Climate Bonds Standard& Certification Newsletter
Q1 2017 ISSUE 3

Record Quarter for Certified Climate Bonds
January to March 2017 has seen a surge inCertified Climate Bonds with 15 issued forthe quarter to the value of USD 4.4bn, ourbest ever performance to date. This result
represents an increase of 275% on the USD

1.6bn of certified bonds issued in Q4 2016.
Standouts include New York State Housing
Finance Agency and repeat issuances fromNew York’s Metropolitan Transportation
Authority (MTA). Of particular note has

been a host of bonds from Australia including
a domestic green record of AUD 750m fromQueensland Treasury Corporation (QTC) andthe first green bond from the CommonwealthBank of Australia (CBA).

Breakdown by issuer domicile

Breakdown by currency

Breakdown by use of proceeds

India 2%

JPY 1%
UnitedStates
17%

USD
28%

AUD
25%

Australia
39%

Mauritius11%

Low carbon
transport
54%

Luxembourg
6%

Germany 1%

Low carbon
buildings
14%

EUR
43%

France24%

Renewableenergy32%

INR 2%

Programmatic Certification - 3 Big Issuers Get Started
In our last newsletter we talked about
the benefits of the new Programmatic
Certification for large bond issuers, astreamlining feature launched as part of theStandards V2.1 upgrade of January 2016.
We now have three examples of it in practice.
New York‘s MTA, New York State HousingFinance Agency and French rail operator SNCF
Réseau, have successfully adopted theProgrammatic Certification process as part oftheir ongoing green bond issuance programs.
See our three profiles on P2.
What is Programmatic Certification?
Programmatic Certification is a
streamlined process to certify multiple
green bonds against an existing large
portfolio of green assets.
Who can use programmatic certification?
Programmatic Certification can suitestablished issuers with large pools or
pipelines of green assets and the potential toissue a number of green bonds each year.

Benefits of Programmatic Certification
The streamlined process for Programmatic
Certification is lower cost, less resource
intensive and more flexible for repeat issuers.

Who should use
ProgrammaticCertification?

During the typical certification process
for green bonds, issuers must engage
with a verifier for pre-issuance and postissuance certification each time they issue
a green bond.

Programmatic Certification will suit avariety of issuers with green assets:

With Programmatic Certification,issuers complete pre-issuancecertification that includes the eligible
assets in their pipeline or ‘stack’ thatthey will be issuing against in future.
Thus the normal post-issuance certification
for the first green bond in the program
takes place.

• Public authorities in transport,

They can then issue multiple certified bonds
but only need to engage a Verifier once a
year no matter how many times they issueduring the year.

Want to know more?

This significantly reduces the verification
burden and the transaction costs for regularissuers of green bonds.

• Major corporations in energy,buildings, transport, automotive,water, waste;water, energy & housing;• State and provincial governments;• Commercial banks,

Multilateral Development Banks andDevelopment Finance Institutions

Please contact
rob.fowler@climatebonds.net
or matteo.bigoni@climatebonds.net

Continued on page 2

PAGE 1

Continued from page 1
How does Programmatic Certification work?
1. The issuer’s eligible stack and firstgreen bond in the program is Certified at
pre-issuance and post-issuance stages inthe normal way. This involves the Verifierchecking the issuer’s internal Green Bond
Framework for the program and the stack or
pipeline of green assets.

2. When the issuer comes to issue again under
their program they provide the application
documents to the Climate Bonds Standard
Board and receive the formal Certification forthat green bond, but the Verifier is not involvedin each green bond issuance.
3. Instead, the issuer engages a Verifierto undertake an annual review of theissuer’s Green Bond Framework and thegreen bonds issued in the previous year
under the program.
4. Annual reporting obligations remain
the same for each green bond andthese can be wrapped up into a single
annual report for the entire green bondissuance program.

