New York, New York - As the green bonds market continues to show impressive growth, leading investors today released a Statement of Investor Expectations to support the development of a consistent, durable framework for the green bonds market, which has enormous potential to grow, especially in regard to clean energy financing and other solutions to climate change. The investor group was convened by Ceres’ Investor Network on Climate Risk (INCR), a network of major institutional investors.
The investor group, made up of substantial purchasers of green bonds including pension funds, insurance companies and asset management firms, voiced support for the Green Bond Principles published in January 2014, and seeks to build on the Principles by addressing the following four key areas that would benefit from further definition and structure:
- Eligibility, including general criteria for “green” projects
- Disclosure in the Bond Offering Statement, including intended use of proceeds and other actions consistent with investor expectations
- Reporting on use of proceeds and project impacts and benefits
- Independent assurance
“Green bonds are a critical financing mechanism for the clean energy solutions we urgently need, and the growth and integrity of the market will be supported through clearer standards that provide further guidance to issuers,” said Chris Davis, Director of Investor Programs at the sustainability advocacy group, Ceres, which launched a Clean Trillion campaign last year to boost clean energy investment globally to an additional $1 trillion per year by 2030.
In releasing the Statement, investors underscore the importance of the investment community developing and adhering to clear standards for green bonds – standards that provide further guidance to issuers and support growth of a robust, credible green bond market, which tripled in size in 2014 and is expected to continue growing in the years to come.
"Strong standards and clear disclosure will be crucial for the further development of the green bond market, and we welcome INCR's initiative to provide investors with a dedicated platform to voice their expectations,” said Cecilia Reyes, Chief Investment Officer, Zurich Insurance Group – a member of the green bonds working group convened by INCR. “As one of the major investors in green bonds, Zurich will continue supporting the development of market standards and procedures to ensure the integrity of green bond issues."
Identified by Ceres as one of 10 key drivers of a low-carbon economy in its 2014 Clean Trillion analysis, green bonds will help accelerate private capital flows into clean energy. According to the report, promoting green banking and debt capital markets will “broaden the universe of highly-rated fixed-income products attached to clean energy…making it easier for investors to increase allocations to clean energy within existing liquidity and creditworthiness constraints."
“As an active green bonds investor and a fiduciary for the retirement savings of 868,000 California educators and their families, CalSTRS believes this investor guidance will contribute to a strong and credible green bonds market, and to financing clean energy solutions to the risks posed by climate change,” said Jack Ehnes, CEO of the California State Teachers Retirement System (CalSTRS) - a member of the green bonds working group convened by INCR.
As more investors communicate clear expectations, issuers of green bonds are more likely to structure green issuances in accordance with these guidelines, contributing to the development of bona fide standards. This is a crucial building block for further market growth, and would help issuers better understand the benefits of issuing green bonds, the growing investor demand, and the criteria that leading investors use in evaluating a bond labeled as “green.”
"It has been encouraging to see the growth of the green bond market since the first labeled green bond issued by the World Bank in 2008. This Ceres-led investor initiative is an excellent example of a constructive dialogue among and between investors and issuers, stimulated by green bonds. It is a further step in the right direction for the green bond market," said Doris Herrera-Pol, Director and Global Head of Capital Markets at the World Bank.
For more information, visit www.ceres.org/clean-trillion.
Ceres is an advocate for sustainability leadership. Ceres mobilizes a powerful coalition of investors, companies and public interest groups to accelerate and expand the adoption of sustainable business practices and solutions to build a healthy global economy. Ceres directs the Investor Network on Climate Risk (INCR), a network of over 100 institutional investors with collective assets totaling more than $13 trillion. Ceres also directs Business for Innovative Climate and Energy Policy (BICEP), an advocacy coalition of more than 30 businesses committed to working with policy makers to pass meaningful energy and climate legislation. For more information, visit www.ceres.org or follow on Twitter .