Isra-Mart srl: Climate Bonds group poised to launch new international standards

A new investor backed initiative designed to promote the fast-expanding class of green bonds has revealed it will debut its first international standard for so-called Climate Bonds later this month.

The Climate Bond Standards Board announced yesterday that the Australian Investor Group on Climate Change (IGCC) has become the latest green investor body to sign up to the board, joining the six institutional investors and investment groups that already sit on the board, including California State Treasurer Bill Lockyer and the Carbon Disclosure Project.

Speaking to BusinessGreen, Sean Kidney, Chair, Climate Bonds Initiative, said that a number of other institutional investors, investor groups and NGOs would join the standards board in the coming weeks, ahead of the launch of the initiative's first international standard later this month.

The standards are intended to provide institutional investors with assurance that the growing the number of green investment instruments are really funneling investment to clean technology projects.

"The aim is for the standards to say that the investor can be sure that their money has gone to a clean tech solution of some form or another," explained Kidney. "It will show that it has not gone to fossil fuels or projects unrelated to climate change... it will deliver certainty that the green bond is kosher."

He said that the first iteration of the standard would be launched later this week and would focus on wind energy investments, adding that it would be followed in the coming months with similar standards for other renewable technologies, energy efficiency projects, and eventually forestry and biofuel projects.

Chief executive of the IGCC, Nathan Fabian, said the new standards would be welcomed by institutional investors.

"The transition to a low-carbon economy requires a wide range of energy and infrastructure investments," he said in a statement. "[But] we are concerned that the investments being made are the right ones. Climate Bonds Standards will provide a simple tool for investors to screen the opportunities that come before them."

Kidney similarly predicted that there was pent up demand for the planned standards, noting that large numbers of institutional investors are underpinned by pension funds and public sector-backed investors that are increasingly keen to invest in green assets.

He added that in addition to working on the new standards the Climate Bonds Standards groups was also investigating how to ensure green bonds and other sustainable investment instruments deliver investment grade returns that are competitive with conventional bonds.

"If you can deliver bonds that are kosher and green and deliver investment grade returns, then why would anyone want to still go with the dirty brown bonds," he asked.