First green bonds standard weeks away, Californian State Treasurer joins board

Certification will verify CO2 reduction of climate bonds.

Investors will shortly be able to check whether so-called green bonds support agreed CO2 reduction targets when the first Climate Bonds certificate is launched. The Climate Bonds Initiative, which is leading the standards program, said its first Climate Bonds certificate would be issued within weeks to bonds that are backed by assets meeting the new standard. It said compliant assets would include wind farms and solar energy plants. Licensed third party verifiers will review proposed bonds to confirm their compliance. Some $12 billion of green bonds backed by investments related to climate change solutions have already been issued into the market. The Climate Bonds Initiative says growing this green debt market will give institutional investors opportunities to switch from carbon intensive to low-carbon investments and fuel the growth of the low-carbon economy.
Launched in 2009, the initiative is a civil society network, which was created by the Network for Sustainable Financial Markets and the Carbon Disclosure Project. It has since gained significant support from institutional investors.In its latest backing, California State Treasurer Bill Lockyer has joined the Climate Bond Standards Board that oversees the initiative. Lockyer manages a $70bn investment portfolio and sits on the boards of the $236bn California Public Employees’ Retirement System (CalPERS) and the $155.4bn California State Teachers Retirement System (CalSTRS). Under Lockyer, the California State Treasurer’s Office was one of the first supporters of the World Bank Green Bonds Program, making a $300 million investment in 2009. Sean Kidney, Chairman of the Climate Bonds Initiative, said: “According to the International Energy Authority we need up to a trillion dollars a year to be flowing into low-carbon industries if we’re to avert catastrophic climate change. That money will come largely from bond markets. We need to ensure it’s invested to support a transition to a low carbon economy. Standards will provide a multi-country tool for investors and governments to assess the integrity of green investments and to preference them. It will support liquidity with green portfolios, essential for investors today.”