At a Glance - Programmatic Certification profiles
CASE STUDY 1

CASE STUDY 2

CASE STUDY 3

Metropolitan
Transportation
Authority (MTA)

New York State
Housing Finance
Authority(NYSHFA)

SNCF Réseau

Bonds: USD 782m (Feb 2016),
USD 558m (May 2016), USD 312m(Feb 2017), USD 325m (March 2017)
Criteria used: Low Carbon Transport
Verifier: Sustainalytics

Bonds: USD 45m (Dec 2016), USD 54m(Jan 2017), USD 56m (March 2017)
Criteria used: Low Carbon Buildings
Verifier: Sustainalytics

Bond: EUR 900m (Oct 2016), EUR 1bn(March 2017)
Criteria used: Low Carbon Transport
Verifier: OEKOM

Australia – Emerging Best Practice in Market Build
Australia is the 13th largest global economy
but in contrast to most OECD nations is a net
importer of capital. This creates an ongoingneed to attract and retain the attention ofinternational private sector investors.
As the domestic green bond market has
grown from the first NAB issuance in 2014,
Climate Bonds Certification has been
adopted as an expected part of market
structures and investment governance.
Despite its relatively small size, the local
market has seen a diverse range of Certified
Climate Bonds, with multiple issuances from themajor banks, several state governments, alisted property developer, a leading tertiary
institution and several award-winning green
Asset Backed Securities (ABS).
Certification & influence of local investors
The strong take-up of Climate Bonds
Certification in Australia has been driven in partby a combination of local pension funds having
an appetite for green bonds as part of theirgrowing ESG mandates and their desire for thehighest of standards with a clear connection toenvironmental and climate outcomes.
The nationally funded Clean Energy FinanceCorporation (CEFC) has also played apositive role as a cornerstone investor in
multiple certified green offerings, becoming
a significant contributor to capacity building.

Q1 2017 ISSUE 3

Finally, a commitment to certification &transparency from the banking sector has
been a critical factor. Australia’s big fourbanks issuing Certified Climate Bonds (andin some cases multiple issuance) has added
another layer to market confidence, alongwith the prospect of further deal flow fromthe refinancing of their impressive portfolios
of green assets.
We’d like to see other banks in the global
top 100 ranks following this lead from NAB,
Westpac, ANZ & the CBA.
Impacts of Certification
Climate Bonds Certification across theAustralian market has provided greatercertainty for offshore investors, whether
they are looking at the benchmark size
AUD offerings that have come to market in
the last 18 months, or are US or Japaneseinstitutional ‘private placement’ investors
looking for further Australian exposure. Thisbodes well for future green offerings.
Market Credibility & Confidence
Australia’s green bond experience so far
offers a few lessons for other jurisdictions:• Building certification into initial bondissuance can reduce market friction andinvestor uncertainty in early stages ofmarket development.

• Involvement of major banks and highprofile issuers can help attract initialoff-shore demand.

• Support for certification from local

investment authorities or green banks andinstitutional investors provides valuable
signals for prospective domestic issuers.

If the Australians Can…
The role of international capital in Australia’s
green bond market is of note for emerging
market economies looking to finance their
Paris based NDC commitments.
Despite the stalemate in climate change andclean energy policies, Australia has emerged
as an early example for other nascentmarkets of green bond development, diversity
and robust credentials.
The experience to date provides increased
confidence for policy makers andregulators that moving ahead with green
bond promotion, common standards andincentives all can combine to increaseprivate sector investment in low carbon
solutions.
We’d like to see similar features in more G20
nations and additional support for developing
economies to accelerate growth of green
bond markets and investment towards NDC
goals and climate commitments.

PAGE 2

What’s happening with our Technical Working Groups
Water

Bioenergy

MarineStatus: Phase
II public
consultation
imminent

Status: TWG
developing
Criteria

Status: TWG
developing
criteria

The TWG isassessing existing best practicestandards for biomass to determine
what can be leveraged for the Climate
Bonds Criteria.

Criteria for Marine
Renewable Energy has progressed
and we are now handing it over toan Industry Working Group (IWG)
for feedback. Representatives from
the Marine Renewables Industry andVerifier and Investor communities will
sit on the IWG.Public consultation will
open during Q2.

