lee
Research Analyst
Buildings & Waste

Katie House
Research Analyst
Marine & Land Use

Rob Fowler
Head of Certification

Matteo Bigoni
Certification
Manager

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 issolely yours. The Climate Bonds Initiative accepts no liability of any kind for investments any individual or organization makes, nor for investments made by third parties on behalf of an individual or organization.

SEPT-DEC 2016 ISSUE 2PAGE 5