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Climate Bonds Standard for low carbon buildings launched at RI Europe 2015

New rules detail qualifying investments for use of proceeds from Certified Climate Bonds

The Climate Bonds Standard for Low Carbon Buildings was officially launched at the 8th annual RI Europe 2015 event in London today.

The Climate Bonds Standard is a FairTrade-like labelling scheme and the new rules detail what low-carbon building investments qualify for use of proceeds from Certified Climate Bonds.

They include criteria for commercial buildings, residential buildings and upgrade projects. It means that issuers in the property sector can now certify their bonds under the Climate Bonds Standard.

The news comes hot on the heels of this week’s €500m green bond linked to sustainable housing from ABN Amro and last month’s €1bn issue from electricity transmission firm Tennet.

Sean Kidney, CEO of the Climate Bonds Initiative, the not-for-profit industry group – speaking on a panel at RI Europe – said there is now $62bn outstanding in green bonds. He reckons that, “realistically”, 2015 should see the market grow to around $70-80bn this year, just down on earlier estimates of around $100bn.

Of the Low Carbon Buildings standard, Ché Wall, founding chair of the World Green Building Council, said: “Greenhouse gas impacts of cities are enormous and 70% of a typical large city has impact locked up in buildings. If we are to stand any credible chance of greenhouse gas abatement, we need to look to those buildings as probably our biggest opportunity.”The first green bond certified under the Climate Bonds Standard for Low Carbon Buildings was issued by Australia’s ANZ Bank. The Standard was developed by the Low Carbon Property Technical Working Group of 17 experts (see below). The work was sponsored by the Bank of America Foundation.

The rules require buildings to be in the top 15% of performers in a city when it comes to greenhouse gas emissions, or to achieve deep cuts in emissions when energy efficiency investments are made.

Kidney said he expected that, in the long run, green property bonds could make up to 40% of the green bonds market. “But this will depend on confidence among investors that the buildings are making a genuine contribution to the transition to the green economy needed to head off catastrophic climate change. The Climate Bonds Standard is a tool to do this.”

Tatiana Bosteels, Head of Responsible Property Investment at Hermes Real Estate and Chair of the Property Working Group of the Institutional Investor Group on Climate Change (IIGCC), spoke of the “huge opportunity” to unlock the potential of energy efficiency in the built environment.

The expert committee members included Bosteels (chair), and Cath Bremner, Global Head of Environmental Sustainability, ANZ Bank, Niall McCarthy, Executive Director, Eureka Funds Management, Bettina Redway of the California State Treasurer’s Office and Brian Rice, Investment Officer at CalSTRS.