Phase II of the Water Criteria, covering
nature-based and hybrid water
infrastructure, has progressed well.
In February, we convened a very positive
Industry Working Group to respond to
the draft Criteria from the TWG.
The public consultation is scheduled
for late May and will be announced viathe Climate Bonds Blog. The proposed
Criteria will be available online and wewelcome your views and feedback.

Waste
management
Status: TWG
developing
Criteria
Launched during Q1, the TWG is movingahead. The scope of the group has been

Proposals are taking shape for
mitigation thresholds appropriate for arenewable energy source, in line withthe latest climate scenario modelling.
We will be checking in with an Industry
Working Group (IWG) on these
proposals in the next quarter.

agreed - it will focus on waste once it
has become waste, including recycling,anaerobic digestion, composting andwaste disposal assets.
The group is discussing how the‘waste management hierarchy’ canbe used as a simple framework foreligibility Criteria.

Hydropower

Buildings

Status: TWG
developing
Criteria

Status: TWG
developing
Criteria

During Q1,
the TWG considered climatechange mitigation requirements forhydropower, determining a broad
decision tree and assessment Criteria
for eligibility.

Exciting new
approaches andproposals are being discussed by theTWG that will allow the setting of
benchmarks (and hence certifications!)
in a large number of cities andcountries. We aim to finalise those inQ2.

Discussions are now focussing on
complementary climate resilienceand sustainability Criteria, reviewing
existing international, best practiceand standards.
An Industry Working Group (IWG) will
shortly be convened for their input inthese draft proposals.

Q1 2017 ISSUE 3

Due to market demand, we are also
developing eligibility Criteria for themanufacture and distribution of energy
efficient components in the buildings
sector, such as lighting, heating/cooling devices etc. Watch this spacein Q2.

Meanwhile, the TWG continues
to explore robust and verifiable
Criteria for fisheries. It’s a complexarea without CO2 budgets or
trajectories and a lack of verified data.
The adaptation & resilience element ofthe Criteria has progressed and we’ll
be examining how much can also be
applied to the Aquaculture Criteria.

Land Use
Phase I Status:
post public
consultation
Phase II Status:
TWG developing
criteria
For Phase I, the mitigation Criteria,
we’re preparing guidance materials
that will provide transparency
around the TWG process and also aid
issuers and verifiers. These Criteria will
be presented for approval to the Climate
Bonds Standard Board at its next
meeting. We’ll announce the Criteria’s
approval and availability for ClimateBonds Certification on the Blog first!
For Phase II, the adaptation &resilience Criteria, we are part way
through final feedback on the proposed
criteria from the TWG.
In Q2 we will be taking these Criteria
to the Industry Working Group for
feedback on their usability.

PAGE 3

Snapshot of Certified Climate Bonds
Q1: January - March 2017
FranceLuxembourg

Germany

India

SNCF Réseau, EUR 1bn,
Low Carbon Transport

Alpha Trains, EUR 250m,
Low Carbon Transport

MEP Werke, EUR 30m,Solar

IREDA, INR 2bn and INR5bn, Wind & Solar

United States

MauritiusAustralia

New York State Housing Finance Agency,
USD 54m, Low Carbon Buildings(residential)

Neerg Energy(ReNew Power),USD 475m, Solar &Wind

Westpac Banking Corp, JPY 5.6bn, Wind & Low
Carbon Buildings

MTA, USD 312m, Low Carbon Transport
MTA, USD 326m, Low Carbon Transport

FlexiGroup, AUD 50m, Solar
National Australia Bank, EUR 500m, Solar & Wind
Queensland Treasury Corporation,
AUD 750m, Low Carbon Transport & Solar

New York State Housing FinanceAgency, USD 56m, Low Carbon Buildings(residential)

Commonwealth Bank of Australia, AUD 650m,Wind, Low Carbon Buildings & Low Carbon Transport

Subscribe - Sign up here to our blog and receive our newsletters in your inbox.

www.climatebonds.net

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

Lily Dai
Research Analyst Bioenergy,
Water & Hydropower

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 in any form and the Climate Bonds Initiative is not an investment adviser. Any reference to a financial organisation orinvestment 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, norshould 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 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.

Q1 2017 ISSUE 3

PAGE 4